Closing Bell - Closing Bell Overtime: The Fed, Facebook & a Big Rally 7/27/22

Episode Date: July 27, 2022

Another day of big earnings in Overtime with results from Meta, Qualcomm and Ford. Ritholtz Wealth Management’s Josh Brown and Hightower’s Stephanie Link give instant analysis. Plus, an exclusive sit down with Doubleline’s Jeffrey Gundlach with his first take on the Fed decision. And, NewEdge Wealth’s Cameron Dawson reacts to the day’s big rally and breaks down her market forecast.

Sarah, thank you so much. Welcome, everybody, to Overtime. I'm Scott Walkman. You just heard the bells. We're just getting started, as always, at Post 9 at the New York Stock Exchange. And it is another big hour for your money. In just a little bit, I'll speak exclusively to DoubleLine's Jeffrey Gundlach on what the Fed just did and what Jay Powell just said. We begin, though, with our talk of the tape, imminent earnings from Meta and Qualcomm and Ford Motors. So far, a sigh of relief from big tech. Will Meta meet the moment? That is the big question. Let's ask Josh Brown. He is Ritholtz Wealth Management CEO.

Also, of course, a CNBC contributor. Josh, that is what we are waiting on. But I've got to get a comment from you on this big rally, what you think it is about. Is it a closer to the end of the rate hike rally by the Fed? I think what's so fascinating about a huge risk on day like this where every sector is up, every sector is up more than one percent other than utilities, which which is not that bad. But what's so fascinating is if you think back to the pre-pandemic period, when we had long stretches of people not seeing big economic growth, they decided that they were more than

comfortable to pay up for companies that had their own secular growth stories. And then when you look at the tape today, that is exactly what's been leading. The faster growing companies are leading. The value names that have kept you pretty OK so far this year took a backseat to that. Even Bitcoin went up with this big Nasdaq rally. So growth outperforming value by a very wide margin. I look at IWF, which is the growth ETF of three and a half percent. IWD, which is value up only one and a half percent. That's a huge spread. And look at the leadership FANG names taking the torch higher. I'll tell you what.

I mean, what a heck of a NASDAQ for Facebook, now Meta, and Qualcomm to have to report into after this near 500-point rally for tech. Yeah. I also want to remind you, we saw very big rallies in the June FOMC day, and I think in the one prior to that, both of which reversed the next day. Not saying that has to happen again, but just be aware, anything is possible. But today looks like a big victory for the Bulls. This 4100 area is going to be very interesting. If you look at like a three month or a six month chart of the S&P 500, that congestion in May, which obviously resolved much lower for all the major averages, that's

right around here, 4100. In addition, I think 4124 is that declining 100 day moving average. So for a lot of reasons, where the market stopped today at its highest point, that's going to be an area of interest for technicians. Let me take the ball for a minute because I want to give it to Christina Parts of Neveless. As Qualcomm is out, let's figure or find out if they met their moment. Christina? Well, we do have a top and bottom line beat for Qualcomm, but the outlook for the near term is a little weaker.

So revenue came in at $10.9 billion with adjusted EPS, Well, we do have a top and bottom line beat for Qualcomm, but the outlook for the near term is a little weaker. So revenue came in at $10.9 billion with adjusted EPS earnings per share of $2.96. But it's Q4 guidance. The range for earnings per share is $3 to $3.23. So the midpoint is lower than what the street anticipated. The extended lockdowns in China playing a role. You also have adjusted revenue. Q4 revenue is also at the lower end between 11 and 11.8 billion. And although Qualcomm is diversifying, handsets are still a pretty big part of the business, and revenues are on track to grow below the 50% year-on-year guidance.

However, automotive is growing. A theme you know this, Scott, we're seeing across many chip makers. Qualcomm CEO saying they hit, quote, record QCT. So just think about like chip automotive, chips for auto cars and IOT revenues in a challenging macroeconomic environment. Qualcomm is also expanding its patent license agreement with Samsung to a multi-year agreement. So that's good news for them. Pertinent to not only Samsung phones, but all Galaxy devices. You can see, though, shares are down over 2% on that weaker Q4 guidance. Back over to you. All right, Christina, I appreciate that. Thank you, Christina Partsenevelis. By the way, don't miss the CEO of Qualcomm on Tech Check tomorrow morning. Cristiano Amon, the man right there, will be with the gang in the morning. You want to hear directly, of course, from him. So, Josh, I mean, again, big rally, but yet another reminder of some challenges that technology companies are facing as they try and guide out for the months ahead.

You've got issues with China. You've got issues with currency. You've got issues with the macro and on and on and on. Look, as we know, those issues will come, they'll go, they'll get worse, they'll get better. And there will be a whole new set of issues that are facing us and facing the NASDAQ 100, the Dow 30, the S&P 500. But let's all pause for one moment and just remember, these are the greatest companies in the world. That's why they're in the index. So it's not that they'll all come through with flying colors. But when we're talking about Microsoft and even Meta and we're talking about Apple and we're talking about Amazon, A, it's not their first rodeo. B, they have the resources.

They have the flexibility to overcome these challenges for the most part. And that's, I think, still going to be true, whether we're talking about high oil prices or we're talking about an unhappy consumer. The question becomes how much pain are the investors willing to live with as they kind of get their bearings and negotiate these challenges? But like if you think about what we've heard so far from Alphabet is a really great example. If that's the way in which these companies get through, a little bit of, you know, a little bit of pain on the maybe the hiring side, a little bit of lowered guidance on the revenue side, et cetera, et cetera. That's not going to be a problem for these names. They're already down between 20 and 30 percent each. So I think that that's what the market has made that decision over today. In some cases, even more, like a meta down, you know, 50 percent.

The stock's gotten creamed again as we are imminent in terms of earnings from that company. The first ever overall decline in users last quarter. Expectations now of the first ever decline in revenue, Josh. And significant questions here about whether the best days of this company in terms of its growth are behind it. Well, we know that's true because she left. So as soon as she left, that was your signal. She's not only the smartest person in the room at Facebook. She's the smartest person in every room.

Cheryl Sandberg was COO of Meta, former Facebook. Yeah, look, no disrespect to Mark Zuckerberg. Sheryl Sandberg is the smartest person in most rooms she walks into. So I don't think that decision was made lightly. And I don't think it's over, you know, spending on a wedding or whatever nonsense. It's just a recognition that, oh, man, we're now committed to spending a decade dumping billions of dollars into something that may or may not turn into a product and all of our core businesses are under assault.

I don't know that that's such a great setup. The redesign of Instagram is not being well received. TikTok is not going to stop pulling attention away. The core Facebook brand is it's almost like the Macarena at this point. Like it's it's like if somebody says they did or said something on Facebook, you almost half think that they're joking. So that's a very tough position for the company to be. And that's why it's 50 percent off its high. And I don't know that one quarter turns things around, especially when you consider that they're trying. Go ahead. Yeah, forgive me. Let me interrupt you.

Julia Borson has Meta as we speak. Julia. Scott, Meta missing on the top and bottom lines, reporting revenue of $28.82 billion versus the $28.94 billion that analysts estimated. Earnings also missing, coming in at $2.46 versus the $2.59 that analysts had estimated. Also looking at daily active users, the daily active users were a slight beat, 1.97 billion DAUs, just a hair ahead of the 1.96 billion estimated. MAUs are a miss, 2.93 billion a hair lighter than expectations. Revenue billion a hair lighter than expectations. Revenue guidance coming in lighter than expectations.

The company is saying the third quarter revenue will be between $26 and $28.5 billion. The analyst consensus we have for third quarter revenue is $30.5 billion. So that guidance is coming in light and we see Meta currently trading down nearly 6 percent. Scott. And the thing you were looking forward to most of all, I think it's fair to say, Julie, is the revenue numbers. They were expected to post the first ever decline. Did they in fact do that? Yes. So the revenue did decline. So it was really the revenue growth rate is declining. So that's the question. And it did revenue did come in lighter than estimates. So this is the first time in Meta's history that the revenue has declined. So that's something to watch there. But also, to me, the fact that the guidance is light, that's likely the factor that's most weighing on the stock right now. Gotcha. Appreciate having you, Julia Borson. Thank you. We'll talk to you again soon.

In fact, you need to pop back on. please let us know. Stephanie Link joins us now. She, of course, is CNBC contributor, Hightower Advisors, chief investment strategist, owner of MetaShares. So your instant reaction. Have you had time to sort of soak it in? DAU's beat, MAU's miss, that revenue guide was lighter. And then the big deal again, that first ever decline in revenue growth? Yeah, OK, so the whisper number for revenues was actually 27 to 28 billion. So they come in at 28.8 billion. I think that's a bright spot.

The guidance also lower at 26 to 28 billion. But the whisper was that they would have to lower it to 27 to 29 billion. So kind of in that range, a little bit light. DAU is better than expected. I want to see what we got to hear what they have to say about reels and messenger and the growth and the monetization and the path going forward there. But the other thing I want to hear is about OPEX, because that's where they actually can move the, they have a lever to pull, right? So the OPEX, their guidance is for 87 to 92 billion. I would not be surprised to see them lower it to 84 to 86 billion to just to soften the blow on the revenue line. None of this is surprising to me. Guess what?

You know, Alphabet was not that good yesterday, but it was down so much into the print that it was able to rally. Microsoft, actually, I would argue, was actually better than I expected. And I understand why that rallied. But we know that this quarter for Meta is the toughest comparison for the year. We also know this is the third quarter in a row of IDFA challenges and the changes that they've seen, and they're working on that. So going forward in the second half of this year, you're actually going to be able to see, I hope, better momentum against easier comps. We also know that slower GDP is hurting ad revenues.

We get that, right? And we also know about competition. But I think this company is still able to post a 3% DAU number, not so bad on the MAUs either. And let's just see what the engagement numbers are, because that's what's going to be more important to see if people are leaving the properties and still going to TikTok. And they probably are. But let's see what the momentum is going to be on the real side going forward. Guys, I appreciate your understanding. I've got to go. I've got a lot coming up here with Jeffrey Gundlach waiting in the wings. Stephanie, Josh, I'll talk to you again soon. Ford is out as well. That means I go to Phil LeBeau right now. Phil. Scott, take a look at shares for Ford popping after a beat on the top and the bottom line and a beat by quite a bit,

earning 68 cents a share, well above the estimate of 45 cents a share. Revenue, automotive revenue coming in at 37.9 billion, more than 3 billion above what analysts were expecting. And then they have affirmed their full year guidance to earn between 11.5 and 12.5 billion dollars. The numbers within the numbers, operating cash flow of 2.9 billion, adjusted free cash flow of 3.6 billion, automotive EBIT of 3.3 billion. And they're still targeting EBIT margins of 8 percent for their EV business. Also, when you take a look at them, they are feeling the impact of commodity costs. A $4 billion headwind is what the company says. And they're seeing inflationary pressures of $3 billion for the year. One other note, they are raising their dividend in the third quarter to $0.15 a share.

Overall, when you look at shares of Ford, that's the reason why you see a nice pop here. Again, a beat on the top and the bottom line. Scott, back to you. Phil LeBeau, thank you very much. Don't miss the CEO of Ford, by the way, Jim Farley. Mad money tonight. There he is. You'll see him with Jim coming up in just a little bit. So, again, a recap quickly. Qualcomm beats weaker guide meta.

They missed revenue guide light as well. We'll stay on top of those movers in overtime. So don't go anywhere, because after this quick break, our exclusive interview with DoubleLine's Jeffrey Gundlach. We'll get his instant reaction to today's Fed decision and the big market move that followed. We're back in overtime in just two minutes. We are back in overtime. Stocks surging after today's decision by the Fed, raising rates by 75 basis points. For instant reaction now, let's welcome in double line CEO and chief investment officer Jeffrey Gundlach. It is a CNBC exclusive and it is so good, Jeffrey, 75 basis points. For instant reaction now, let's welcome in DoubleLine CEO and Chief Investment Officer Jeffrey Gundlach. It is a CNBC exclusive, and it is so good, Jeffrey, to have you back with us on a Fed Decision Day. Welcome. Thanks, Scott. It's nice to be here again. Another busy day,

busy week for the markets. You got that right. What's your reaction here to what the Fed did and what Powell said? Powell's getting pretty good at scripting, it's not really a script, but conducting these press conferences after the meetings. He starts out, and this is like the third time in a row, but I'm often critical of Fed officials. I think Jay had one of his best press conferences today. He started out with a stick. Basically, it's essentially bring inflation down. We need to bring inflation down. We must bring inflation down. And then he starts to get more dovish as he goes along. And he starts to say things that are reassuring to the markets. And he ends up talking the markets up and, frankly,

changing the sentiment, I feel like. Not only did stocks do well during and after the press conference, but we saw some real action in the bond market as well. We've been having a lot of volatility in the credit markets. June was a terrible month for the high-yield bond market and the emerging markets, and then we've had a pretty strong rebound in particularly corporate bonds and the high-yield bond market. And they really got second wind after the press conference today. I think that we have an interesting situation now where markets are priced cheaply enough, thanks to all of what's happened in the past few months,

where you're at a starting point for certain parts of the credit market, and I'd certainly say for some of the riskier parts of the stock market, where you're from a starting point where the valuation is such that the possibility of good returns, I'm not talking about in a month, but good returns over a six to 12 month horizon have significantly improved. And I think one of the things that was really important was that we didn't get this forward guidance stuff so much as in the past. There was a guest prior to Powell's, to the minutes being released and the interest rate hike, there were people saying that they were hoping that we would get more guidance. And I wrote down in my notes, no, just the opposite. Because this

guidance is what cost the Fed credibility in the past, kind of promising certain things and promising that certain things wouldn't happen. And then events change and they had to make them happen. And that didn't happen this time. In fact, they even said meeting by meeting, which I don't think that's a phrase I've heard in a long time. And I like that meeting by meeting. That's what I want. I don't want the Fed to phrase I've heard in a long time. And I like that meeting by meeting. That's what I want. I don't want the Fed to make silly things that are based on backward-looking data, make a commitment to something, and then have all expectations have to be reset. So I thought that was pretty good.

So all in all, I actually think this market reaction seems less of a sugar high than the prior two in June and May? It's interesting. I was talking about, Judge, a little bit facetiously a couple of months ago. They should just raise $200 and get it over with. And now we have raised $200, although not all at once. You said paint or get off the ladder. Take Fed funds rate to 3% now is what you told me the last time you were on. Now they've done 75 back to back. That's pretty aggressive. That's right. Well, they're painting. I mean, they're still on the ladder, but they're actually making progress on the job. And so I think that's

a good thing. So what's important now is actually the Fed has to understand, and Jay said this pretty clearly, that these things have a lagged effect. And so now that we've, in under three months, moved 200 basis points, we need to wait and see to a certain extent. I'm glad there's eight weeks before the next meeting, because we'll get two full data sets by then, and that'll give us a lot more clarity. One thing that I think people don't talk about, and I didn't hear anything about it anywhere today, it didn't come out of Jay, is how much the money printing was responsible for all these dislocations and for the inflation rate. And unfortunately, I believe if when an economic downturn comes that's of significance,

and this is what the Fed wants to avoid, a downturn of significance, because I think they understand that we're probably going to print more money again. And so ironically, if you want to have less inflation long term, you want to really avoid, weirdly, overdoing it now and causing that more steep recession. So I heard Jay Powell say a couple of things fairly concisely, and I applaud him for that. First of all, he acknowledged that 2.5 is the neutral rate, basically. And he acknowledged that the bond market path that he has now followed, and I've been critical in past meetings, particularly before they started liftoff, that they need to follow the two-year. Well, since the last meeting, now that they've gone 150 in six weeks, the two-year Treasury yield is down 50 basis points, and the Fed funds rate is up 150 basis points. So there's a 200 basis points swing there. So the Fed is no longer behind the curve. And I think they have to understand that,

and I think they do. I think that's what came away and why the markets are probably more sustainably calmed down by this. I think they understand that... Go ahead. I was going to say, I'm almost stunned to hear you say what you're saying. It sounds, I mean, Jeffrey Gundlach is essentially saying that the Fed has gotten its credibility back. I think they're at a local high, if not an all-time high, in Jay Powell's credibility.

He had some low points there, let's face it. The transitory thing, I think people have beaten everybody, let's face it. The transitory thing, I think people have beaten everybody in the government up enough about the transitory thing. But looking longer term, I think valuations are pretty good. I think when you start at a thousand basis points of excess yield on parts of the bond market, like the triple Cs, we'll round them up to a thousand basis points. There are parts in the securit like the triple Cs. We'll round them up to 1,000 basis points. There are parts in the securitized market in bonds where there's realistic returns of 11% and 12%, even if you go into a moderate recession. I think one of the things I'm going to applaud Jay for again

is he sort of admitted that he's calling a victory now a mild recession. I heard him say that the pathway to just an economic slowdown is getting very, very narrow, and hopefully we can just have a mild recession. That's the best possible outcome for all financial markets would actually be a mild recession and continuous sequential declines in the CPI. It's not going to drop down to 2% next year. It's not going to drop down to the fours this year.

But hopefully it's peaked out, at least on the headline level. We have a little bit of decline in commodity prices. It just feels like a lot of the price increases have stabilized, at least for now. So we need the inflation rate to come down. And if it does, I think we'll be able to avoid a severe recession. We'll just have a mild recession. And that would be a good outcome. That would be a good outcome for investors' portfolios who've been really reeling. I mean, I can talk about what happened since the May meeting. It's a mixed bag, but obviously on a year-to-date and a one-year basis, a 60-40 portfolio and all kinds of

financial assets are really struggling. Interesting to compare where we are now to back in May or March or so, let's call it May, where we're now up 200 basis points from before the May meeting. And it's interesting that we're kind of flat in a lot of markets. Of course, bond yields are up with that happening. But a lot of markets are sort of flat, and they're not down an awful lot. So the market has handled this 200 basis point increase pretty well. And in fact, I think it's sort of helped to stabilize it, because the Fed is no longer behind the curve. I think they may not be able to get four more hikes in this year. I hope they don't do that. That's what is in the work right now. The shape of the yield curve says that maybe four more hikes, maybe not even four between now and December. So I think we're going to end at around 3%. One thing that I am pleased

with, Judge, is in our last Fed Day conversation, you asked me about the bond market. And I said the opportunities in the long end of the bond market. And that's actually been one of the better performers since then. So we've gone a long way on that. The long end of the bond market does not look attractive to me at this level because we've had a rally and the Fed is less inclined to really put the hammer down, I think. And so the long end may be drifting higher as we move into year end. You know, there is one question as to whether the market is underestimating or is too sanguine on really what lies ahead still from the Fed. You know, we have this huge rally today. But even

before that, right, Powell says today, quote, strongly committed to bringing inflation down. We have the tools we need. We have the resolve. And I know some have doubted whether, in fact, you included, whether they did, in fact, have the resolve. They're still going to raise rates and they want to restrict policy further from here. Now, there may be a lag, obviously, as you mentioned, from the policy that they've already moved, but there's a lot still to come. And I wonder if the market truly is getting that at the moment.

What do you think? Well, I think the biggest part of that cocktail that people aren't really factoring in, and it got little play at the press conference, is the quantitative tightening. They started supposedly letting assets roll off the balance sheet in June, but it's been very little. It's actually less on a net basis than what they forecast it would be, and they're still ramping up.

And they're going to get to a full-on quantitative tightening of about $65 billion in treasuries and $30 billion or so in mortgages or $35, whatever it is, per month. And last time that happened, and the Fed funds rate was at 2.5%, we had December, January 2018, 2019. And that's the biggest headwind out there, is the Federal Reserve is committed to quantitative tightening. And that's another piece of the puzzle.

We had massive stimulus with money printing and monetary easing, quantitative easing. Now we're tightening. We've already done 200, 225. And now we're really going to start doing quantitative tightening. And that's going to be a headwind that will continue volatility, I think, and we'll probably see nothing resembling a straight line. But I do think when it comes to investors who are smart or lucky enough to have raised cash and be in a conservative position, there's a lot of investments in the bond market right now that have potential for 10% to 15% IRRs. You're not going to find them in an index fund, but these are the parts of the market that were really struggling with the Fed

kind of almost an automatic pilot concept and lots of illiquidity that were brought on by that. And of course, the summer times, other variables of thin liquidity. The vacation season seemed early this year. People seemed very anxious to get out on the road. And so June was an unusually illiquid period for the market. It feels like it's getting better, not worse, thanks to the Fed's newfound, I think, more on-point rhetoric. So you're right, Scott. I'm actually giving Powell the highest rate of any press conference in his career as chair.

So let's do this. Let's do this, Jeffrey. Let's take a quick break. Let's come back. I do want you to tell us what some of those best opportunities are in the bond market before we leave today. But we have a lot more to get to with Jeffrey Gundlach, of course, of DoubleLine after this quick break. We're back on Overtime after this. We're back now in Overtime with our exclusive interview with Double Lines, Jeffrey Gundlach. Jeffrey, you alluded to the fact of the Fed chair earlier saying they're virtually at neutral. Now, the question to you is, how far beyond that do you think they'll have to go? Because there seems to be a debate, even in the room itself, of how far you go.

Is it three? Is it three and a half? Is it four? What's your best guess on that? Well, obviously, events can change pretty radically. But right now, with the data set that we're dealing with, I would say they're going to go to three percent. And I think that you'll see that there'll be enough prints that won't be what they're looking for on the CPI. It's not going to go from 9.1 to 5.0 between now and year end. But if we get, you know, three or four sequential CPI declines, I think the Fed will stop hiking. I hope they actually take a pause if there's one decline in the CBI. I hope they pause one of the next two meetings. I hope they do nothing.

Because I think we want to see the aftermath of these rate hikes percolate through. And of course, as I said in the last segment, we got the quantitative tightening coming. So I think we're getting pretty close to the end. We see the yield curve is flat as a pancake. The two-year Treasury, which I talk about as being the true guiding signal for the Fed, they still won't admit it. They say they look at inflation, which they should, and they say they look at the labor market, which of course they should. But what they're looking at, and I've said this repeatedly, I'm sure I'll say it to you again many times in the future, Judge, they follow the two year and the two year Treasury has dipped below 3%. If you use the total shape of the yield curve,

it suggests that they're going to 350 and then that'll be it. But I don't think they're going to get there. So that's what I think is going to happen. Wow. We're getting pretty close to the end is what you just said. And maybe that's what this equity market rally today is sniffing out as well. The question is, along that journey, how much pain they're really willing to inflict on the economy? And Powell wouldn't really go there today. Asked directly by our own Steve Leisman, once again, with the question that gets the answer and he wouldn't commit to it, Leisman tweeting later, the sound you hear of a slamming door is Fed Chair Jay Powell's total, utter and complete refusal to discuss how the Fed will react to weakening economic growth or a recession. He does not want the market to believe there is any give in this inflation fight.

What's your reaction to that? I'm going to applaud Jay Powell for slamming the door because the way he gets himself into trouble is to answer hypotheticals. And then the data set that comes forward is obviously not in line with any of the literally in line with any of the hypotheticals. And then he looks all fumbling because he ends up doing something utterly uncontemplated. So who knows how the slowdown is going to look? We already have a slowdown going on in parts of the economy. Housing is obviously slowing down. Consumer demand is obviously going to be slowing down. So there are parts of the economy that way. But I just think that we need to be more

truly data dependent, and we'll have to see what happens. There's so much uncertainty right now in what a normal economy looks like because of the massive dislocation of 2020 and the money printing. Job number one, in my opinion, is to make it as improbable as possible that we decide that money printing is a solution for us again. Because that's what's gotten us into all of these problems. I'm talking societal problems. I'm talking inflation problems. I'm talking rancor problems in the political discourse arena.

We need to stop printing money. And so I am rooting for Jay Powell. I want him to be able to accomplish a negative economics experience, but not one that is born of autopilot excessive tightening. And that's the answer that he gave Steve. And, you know, it's nice to try to get clarity. I thought this press conference had more clarity. We know what neutral is. We know where he thinks the terminal Fed funds rate is. We know that he's willing to take a little bit of economic pain. The real problem is, what's the definition of a little economic pain? I think what we're experiencing now, we can experience a little bit worse than what we're doing now. But if the trap door opens up, we're going to have these Congress people and these governors putting out stimulus checks again,

and the inflation merry-go-round is going to go into overdrive. The way we get out of it is, I think it was David Kelly. He's a good guy. He comes on your network before the Fed meetings. And I like listening to what he has to say. And I thought he said something pretty well. He kind of set the table for that same concept that I'm fond of. And that is, why don't we let these percolate through the system?

We don't have to pile drive this economy with another 75 and another 75. We've done the 200. Let's see what happens. We're in sync with the bond market. So I think being as open-minded as possible, which is essentially his answer to Steve, I really do feel that that's not a non. I don't think that's a non answer. I think that's good policy. Would I be making too much of a leap to say that where whereas Jeffrey Gundlach once thought a hard landing was inevitable? Now you've come around to the idea that he can pull off his so-named soft-ish landing that, by the way, he still thinks he can do? I'm going to say a crash landing is avoidable. I think that a soft-ish landing is your best case.

I probably wouldn't give it great odds. I think we're going to have some noticeable economic distress. But I don't think it has to be really a free fall because Jay, I think, gets it now that he's in sync with the market. Yes, we have negative interest rates. Yes, there's still odd pricings relative to inflation and a lot of assets. Yes, there are still a lot of dislocations in the housing market, the services economy, the supply chains, all that. But I just feel like the approach that's being taken instills more confidence than where we were a year ago. You've given, I guess, equity investors the belief, I think, that stocks can continue

to do better than maybe we thought not that long ago. You did tease the idea of where the best ideas are within the bond market right now. Let's lean on your expertise for that. Tell our viewers where that is. Well, being a risk-averse bond investor, I always look for cushions of safety while finding opportunities for premium income. And where that's developed is in the middle part of the credit market. So I'm talking about the double B, single B areas of securitized credit or high yield, which have widened out a lot. They've snapped back some.

But if you look for things where if you assume there are going to be some defaults, you assume there's going to be some losses, but you have investments below you that take those losses first. And so if we have a moderate economic downturn, you will have volatility in prices, but you're clipping coupons here in some of these investments that are rated like maybe double B, single B, maybe even very high in the single C category for selected industries. You're clipping

coupons that can be 10, 11, 12 12%. And at spread levels that historically can withstand a lot of defaults and still not have a principal loss to the middle of the capital structure. So investors, it's not easy for investors to do that. You need to know how to rifle shoot, but you're looking for moderately risky credit funds, either in the high-yield bond market or in the bank loan market. We have bank loans now. You can buy AAA in some parts of the securitized market, in some parts of the bank loan market at discounts to par. And these things tend to gravitate up to par. We're talking about

top-quality types of companies, AAA-rated tranches in the CLO market, double B companies in the bank loan market. Those are areas. And the way you can, you don't have to be an expert to screen on these funds. Look for funds that are down 12% year-to-date. That'll be a good place to start. Those have underperformed because credit's been bad. You're not going to find that in my flagship funds because we haven't had that problem. But you go to the more off-the-run things, income funds or premium income funds, you'll see they're down a lot, yet they've stabilized.

And they're going to be the primary beneficiaries if the Fed manages to get this quasi right. So let me ask you quickly before I let you run because I have some developments related to Meta's earnings that I need to get to. EMs, we've talked about that for a few months now. An area that you liked, but you hadn't yet put your toe in the water for the most part. Have you yet? Do you still like it? No. I think that if you had to make a trade today and you weren't allowed to make another trade for two years, I would own nothing but emerging markets, but I haven't bought any. We're underweight in emerging market bonds.

Thank God. They've been terrible. The dollar's been very strong. That's been a double whammy. And emerging market equity has just been such a bad performer that I am not willing to catch the falling knife. I've stayed away. I love it on a valuation basis. I love emerging market debt relative to developed market debt on a valuation basis, but we need the dollar to crack. And I would advise investors to watch on the Dixie Index 105. We've been pushing up. We've been up 107. We're at 106 after the Fed looked a little

more dovish. So it's not a big drop. But if the dollar index drops below 105, then it's that moment that you assess how to size the emerging market trade. All right. That sounds great. I appreciate your time, as always. I know our viewers love hearing from you right after the Fed chair finishes speaking after that big decision is made. September is going to be a doozy, I think, and hopefully we'll be talking to you again then, Jeffrey. Thank you so much. All right. I'll see you in September, Judge. Have a great summer. All right. Yeah, you as well. That's Jeffrey Gundlach joining us exclusively today. We do have that aforementioned news regarding Meta. Julia Borson just speaking with that company's CFO.

Julia. That's right. I just spoke to Meta CFO Dave Wehner. I pressed him on Meta's top and bottom line miss and also the lower than expected guidance for the third quarter. And he told me that they are seeing the economic cycle have a broad impact on the digital ad business, which is looking more challenging than it was in the last quarter. He also noted that they're seeing a broad-based deceleration across ad verticals and also across both direct response and brand advertising, noting that online commerce remains a challenging category. Now, I also asked him what's next for Meta's investment in the Metaverse. He said that they are being more focused on and disciplined on spending both in the Metaverse and across the board at the company. But he did say that the Metaverse is still a key business that they're investing in for the long term.

Scott. All right, Julia, thank you for that update. It's time for a CNBC News update now with Shepard Smith. Hey, Shep. Hi, Scott. On a busy afternoon. Here's what's happening from the news. The White House has offered a deal to Russia to bring home jailed Americans Brittany Griner and Paul Whelan. No specifics from Secretary Blinken today, except the offer made last month. He did say he's requested a call with the Russian foreign minister to discuss, and if they speak, it would be the first time since the Russians invaded Ukraine. Two former Minneapolis police officers sentenced to federal prison today for violating George Floyd's civil rights.

One helped pen Floyd to the ground. He got three years. The other held back the crowd, got three and a half. Both still set to stand trial in October on state charges on manslaughter and aiding and abetting second degree murder. And the suspect in the Fourth of July massacre at Highland Park, Illinois, hit with 110 additional charges by a grand jury today. Seven people killed, dozens of others injured, when a gunman opened fire from the roof of a building on the parade route. He also faces attempted murder and aggravated battery charges. The suspect scheduled in court next week.

Tonight, Steve Leisman on the Fed decision, gun manufacturers grilled on Capitol Hill, and the name, image, and likeness deals that are changing the face of college sports. On the news, right after Jim Cramer, 7 Eastern, CNBC. Scott, back to you. All right, Shep, I appreciate that. Shepard Smith, thank you. Up next, more on today's big rally. Stock soaring on the back of the Fed. New Edge's Cameron Dawson joins us now to break down that move, whether she thinks it is sustainable. That's next. Joining me now, post-9, to break down today's rally and that interview with Jeffrey

Gundlach is Cameron Dawson, Chief Investment Officer at New Edge Wealth. It's good to see you again. That was a bit of a kinder, gentler Jeffrey Gundlach, at least as it relates to FedShare. Has Powell gotten his mojo back? Well, that's what Jeffrey said. He said that he finally got his credibility after removing the forward guidance and saying that they're going to be data dependent going into each and every meeting and making the decisions once they get to the meetings.

Do you agree? Well, I think that it is a good thing because it means that the market can take cues about the real data instead of some projected data, for example. So we're going to be having to watch labor data like a hawk now, as well as the CPI data like a hawk. And then that can be more of a determinant of what the Fed will do. I tell you, I mean, speaking of what they will do, Jeffrey thinks we're close to the end. You agree with him on that? Because he was pretty positive on the stock market and returns going forward, too. Yeah. More so than you have been. Yeah, definitely. Well, so we have been thinking

that we could see more volatility because we thought that the Fed certainly wasn't in a position to pivot. Now, was today's meeting a pivot? We don't think so. Now, the Fed said that they think they've gotten to neutral, and that would be in line with the Fed dot plot. At 2.5%, that's neutral. And then what really got the market going was them saying that they'll pause once they go a little bit beyond neutral and reconsider. So if we get another 75 basis points in September, that gets us to 325. And then do we see them pause and see how things shake out and happen? Maybe you go 50, though, in September and you get to three, as Mr. Gundlach suggested that that was his call there. And I think that's where the market is sort of heading, whether it's ahead of itself or not,

is the $64 trillion question or whatever you want to put it. But that's where it seems to be. But we can't forget that this is still highly dependent on inflation data and highly dependent on inflation expectations, which themselves are dependent on gasoline prices. We go back to that June meeting. The Fed was talking all about inflation expectations and the worry that they become an anchored. But the reason that they fell in July is because gasoline prices fell. If we see them climb again, then we're in a scenario where we

could be starting to talk about more risks on that front. Lastly, and quickly, earnings not as bad as feared. Is that the headline you take away? Yeah, I think that it's not as bad as feared, as well as the fact that even when we've had good news, the market's been really eager to pick out a couple of positive points and see stocks rally. So clearly, positioning got very short going into this Fed meeting, going into earnings. Valuations had gotten lower. So it is a relief rally. It doesn't necessarily mean we're out of the woods for this broader correction.

Great having you here. I appreciate your understanding. Our time is pinched. It's been a very busy hour. That's Cameron Dawson joining us here from New Edge. Up next, we're all over the big movers in the market in OT. We'll be right back. Christina Partsinello is tracking that action for us.

Christina. Well, shares of Etsy right now soaring, even though its guidance came in light. And then Spirit Airlines shareholders scrapped its merger deal with Frontier, paving the way for another airline. And shares are moving. I'll have the details next. Take a look at shares at Best Buy.

They are down in OT. There it is, down more than 3%. They cut their Q2 and full year sales outlook, saying consumer demand has softened even further than expected due to inflation and deteriorating consumer sentiment. Christina Partsinello is tracking the rest of the big movers for us. Christina. Shareholders voted and Spirit Airlines is terminating its merger agreement with Frontier Group, the parent of Frontier Airlines. Both airlines agreed in February to combine into this giant budget airline, but an all cash bid from JetBlue cast doubt over that deal. The company will continue discussions now with JetBlue. So you could see Spirit trending 2% higher, Frontier up half a percent, and JetBlue trending

about 1% lower. Shares of Teladoc, though, look at those crashing in the OT right now as the company continues to see, quote, increased uncertainty in the macroeconomic backdrop and is guiding on the lower end of its full year guidance. Shares down over 17 percent. Revenues came in slightly above estimates, but they posted a $19.22 loss per share, which includes a $3 billion Goodwill impairment charge. And higher prices continue to help retailers. Etsy's Q2 revenue jumped 11 percent on the quarter. The company guided lower, though, for the third quarter, citing foreign exchange volatility and pressures on consumer spending. The growth in revenue, though, for this past quarter came from higher marketplace transaction fees. And that's why you're seeing shares soaring right now. They were up 16%. Now coming up 11% could be some

short covering, too. Back over to you. All right. Good stuff, Christina. Thank you, Christina Partsenevelis. Up next, we're counting down to Meta's conference call set to kick off top of the hour. We have a shareholder standing by with what they want to hear on that call. We're back right after this in OT. Take another look at shares of Meta in the OT after that miss on earnings. You see the stocks down about three and a half percent. That call, the conference one, is kicking off in just a few moments. Joining me now is Meta shareholder King Lip, chief strategist at Baker Avenue Asset Management.

King, welcome. It's good to have you on today to react here. What is your initial reaction? Well, we thought the Q2 numbers were honestly kind of a mixed bag. On depositors, daily active users coming in at 1.97 billion. We like that number. The ad impressions coming in at 15%, also better than expected. But there are some notable negatives. The average price per ad was down about 14%.

So that's actually much worse than expected. The EPS miss and the revenue miss we expected, to be honest. We didn't notice that the company purchased fewer shares in Q2 than in Q1, from $9 billion down to $5 billion. So we think it was a mixed bag. But the Q3 guidance was really what concerned us. Quite a bit of a decline from estimates. So that's something that would be something that we'd be monitoring for this quarter. Let me ask you this. Why do you own this stock? What's the reasoning behind it? I think there's a couple of reasons. One, it's a cheap stock. If you look at the valuations of Meta from a price to sales, price to book, forward guidance, forward PE. We're about two

standard deviations below average. So given the potential for growth in a company relative to its valuations, we think it's a very attractive stock at this point. Yeah. I mean, do you have to put yourself in a frame of mind that I'm willing to own it because it's cheap for all the reasons you said, but at the same time acknowledge the fact that the company's best growth days may be behind it? Do you think about that? We do. We think the let's just say the the family of apps business will continue to be a good business. I think the catalyst for Facebook going forward for meta going forward, uh, if you will, is going to be the reels business, um, which is basically their comp their competition to take talk. We,

we do think that's a potential, um, catalyst for the shares. And also we think the reality labs business, um, you know, it's in its infancy, if you will, at this moment in time. But in the future, we do see quite a bit of catalysts there as well. Yeah. We'll see what happens on the call. As we said, it's not far away. A fact about 20 seconds until it begins. We'll talk to you soon, King. I appreciate it. Reacting the shareholder, of course, to Meta on that company's earning and then the stock decline afterwards. Of course, we have a big earnings day tomorrow. It's Apple, it's Amazon, it's Intel. I'll be on the desk. I can't wait to see you then. Fast Money begins right now.