Closing Bell - Closing Bell Overtime: The Bear Bounce Battle 8/2/22

Episode Date: August 2, 2022

Have markets really turned a corner? Joe Terranova of Virtus Investment Partners gives his forecast for stocks. Plus, top-rated chip analyst Stacy Rasgon gives his instant reaction to AMD results. And, three top picks for your portfolio with Lauren Hill from Westwood Quality Value Fund.

All right, Sarah, thanks so much. Welcome, everybody, to Overtime. I'm Scott Wapney. You just heard the bells were just getting started here at Post 9. And a slew of notable earnings are imminent. Starbucks, PayPal, AMD, Electronic Arts, and others are reporters, as always, standing by to break in the moment those numbers hit. Also ahead, I'll speak with Tom Lee's star chartist, Mark Newton, on why he thinks a once hot sector is about to roll over and what that might mean to your money. We begin, though, as always, our talk of the tape, the battle over this bear bounce, whether we have truly turned the corner or not. This is more Fed speakers fuel the debate over the market's reaction to the most recent meeting and what lies ahead. Let's take

all of that to Virtus Investment Partners chief market Strategist Joe Terranova. He's also a member of the Halftime Investment Committee right here with me at Post 9. So we'll get to the rally in a second, the pullback in a moment. You got a lot at stake, though, with these numbers that are coming out imminent. You own AMD personally. The JOTI ETF, which you manage, owns that as well. EA, you just recently bought. What are your expectations for AMD? That's the most critical one, I think, coming in here. Well, you just recently bought. What are your expectations for AMD? That's the most critical one, I think, coming in here. Well, they guided higher in April. The expectation, I think, is a little bit high here. And the reasoning for that is we believe market share has been gained from Intel. So I'd like to see the gross margins in the mid-50s. I'd like to

see the free cash flow generation right around $2 billion. That's going to be important to me. But this is very critical in terms of extending a lot of the positive technical momentum that's been established over the last several weeks for growth and technology. All right, I got EA is out. We're going through it, and we will certainly bring that to you the moment we get to the bottom of what is at stake here. We could take a look at shares here and see what they are doing. But, you know, coming a day after Activision Blizzard came out, questions over the future of gaming coming out of the pandemic, stocks down. Steve Kovac, what's going on?

Yeah, Scott, we got a slight beat here on revenue for EA. One point three billion dollars versus one point two six billion dollars expected. EPS coming in at a dollar eleven, but that is not comparable to estimates. And then some guidance. This is their fiscal key one. So for the full fiscal year, they're guiding $7.9 billion to $8.1 billion versus the $7.97 billion estimated. And September quarter guidance is coming in a bit light here, $1.72 billion to $1.775 billion

versus the $1.87 billion estimated. And look, Scott, like we talked about yesterday during Activision, tough time for gaming companies. We got lots of reports out there that spending in gaming is down and not a lot of big money-making titles on the horizon, but EA's FIFA games saw 10% increase in daily players quarter over quarter, kind of bucking that trend. But keep in mind, they're about to lose that FIFA franchise, Scott. Yeah, I was literally just going to say that about losing what has been a critically important

and very popular franchise. Steve Kovac, thanks to you. We will come back to you shortly again. Caesars, Airbnb, Starbucks, PayPal, all of those expected in the next few moments. Let me turn your attention to the market. What is this, a rate shooting higher sell-off that we got? Without question. I said to you yesterday on the halftime show the technical momentum that we have established. It will reverse based on what the bond market did. The bond market has led the equity market into the July rally.

If the bond market is going to reverse, the equity market's going to reverse as well. 250 on a 10-year earlier this morning. 276. 276 going out. 6% moving yields on the 10-year today. A lot of Fed speak coming out and alerting the market, wait a second, let's not get too excited about the Fed pivot. So the bond market has been leading us. It's going to continue to lead us. And it's somewhat disconcerting as someone who's long the queue still that we saw this push higher for a 10 year Pelosi landing in Taiwan. Obviously, maybe the tensions around that leading to yields up, too. But you mentioned this Fed speak. Mester today, quote, haven't seen anything suggesting inflation leveling off. You want to send her a report on what commodities

are doing, gas prices and stuff. Maybe she hasn't been to the pump. I'm not sure. But there are a whole array of inflation metrics that, in fact, are cooling off now. Some of the most important ones are not. Mary Daly, nowhere near almost done. That's throwing the cold water you suggest on the meeting last week, this bullish and dovish take that came out of that. Charlie Evans says, well, 50 basis points is a reasonable assessment. He says 75 could also be OK. I doubt that more would be called for. You put all of that in the pot and what do you put in the bowl?

What do you get from that? So as an investor, I actually like and applaud that because they are still clear that inflation is the enemy and they're targeting inflation, which is the correct thing to do. We're seeing that there are select commodities. There are shipping costs. Lizanne Saunders pointed this out. Shipping costs have fallen year on year dramatically. But these are welcome signs within the economy. But let's not let's not step back from combating inflation. Let's understand we're a long way off from getting

inflation where it needs to be. I like the commitment and discipline on the part of the Federal Reserve and saying, wait, pivot not so fast. I beg your pardon for just a moment. Contessa Brewer has Caesars. Wow. It looks like they reported a loss. The street was expecting 17 cents. Looks like a loss to me. Is that what you see? Yeah. Yeah. A loss of 57 cents. But look, they're coming in with revenues that beat. And also, I just got to put this into some perspective. They are also announcing really strong results for their bricks and mortar. You've got Las Vegas now setting an all-time quarterly record for adjusted EBITDA. That's the key earnings metric for these casinos. It's coming

in 10 percent above the record that they set last year. And you're looking at Vegas margins now of 49 percent. Vegas is just on fire. It is just full steam ahead. I'm looking at the regionals now. These are the casinos that are spread throughout the country. The performance here, they were up against really tough comps, but it looks like they're coming in a little bit softer than last year, but still well above 2019 levels. You can see right now that stock is already popping, almost up 4%. The big surprise here is the digital loss came in at $69 million. I'm guessing that the street is going to see that as not as big a loss as they were expecting. Remember, there's all those promos that came out here. So we're going to keep an eye on this one.

All right. Yeah, good stuff. All-time record. Wow, Vegas, I guess not a big surprise given everybody wanting to get out and about and hit the tables and everything else. Airbnb is out. Speaking of people being out and about, Steve Kovach, what do you see here? Yeah, Scott, shares falling about 10 percent on these headlines here. Revenue coming in effectively in line with expectations, $2.1 billion versus $2.11 billion expected. EPS, a hefty beat here, $0.56 versus $0.43 expected. And Knights and Experiences book missed a bit. That might be hurting the stock here a little bit, $103 million versus $106.3 million estimated, but that's still up 25% year over year. They're also announcing share buybacks here,

up to $2 billion, and offering some rosy guidance here in Q3. $2.77 billion revenue versus $2.8 billion revenue versus $2.77 estimated. And they're also saying for this quarter, adjusted EBITDA will be the strongest yet they've had as a public company. And look, this is the same story, Scott, we've been hearing throughout the earnings season, showing that strength and shift to consumer spending, to services, and also Airbnb saying demand is as high as it has ever been, despite this macro environment we're in, Scott. All right. Good stuff. Steve Kovach, thank you very much for that. Do not miss, by the way, Airbnb CEO, Mad Money, with Jim tonight, 6 p.m. Eastern. There's Brian Chesky, and he's going to

be speaking with Jim. Starbucks is out. Kate Rogers has the numbers for us. Kate? Hey there, Scott. Beat here on the top and bottom line for the third quarter for Starbucks. Net revenues, $8.2 billion. That is higher than the $8.1 billion estimated by analysts. EPS adjusted $0.84.

Gains driven there by U.S. performance and demand globally outside of China. That is also a beat compared to the 75 cents that analysts were looking for. Comps up 3 percent globally. That's a slight miss. Up 9 percent in the U.S. That's right in line with estimates. Falling 18 percent internationally. That is a larger than expected drop versus the estimates of a fall of 14.5 percent.

And that international drop includes 44 percent decline in China. Now, remember, there were mobility restrictions in China for about two thirds of this quarter. Episodic closures there also continue. The company's saying people are kind of starting to return to their routine there, but short term disruptions remain. So once again, a 44 percent seems for sales decline in China. Starbucks second home market rewards members in the U.S. up 13 percent to 27.4 million members, and guidance remains suspended for the remainder of the year. Back over to you. All right. Got a China issue to contend with with Starbucks. Kate Rogers, thank you very much. I'm also seeing that AMD is out. I told you we're going to go through that

and pop on in just a second. But you want to comment on what, if anything, you've seen thus far? What jumps out to me, you said the stock was down about 6%. We can throw it up in overtime. You were looking for gross margins of 54%. I see a 46% number. Now, if that's the comp number that we're talking about here, that would be below what you were looking for. I think the adjusted margin is right in line, which is not going to be good enough. There's not very much in this report that exceeds the expectation for AMD. And that will be a little bit problematic here in the near term. I think the stock will steady itself over time. It's not going to motivate me to pare back or to liquidate my position, either personally or within the quality momentum index. This is still one of the best in breed

companies for sure. The problem is, is that, and we heard this from Intel, the PC market is weak. It is. Okay. So they make up for some of that usually in data center. They grab market share, you know, continually from from Intel. By the way, going in, I'd even realize their market caps almost identical AMD and Intel. And that just shows you how much AMD has come off of its, you know, high flying levels of, you know, six to eight months ago when when it was one of those poster stocks for big market cap things, along with Nvidia. Christina Partsenevelos, what do you see here? What's driving this stock down some 6%, do you think? Well, you have the revenue. Yes, it was a beat for Q2, but it was more of a muted beat than we've seen in previous quarters at 6.55 billion. EPS, earnings per share, also came in higher. But what we're seeing is revenue

guidance. This is a huge concern. Even though the company had an analyst day back in June and they provided their expectations for their guidance, we're seeing it at $6.7 billion for Q3. The street was expecting $6.82 billion, so that's lower than anticipated. We're going through the report. I'm seeing they did say higher sales on data centers, which was a key point given the weakness that we saw with Intel most recently. But and also gross margins here. Gross margins came in at 46%. That is a decrease of two percentage points year over year. So those are probably some of the biggest things right now. Just the guidance, which is a little bit weaker than anticipated and the revenue that came in muted for the second quarter. All right. Christina, thank you. Again, you know what we see, Joe, we see, you know,

companies that are more exposed to consumer in terms of chips versus those who are more exposed to, let's say, autos or industrials. I'm thinking Texas Instruments went one way, Intel, AMD, and some of the others that have come out, they go the other way. Yeah, on Semi with exposure to EVs as well. So I agree that we're not at the point where we can believe that Semis have made the turn. I called this a head fake just 10 days ago. I'll maintain positioning in what I think is best in breed, which is NVIDIA, which is AMD. They're both down.

I'll acknowledge that after the close. I'm not going to make too much about a move in the after hours. But to think that we've reestablished or have gotten past the headwinds for the sector and the industry, I think, is a little bit too soon to be calling. OK. PayPal, that's the one we're waiting on. And we'll bring that to you as soon as it crosses. Let's, in the meantime, broaden the conversation out and bring in CNBC contributor Kerry Firestone of Aries Asset Management and A.J. Oden of BNY Mellon Investor Solutions. It's great to have both of you with us. Kerry, you own PayPal. As I said, it is imminent after what you've gotten so far from some of the other tech companies. This is a stock that has gotten absolutely hammered

this year. What are your expectations coming in here? Well, we're hoping they come in around the consensus number, 87 cents. But this has been a tough quarter we've heard from several companies the consumer market is not so great we heard it from walmart and target but amazon had a decent quarter and i think that's a good measure for for paypal the type of spending it's a secular growth story e-commerce is still building what we really need to hear is what they're talking about for guidance, how they're doing on the CFO search. They're also looking for a COO. And Elliott Management, of course, is, you know, kind of dark horse in the background. But that's, I would think for investors, something that's positive that there's a buyer out there and an owner who has a commitment to this company and thinks there's a lot of

potential to improve margins over time. And if this management isn't going to do it, maybe they'll step in. Yeah, and I think we heard Kate Rooney, who is on the case there, waiting for that to drop any second now, suggest that PayPal is yet to acknowledge Elliott publicly yet. So we'll see if that comes with this release as well. So, A.J., I turn to you and I turn you back to the market. And I want to get you and your response to what Joe said earlier about, you know, it's this Fed speak today.

It's this sharp move in the 10-year today, up 6%. You thought we're around 260. Lo and behold, you look at the close here, we're at 276. You think the market got it wrong following the Fed meeting? You know, I think the market may have got ahead of itself a bit. You know, I think pricing in this Fed fund futures rate, the potential for rate cuts in 2023. You know, obviously we saw the compression in yields, which I think that's where growth stocks and some of the bear market rally that we saw. And so, yes, I think the market did get a bit ahead of itself right now. And so obviously those conversations today, bringing the market back down a little bit

and the understanding that the Fed is going to continue to move forward to raise rates so they can get price stability back under control. So, Kerry, I mean, do you take the other side of that? Your suggestion to our producers today was that the rally, quote unquote, feels pretty real to me. Does that suggest that you think stocks have reacted the right way to what Powell said last week? Yes, we think that. And I was also alluding to the fact that an 11 percent move is not nothing. I mean, it's it's half of what was lost. And I think this can continue if the Fed backs off the idea that

we're going to keep at these 75-bip raises. They already backed off the 1%, not that anybody at the Fed ever said 1% was imminent. But there were a lot of investors who were so negative about inflation, about interest rates, about what's going on in Ukraine. And we had a shipment that left Odessa, which was positive. We know earnings have been relatively weak, but the market is down 20. It was down 20 percent. And I think it bounced off the bottom because stocks were attractive. And, you know, you can't deny that there are many stocks that were selling at all time

lows on a P.E. multiple. This market had come down many multiple points. And so I think astute buyers stepped in there. And even if we retrace some of this, you still have to make those moves when stocks give you that opportunity. Hey, Carrie, let me go to Kay Rooney. I'm told she has breaking news regarding Robinhood. What do you have, Kate? Hey, Sky. Yeah, that's right. Robinhood cutting another 23 percent of its workforce. This comes after nine percent job cuts back in April. CEO Vlad Tenev saying in a blog post just now that while employees from all functions will be impacted, the changes are particularly concentrated in operations, marketing and program management functions. It comes after those April job cuts where they talked about a greater need for cost discipline throughout Robinhood and said that, quote, this did not go far enough. So they needed to really ratchet up

that job reduction and higher hiring slowdown. But since that time, they say we've seen additional deterioration of the macro environment, inflation at 40 years high, 40 year high and talking about some of the broad crypto market weakness and say that has further reduced customer trading activity and assets under custody. Robinhood does report earnings tomorrow, Scott, so we'll likely get a little bit more color and information from the CEO on that call. Back to you. Yeah. All right. Tough times at Robinhood continuing there. I see that PayPal's out. I'm going to give you a moment to go through that. Kate, I don't want to put you on the spot before you've had a chance to actually take a look at what's going on here.

I'll hear from you momentarily. Joe, you used to own PayPal. You bounced it, though. Oh, I sure did. Why? Lost significant momentum in terms of sales growth, its price performance. And now it's challenged by a significant FX headwind. We'll hear about it now. Hopefully, Elliott Management stepping in here with some form of a position is able to stabilize the stock. And I think that's the first thing that's needed for PayPal, stabilization. Yeah. So, Kerry, I'm looking at the stock, obviously, up 8%. So the street likes what it got. I don't know if you've had a chance to take a look at things as you've been here live on the air with me. But, you know, this one really is one of the poster stocks of

how, if you want to say, overvalued some of those stocks. I mean, I think at one point the market cap was bigger than Bank of America. Do I need to say any more than that to show you and our viewers sort of where this market got to and where it has re-rated to? Yeah, I think it makes sense that these stocks came down because multiples on sales of so many stocks were, you know, 15, 20, 30 times sales. So you had to bring that down. And unfortunately, you know, for owners of PayPal, the market took them down, you know, 70 plus percent, some stocks down 80 or 90 percent. It's still a company that has a very good business. It's selling for less than 19 times earnings. So it's not a stock that has no earnings. It has a lot of earnings and cash flow. And we believe that at this price, where it trades

at about half the multiple of Brown Foreman with a lot more growth, it's an attractive stock right here. And we'll see how the market reacts. All right. We are seeing it right now. Now I'm going to go back to Kate Rooney, who's had a chance to take a look. Kate. Hey, Scott. Yeah. PayPal here with a beat on the top and bottom line and a lot of news coming out of this release. We got a new CFO. There's a little bit of news here about Elliott as well. We'll start with the numbers. Adjusted EPS was a beat by seven cents. That was 93 cents adjusted revenue, six point eight billion for the quarter. Also a beat mixed on Q3 revenue guidance.

We had one revenue number below estimates and then the full year guidance was also mixed. Total payment volume, that's a key number, $339.8 billion. And then some of those headlines I mentioned, Scott. First, new CFO for PayPal. This was something investors have been really focused on. The payments giant hiring Blake Jorgensen. He had been the CFO over at EA, was at Levi's and Yahoo before that. PayPal's chief product officer, the CPO,

Mark Brito, is retiring at the end of the year. Also, a $15 billion share repurchase authorized by the board. And then Elliott, they say they're entering an information sharing agreement with Elliott. There's a quote in the PayPal release from Jesse Cohen, the managing partner over at Elliott. We now know the size of that investment as well, $2 billion. Jesse Cohen saying, quote, as one of PayPal's largest investors with an approximately $2 billion investment, Elliott strongly believes in the value proposition at PayPal. He says PayPal has an unmatched and industry-leading footprint across its payments business and a right to win over the near and long term. Today's announcement highlights a number of steps that have been underway and are being initiated to help realize significant value at the company. But confirming that, Elliot News, the first comment we

have heard from PayPal, stock up more than 9 percent here. Scott, back to you. Yeah. All right. Good stuff, Kate. Thank you. You wanted to make a comment. You get the buyback. You get this agreement to share stuff with Elliot, by the way, massively successful activist firm who we just told you about the other day was now the largest shareholder in Pinterest. Now, they say, according to Jesse Cohen of Elliott, they're one of the largest now in PayPal as well. So this is how you initiate the turn. This is how you reverse a tremendous amount of negative technical and fundamental momentum in a stock. You release an earnings report. You resolve many issues ranging from the CFO to also guiding lower based on the spot rate for currencies, a $15 billion buyback. That is a significant buyback for this company and then also

acknowledging the presence and agreeing to work with uh singer this this is exactly what paypal needed to do i applaud this okay good stuff from you carrie why don't you give me a quick comment now that you've gotten the details from kate rooney you've heard joe's commentary then aj i want to wrap up from you then i got to bounce I got a lot of stuff coming up. Yeah, I think they hit the high points. Kate talked about it. CFO, acknowledge Elliott, upbeat on the top bottom line. And remember, in this environment, venture capitalists are not funding all of these startup competitors to PayPal. That's also a plus. OK, so you've taken all these earnings into context, AJ, with what you got last week, too. It certainly seems that better than feared.

But I don't know if you have a comment individually about any of these names, but leave me with a last word here before we let you go. Yeah, no, I would say, you know, obviously earnings, earnings a little bit mixed here, but mostly what I've been looking at is the consumer, right? We've seen personal savings rates decline and ultimately, you know, average weekly wages have been going down. So for us, we're slightly underweight equities. And so, you know, we're seeing the bear market rally is a little too premature. And so we're at a pause here. But, you know, positive, it's been mixed for earnings. So that's not necessarily a completely dismal sign, but still a little too early for us to enter in at this point to go neutral or overweight equities.

All right, good stuff. AJ, good having you on. I believe your first time, first of many, I hope. AJ Oden joining us there and Kerry Firestone, I know I'll see you again soon. Joe's coming back a little bit later. We're just getting started right here in overtime. Up next, we are digging in on AMD. Those shares are on the move after reporting just a few moments ago. Instant reaction to that report from the number one chip analyst, Stacey Raskin. We're live at the New York Stock Exchange. OT're back in overtime. Another check on shares of AMD reporting just moments ago. Let's get instant reaction now from the quarter, from the top-ranked chip analyst, Stacey Raskin.

Bernstein Research stock is down here. Stace, what is your instant reaction here? Yeah, look, in this environment, I actually don't think this is that bad. The quarter was kind of in line to a slight beat. The guide is just a little bit light, maybe $100 million under consensus. In this environment where PCs seem to be getting weaker every day, I think that's OK. Gross margins and everything else are holding up. And they held the full year. So they're still looking for a decent recovery into Q4. And what I like, if you sort of parse the numbers, you come up with an implied Q4 gross margin that actually goes up quite a bit.

It goes up to 55 percent. It's up about 100 bps. That suggests to me that the mix is getting better as you go from Q3 to Q4, which also may be suggestive of data center continuing strength into the end of the year. So I think in this environment, it's not bad. Yeah. Are we able in this kind of an environment to look past guidance that you said was okay and the guy sitting next to me joe taranova to my left here who's a shareholder said to their guidance is a market are we in the right environment for just i think for pcs frankly and is probably enough especially just given how horrendous

we've seen some other players in that space be recently. And again, to that end, you look at these numbers, even in a weakening PC environment, AMD's client revenues are 25% year over year. So they're clearly taking tons of share and they are not being impacted by the same kind of inventory flushing that their larger competitors being impacted by. And data center here is like I think was great. It's hard to know the consensus. They changed their segments. I don't have good sell side consensus numbers, but these beat my data center estimates. It was up 83% year over year. Again, for some comparison, Intel's data center revenues were down 16% on a much larger base. So again, they're

clearly taking tons and tons of market share. I think within the PC market is probably OK. I will take these results. I think they're fine. Hey, Stacey, I got to let you go. And I appreciate your patience and understanding on that. I've got some breaking news that I have to get to. Stacey Raskin, the instant read there on AMD. I know we'll talk to you again soon. Back to Kate Rooney, because Robinhood, along with the job cut announcements, also has an earnings announcement. Kate. Yeah, Scott, a surprise earnings release from Robinhood. The company was supposed to report after the bell tomorrow and out with numbers early. It comes after announcing it would lay off 23 percent of its workforce, about 780 employees.

Let's start with EPS, though, a 34-cent loss. That was three cents better than expected on revenue, 318 million for the quarter. That was a miss. Also news that the chief product officer, Aparna Chennapurgada, is stepping down as well. We don't see guidance quite yet, Scott, but it talks about some of the costs for that restructuring. A $30 to $40 million charge in the third quarter related to employee severance in connection with that restructuring. They also talk about a cost here related to office closures. So there's going to be two office closures as part of that, $15 to $20 million in charges based on

those closures and contract termination fees. So some more costs in the third quarter associated with what is supposed to be cost cutting and some of that reduction to the employee base. Scott, back to you. Hey, Kate, can characterize for me, just through your own eyes and reporting, just the remarkable fall that this company has seen from not even a year ago? As you've reported on it, you have interviewed Vlad on numerous occasions, the founder, the CEO, just where this company was and where it is today. Quite the change from a year ago. So this company went public last year, really at the height of the GameStop saga and rode that wave of retail interest in not only individual stocks, but cryptocurrencies and really had its high back last summer when it went public.

Since then, it's been an uphill battle. Some of those costs, some of that hiring, they have increasingly had to say we overdid it on hiring and spending. The costs have gotten out of control. If you talk to investors and say that this is a much needed change, they've said that they have needed to cut the employee cost. Stock based compensation has been a big issue. And Vlad Tenev has stayed optimistic throughout this and talked about this long term vision of democratizing finance. But so many other fintech companies, PayPal included, that we just talked about, have talked about the same vision. A lot more competition in stocks and crypto, not to mention companies like FTX entering the fray. So just more competitive pressure, not to mention all of these macro headwinds and of stimulus. So it seems to be really getting worse here for Robinhood.

And we'll see if the worst is over, which we thought happened in April. They announced this job cut. This is a surprise that they had to go even further. Yeah, no doubt. Kate, thank you for that great insight from you. What in the world do you make of something like this? Like a kind of a darling of a year ago-ish. And then this tremendous fall between the layoffs and the earnings, the crypto blow up, the lack of trust, I think you can say, or the loss of trust that some investors have had with this platform through the meme mania episode, that whole, you know, the craziness that happened in that period of time? Monthly active users, plain and simple.

Q2 of 2021, they were above 21 million. Now they're down to 14 million. Last quarter was a little less than 16 million. How do you get those monthly active users back again? And I think the answer resides itself in some form of rebranding this company. Yeah, I don't know. Maybe Sam Bankman-Fried has some answers that he can inject in here.

I mean, it's hard press to come up with other things that you've seen. What they were is not what they're going to be if they're going to be successful. Yeah, OK. Let's get the news now with Shepard Smith. Hey, Shep. Hi, Scott. From the news on CNBC, here's what's happening. Speaker Pelosi on the ground in Taiwan, the highest ranking U.S. official to visit the disputed territory in 25 years.

China's responding with a new round of military exercises. In an op-ed released minutes after she touched down in Taipei, Speaker Pelosi wrote, we must stand with Taiwan. The Justice Department filing a lawsuit today challenging Idaho's abortion ban. The Attorney General Garland arguing now that it conflicts with federal law that doctors provide women with medically necessary procedures. This is the first major suit by the Department of Justice since the Supreme Court overturned Roe v. Wade. And the NFL suspends the Miami Dolphins owner Stephen Ross, fines him $1.5 million, and forces the Fish to give up draft picks. The league reports Ross tampered with quarterback Tom Brady and the former Saints coach Sean Payton while they were both under contract with other teams. The investigation launched after the Dolphins' former coach Brian Flores filed a racial discrimination lawsuit against the fish and the whole league.

Tonight, primaries across five states today. Veterans get a vote on burn pit legislation and robots helping with loneliness on the news. Right after Jim Cramer, 7 Eastern CNBC. Scott, back to you. All right. Great stuff. We'll see you then. That's Shepard Smith. Thank you.

Up next, trouble in the charts. One top technician now raising the red flag on the energy trade. Just as more and more traders are piling in on the pullback. Fundstrat's Mark Newton joins us when Overtime returns. We are back taking a look at shares of actually we're taking a look at WTI here. You know what, guys, let's do this. Let's throw a PXD, if you could, in the control room for me, please, because it's going to segue in here anyway. As that company has reported, we're lucky to have Joe Terranova sitting next to me here. There's the stock. It's it's just slightly higher. But what do you see here? It's a popular stock. So again, this fits the thesis of what we've talked about all year, why you own energy,

because they're going to return the capital to the shareholder. And that's what PXD is doing here. They're increasing the quarterly dividend significantly. So they're not investing in the wellhead, right? They're not investing in production. They're investing back in the share price. And that's why you want to own these companies. Oxy is the other one, right? Occidental, which is a huge Buffett and Berkshire name for all of you who follow that stock. Seems like he buys it all the time. You own it in the JOTI. We can take a look here again. It's just a dip lower. But that's been the big story for the last many, many months is Buffett's presence. Yeah. Cash flow is strong here. I mean, this is a solid report given the environment. It's a little bit in line and understand there's been a significant outperformance for Oxy relative to the other energy companies.

So Oxy needed to go beyond just an inline quarter. OK. I said it was a perfect segue because we do have Mark Newton with us. He says the recent drop in oil could spell trouble for the energy trade. There he is right there. He, of course, Fundstrat Global head of technical strategy. Why you make this call? Well, Scott, to me, it doesn't seem like crude oil has officially bottomed out. A lot of my cycle work projects a continued sell off into September, even early October before prices rebound. Now that we have evidence of geopolitical escalation, that could at least have the perception of a waning of demand in terms of the growth trade.

And that might be important. I think we all know the supply is never going to be able to meet demand truly. So the long term picture is bullish on energy. I have more tactical concerns, specifically given my technical work on WTI, which I think drops into the mid 80s and potentially low 80s. Really? And what sort of time frame does it does it get to that point? I think over the next six to eight weeks. And so it's really those that are expecting energy to rebound more than it has in the last month are probably going to be disappointed. And I think, if anything, that just points to, you know, growth should continue to work. You know, technology has been up almost 14 percent on equal weighted terms in the last one month. That's a very impressive

gain. Everybody says there's no catalyst for markets to move higher given the downward revisions. And meanwhile, if crude oil starts to continue to fall, that's going to really, you know, cause inflation expectations to come down, you know, more than they already have already. That's going to be a welcome, Matt, particularly for the effort, you know, for the Fed to look at in the near term. Well, I mean, it'd be nice for the bulls if you had technology carrying the weight again in the mega caps. You know, I was talking about Apple today, 161. Microsoft was back at 275. Speaking of levels, I'm looking at 4091 on the S&P. How much room is left, do you think, to the upside here? Well, in the short run, it's important to differentiate between the next couple weeks and probably the next six to eight weeks. I think, look, we've moved up 12 percent in about six weeks' time, you know, about 2 percent a week.

That's a huge move off the lows. So there is some evidence in my work that we should stall out really between now and the end of the week, probably with a cap of near 4,200 and then start to backtrack, which I think probably gets to 3,900, so maybe 5% down. But then I think, look, the time between now and mid to late September should be positive. Cycles are bullish. And I think we probably get to 4,350, even 4,400 between now and late September. So I do not think that we need to revisit the lows right away, which goes opposite of what a lot of people are saying, that there is no catalyst. There's no reason for stocks to rally. You know, the breadth has been impressive over the last

month, and it's important to reiterate that. Man, 43 to 4,400. All right, we'll hold you to that. We will have you back. Mark Newton, thanks so much. I'll talk to you again soon. Mark Newton, of course, with funds right up next, bailing on a big bang. Joe Terranova hitting the sell button on J.P. Morgan today. We'll debate that move and what he bought from that sale. We'll do it in halftime overtime. In today's halftime overtime, bailing on J.P. Morgan to buy Uber. Joe Terranova making that case for the exact trade earlier today on the half, despite the huge rally in Uber shares after the company's first ever cash flow positive quarter.

Let's listen. I went through my entire portfolio and I said, which is the one name that I would sell to put Uber into the portfolio? I already own Bank of America. I own Morgan Stanley. I own Goldman Sachs. And I bought JP Morgan too darn high. And it's just sitting there doing nothing for me.

So how about I kick JP Morgan out of the portfolio and I buy Uber? I don't know what everyone thinks of that, but that's exactly what I think I'm going to do. Okay, that was Joe Chernova today on The Half. And you did just that. Besides changing your outfit to come on Okay, that was Joe Chernova today on the half, and you did just that. Besides changing your outfit to come on overtime, that was the change you made. You actually sold JPM and you bought Uber? I did. I have exposure in financials with Goldman Sachs, Morgan Stanley, Bank of America, Blackstone. So I'm overweight financials. JPMorgan, I bought it too high. I

bought it up at around 124 towards the end of May. And I wanted to make room in the portfolio for what I believe is a stock that has the ability to give me in the near term 20 to 25 percent of potential upside. Profitability has been the challenge, the question for this company. But you're talking about management that's speaking towards profitability. You're seeing the free cash flow generation that's actually there. You're seeing a company that clearly, in terms of its gross bookings, is exhibiting exorbitant resiliency and strength. So overall, whether it's delivery or mobility, I like what this company is doing.

It is certainly extended itself on the downside. And I think I'll be able to capture a lot of the price recovery here in the coming weeks. All right. There are two ways to take the story, obviously, making the case for Uber, making the case against J.P. Morgan. Serity Partners' Jim Labenthal is on the phone with us right now. He owns JP Morgan. So rather than ask you about Uber, I'll ask you about bailing on JPM, which Joe did. Good or bad move? Well, first off, happy to be on with you, Scott. I'm happy also to hear that Joe is overweight financials. I can't get enraged that he's selling JP Morgan when he's overweight financials. I hope he's still overweight financials. He's supposed to be overweight financials with where we are in this economic cycle, which is to say

ready to re-accelerate. But with regards to JP Morgan, here's how I look at it. You're trading now at 1.3 times book value, which for JP Morgan is a very low valuation, 3.5% dividend yield. And yes, they suspended buybacks. But when they reinstate them, I don't know if that's three, six or nine months, they will. One of two things is going to happen. Either the stock's going to go up because they're reinstating dividends, excuse me, buybacks, or the stock's going to stay cheap and they're going to buy back more shares than they otherwise would and concentrate my earnings power. I am very happy specifically in J.P. Morgan and very happily overweight in financials as well. Jimmy, you just said it. It's the buyback. So I don't know when the buyback is going to return.

And you're right. When they reintroduce the buyback, the stock is going to advance and it's going to advance very aggressively. But while I'm sitting and waiting, why can't I capture the potential opportunity that I see in a company like Uber? Yeah. So, you know what, Joe, this is one of these moments where I think we're both like thinking we're in a fight, but we're not. I can't argue with you. You own Goldman Sachs. You own Morgan Stanley. Let's turn it into a fight. Scott likes that. Let's just turn it into a fight anyway. All right. I mean, you said we're ready to reaccelerate. That's a reason to buy the banks. Are we really ready to reaccelerate for the economy?

Aren't we still decelerating? Well, Scott, remember that the stock market anticipates six months. And so the deceleration that we may be in right now is not what the market is focused on. It's not what the market should be focused on. The market should be focused on early 2023 when you've got all that supply chain onshoring and infrastructure spending. I know how you feel about it, but here's the thing. That needs to be financed at every level, at the corporate level, at the general contractor level, at the backhoe renter level. And that's all going to play well to the financials. I'll tell you what, I will take your bait, and I will say this. If you're switching J.P. Morgan into Uber,

what you're doing is you're taking a stock that has outperformed on any time frame longer than one day, and you're switching it into a stock that's losing money. But my heart isn't really in fighting Joe about this. I love him. I think he's a smart investor. I can't get into the fight here. Darn it.

It's not a matter with you, Jim. I'll try next time. We'll talk to you soon. Thanks for calling in. I know it's Joe. He put a new suit on and everything for overtime. We'll talk to you soon. That's Jim Labenthal calling in.

I'm finally saying goodbye to you. Thanks for being here for so long. All right, that's Joe Chernova. Up next, we're tracking all the top stock moves in overtime. Christina Partsenevelos standing by with that. Christina. Well, we've got two CEOs who are out. I'll have those names after the break and shares of Match Group, the parent of Tinder and Hinge, are plunging on earnings. I'll break down those numbers very soon. We are tracking the biggest movers in overtime.

Christina Partsenevelos is here with that. Christina? Well, let's start with shares of Match Group plunging right now. This is the company that owns Tinder, OKCupid, Hinge, and of course other dating apps. And it missed on revenue and its Q3 guidance. You can see shares actually plunging 22% right now. The company is struggling to get new users saying, quote, their willingness to try online dating products for the first time hasn't yet returned to pre-pandemic levels. Tinder CEO is also leaving. There's no successor in place thus far.

The company is also focused, like many other firms, on lowering costs. So they said they've reduced hiring plans for 2022 and cut back on marketing spend. FinTech firms SoFi moving higher right now in the OT on a smaller than expected loss and a revenue beat, or I should say higher, well over 6% higher. The company also raised its full year guidance. They have roughly 450,000 new members. That's the highest member growth on record. And now that means they have a total of 4.3 million. And lastly, software firm MicroStrategy dropping about half a percentage point right now after announcing

they are splitting the role of CEO and chairman. That means Michael Saylor, who founded the company back in 1989, will no longer be CEO, but he will remain as chairman. Saylor will be replaced as CEO by Feng Li, the company's president. Scott. All right, Christina, thank you so much. That's Christina Partsenevelis. Up next, by the 20% slump, our next guest making that case for one key apparel company. We'll reveal that name in our two-minute drill, which is next. It's time for the two-minute drill. Joining us now, Westwood Quality Value Fund co-portfolio manager, Lauren Hill.

It's good to see you again. Let's go through some of these picks here. It's the one we teased. It's Lululemon. Why this one and why now? Yes. Lululemon, it's the premium women's athletic wear brand and a global growth story. I think the five-year targets management slated out are easily achievable. I think they're 76% upside to the stock over the next three years.

I think that Lulu can grow sales 15% over the next three years for three reasons. They're going to open a lot more stores, especially in China. They're going to have bigger stores as they expand their men's and their footwear line. And also they're going to grow their e-commerce, which naturally happens as you move to new markets. The CEO, Calvin McDonald, has done a great job coming from Sephora. He knows how to raise margins. I see operating margins expanding over time as he both scales the business and also as he returns, he's a return on the investments he's made for the last few years. What about Six Flags?

Yes, this one is not for the faint of heart, but it's a wonderful turnaround story. It's now led by the CEO, Salim Basul, who successfully led Middleby for the past 19 years. I think that there's near-term pin-up demand for safe, affordable, local family entertainment. And longer term, he's going to shift the focus from maximizing attendance to offering a premium experience for guests. And I think that's going to work. And I see a reward-to-risk ratio of over four times. Okay. Lauren, I appreciate your time very much. That's Lauren Hill joining us. Beat the clock today in our two-minute drill. Thank you. Let's get to our last word with Mike Santoli. It's good to see you. What was this today about the rates moving higher, you think? I think it was it was the spring loaded move in rates largely. You know, obviously, Fed speak out there reminding you of what they have to remind you of. Investors don't

get ahead of yourselves in predicting a pivot, but also just the equity market having gotten up to this very logical place to kind of pause. Earnings reactions are certainly part of it. But I think we insulated ourselves with the last couple of weeks from the idea that earnings itself are going to be the big shoe to drop. So it's really company by company. PayPal, speaking of company by company, that's an important one. It's fascinating. You've seen it with PayPal, with Airbnb, with Uber today. This idea that this decision had these companies paid their debt to society, so to speak, with the stocks down as much as they are.

PayPal clearly always a good business that just probably got way ahead of itself and people thinking it could take over the world. I do think it's interesting if you look at something like Airbnb and Uber, the charts all look the same, which is massive, persistent declines and a very violent bounce at the tail end of it that hasn't yet proved anything. So I'm looking also at things like the IPO ETF for a sign that some of the epicenter parts of this market that got blasted early might be healing. I'm thinking of ARK, as you were saying, that I'm writing down ARKK. But it's up a lot in a short period of time after being down a ton. And then you have Hood, right? So Robin Hood, as part of that class, is clearly not doing anything to redeem itself. But that's because it never had anything that any of the other discount brokers did except for Buzz and Brand.

And that hasn't necessarily carried. Yeah, right. So far, I would say, well, we have a ton more than what they have. And we have more, you know, businesses that matter to the overall pie rather than just one. My take on it, though, is FinTech has proven itself to be more fin than tech. It's just finance. It's not recreating anything. And you can't value these companies based on, you know, adjusted EBITDA or something. We've got 30 seconds left. Are we still in the prove it stage or are we getting further along that line, you think? We are in the prove it stage for the overall market.

No, there's no doubt about it. It still has to show that it's more than just a reflex bounce. I still think the June low has a shot of being important, but it's a long way down to there if we're going to retest it. Yeah, which you still have some people suggesting that we will. Absolutely. And that's what makes a market. All right, good stuff.

Thank you. That's Mike Santoli. I'll see him, of course, for his midday word and last word tomorrow. Does it for us. I'll see you back here. Fast Money begins now.