Closing Bell - Closing Bell Overtime: The Relentless Reset 06/17/22

Episode Date: June 17, 2022

It was a wild week for stocks on Wall Street … so what could be in store for markets and your money over the next few weeks? Cerity Partners’ Jim Lebenthal gives his forecast and where he stands on big recession fears. Plus, energy was the big loser for the week. Dan Greenhaus of Solus has been bullish on the energy sector – we find out where he stands now. And, Mike Santoli’s “Last Word”. His expert take on the big market rout and what he’s watching as we head into a fresh trading week.

All right, Mel, thanks so much. Welcome, everybody, to Overtime. I'm Scott Wachner. You just heard the bells. We are just getting started. In just a few minutes, I'll speak to Fundstrat's chief chartist, Mark Newton, whose new note attempts to answer the critical question for investors. Where is the bottom? We begin, though, with our talk of the tape, this relentless reset of your stocks, your money, and your expectations for where all of those might be heading in the weeks and months ahead. Let's ask Jim Labenthal. He is Serity Partners' chief equity strategist and member, of course, of the Halftime Investment Committee. Jimmy, it's good to see you. Boy, your optimism was certainly tested this week. So where do we go from here?

Yeah, I do feel like I'm training for a mixed martial arts competition here. But look, I think the obvious thing is we kind of bounce around here for a while. What's a while mean? It means probably a couple of weeks. We've got to get through the pre-announcement season for earnings and then really see, Scott, because as you know and you and I debate, there's a big question about what earnings really are. The estimates on the macro level have hung in there and actually even gone up week over week. And I know that defies a lot of belief.

So we're going to have to see as the results come in if the macro analysts are out of their minds or if actually the economy and corporate profits are a lot better than people are giving credit for. I will note that it seems like you've got negatives and positives, right? We get a pre-announcement from Target a few weeks ago that was awful. This morning, you get a pre-announcement from U.S. Steel. I mean, this is a hard asset, old line economy stock, but it was a pretty darn positive announcement. And, you know, when I think about economic growth, I think about Steel. So we've got to see how the results come in.

The problem is, I mean, these earnings expectations or estimates, if you want to call them that, they don't just seem to defy belief. They defy logic, right, Jim, given sort of where we are. We look at every economic metric that's been coming out. It's been weakening. There are real, real doubts about how long the strength of what feels like a pretty strong consumer, at least what was a strong consumer, can last given everything that's going on around them. Yeah, so I'll acknowledge what you just said. The economic statistics have been

coming in disappointing, but I would say not as disappointing as maybe the headlines would lead you to believe. If I look at today's industrial production or Wednesday's retail sales, they did miss expectations, but only by a few tenths of a percentage point in each case. So it was not a dramatic like falling off a cliff. With regards to the heart of the economy, which is consumption and the consumer, ultimately that test is going to be met or failed by what jobs do. And I take some comfort not just from where initial jobless claims are, but where from continuing claims are, which is at or near a 50-year low. And that's indicating that there are a lot of job openings.

So as people get laid off, and we're seeing the layoff announcements, there are plenty of job openings for them to go to. Ultimately, if that hangs in there, note I use the preposition if, if that hangs in there, this economy can do just fine. So you have a big price target for the S&P still, $48.96 or thereabouts. Is that about right? That's correct, Scott. OK, now let me ask you this. Let me let me ask you this, because it seems to me your whole case for that is predicated on your scenario playing out, that there will not, in fact, be a recession. I want you to listen to what Professor Siegel told me yesterday in overtime about that very question. We're in a recession. It's a mild recession. It's not an official recession by the NBER, certainly not yet. But this first half is negative GDP

growth and it's ending on a slide. And, you know, just when the Fed is, you know, the most aggressive because it waited far too long. Yeah. So throw your textbook definitions out. That's what the professor says. We're already in one, Jim. Yeah. You know, the professor was my professor 25 years ago and he's an extraordinary man. He's an extraordinary investor. So I differ with him at my peril. But indeed, I do differ with him. Look, I see where the first quarter GDP number came in. And we know that it had a lot to do with inventory adjustments. I see where the Atlanta Fed GDP estimate is for the second quarter. But here's the thing. If you're out and about in the economy, it does not feel like a recession. I don't care whether it's, you know, you're in an airport,

you're on a highway, you're in a restaurant, you look at jobless statistics, you look at ISM surveys. It's more, you know, it feels like a recession because we're all talking about it. And by the way, that can actually create a recession. But if you look at the numbers right now that add up to where the economy is, it just doesn't spell recession to me. Again, I'll close by saying I differ with the great, I mean great, Jeremy Siegel at my peril. That's fine. But what about if you're at the gas station, where the real numbers are making people feel like we're already in a recession, or you're at the grocery store,

where you're spending so much of your paycheck that it feels like you don't have anything left after you go to the gas station and the grocery store. So for Americans right now, it does feel like we are in a recession. They don't care about the textbook definition either. And at some point, that's going to take his toll. That will be the shoe that drops next. You know, you very well could be right, Scott.

And listen, I'm learning to dance with the fact that I could be wrong on my positive outlook. But regarding gas and food, which obviously and very unfortunately is eating into consumers' paychecks and really hurting the people who can least afford it. What we have to remember is at the end of the day, if you have jobs, that's the big if, which right now people do have jobs and a lot of job opportunities, then they have the money with which to spend. And it actually doesn't matter if it's on gas and food or a new tie or a new tire or whatever. It is the velocity of money moving through the economy that matters. That velocity goes down when people are unemployed.

That's when they don't leave their house to actually travel and consume. Right now, the job statistics are pretty darn bright, and that's what's going to keep this economy going. Let's get to the heart of the matter with this market. Another rough week, 10 of 11 weeks down for the S&P, 11 of 12 down for the Dow. In terms of whether we've hit a bottom, Barclays today said no capitulation yet.

3,500 test of the S&P is possible. Michael Hartnett of Bank of America, who has been, I would say, negative for a while, months, in fact, has been the most correct strategist on the street. If you look at his calls and where stocks are now, he says we say S&P 3600, you nibble. 3300, you bite. 3000, you gorge.

Do you think we are getting to those levels, either 33 or 3000? Because let's just say we're at 36 now. Yeah, so we're at 36 now. Yeah. So we're, yeah, we're at 36 now. I don't think we have to now look, I can't guarantee what the future is going to hold, but I don't think we have to. I think it really hinges on what the next couple of weeks in terms of pre-announcements look like. But what I want to say to everybody who's listening is you can go out there right now and identify high quality companies and feel pretty confident that one, two, and three years from now, the purchases you make today are going to be fabulous purchases.

Now, I'm talking about high quality companies. I don't care whether it's Apple or JP Morgan or Home Depot. We can go down a long list. I'm not suggesting, and in fact, I'm discouraging investors from taking the real speculative plays. And I only use the term Cathie Woodstocks as a describer, as a descriptor, not to impugn her. But that's a description of a certain type of stock that trades at high multiples of sales. They may well be disruptive, but right now you just can't value them and they could be very dangerous in this environment. Let me ask you this. Bottom line, bottom line, Scott, I'm sorry. You don't need to take that risk in those sorts of stocks. You've got such

wonderful opportunities in the high quality,, positive cash-flowing stocks right now that you don't need to take the risk in those other stocks. Okay, you've led me to the place that I wanted to eventually get to anyway. As you speak of these, your words, wonderful opportunities within the market because I think people look at what's happened this week, they feel terrible, and they're afraid that stocks are only going lower, perhaps as low as that 3000 level that part net talks about. And some have suggested that stocks could even fall out of bed much lower than that. I'm trying to glean from you and others who come on the network

today. What's the sign? What do you look for before you decide to go after those fabulous opportunities that you just suggested exist? We're not going to get data points for a while. Do you wait for oil prices to come down to suggest that that may be a weight off of the shoulders of everybody? Do you wait for earnings and see how the guidance looks? What's the key? What's that thing that hits the switch for you that goes after those wonderful opportunities you say are there?

Well, listen, this is a market that's trading on sentiment. So if you're trying to find the bottom and say, when is the best day? Certainly you have to have sentiment turn. And how does that look? That looks like more than one day that's up in a row. That looks like a day where at least one day where you go up into the close. And frankly, we haven't had that in weeks. We haven't had it in weeks. Any rally has faded as we saw it today. So the sentiment is clearly negative. But since actually picking a bottom is pretty rough and, you know, you're being generous and not bringing my feet to the fire on some incorrect calls I've made this year regarding that, what I would say and do say to clients is don't try to pick one day. Dollar cost average your way

in. You can do it over a your way in. You can do it over a couple of weeks. You can do it over a couple of months. But parse out your purchases over the coming weeks. You do have to think, and I do, that the Fed's heavy lifting is going to be done over the next three months, right? We're at 150 to 175 on the Fed funds rate right now. I think it's reasonable that we'll be up another 150 basis points on that by the time the September meeting is over. This summer is probably a very good time to just space out your purchases throughout the summer. The key thing is whether that heavy lifting, maybe they're lifting an anvil,

and whether they drop it right on the head of the economy and break something. And that is the critical worry. That's what the markets, I think, are trying to figure out. Let's broaden the conversation on that note with Truist's Keith Lerner, requisites Bryn Talkington, also a member of the Halftime Investment Committee. It's nice to have everybody with us. Keith, you think this is a little overdone at this point? I mean, I hear you. A lot of stocks appear oversold.

That'll get you a ham sandwich and a bag of chips. You know, great to be with you, Scott. Listen, we've been saying our message this year is reduce risk, go more up in quality, be a bit more defensive. But on a short-term perspective, you know, I do think things are getting a little bit one-sided. We are in a downward trend, but I think the risk-reward, at least short-term, is somewhat improving. Now, one metric we look at, Scott, is just saying, what's the percent of stocks above the 50-day moving average right now? That's 2%. We look back since 1990. We've only seen that happen nine other times. And

historically, when you get that oversold, when you look at, let's say, three, six months later, and especially a year later, markets tend to rebound. Sometimes there is a further overshoot. But what we're saying is any further overshoot from this standpoint, we think we'll recapture on that rebound. But that is in a context of a very choppy market. And again, we're not saying to be aggressive here. We're just saying at this point, this is not a place where we would be recommending reducing equities, especially that maybe the last point, Scott, is we're down about 23 percent. The median decline around the recession is 24. So you're basically baking that in. The average is around 29 percent. Of course, we could go more

than that. But markets don't move in a straight line up and they don't move in a straight line down. So, again, I would be hesitant to be pressing shorts or becoming more aggressive selling at these levels, given how oversold and how one sided sentiment has become. So, Bryn, the words I wrote at the top of the show today, relentless reset of your stocks, your money and your expectations. You heard what Jim Labenthal said, a member of the investment committee like you. It doesn't appear as though he has fully reset his stocks, his money, his expectations for where we go here. Is that correct? Should he? Does it mesh with your view? Well, I mean, Jim has a discrete basket of names, right? And so you have to, that's so important.

He's not buying the broad market. He's buying these discrete basket of names. So he could actually be wrong on the economy, but be right on his names because he has high quality names. As an asset allocator, when I'm looking at the whole portfolio of asset allocating, to me, it's like the trade has to be defensive all year. What I think the markets in this conundrum, and you and Jim were talking about jobs, is that the Fed actually wants unemployment to go higher.

And so the Fed is like pressing on that. They're tightening financial conditions. And so they're actually wanting the consumer to get weaker because that's what happens when you raise rates and, which has never happened, at the same time, you're actually reducing the balance sheet. And so this really strong financial tightening that's now starting to happen globally, I think we're in these unchartered waters. And so as an asset allocator, you know, we have, I've talked about a lot of cover call strategies. On the bond side, we have, I've talked about a lot of cover call strategies. On the bond side, we have ultra short, we have no duration, because we do want to stay invested though, right?

Because if you just sit on the sidelines, and to your point, what signals and wait for the signals, the signal is going to be when nobody wants to buy, right? When Mark Haynes at the bottom, you know, in 2009, there was no positive signals. It was terrible out there. And so to me, that's the signals when it gets really bad. And so I don't think actually it's that bad yet. It's felt really orderly and just like this daily grind. And I still, when I look at multiples, whether it's the NASDAQ or the S&P,

we're really just fair value. And to me, when you go into uncharted waters with what the Fed as well as the other global central banks are doing, I think multiples need to be undervalued in order to get a good bottom. Jim, you know, I think Bryn says something so fantastic for me to come back to you with is that you're not only fighting the Fed in a symbolic sense, if you want to say it that way, you're literally fighting them in a literal sense of what they have told you they want, what Bryn just said. They want unemployment to go up. They want the consumer to go down. So how can you fight that to get where you think we can go?

Okay, so it's interesting. That's actually not what I've heard the Fed say. I've heard Chairman Powell say that he does not want to cause a recession. I didn't say cause a recession. I didn't say cause a recession. But by virtue of what they're doing, they have articulated that, and that is the inevitable scenario of what they're doing, they have articulated that. And that is the inevitable scenario of what they are doing. And I think that's Bryn's broader point. By simply raising rates to the degree they

are at a time when the economy is slowing to the degree it seems to be, that that is the ultimate. So why fight it? The message, just to be clear, the message that I'm hearing from the Fed is they want job openings to go down to a level that more meets where unemployment is, which is to say the job openings and labor turnover survey is at 11 million job openings right now. That's versus five and a half million people unemployed. That ratio is the highest it's ever been, and it's causing wage inflation. The Fed would like to see those job openings come down, and possibly by being filled by layoffs in one industry, then being met by jobs being filled in another industry. That's why, you know, when we look at the layoffs that are going on at places

like Carvana, Peloton, it's not, it shouldn't be freaking out the market, because there are a lot of companies that want to hire people. It's getting that ratio down that the Fed is trying to work on. Look, there's ratio down that the Fed is trying to work on. Look, there's no question that the Fed is an aggressive force against the markets right now, but one has to also acknowledge that the markets, at least the S&P 500, are off 21 percent, I think, maybe it's 22 percent from the recent high. So there is an effect that's already been felt on the stock market. And what's not being felt and not being properly reflected is economic activity that is yet to come from supply chain onshoring,

particularly in 2023 and beyond. Yeah, because I'm looking at the reference to the comments from the Fed chair. Unemployment's going up, and we're, the Fed, is good with it to get inflation down, right? He's making the point that they need to cool the economy really by any means necessary. Yeah, but the unemployment target that they have is 4.1% from 3.6%. I can't look at a 4.1% number and think that we're in some sort of extreme situation in the economy.

Yes, yes, it's an increase in unemployment, but it's from an unnaturally low level to begin with. 4.1 percent is not a heartbreaking level. That's, by the way, I mean, you and I have been through recessions, right? Those aren't the numbers that you feel in a recession. That's where you get to 7, 8 percent. That's what a recession feels like. I mean, you're assuming that that's what they can manufacture, and that's the open question, Keith. So on that note, and I'll give you the last word, this idea of whether we solved anything this week, whether we feel like yesterday was any sort of capitulation move,

because I think, you know, Melissa Lee in the last hour was doing an interview with a technician who suggested we haven't checked the boxes. Don't don't confuse a bare bounce with a longer lasting bottom. We just haven't met the conditions in any way that would suggest that. Do you agree with that? Yeah, I think at this point, you're more likely set up for at least a bounce. It's hard to say that we've seen the bottom yet. You know, one thing, one missing ingredient, we are oversold and sentiments one side. But even the last couple of weeks, we've seen inflows to stocks still. So that's not something you tend to see at the low. But I think there's enough to see at least some type of rally. And for investors who are over allocated to equities, what we say

is use that balance to get your position in down somewhat. And the last point about like the unemployment rate, you know, we just did a study. The unemployment rate tends to bottom about a, you know, a year before recession. And with those Fed projections, you know, it's increasing the probability of recession and the market's going to be forward looking and looking at those kind of weak economic trends as we look six to 12 months forward. And I think that's what the market is looking at right now. I've thrown out some targets that people are talking about as to whether the opportunities would even be better than what they present themselves to be now, if you think they are good now. Keith, give me a number. I mean, in your head, what makes

sense to you? Thirty five hundred below that? I don't have to pin you down to an exact number, but is thirty five ish around the range you would you would think we could settle? Yeah, well, we look at this as risk reward as opposed to the exact number. But the average recession would bring you down to about thirty four hundred. So as we move, like even thirty five hundred, thirty four hundred, if we get down there, I think that becomes a lot more attractive would bring it down to about $3,400. So as we move like even $3,500, $3,400, if we get down there, I think that becomes a lot more attractive because the other thing, Scott,

is you don't have to get the exact bottom. What's really important for viewers to know is once you hit a low, you know, during a down market in a recession, the one year move forward off that low is like a skyrocket. It's about a 40% move. So that's the point is like,

even if you don't get the exact low, if you're going down there and you overshoot a bit, the return on the way up, you're likely more than likely to recapture that. But I guess the last word, though, Scott, is I still think this is going to be a challenging market for the next several months because inflation is still going to be elevated. And we're not going to get a kind of a capitulation from the Fed. In order for this market to have big gains, we're going to really need to see inflation come down and the Fed pivot. And I just don't think that's going to happen over the next few months. All right. It's great to have everybody with us. Happy Father's Day to the dads. And I'll see all of you soon.

Bryn, thank you as well for being here. Jim, you'll be back with me in just a little bit. Let's get to our Twitter question of the day. We want to know at what point on the S&P would you start buying stocks? Three thousand? Thirty five hundred? Maybe now. You can head to at what point on the S&P would you start buying stocks? 3,000? 3,500? Maybe now. You can head to at CNBC Overtime on Twitter. Vote. We'll bring you those results as we always do at the end of the show. Up next, energy is getting slammed. As you know, this week, the XLE is down more than 15 percent just since Monday. Dan Greenhouse has been pounding the table on that sector. We'll find out what he is doing after this week's slide, and we'll do that next in overtime.

All right, welcome back. We are back in overtime. You can check out the move in energy this week. It was the worst performing sector, falling 17%. Mike Santoli here with a closer look at energy slide. Mike? Yeah, Scott, trying to put it in perspective relative to the huge surge we saw in energy stocks leading up to it.

This is the XLE energy sector ETF relative to the S&P 500. This just measures the outperformance recently of the XLE. Very, very sharp reversal, as you see up there on a relative basis. But I mean, I guess you'd have to say that that general uptrend has not really been broken just yet. Down here, look how weak we were. We were just coming off a negative crude oil prices. So I think this is a positive in general. You'd probably want to see people back away from the one major trade that has worked.

It probably helps with inflation expectations. We'll see if it continues, even if these companies still remain well positioned. Take a look at a few kind of commodity related bellwethers. So Chevron, one of the best energy stocks, as we know. So here's Chevron against this is a agricultural commodities, food producer ETF. This, of course, is Freeport MacMoran. That's a copper proxy and Barrick Gold. That's the symbol for a gold miner. So you see all the rest of them had these good runs and they've all rolled over. It's a a gold miner. So you see all the rest of them had these good runs, and they've all rolled over. It's a one-year chart. So you see that big gap, energy versus all other types of stuff, of commodities.

So, again, this might also feed into this idea that the markets have not given up just yet on the idea of peak inflation, Scott. And the question, too, I mean, this is not out of the ordinary of what some have been calling for with money coming out of energy. The question is, does it go into something to help fuel a rally in some of the other areas that were beaten down at the expense of oil going up? That's going to be a key question, Mike. Go ahead. No, I was going to say, you know, I would say maybe. I don't think that's really what's happening right now. I think it's a lot of profit taking and people just having losses elsewhere.

Also, remember, again, even after the run, energy only 5 percent of the S&P. It's not clear that money can carry the rest of the market. No, I would agree with you wholeheartedly. It's a matter of whether some of those profits are sitting there in cash waiting to go into something else. I'll see you later in Santoli's last word. Let's bring in Dan Greenhouse, chief strategist at Solus. He's been bullish on the energy sector. It's good to see you, Dan. Welcome. And I think the last time we had a conversation, which was maybe less than a week ago, you suggested that you hadn't done

anything to your energy holdings. Now what? Yeah, I mean, listen, our view is structural in nature, not, you know, favoring it versus other sectors in the market, let's say. And then the views that we hold are not particularly out of consensus at this point, although they might have been when we sort of started taking a look at the sector. And it was really predicated on the low levels of inventories, which remain in place today, the reduced CapEx budgets on the part of the majors and the minors and the investor pressure against doing sort of a capex that exceeds your cash flow. And nothing has more or less changed on that front. Even if you wanted to drill more right now, you've got expensive labor. First of all,

you've got to find the labor. And if you do, it's expensive. The materials are more expensive. And the overriding ESG theme is really what started this whole conversation for a lot of investors such as ourselves in the sense that traditional investors were just shying away from the space, which opened up valuation dislocations. And that ESG focus, if you will, or lack of focus on the space also remains in place today. So listen, it was a bad week. There's no doubt about it. But those structural factors are in play and probably provide support to the commodity beyond what might normally be expected in this type of environment. Well, see, that's an interesting point you make because, and I know this is going to sound controversial, and it's not me making this point,

but there's a gentleman by the name of Tom Fitzpatrick over at Citi who put forth a thought today that his headline of a note is, is oil about to spoil the narrative in the short term? He is talking about WTI going down to 86 to 93, and that that would be about, you know, changing the short-term landscape potential of the market. I'm wondering, I guess that would lead me to ask you, how tied to the overall market performance is elevated oil? And if oil does have a sizable pullback, does that open the doors for a broader rally in stocks? Yes. So I'd answer that two ways.

First, with respect to the sector, I think our view is that oil can come down and the equities and the credits don't necessarily need to see a similar decline, if you will. For starters, a lot of the names are not incorporating oil at current levels. You've got the geopolitical risk premium and a number of other things at play. So even if you fail, as we have, it doesn't actually imply, although that's what's happening, that all the equities need to come down and the credits need to widen out. So in a structural sense, we still believe that. But for the broader market, I think you hit the nail on the head. And I think in your conversation just now with Jim Labenthal, you're talking about what are the types of things that the market needs to see.

And as a starting point, the answer is lower gasoline prices and lower oil prices. Because if you're looking for the Fed to give you anything resembling a white flag, you're not doing anything until some of these commodities start coming down. Because for the average person on the street, inflation, quote unquote, is gasoline at the pump and commodities and I'm sorry, and food at the supermarket. And so you've got to start seeing some relief on that front before the Fed can do anything really in terms of taking its foot off the brake. So you were with me just prior to the CPI print a week ago when you suggested that stocks could bounce up to mid 4000s, what you said. Obviously, the CPI upset all of that. The question is, when you look at the market now, posted, how does it set up for the next week or so?

Yeah, I don't know. I don't know about the next week. And my point about the mid-4,000s was that's traditionally the type of bear market rallies that you have. They go up, call it 10%, maybe 12%, and that would have put you in that level. But obviously, the CPI number, which came out shortly thereafter, as you said, spoiled the party. In a larger sense, you and I have been talking about this for quite some time, investors need to deal with the reality that the Fed put is dead, so to speak. And that's not unimportant considering its importance over the last 15 years. And the overwhelming likely outcome of what they're doing is going to be negative for risk assets, and probably more so. That said,

you've done a lot of the work already. And I think you talked about this in the last segment as well. The multiple's down 40% or something. Obviously, we haven't seen earnings come down. But a 40% drop in your forward earnings multiple for the market as a whole is a very substantial decline that goes a long way to correcting some of the excesses that occurred in the post-COVID environment. Earnings are going to come down. We know that. X energy, they have already started to do so, at least for this year. But that multiple drop gives you some cushion going forward to think about what the potential downside is from here. Is this all about, and lastly, too late and too much from the Fed? They waited too long and now they're going to do too much?

I mean, they have made several mistakes. I'm not alone in that belief. I think even at the time, let alone in retrospect, you knew there was mistakes being made. And again, these are human beings doing their best. But the odds that they thread this needle just remain exceedingly low. I wish them the best. But as investors, you have to plan for the likely outcomes, what's your expected value. And your expected value is that this is just not going to end well. And that's what you see in risk assets already. Yeah. Good weekend to you.

Happy Father's Day as well. It's Dan Greenhouse. We'll see you soon. Thank you. It's time for a CNBC News Update with Kelly Evans. Hey, Kel. Hi, Scott. Hi, everybody.

And good evening from the news on CNBC. Here's what's happening. The death toll in last night's Alabama church shooting is now three. As mourners gathered for a prayer vigil today, authorities said an 84-year-old woman who was injured last night died today. A 71-year-old man is in custody. Julian Assange's wife is vowing to use every waking hour to fight her husband's extradition to the United States using every available avenue. Stella Assange told reporters Assange said he would kill himself if he's sent to the U.S. to face espionage charges. The U.K. approved his extradition today. And as Britain suffered through a massive heat wave, Kay Middleton and Prince William appeared at the annual Royal Ascot horse race. With temperatures soaring into the 90s, men were allowed to remove their jackets and ties as the event's organizers relaxed the usual strict dress code.

And tonight on the news, right after Jim Cramer, I'll be filling in for Shepard Smith at 7 Eastern. We will look at how mortgage rates today compare with a decade ago when millions of homes went into foreclosure. Scott, back to you. Not the jackets and ties, Kelly. We'll see you tonight. Still a hat. All right. That's Kelly Evans joining us. Up next, a bold call from one top technician. What Fundstrat's Mark Newton is seeing in the charts that could be a bullish signal for your portfolio. We're back right after this in overtime. All right. The Dow closing down for the 11th week out of 12. That's never happened before. But the current washout could be nearing capitulation. That's what Fundstrat's head of technical strategy, Mark Newton, says. He joins us now. It's nice to see you again.

Thank you, Scott. This market has been hard to keep up with. I know for you as well, because it surprised you in the downside this week and the magnitude of it. Yeah, 100 percent. Look, it's always much easier to pick bottoms with an uptrend than after a market's been down 25 to 30 percent. And so you really just have to pick spots coinciding with, you know, meaningful changes and sentiment and momentum and breadth and cycles. And so a lot of that suggests that we are, in fact, getting close to an area where stocks can finally have a more meaningful rally. You know, it's interesting you

say that because I referenced a conversation that I heard Melissa have last hour with Chris Verone, who suggested that we haven't met a lot of the conditions that are required to declare a bottoms close and not to confuse that with another bear market bounce. How would you respond to that? There are just simply so many things we haven't checked off yet. Well, I would agree that this year is very different than 2020. However, when you look at things like the percentage of stocks above their 50-day moving averages, it is now down to 2%. That certainly was present back in 2016 and 2018. We have finally started to see some evidence of a little bit of VIX backwardation, although it's not at levels that I think are probably important just yet. You know, there's 70% of stocks now that are down more than 20%

off their highs. So, you know, any given year when the market's down 20%, the odds certainly are in your favor to try to take a stab at trying to buy for a rebound. But it's much, much different, you know, in saying that, is it a bottom versus the bottom and whether it's going to be a recession with a capital R versus a small R? And really none of us know the question to that, but I think it's a great risk reward when I start to see some evidence of equity put to call getting close to one, which was near what we saw in March, 2020. Obviously some evidence this past week of a little bit of oversized selling, that meaning the trend or the arms index showed two readings of over 3.5. So some big, big selling on the downside.

And that came specifically from a lot of groups that had not been going down recently, like energy all of a sudden and utilities. And, you know, these starting to join technology on the downside, I think, is a meaningful change in character for this market that investors should pay attention to. When do you make a more definitive statement and what causes you to do so? What's the level that makes sense to you in your mind? Well, the technical analysis is all about price action. And while, you know, myself or anybody could say we're getting close, you know, we need to see markets go from a downtrend to starting to make higher highs and higher lows. And unfortunately, you know, there's no way to catch the bottom of that.

That's going to take a movement over 4,200. So I have some cycles that I suggest that we're going to bottom towards the end of June, you know, towards the Russell rebalance, potentially as early as next week. And I think a couple of things are important. One is that we seem to be getting close to a time when yields and also the dollar should peak out.

And those are important because times when the dollar is rising rapidly happened in 2000, 2001, 2008, also 2014. Those proved to be difficult for the market. So if growth starts to slow meaningfully and we're seeing evidence of copper breaking down substantially this week in a way that the dollar starts to roll over, and I think that might be a few weeks away. And the 30-year has really peaked out right near 2018

highs. And we saw evidence today of technology outperforming as yields drop. So that's the key for investors. Watch when yields and the dollar start to roll over. Growth should start to act better. You look at FANG stocks this week, you know, stocks like Apple, Amazon, Netflix, they're only down about three to five percent, much better than the overall average. So seeing that outperformance in some of these high growth technology discretionary names should be very important to the industry. So, you know, it's tough to say we're at the bottom. I still think we're probably going to 3,500 to 3,600 over the next couple of weeks. But I am much more willing to take a stand and say I'll buy here and think that indices are higher within three to four months. It's funny, as you were saying that before you got to Apple, I was looking at Apple on my screen at 131.56 and wondering if that's a sign of strength or of a sign of something that's yet to come.

And we're going to find out. Mark, I appreciate it. That's Mark Newton of Funstrat. Thank you, Scott. Have a great weekend. Yeah, you as well. I'll talk to you soon. Still ahead, the staggering stats from one rollercoaster week. Christina Partsanova standing by with our rapid recap. Christina. I've got some quiz material for this crazy week. Which tech sector took the brunt of this week's sell-off on the Nasdaq? And another company just hit its lowest point since going public seven years ago. Hint, it's the oldest dating site in the world. Do you know the answer? Stay tuned. We're back in overtime on a Friday.

Let's get right to Christina Parts and double us with your rapid recap. Hi, Christina. TGIF. We got some green on the board, but it still wasn't enough. The Nasdaq was almost 5% lower on the week, and it's 10th negative week in the past 11. Today was busy, though. 18.6 billion shares traded across all indices on pace for the highest volume day since March 18th, which was the previous triple witching day. That's when expirations of options futures and options contracts all happened on the exact same day.

Switching gears, let's talk about some big movers. Cancer-focused biotech Segen was the big winner this week, up 18% on the NASDAQ, reports that Merck is interested in acquiring it, followed by JD.com. You can see up 6% this week, and JD.com is possibly exploring an expansion into food delivery. And then you've got several other bio winners like Regeneron and Biogen. You can see they're climbing higher or climbed higher on the week, past tense. But it's the chip space. That was the first question I asked before the break that got hit hard this week.

AMD and Marvell down 13%. It's the worst week for Marvell since 2015. Other notable movers, or just one, that would be Match.com. That was the second question I asked you. Match.com is traded or traded at its all-time low back since its IPO in November 2015. And lastly, we have some late afternoon news. Starbucks head of North America will be leaving the company after 17 years. And this is going to happen at the end of the month.

This head of North America is one of the key Starbucks executives responsible for handling the expanding of Union Drive among baristas. She will be replaced by the current head of the Asia-Pacific business. Starbucks moving 1.3 percent. And that is not after hours, so never mind. All right, Christina, have a great weekend. You too. All right, we'll see you on the other side of that.

Up next, why today's pop in U.S. steel could be a big win for one of Jim Labenthal's top holdings. He's back with us next in Halftime Overtime. In today's Halftime Overtime as the S&P 500 closes out its worst week since March of 2020. We're back now with Jim Labenthal to take a closer look at some of the marquee names in his portfolio. Wanted to get an update, really, Jim, on where you stand. Tough for cyclicals, obviously. Cleveland Cliffs down 13 percent this week. Greenbrier down seven and a half percent. Kinder Morgan down because of what's going on in energy. Why don't we start there with those? What are your thoughts today? Yeah, sure. And the overarching comment that I'm going to make, it's apropos of the earlier comments, is that the numbers and the results from the individual companies

are indicating something very different than what the market overall is saying, in particular about economic activity. And that comment I just made is writ large in U.S. Steel today, which preannounced record results for this quarter. So, you know, here we are in the heart of what seems a maelstrom of negative economic news and negative economic sentiment. And here's U.S. Steel pumping out iron and steel at a record pace. Also, by the way, also important, they're buying back shares. So they bought $320 million worth of shares this quarter. That's about 6% of their market cap right now. And I think that's emblematic of what stocks in general should be doing.

I don't care if it's U.S. Steel, Cleveland Cliffs, of course, a competitor in which should be feeling the same effects, or an Apple or a Google. I don't think we're giving much credit to share buybacks. In terms of Cleveland Cliffs, though, I do want to say this. Second quarter earnings estimates have been coming down over the last couple of months. That really is in opposition to what U.S. Steel just told us. And it's also in opposition to what the company led by Lorenzo Gonsalves, who I know you know, has told us, which is that they're putting up records this year. And I think we can believe

it based on fixed price and fixed volume contracts that they have. Now, it's just one example, Scott, and we can go through more. You tell me what you want to talk about. But the company results are pretty darn good. I want to just note the fact and look, I mean, it's been a rough week for everybody. The market was down so much that, you know, I'm not trying to single out the fact you've got a loss, loss, loss, loss. General Motors, Qualcomm, Alaska all hit new 52 week lows just today. If you have one of those three that you're most concerned about against GM, Qualcomm or Alaska, Which one is it? Well, geez, you know, I'm not really concerned about any of them, but OK, OK. You know,

General Motors, you do have to wonder why is it trading so badly? I mean, I'm not looking at the estimates right now, but it's probably five times earning is probably one times book value. You know, these guys should be generating record cash flows. I know production volume is down, but prices are up, up, up. I think what we really need to see from them is going back to what I said. They need to buy back shares. They really do. Mary Barra is being very coy about redistributing shareholders' cash back to them. And I understand that she wants to invest in the electric vehicle business, but I think it's time to take a stand on the balance sheet

and distribute some shareholder capital back to us. Having said that, Scott, I'm answering your question. I'm really not that worried about General Motors because, you know what, people need cars. We're driving like crazy. They're wearing out. We need new cars. All right. Jimmy, thank you. Thanks for sticking around on this Friday. We'll see you soon. That's Jim Labenthal. Still ahead, the next market catalyst to watch, when Money Manager is going to tell us what's on his radar. We'll do it next. It's time for our two minute drill with

us today is advisors, capital management, CIO Chuck Lieberman. It's good to see you on this Friday. Your view first on the market. Where are we going from here? Hard to say, but I think the markets reacted excessively to the news that the Fed is tightening policy. So I think current valuations are extremely attractive. I'd still stay short on the bond market. I keep my duration there short. Okay. So if we've got some attractive stocks to look at, let's talk about a few that you like.

Energy transfer is number one. Let's do that first. E.T. Right. So here's a stock that has an 80 cent dividend stock price of 10. So an 8 percent yield free cash flow is now over two billion dollars, two point two billion dollars. They reduced their dividend a couple of years ago to improve the balance sheet. They succeeded. Now the leverage ratio is down about 4.0. So the balance sheet is healthy.

They're going to be swimming in cash if they don't do anything. And they are likely to do something. They're likely to increase the distribution or start buying back stock. They do have a large project going, Lake Charles. That's an LNG facility to export LNG. They've already got contracts to sell 6 million tons a year. They probably want 10 before they give a green light to the project. But once they get that, they'll probably also sell off large chunks of that project.

All right. Chuck, I've got to run. Be well. We'll see you soon. That's Chuck Lieberman joining us there. Up next, it's Santoli's last word. To the results now of our Twitter question, we asked at what point on the S&P would you start buying? 47 percent of you said, I'm buying right now. All right. 19 percent said 3500. 34 said 3000. So 47 percent wins. I am buying stocks right now, is what you said. Let's get to Mike Santoli for his last word. Does that surprise you, Mike?

I wouldn't say an outright surprise. I think it almost is a little bit reassuring that more than half of everyone said they want the stock market to be lower before they start buying. So, you know, if we're looking for contrarian sentiment signals, that's not a bad one. I do think down 24% on the S&P in less than six months. It has people both wanting to do some buying, but also fearful of the force of this downtrend. I think that's where everybody is right now. It's worth recalling. We came into this week thinking maybe it was starting to get a little bit disorderly and bad enough that you can start to say maybe we're kind of coming to this climactic point in the sell-off. Clearly, it was not the case.

A failed retest. Remember, we were at 3,900 a week ago. We were trying to retest that 38-something level. Miserably failed. And here we are today. The market kind of gets its feet under it, sort of, in the 36s. And we're saying, okay, maybe we have some calm right here. Big question to me is, did we see, for the time being, peak stagflation panic this week? Because that seemed to be just a huge crescendo of fear,

two-sided inflation and growth coming under question. And we've seen indications with energy going down, yields coming in, stock market no longer, you know, going to zero. Maybe we kind of burned out that energy for the moment? Yeah, I don't know. I mean, due for a bounce, right? So many different things suggest we are, which means nothing in the end. Well, that's right. Yeah. No, it doesn't mean much of anything. It means that the preconditions are there. Extremes can always get more extreme. But if you look at all the studies of these types of

conditions, if you dial it out, you know, six months, 12 months, in most cases, it paid to be a net buyer. The cases when it didn't pay were those multi-year bear markets that really just kept spiraling lower in 2002, 2008, 2009. So that's your call right now. Are we going to go into a bad recession or not? Yeah. I mean, I guess we're going to watch oil closely as well. You know, we just don't get earnings for a while. We don't get more inflation reads for a while. We're going to be pinned on the things we can see right in front of us every day. Mike, happy Father's Day to you. Have a great weekend.

Same to you. Thank you. I'll see you soon. Thank you. All right. That's Mike Santoli. Let's go to Fast Money right now.