Closing Bell - Closing Bell Overtime: The Rally Still Rolling? 2/14/23

Episode Date: February 14, 2023

CPI came in hotter than expected – Joe Terranova breaks down his playbook for stocks now. Plus, President Biden officially named Lael Brainard to lead the NEC. Steve Liesman explains what could be next. And, market expert Mike Santoli tells us what he’s watching in tomorrow’s trade. 

Sarah, thank you very much, and welcome to Overtime. I'm Scott Wapner. You just heard the bells. We're just getting started for Post 9 here at the New York Stock Exchange. Airbnb earnings are imminent. We're going to have the report and see the stock move just as soon as that happens. We'll, of course, also discuss what today's CPI report means for the recent rally in stocks. Joe Terranova joining me momentarily for that very important conversation. We do begin, though, with breaking news from the White House.

We go to our Kayla Tausche in Washington, where I guess one of the worst kept secrets is now official. Kayla. Now official, Scott, President Biden officially naming Lael Brainard, currently the vice chair of the Federal Reserve, to lead the National Economic Council and promoting longtime aide Jared Bernstein to chair the Council of Economic Advisors. Brainard replaces Brian Deese, who departs later this month after two years as the White House's top economic policymaker. And Bernstein replaces Dr. Cecilia Rouse, who will return to her tenured role at Princeton after a two-year sabbatical. Bernstein's appointment will require a Senate confirmation.

For Brainard, the move is seen within Washington's political circles as an elevation from one among a troika of top officials at the Federal Reserve to a role shaping the economic policy of the executive branch and all of its agencies. Former officials tell me the move was a natural next step, given Brainard's background, and a possible precursor to future appointments at the Fed or Treasury. In a statement, President Biden praised Brainerd's quote, extraordinary depth of domestic and international expertise, saying she is a trusted veteran across our economic institutions and understands how the economy affects everyday people. Now, as part of this reshuffling, the White House also

announced Deputy NEC Director Bharat Ramamurthy will take on a new communications role and Labor Department Economist Joel Gamble will be the new number two at the NEC. Scott, back to you. All right, Kayla, thank you. That's Kayla Tausche with Breaking News out of Washington. Now let's bring in CNBC Senior Economics Reporter Steve Leisman, who joins us. So I want to talk about what this means for policy. Steve, the Doves just lost an important voice in the room, didn't they? I think so. And I don't know that it matters immediately, Scott, as we were kind of talking about on halftime. The debate is not now and it's not next month or the month after. The debate is something that it would matter more in the summer when the Fed is on hold ostensibly

and how long they remain at that hold and, of course, how high they go and how they react to it. Brainerd has been a person who has argued that there are other ways inflation can come down other than weakness in the labor market. She suggested, for example, that high oil prices and the supply chain issues that created higher prices, if those went away, that might also bring down prices in the service sector as well. She's offering alternative theory. But importantly, Scott, she has not come forward with a different view on where rates should

be right now. So this idea of going to 5% and holding there, I think Brainerd held that. So I don't think a Dove or any other person is going to come in and change the chair or even the broader committee's mind about that. But what about having the number two position, Steve, at the Fed open at an especially critical time, arguably the most critical for a Fed in decades. I think that's a good point right now. And you know what they say, power abhors a vacuum. So really the question I think you're asking, Scott, is who steps in? And I think somebody like a Governor Waller, who has been very outspoken about the inflation dynamic, and we've had a lot of good

conversations with him over time, he could become more important on the board. John Williams, a New York Fed president who serves also as the vice chair of the Federal Market Committee, his voice would be more important. It's already important right now. And some of the other presidents may step forward. Remember, Scott, we've had a lot of retirement out there. Guys like Evans, Esther, George, they've stepped down. So there's still some sort of, I don't know what you want to call it, but ideological and intellectual reshuffling going on at the Fed as to who's really running the show. So I think that might, on balance, create some uncertainty when, you know how we come on all the time with all these Fed speakers, the question is, who do you listen to when? It may not be all that apparent to folks who's really the power

behind the throne here. All right. We'll see who the replacement is going to be. And then you have to talk about a confirmation hearing and all of that noise that comes along with that. Steve, thank you. I got to go because I got a lot on my plate. That's Steve Leisman, our senior economics reporter. Airbnb, we're still waiting for that. I said it was imminent. We'll hear from our reporter. Stock looks like it's getting a big move here. Deer Bosa has it for us right now. Why is it popping like this, Dee? Hey, Preble, it is a beat on the top and bottom lines. Cost cutting leading to a huge EPS beat. Q4 revenue, let me give you that. It's $1.86 billion was expected coming in at $1.9 billion. EPS was expected at $0.25. It's $0.48. So huge beat there, nearly $2 billion net income for the year.

Guidance better than expected on Q1 revenue and adjusted EBITDA. One potentially soft point, Scott, is that adjusted EBITDA expected to be flat on the year due to slower ADR growth. That's average daily rate, the rate per booking. And a little bit soft on Q4 growth booking value. But as you said, stock is popping nearly five and a half percent so the street at least initially liking these results we'll get more on the call all right you let us know what else we need to know that's dear jabosa airbnb moving higher by about six percent here in overtime let's bring in joe terranova vertis investment partners chief market strategist you're here on set of course so we'll start on on this this is stock that's been on the move

you've watched it. It's popping again. Do you like it here? I think you can buy the stock here because they delivered amongst very high expectations. They gave you the type of earnings report that exceeded the expectations. Now, it's consistent with what Hilton has said. It's consistent with what the airlines have said. It's consistent with what Marriott reported this morning. It's even consistent with the cruise lines, right? But the expectations, the earnings estimates, and the revenue estimates over the last quarter, Scott, they were moved higher significantly from the analyst community multiple times. And for them to deliver the type of margin beat rather the margin beat

to see the strong travel demand continue to be present this is a stock that while a little little expensive at 46 times a little expensive i think it's got momentum behind it i think it carries further to the upstate getting even more expensive as you're talking about it it's up near eight eight percent you do like marriott better, though. I do like, well, because of valuation. Marriott's 25 times. But I think Airbnb, listen, Airbnb is also taking market share. That's clear. That's obvious. So I've reversed my sentiment towards this stock because for the majority of 2022, I was very skeptical about their ability to improve the fundamental environment and to carry that into or translate into an appreciation for the stock price. It's doing it now. All right. We will watch that

for the remainder of overtime as well. But let's turn our attention to the market at large because you got, you know, we're waiting for the CPI, a little hotter than expected. Stocks pretty much took it in stride, I think you could say, given the way we held up throughout the day and the way we finished. Did not break the fever for the Nasdaq listed technology, communication services, consumer discretionary stocks that have been rallying so far in 2023. Are you surprised by that? Because rates moved up. Rates moved up. But yet those stocks didn't go down. Rates moved up, but the VIX volatility declined significantly, down 7% on the day, below 19 now. Dollar moved a little bit lower. So the overall momentum right now in the interim, I said this with you yesterday on the halftime report,

in the interim, the bullish forces are in control. The runway is clear for them in the immediate term to extend the rally further for Q1. Am I surprised what we got today? I think collectively all of us are looking for a moment where there's going to be this overwhelming fundamental evidence that's going to break this fever because myself and others are very suspicious that a lot of these NASDAQ hyper growth stocks and even some of the NASDAQ growth stocks can sustain the appreciation we've seen so far. So Airbnb is still popping up now better than 9 percent just to keep letting you know what's going on with that. Earnings report and the guidance obviously being viewed positively on the street.

BTIG's Jonathan Krinsky today says we would fight the urge to chase tech strength here given the widening divergence that you've seen, which you're alluding to and not positioned for. But I mean, if rates moving up doesn't break the fever in the words that you used, what is going to reverse this trade? Earnings. I think ultimately it comes down to earnings because we just had earnings. So we have to wait another whole earnings period. I think the I've said that. Yeah, I yeah. I think the runway is clear into the April earnings report. Revenue growth, okay, up what, 5.8% so far. Earnings growth, down. You've got a contraction of 3%, in particular, in technology, the very sector that we're talking about. So while Jonathan is saying saying don't fight the urge I can tell Jonathan. It

actually putting real money to work in the market. There's going to be an underperformance and that's what I'm doing right now because I have not accepted. Ownership of these types of stocks within my strategy do you think the market is. Believing the idea of higher for longer. The rates market and fed funds futures certainly have moved more in alignment with the Fed, but the stock market hasn't necessarily done the same. Is it in denial about a higher for longer idea? Post jobs report, CPI today shows you how sticky this is going to be. It's not going to be a linear move lower for inflation by any means? I think what the market is comfortable with, and yes, I think the market is now in alignment with the Federal Reserve, and that's clear when

you look at pricing looking forward. But I think what the market is comfortable with is that the Federal Reserve is not adversarial anymore because the speed at which monetary policy is being administered is not as intense or as rapid as it was in 2022. So now it's more about duration. It's more about 25 basis points coming in March, maybe another 25 basis points coming in May based on the economic data that we're getting currently, and maybe another 25 basis points. So it might be 25 basis points slowly dripping out. Now, let me just finish the thought on that. What does that lead to?

To me, that leads to what has been my thesis all along for 2023. I think the second half of the year, in particular Q3, is where you see the lag effect really impact consumers and corporate earnings. Some are not giving up on the idea of rate cuts this year, even though the market doesn't have that priced in. Listen to what Jeremy Siegel said on the Halftime Report today. I mean, the odds may have come down, but he's not fully given up. Listen. I'd say the January data that I have, that we saw on payrolls, made me think less likely. I still think it is likely more than 50 percent that they will cut. But maybe I thought it was 80. Maybe now I think it's 50 percent that they're going to cut.

What do you think of that? 50 percent chance of a cut. But that means you have a hard landing in risk assets. You have a hard landing on Main Street. You have a hard landing in the economy. Or you just mean that inflation or you just mean that inflation has come down enough that maybe it doesn't have to get to two percent for a rate cut, but it comes down far enough that they actually cut. I don't think if the inflation rate is four percent that the Federal Reserve is cutting unless there's some form of geopolitical or exogenous shock upon the market. All right. Let's bring in Kevin Gordon now of Charles Schwab and Jessica Inskip of OptionsPlay as we expand our conversation. So, Kevin, I'll go to you as you sit here.

Are you surprised at all by this reaction in the market today to what was a little bit hotter than expected CPI? Yeah, I'm not as surprised because I think that the volatility regime around our reaction or investors' reaction to inflation data has changed. I mean, this is not the same regime as it was in 22, where we're getting hotter than expected prints and it's taking longer for inflation to come down and the market is correcting down because of that. I think it shifts a lot more to the labor market. And I think that's what happened today in the reaction, you know, shifting to, OK, there was a focus on services staying stickier, got a little bit of a pop in core goods inflation. We'll see if that holds,

not necessarily the start of a trend yet. But I think that's where the attention is now shifting, because now you have to really kind of think to yourself as an investor. And I think that this is going to be one of the more defining characteristics of the year is how much is the Fed willing to sort of tie themselves to the Phillips curve mast? How much do they actually need to see unemployment go up with wages coming down, which I'm not really in the camp that wage growth has even softened that materially yet. So I don't even think we could declare sort of victory that you're seeing that dynamic unfold. So you're in the don't fight the Fed camp fully. I mean, and you have been. What's interesting is it appears to me, Jessica, from

the notes that I've read, that you're in the don't fight the tape camp, that we've cleared enough hurdles to take a run at some more. To an extent. So I think we cleared hurdles from a technical perspective, but I find that we're going to be range bound. And I completely agree with Kevin and Joe. A lot of it comes down to the labor market. And I'm very skeptical for the second half of this year. Think about the earnings consensus for 2023 in the outlook since the June highs. They have been slashed by 12 percent, breaking that down. Eighty five percent of that is due to margins, 15 percent sales. So that tells me that cost or sales are deteriorating faster than cost, which is a huge concern. So we have to have our focus on the labor market and the consumer.

And if that income stream is still there or that savings buffer, which is ultimately what could break. Kevin, what do you make of this tech trade that we've been focused on so intently? And I'm asking you the question looking at my screen because I'm looking at yields. I got a 10- year at 375. I got a two year at 461, both up on the day on the CPI report and both have been moving higher after the jobs report. Yet the Nasdaq, as Joe pointed out, closed up today. I think the tech trade needs to be separated into what's high quality and what's not high quality. And so if you're looking at companies with no earnings, particularly now in the backdrop of earnings revisions to the downside,

completely tanking earnings revisions for the broader macro environment. But even though some of those stocks have rallied this year, actually a lot of them have been leading the market higher, I think the positive aspect of that is that flows into those areas haven't been as strong. So if you look at fund flows from an individual equity investor perspective, they haven't been as strong. So if you look at fund flows from an individual equity investor perspective, they haven't been as strong. So I think that's actually a good thing, very different from what we saw last year

when you had rallies in March and June through August, and then even into the end of the year in some of those names, flows had been pretty strong. So I would put a lot more weight on that this time. Still not good to see them leading us because I don't think that we're going back to a zero interest rate regime where they're going to be benefiting from that kind of environment. But as I was saying last time I was on with you a couple of weeks ago, any move higher and any pop higher in a name with no earnings growth, I would fade that completely because I just don't think we're in a supportive backdrop for that. Jessica, do you fade this trade? You fade this move in tech that's led the way

thus far this year? Portions of it. And said this repeatedly as well, it's that automation. And I think AI had some beautiful timing. It has tailwinds, which is the hot labor market and can really help with productivity, which will certainly help with those costs and margin pressures that firms are experiencing. And even on the reports for everyone that's reported CapEx spending so far, even though that's coming down, it was 24% on the third quarter, 19% this quarter. It's a need, not a want. We need, and even Brian Monahan said it this morning, engineering outwork. That digitization and any companies that focus on that are certainly going to benefit and have valuations and translate into earnings. Maybe, Joe, it depends on

how many more hikes there are for how long this trade can last. I don't know. Harker today, Philly Fed expects the Fed to raise a few more times this year, a few more. OK, I'm comfortable with that. I think that, look, you know, consistent with everyone, what everyone is saying right here, it's it's don't give in to the temptation of the higher value growth trade that was so dominant over the last several years and looks right now to be appealing. And why that's so challenging as a money manager is you're going to have to accept for an extended period of time, you're going to underperform.

You're going to have to sit in the center of the stage and have people say, well, you're underperforming. You're not there. You're not buying those names that are leading the market higher. You're thinking to have to sit in the center of the stage and have people say, well, you're underperforming. You're not there. You're not buying those names that are leading the market higher. You're thinking about yourself. You're not seeing something. The questions that you're going to get. But it's myself.

No, I don't mean, I mean, I hear you sort of channeling that. You're 100% correct. And you have to be willing to give up that performance if you know on the other side the federal reserve's not done they're not done because they pay attention to the phillips curve and there are going to be this slow drip of 25 basis points higher and higher and to your initial thought no inflation is not going to have this straight line back down to four percent it's going to be a very bumpy road and i think that's the environment so maybe that's the environment. So invest accordingly. Maybe, Kevin, people are still too under-positioned for a soft landing, like David Solomon of Goldman Sachs.

I think the chance of a softer landing feels better now than it felt six to nine months ago, he said today. Yeah, well, I mean, that makes sense because CEO confidence just ticked up, as measured by the conference board. So you're actually starting to see a little bit of a recovery in some of those sentiment metrics. But in terms of a soft landing, I think what Joe was saying, it depends on how you define it. And if you're going to define it as sort of this miraculous or immaculate disinflation when you have inflation coming down, not a significant deterioration in the labor market, I actually don't know how good yet that is of a scenario for the Fed.

Because if you still have really tight labor and now you have real income growth re-accelerating, as per the January jobs report, if you want to take that at face value, and then you have real GDP growth accelerating at the beginning of this year, I'm not sure how comfortable they're gonna be with that. I think that's why they've been a little bit more reticent in discussing, certainly rate cuts,

but any easing in policy and not staying below 5%. But back to the tech discussion and sort of this mega cap growth trade. You know, when you go through what we think of as these dual cycles, where you have long cycles sort of preceding the pandemic, and then now we're in a shift of some sorts, you go through a bear market, which we had,

you go through a recession, which we had a form of a recession already, that tends to usher in new leadership. And I think you're starting to see early signs of that, even within flows and moves into international equities. And that's not the only trade that's going to be apparent for the next 10 years. But I think it kind of gives you a little bit of a chance

to reset a little bit and think, what's the next sort of bout of leadership that you're going to have? Let's just throw up Airbnb again, because I noticed out of the corner of my eye that it was running still after a good earnings report and the guidance that the street like now it's up 11 percent. So you've got continued inflation someplace that's in the stock price in overtime of Airbnb. And Jessica, you're not

surprised you were looking for something good from this company today, weren't you? I was. Yeah, I was expecting positive results. A lot of the data said that it was going to be positive based on downloads and a lot of reports that I pulled. They had an increase in bookings by 37 percent, so certainly translates over to positive results. But something that was said was for the forward guidance and the average daily rates coming down, that to me is actually a good sign for the overall inflation picture that I took away from the results of Airbnb. Okay, we'll leave it there. We had a lot on our plates, and I appreciate you helping us get through all of that. Jessica, thank you. Kevin,

thanks for being here as well. Joe, we'll see you in a bit. That's Joe Terranova. Let's get to our Twitter question of the day now. We want to know, is the Fed going to cut rates this year? Do you think so? Head to at CNBC Overtime. Vote yes or no. We'll share those results a little bit later on in our hour. We're just getting started, though, here in overtime. Up next, your post CPI playbook. Ed Yardeni is back. He's breaking down how he is trading today's key inflation data. What it might mean for your money. That's just ahead. We're live in the New York muted reaction in the market today following today's CPI report.

My next guest says, while more rate hikes are likely, we still might be able to avoid a hard landing. Let's bring in Ed Yardeni of Yardeni Research. Welcome back. Surprised by the market reaction today? I mean, what do you make of it after that highly anticipated CPI? Well, Scott, as you know, today is Valentine's Day. And I think there were some people worrying about a Valentine's Day massacre in the market if the inflation rate had turned out to be higher than expected. It came in pretty much with expectations. And I think that's why the market took it in stride.

And I think we still have a moderating trend in inflation. Remember, the Fed is looking at the consumption deflator more than they're looking at the CPI. And that consumption deflator ended up last year at 5%. I think it's going down to 3% to 4% this year without a recession. It's still slow and sticky, though, right? The decline in inflation and maybe a little more lumpy than some would have projected not that long ago, thinking that might, you know, as I was saying with Joe Terranova, that it would be more linear

in its decline. Yeah, I think linear is not necessarily the way it's going to play out. We're going to have, I guess, some bumps along the road, as the Fed chairman Jerome Powell called it. But all in all, I think that we are seeing certainly very strong disinflation in the goods part of the economy. Services, everybody knows the rent inflation measure has got some flaws in it. So we're all focusing on services excluding the, you know, just focusing on services excluding rent. And what we're seeing there is the stickiness that you allude to. It's on a deflator basis, it's turning 45 percent. But I think it's going to moderate. A big part of that is transportation services. And I think that reflected energy prices, even though energy prices are not supposed to be in the service measure. Right. But I want to get at this idea of a rate cut, which some have been

hanging their hat on, you included. Right. And Jeremy Siegel has been. I haven't. You don't think the Fed's going to cut rates down the road? No, I haven't thought that all. Last year, I didn't think it this year because I'm not in the recession camp. I've been in the soft landing camp. Now I'm wondering whether I should be in the no landing camp. But I didn't see any particular reason for the Fed to lower interest rates. I thought that they would take it up to five and a quarter percent and then they would leave it there.

Look, I've been following the Fed's script. The Fed's December script was that they're going to keep the Fed funds rate, get it up to 5.1 percent and keep it there through year end. I don't have a problem with that. And then next year is where they're talking about lowering it to 4.1 percent. And then the year after that, to 4.1 percent and then the year after that, the 3.1 percent. I think that's a very plausible scenario to me. OK, I got you. I'm glad I'm glad we got that taken care of. Let me ask you this. The president was speaking just a short time ago, and I want to play a sound for people. This idea of this war on buybacks. OK, here's President Biden from a few moments ago, kind of doubling down on on what they've been talking about as it relates to that practice.

Ninety one percent of all corporate execs are paid by stock. What's the one way to increase your salary? Buy back your stock. It raises the price of the stock, raise the value and shareholders and you do well. But guess what? You end up not investing in the thing you're engaged in. I mean, I bring that up because I want your reaction to it in the terms of it being a stimulator for stock prices in the past. People point to the fact that, well, there's going to be more of the buyback windows open. Companies are going to buy back more of their stock. It's going to help those stock prices go up. What do you make of the comments just in and of itself? Well, I've actually done a lot of work on buybacks over the past several years. And

one of the conclusions is that a good chunk of buybacks are actually used to offset dilution from issuing stock to employees. And there's this kind of myth that all these stock buybacks are just for the benefit of one or two or three of the top people in the company. The reality is that most of these companies that have compensation plans, stock compensation plans, have it for a lot of their employees. So a lot of them actually benefit. And then, of course, as we know, stocks are included in a lot of people's pension portfolios or IRAs. And so there's nothing wrong with the stock market going up. And it's usually based on the fundamentals rather than on these buybacks.

Warren Buffett says he loves buybacks because it is a good way to return capital to investors. It gives them a bigger share in these companies and more interest in making sure that they're managed properly. There are many who obviously agree with you. But do you think, first of all, I mean, I don't know whether you think it's likely that any sort of policy would go into place that would be punitive to companies that do buybacks, whether it's quadrupling the tax on it or, you know, reducing stock based compensation, et cetera. But, you know, if it did, it would certainly, you know, deter some behavior from companies or CFOs who were thinking about the practice. Well, I think it might. But I mean, right now it's a one percent tax.

And that was just kind of opening the door, as we saw, to a four percent. And then what? Ten percent, 20 percent. I think this is just an example of what Willie Sutton said when he was arrested for robbing banks. Why did you do it? And he said, that's where the money is. There's a lot of money involved in buybacks. But the reality is, it's actually pretty small compared to overall corporate cash flow. There's this notion that buybacks are eating into all corporate profits, and there's nothing left for investment. That's not true at all. Corporations are investing. Their investment is at an all-time high for capital spending. And it's a relatively small

percentage of compensation. But I think some of it is related to compensation. Well, never let the truth get in the way of a good political soundbite. I think we've learned that over the years. Ed, thank you. I appreciate it. That's Ed Yardeni joining us once again. It's time for a CNBC News update with Contessa Brewer. Hi, Contessa. Hey there, Scott. Good afternoon, everybody. The Biden administration is preparing to announce as much as $10 billion in additional aid for Ukraine when the president travels to Poland next week to mark the one-year anniversary of Russia's invasion. That's what a current senior U.S. official and a former senior U.S. official tell NBC News. But that package will not include the F-16 fighter jets that Ukrainian President Zelensky has requested. The State Department says Yale University researchers have identified at least 43 camps and other facilities

in Crimea and Russia, where at least 6,000 Ukrainian children and probably many more are being held for political reeducation, quote unquote. And two days after the Super Bowl, William Hill's U.S. betting system is still offline after failing during the game's second quarter. Caesars Entertainment, which owns William Hill, is apologizing for the problem and says it's working to get the system back in operation. The timing, of course, Scott, could not be worse for that. That's for sure. Contessa, thank you. Contessa Brewer. Berkshire's 13F is hitting the tape. Christina Partsenevelos is here with that. Christina, what do we know? Well, I want to point out, recall in mid-November, we told you the Berkshire Hathaway took a big bet on Taiwan Semiconductor, an over $4 billion stake.

But that happened in Q3. Well, we're finding out today from the 13F that it cut its stake by 86% in Q4, ending December. So the stock is reacting in the OT right now, down almost 4%, but on light volume as we learned that Berkshire sold out of most of its position out of Taiwan Semiconductor. So this really shows how hedge funds just move in and out of stocks. Berkshire also cutting its U.S. Bancorp stake by 91 percent, stock not really reacting so much, and then also shed some McKesson shares. This, though, very important for our viewers, happened in Q4,

so not reflected of this current quarter. But I do have data for the current quarter, and that comes from 13G filings, which shows when a company takes a 5% or plus stake in a firm. Berkshire did cut its stakes in Activision Blizzard this quarter, as well as Bank of New York Mellon this quarter. And lastly, boosted its position in Louisiana Pacific this quarter. There you go, Scott. All right, Christina, thank you. We'll see you in a bit.

That's Christina Partsinovlos. Up next, the software shuffle. That sector is seeing some serious gains this year, and a pair of halftime committee members are making some big trades in that space as well. We'll debate those just ahead. And during February, we are celebrating Black Heritage through the stories of some of our CNBC teammates, contributors, and leaders in business. Here is CNBC contributor and Longview Global's managing director, De Jawadric McNeil. My personal and professional journey is highly

influenced by the history of the African-American experience here in the United States. The struggle and sacrifices made for freedom, justice, and equality has made it clear to me the need to continue to press forward no matter how difficult the challenge. Our advancement here in the nation in education, science, politics, arts, and culture has inspired me to make my mark in my profession. I am proud of my heritage and proud to be an American. In today's halftime overtime, the software shakeup, that sector nearly doubling the performance of the S&P 500 so far this year. And now two halftime investment committee members are making big moves in that space. Josh Brown getting into Oracle, Jim Labenthal getting out of Salesforce.

I think technically you've got a really nice setup here. The fundamentals are in sync with that. And this is a name that has yet to really be discovered by investors that are looking at all these other tech large caps. I've got all sorts of opportunity to replace this technology name with a technology name that I can understand the pricing better of. So I'm taking the gift of this last three months. All right, Joe Terranova, back here at Post 9. Let's talk about these moves first and foremost. Josh in Oracle, like it?

Very much so. Quality company. It's the type of software company that you're respectful of the valuation. I think that clearly they're pivoting and diversifying the business model. Certainly more exposure to things like the cloud. I applaud that move. I think it's a great one. Jim, out of Salesforce. What do you think of that? It's just taking advantage of the pop that we've seen recently. I have no problem with that. It's a complicated story. They seem to be in several different places. I think they need

to streamline their focus. They need to get away from being serial acquirers. I like Jim's move as well. All right. What about the moves that we've seen in software up 14 percent year to date, the ETF that tracks that and cloud is up even better than that, 20 percent. Seeing you listen, you're seeing a strong recovery. I'll talk about, you know, eating my home cooking, so to speak, out of Datadog, out of CrowdStrike in Q4. Why? Because those were the type of names that were struggling in an environment where the cost of capital was a moving target. Those are not the names that I want to own. Out of Microsoft, too, which is another cloud play. As well.

But listen, two names that are in the IGV, Cadence and Synopsys. JOTI ETF has owned each of those since inception in November of 2020. Now, you could struggle with the valuation, valuation in the mid-50s, okay? But these are companies that are seeing the growth correlate with that valuation. They're growing nicely into that valuation. Those are two names that we own. You still own Crowd. Do not own Crowd. Remember, I exited Crowd, talked about it with you on Closing Bell. I exited Crowd right talked about it with you on Closing Bell. I exited Crowd right around 112, 113.

I think what crowd? It's 116, somewhere around there? It is. 116 and change. But you would advise people to do what Jim— I love Oracle, yeah. What Labenthal did, though. Take advantage of the pop and reduce your exposure to some of these names? Is that your playbook?

Yeah, I think Salesforce is a complicated story. I'm not even talking about just that, Salesforce. I'm talking about all of these stocks, as I said, whether it's software up 14, cloud up 20, to start the year. Yes. Yes, that is what I would do. Okay. Thank you for being here. Thanks for sticking around. Joe Terranova. Coming up, we're tracking some big moves in overtime. Seema Modi standing by with that. Hi, Seema. Hey, Scott, stronger than expected results from Airbnb providing a nice lift to other travel names. And over time, we've got the biggest movers coming up after this short break. We're tracking the biggest movers in overtime. Seema Modi is here with that.

Seema. Scott, let's stick with the travel trade. TripAdvisor delivering a 12 cent beat on its bottom line, fueled by Viator, its tour business, which grew 168% year over year, a sign that travelers are not just booking trips, but experiences as well. That is helping the stock move higher by 6% in overtime. New CEO Matt Goldberg said Trip is looking to identify new opportunities. GoDaddy fourth quarter results came in below Wall Street expectations. 60 cents versus the 62 cent estimate while revenue was in line. CFO adding that the company is taking actions to align its cost structure. Just a few weeks ago, RBC analyst

Mark Mahaney calling it a recession resistant business. Stock is down 2%, but still higher by 8% year to date. Devon Energy, missing earnings estimates by a wide margin, 166 versus a 175, a share estimate in the fourth quarter. The company says there will be no change to its disciplined approach in 2023. The board also approving an 11% increase to its dividend. Stock dropping here by 5%. Scott? All right, Seema. Thank you, Seema Modi.

Coming up, charting the market's next move. Stock dropping here by 5 percent. Scott. All right. Seema, thank you. Seema Modi coming up. Charting the market's next move. Top technician Mark Newton drills down on the key levels every investor needs to be watching, especially after today's hot CPI report. Overtime's back in just two minutes. All right. Stocks lower today after some hotter than expected inflation data. But our next guest says this is a great time to buy on any weakness. Joining us now, Fundstrat's Mark Newton. I mean, you've been making the case that stocks are going higher. Today doesn't upset that at all? Well, Scott, we were down right near 4,100, if not below.

We managed to recover the entire early sell-off. So, you know, I know a lot of investors had expected some type of a St. Valentine's Day massacre. If anything, this was a nice sugar high for the bulls on Valentine's Day. We recouped all the early losses. So, you know, it all has to do with three things, in my view, right? Seasonality, February, particularly in pre-election years, is far more positive than it is in regular years. We're up almost an average of 1% on average versus being negative.

So we're in the most bullish quarter of any of the 16 quarters of the four-year cycle. Sentiment, even though it has gradually started to get more bullish, still very, very pessimistic overall. We have 65% of investors that think that this is a bear market rally, that we actually could go down and test the lows. You know, and the third is safe haven underperformance. And I think that's also interesting. The three S's, we're seeing defensives, utilities and REITs all sell off sharply. That's not something that typically happens ahead of a big pullback. So the reasons for why the market should go down technically are just not there. Interest rates, of course, have backed up a little bit. That is something to watch. I see rates actually reversing and pulling back into the month of March, if not April, lower.

And given the correlation, that should be bullish for equities. I know, but it's like, you know, rates going up is not an oh, by the way, and rates are going up. It's like, uh-oh, how high are rates going to move? How quickly might they get there? And can stocks withstand that? Stocks have withstood that. If anything, stocks have been far more resilient given the Treasury market sell off that we've seen in the last two weeks. I think rates have been up the last six out of eight days. Stocks have barely budged. I mean, we're largely unchanged in the short run. So in the back half of February, you know, to the bear's credit, you do tend to see

a little bit more evidence of consolidation and possible weakness. But I think that's going to prove minor. I don't expect the S&P to get down under 3,900. Even on weakness, I'd be a buyer, and I fully expect that we're going to push back up above 42.50 into March. So, you know, momentum is there. Breath is there. Technology has clearly come back. Look at semiconductor strength. It's simply formidable. It is an amazing sector right now.

And also, everybody's negative, thinking, well, why is the market going up when earnings are going down? Well, that's exactly the reason you want to see. When everybody is saying the same thing, then it's right to expect this rally can continue for maybe reasons that investors don't understand. You've taken a look at one stock in particular that you like, I'm assuming from a technical standpoint, it's Monster Bev. Is that right? Yeah, that is part of my upticks list, Scott. It's a long list that I run for Fundstrat and FSI. And so that's been in the list for the last few months. One of my favorite staples, I don't love the staples sector, but this is certainly an outperformer and recently has broken out to new all-time highs after a couple months of consolidation.

So I love this name technically. Yes. But you don't want, to your point about you don't love the staples, you want to move further away from the 2022 playbook and embrace what's working now? 100%. I still want to be in energy. One of my favorite sectors, I think crude has bottomed. I think natural gas is bottoming today and could actually bounce. Energy is a sector investors want to be long from February, at least through the spring. That's a seasonally bullish time. And I think crude oil has bottomed as well. Healthcare should be on the comeback. So I

think that's an area investors want to take a close look at, specifically biotechnology. Technology, to its credit, has come back very sharply in recent months. That's also good. And industrials, those are my four top outperformers for the year. So, yes, avoid the staples, avoid utilities. You have to be far more selective in what you buy there. I'm very much risk on for the months to come. Well, I think that's a good last word to leave it at. Mark, thank you. That's Mark Newton of Fundstrat joining us. Still ahead, another last

word. Santoli's is coming up. And at the top of the hour, economist Paul McCulley breaking down today's inflation report. That's just ahead on Fast Money OTs back after this. All right, the 13Fs are still coming out. Christina Partsinevelos has details on yet another one. Christina. Now let's talk about the latest from Appaloosa, David Tepper's fund. The 13F reveals a new stake in Caesars, also Disney, but honestly, that's still a relatively small position. Neither stocks are moving on the news. The fund boosting their position in Uber, which now means that they have a substantial stake in the company,

while reducing exposure to Meta. All of this happened in Q4. So, again, this is backwards looking, not reflecting the current quarter. But you can see Meta down ever so slightly. Very, very flat to the negative. But, Scott. All right. Christina, thank you for the insight there.

Last call to weigh in on our Twitter question of the day. We want to know, is the Fed going to cut rates this year? Head to at CNBC Overtime Vote. We're going to bring you the results. Plus Santoli's last word next. To the results of our Twitter question, we asked, is the Fed going to cut rates this year? The majority of you, some 78 percent, saying no, they are not. Let's get to Mike Santoli now for his last word. We made it through.

CPI came out, wondered what the day was going to look like, and it ended up looking OK. Yes. Second month in a row, CPI didn't really disturb the stock market picture. Now, obviously, yields, everyone is now focused on these levels. Moved up. And it's worth asking the question. So where we are now, like three, three and three quarters in the 10 year yield. We first got there on the way up in late September. S&P is 10 percent higher now than it was then. NASDAQ similar up about 10 percent since late September of last year. The difference is that Treasury volatility

then was at a 14 year high. Yields were racing higher. Inflation had not yet peaked. The Fed was still seen as having to run full speed to catch up to inflation. So that's a big difference. The move index, the Treasury VIX basically is way down, much more toward the normal zone at the moment. So it's considered to be more in a band. And let's remember, we peaked in 10 year, what, 420 or thereabouts. So you're not getting sticker shock from this yield level at this moment. So it's considered to be more in a band. And let's remember, we peaked in the 10 year, what, 420 or thereabouts. So you're not getting sticker shock from this yield level at this point. The moves are more incremental. And I think it also is worth asking the question, as I've been trying to say for a couple of years, is the tech up, yields down, yields up, tech down relationship was always overplayed as the main driver. You've been saying that consistently.

Yes. Now, it's not that it's not a factor. It really, especially in the beginning, it was a huge factor because it was all about the valuations. But now it's much more about which tech companies, individual ones, have seen their estimates come down enough. It's no longer the case where you're cutting estimates like Alphabet is still on the downswing. And that's why it trades at, you know, a six and a half percent free cash flow yield because people don't think it's going to be there. But Microsoft and Nvidia, people think maybe you have upside to it and they're outperforming.

This idea that Mark Newton just put forth that we've got a little runway to go into March. We've cleared some good hurdles and it's, you know, could be a little sale here. I'll go back to the point that I was, you know, starting to bring up in January, which is so much looks textbook to this, you know, even though the details are very, very daunting in terms of the macro conditions and the uncertainty around the Fed and valuations, whatever you want to throw at it, you know, October low, 25 percent cyclical bear market culminates in an October before a midterm election. You get the seasonal tailwinds. You definitely have people mispositioned for a rally and they have to catch it. I don't know what that means, where the ceiling is. Right. Nobody knows where that is. Right. I don't think it's about

like a quick blip back to anywhere near the record highs. But there does seem to be a little bit more to the same forces that brought us to this point. They may not be spent. Let's finish where we started this hour with news of Brainerd going to, you know, run the economic committee for the president and what that means for policy. Losing such a key dove in the room at a critical moment means what to you, if anything? It probably means it's more difficult to make a kind of thoughtful, nuanced, dovish case internally. As somebody of that stature who has that background, who also was willing, by the way, to say, listen, we have to do something about inflation because

that's the thing that's most corrosive to your average household's financial condition and feeling. So I think that's probably a challenge. I don't think it's insurmountable. I think this is a very tight committee right now. They're all pretty much on the same page because they know that there's one job they have to do. All right. We'll see what we get tomorrow. Mike Santoli, thank you for your last word. That's mine. I'll see you tomorrow. Fast monies now.