Closing Bell - Closing Bell Overtime: Wall Street’s Big 2-Day Rally 10/4/22

Episode Date: October 4, 2022

It’s been a dramatic two-day move higher for stocks. But does it mean the lows are actually in? Joe Terranova gives his take. Plus, shares of Twitter soared in today’s session as Elon Musk has revived his bid to buy the company. Platform’s Casey Newton weighs in on what’s at stake and what it could mean for the stock. And, Fundstrat’s Mark Newton says the Q4 bounce back is just getting started – he makes his case.

All right, Sarah, thank you very much, and welcome everybody to Overtime. I'm Scott Wapner. You just heard the bells. We're just getting started right here from Post 9 at the New York Stock Exchange in just a little bit. I'll speak to a market watcher who says this rally could go another 10 to 15 percent higher from here, plus the latest, of course, on the Musk-Twitter deal that's about to go down and at the original price.

We begin, though, with our talk of the tape, this dramatic two-day move for stocks, whether it means the lows are firmly in, at least for the remainder of this year. Let's ask Virtus Investment Partners Chief Market Strategist Joe Terranova. He is here with me at Post 9. It's good to see you again. Quite a move, 5% this week for stocks. Legit. Is it different than the other rallies that we've had or what? Well, we tried this in early September. Remember going into that CPI report, the market rallied aggressively and failed. This does feel a little bit different. It feels a little different. We've now put together two consecutive days, and these are the strongest two consecutive days that the markets have had since April of 2020. What I like about this is it really is a reaction to the reversal in the dollar and in treasury yields. The dollar is down 4% since last Wednesday. 10-year treasury,

which was 4%, down to 3.6%. So you're seeing a reaction underneath the market in the right places. The first place where you're seeing it is a lot of the stocks that have been shorted, heavily shorted. You're seeing that squeeze. Is it a very aggressive squeeze that's going on there? Like the ARK stocks you're talking about? No, it's much different. See, it's more the cyclical stocks.

It's the small cap stocks. It's the Russell. It's a different place. Look at gold. Gold stocks up 10% in the last five days. Silver stocks, steel stocks up aggressively. Even chemical stocks, whether it's Dow Chemical or Eastman Chemical, those stocks are up nearly 10%. So there's a little bit of a reaction here to what we're seeing in the reversal for the U.S. dollar.

And it's taking place in a much different area of the market than we would have expected. It's unbelievable when you look at the move in yields. I noted this yesterday, but I still can't stop looking at the fact the 10-year note yield has dropped 40 basis points in a little more than a week. Your point's well taken on the dollar as well. Now, you mentioned some of the reasons why you think this move has happened. I want you to listen to Eric Johnston of Kenner Fitzgerald, who was here yesterday. You talk about a bear of bears. Well, that's what he was until yesterday. Now he's overwhelmingly bullish. I want you to listen to the reasons that he said he is. We can kick it on the other side. We're very bullish and

our conviction is very high. We think the Fed's last hike is going to be December 14th. So we're a mere two months away from this Fed hike cycle being over. And then the capitulation indicators have all shown up in the last 10 days, where you had the VIX hit 34, you've had the VIX curve invert, you've had the RSI go well below 30, and a number of others that all suggest that we are going to have a sharp, a sharp. All right. What do you make of what he said? Principally that you can see the light at the end of the tunnel for the Fed. So where Eric will be wrong is if we see a very dramatic earning

season that's overwhelmingly negative. If it's overwhelmingly negative and we have massive revisions, then Eric's wrong way to go back and revisit the lows. Do I think that's going to happen? Actually, I don't think that's going to happen. I think Eric is correct to identify the potential that December is the end of the rate hiking cycle for the Federal Reserve. Recently, bad news absolutely is good news. Yesterday's ISM, today job openings at a 14-month low. You've got this rally cry that began with Dr. Jeremy Siegel on the halftime report a week ago last Friday. It's building around the world. The Australian Central Bank, many others, right now the U.N., all talking about ending this cycle. Yeah. So I think we are positioned very similar to where we were in 2018 when we had that liquidity correction and the Fed responded to that. I think the Fed has to at some

point respond. Whenever noninflation comes down, Scott, they need to take a break. They're going to well, they're going to get that message. That's what I was just going to ask you. Are they actually going to get the message of those who are screaming enough is enough for now. If well, if the inflation report bails them out, then without question, they're going to get the message. They're going to turn around. They're going to communicate to the markets that 50 basis points is what you're going to get in November. If inflation doesn't bail them out, I'm still of the belief that they still need to stop November. Give the market 50 basis points. You want to do another 25 in December and then stop.

Let the effect of these interest rate hikes work through the economy, because what we're seeing in the economy is it is slowing demand. It is slowing the growth. That's what the Federal Reserve wants. And I think the jolts today, the job openings at a 14 month low, that really speaks towards what the Fed is looking at at the labor market. We've got the biggest two day rise for the S&P 500 since April of 2020. That's the kind of two-day run that we're on. Now, what do you look for? I'm not talking about data. I'm talking about market action. To tell yourself, well, I think this actually does have the legs that Johnston says, and we've got a guest coming up a little bit later, as I suggested at the top, who says you could get another 10% to 15% out of this. Okay, so you're going to have a very important labor report on Friday.

The near-term positive momentum will slow into that labor report. It doesn't mean it's going to completely end. I think as you move out of that labor report to continue the near-term positive momentum, you want to continue to see a lot of the areas in the market where it is clear that people are short. And a lot of that resides in the cyclical equities. Financials very strong the last five days. Industrials very strong the last five days. I'm not suggesting that people are necessarily short names like Apple and some of these mega caps.

They're not. But those stocks have had trouble of late. And then you've got a nice rebound for Apple over the last couple of days to another two and a half percent today. It's back at one forty six. People were worried that it was going to once it got below one forty that it could go down a fair amount more than that. I think a lot of those mega cap names have been a source of funds as the overall market has declined. I'll tell you sitting with you today, it's not like I'm sitting on set saying, wow, look at Apple, look at the rally that we're seeing in mega cap technology or mega cap consumer discretionary. I don't think that's the area of the market where you want to get excited right now if the positive momentum is going to build further here on the upside. I think it really goes back to why are materials up over the last five days nearly 10 percent? Energy has come back. Energy equities are up 14 percent in the last five days. The spot price of

oil is up 9 percent. I think those are the areas of the market that you want to get excited. And clearly, that's where the short exposure has been for speculators. And let's remember, overall equity exposure for hedge funds, it's at its lowest level since 2008, 2009. But you were telling our executive producer before the show that I made a move in the market. And you asked me if I wanted to know about it then. I said, no, I want to hear about it organically in the context of our conversation. So in light of everything that you just said, what's the move? Well, I told you on Friday I was looking at the QQQ. So you would expect and you asked me yesterday in the halftime report if that would be the trade.

That's not the right trade right now. I don't see that as the right trade. So I am specifically trying to gain exposure to where a continuation of a pullback in the U.S. dollar and a recovery in commodity pricing will benefit. And that takes me specifically towards Freeport-McMoran. OK. Freeport-McMoran. Because you were just mentioning materials. A name that I don't think I've been long for the better part of really the last 18 months,

but where there's a clear opportunity. I went into Freeport-McMoran today. I think there's further upside potential ahead for this company. And beyond there, I think you could look at names like Steel Dynamics. You could look at Nucor. You could look at Mosaic. You could, as I said before, you could look at Eastman Chemical. I think all of these stocks are potentially ripe for further upside potential in the short term. As long as the dollar, And I'm looking at the euro and the pound versus the dollar. Obviously, they're up versus the dollar. Dollar goes down.

Commodities, generally speaking, go up. OK, but the dollar going lower is the trigger. Now the actual call to action is unwinding the short positions. I got you. All right, let's expand the conversation. Let's bring in Morgan Stanley's Katerina Simonetti and Stiefel's Barry Bannister. We appreciate having you both with us today. Katerina, what are your thoughts?

Two-day move, as we said, incredibly strong. Biggest for the S&P back-to-back since April of 2020. Eric Johnston says the lows of the year are in. Are they? Scott, it's really difficult to say. Fed has been so aggressive in their action. And, of course, it's going to yield positive results. But in our view, the earnings risk is still on the table.

And we expect that over the next couple of quarters, earnings are going to continue to decline. They're going to be revised, which in turn would lead to normalization. And that will indicate the actual pivot towards the next bull market we want to stay optimistic and of course we encourage investors to stay optimistic but they should still lean towards the defensive place it is so tempting right now to go for the more aggressive growth type of investments because you see this last couple of days and you know it looks really tempting to believe that we've already seen the bottom but it's impossible to predict whether we have or we have not. So we have to proceed cautiously.

And while we think that the end is near, we don't think that we're quite there yet. What about you, Barry? I mean, you've been trying to tell a more positive story, at least in the near term. Obviously, that story is easier to tell after you have a monster two-day move. But how much further do you think we really have? Well, I think we'll be up through next April. You know, if you look at what happened in the last couple of days is the fever broke in the 10 year real yield, the Treasury inflation protected security. You know, it was that yield going up almost three percentage points in six months off of March 2022 that caused a six multiple

point or 1,200 point decline in the S&P 500. So as the real yield has really pulled back, in fact, yesterday was the fifth largest yield decline, basis point decline in the 25 years of history that we have on the 10-year real yield. that has really triggered a P-E ratio rebound. I don't think you have to worry about a recession until the second half of 23. So there is room for a rally as you go into the early part of next year. Wow, Barry, I mean, do you need a Fed pivot to make that happen or at least a Fed to signal that December's it? We've been saying since mid-year that the Fed would pause, a conditional pause, on the December 14th meeting, the last meeting of the year, the year where they get the last summary of economic projections for the year. We've been saying that they would pause.

It's a conditional pause. In other words, we know that policy works with a lag. Inflation-leading indicators are all falling. Global liquidity has tightened quite a bit. They don't want to kill the patient to cure the disease. And if the data keep going their way, then the pause would last. And if the data don't go their way, they would hike again and we would go right back down. So that's what Janet Yellen did in 2016. And I think that's what they'll do again right now. Katarina, you say a Fed pivot won't end the bear market. How's that

possible? Didn't the Fed hiking rates from the beginning put you into a bear market or certainly set you firmly into one? Scott, Fed is trying to achieve soft landing. Whether they are able to get there or not, the jury is still out. And the question is, are we going to get a recession? And if we are going to get a recession, the severity of it is going to make all the difference in the world. And the environment is such that inflation is high, interest rates are high, consumer confidence is low, and it's most likely going to stay there for quite some time. And that's what we have to prepare ourselves for, that there are still challenges in this market. And Fed absolutely is going to fit to pivot if the indicators are there. But I'm convinced that they are ready to go and do whatever it takes to bring

this inflation down. And it's a total task. I mean, how do you how are you thinking about this? Is this only work if December is it? Otherwise, what do you got? You got a still aggressive Fed going into next year when you're already thinking that earnings may come down a bit and then the economy could go into a recession. You don't want that timeline to be pulled forward if you think the Fed is going to be even more aggressive than you thought. The earnings season is so incredibly important. I would suggest it might just be even more important than what the Federal Reserve is going to do because we know they're going to pause here in the near term at some point.

You have to be able to come through this earning season unscathed. And the jury is out as to whether ultimately that will be the case. If you're able to come through unscathed, I still believe the Federal Reserve, the speed at which they are raising rates, five consecutive rate h hikes 300 basis points over the course of six months two more to come so it'll be a total of seven it's going so quickly it would be prudent for them to pause take a look around and they could always come back and begin to raise rates once again but one way or another i think they have to be judicious. They have to stop. So, Barry, I mean, I've got you say this can go until April. I mean, that suggests I can

get through the next two quarters worth of earnings. You're not worried about earnings growth coming down a lot into next year, estimates needing to come down much more than they have? Margins have been fairly resilient. Companies are pricing ahead of their rising labor costs. I do not expect a lot of earnings weakness in this quarter and next quarter, but I do think that as you get into April, when they report first quarter, they'll be cautious on the rest of the year. And again, it's not unusual for the market to peak around the end of April, maybe

the beginning of May. The other thing I would consider is that we're talking an awful lot about the Fed, but I think geopolitical risk is highly underrated right now. And I'm very, very, very worried about what's going on in East Ukraine or as Moscow calls it, West Russia. You know, it's hairy right now. And I think that could get a lot worse before it gets better, as the standoff gets worse. It reminds me of the Cuban Missile Crisis. Yeah, I mean, that's going to remain an umbrella risk for the, you know, better part of the next 12 months. We just don't know. There could be a positive development that, of course, changes things. And then there could be a positive development that, of course,

changes things. And then there could be the unknown, which certainly takes things in a more ominous direction. So, Katarina, this idea, if you want to stay defensive, what does that mean in terms of how much cash I want to have and whether I want to take the opportunity that has been presented in bonds over the last few months over stocks? Well, Scott, rates are higher. So bonds are finally looking significantly more attractive and they present a degree of safe haven, which is so important in this inflationary environment to bring this yield. But we encourage investors to stay diversified. And while staying invested, staying in equities, pivot towards defensive sectors, sectors such as health care, consumer staples, energy. Look at yields.

Look at individual security selection. that have price stability and generate nice yield because income is so important, especially to the investing public that is relying on dividend income for their income. There are baby boomers out there and they look at the market environment and it's extremely nerve wracking and scary. So we tell them to stay the course, to stay very high quality and income focused in their investment selection. And while we are cautious in the short run, we are optimistic in the long run. We think there is the end of the inside. There's going to be another bull market ahead, but some challenges still ahead. Hey, Barry, I'm looking at your sector ideas and they seem a little suspect to me, to be quite honest. Retail. I got bloated inventories. As a result of that, I got margins that are going to be compressed.

Home building. I got a housing market that's rolling over. Why are builders going to continue to build into that? I've got big tech, cyclical growth, an area of real concern right now, especially if rates continue to move to the way up. Banks. I got worries about the economy. Even you suggest that we could get a recession in 23. Why do I want to be in those what I would call pretty offensive areas of the market rather than defensive, like Katarina is suggesting? Well, if you look at a recession, it's a simultaneous decline of note in income, sales, employment, and production. And, you know, I'm just not seeing the kind of both real and nominal weakness there going forward that would indicate a classical recession. I also expect oil to come down, and that's good for retail. But when you look at tech, it's cyclical growth.

Software, semiconductors, hardware, early cycle cyclicals like semiconductors. What you do is you get a rally in the more cyclical side of the market that takes away some of the shine of the defensives that have led pretty much all year except for a month or so in the summer. So it is a cyclical bet. It's skewed more towards cyclical growth as you finish out the year than cyclical value, which is your energy, industrials, materials and so forth. That's more maybe a first quarter 23 story. But yeah, I would much rather be

cyclical than defensive as I finish out the year because I think the S&P is going to go higher and some of the Fed risk and some of the geopolitical risk, hopefully, and some of the energy pressure and even the inflation pressure is going to subside. I'll give you the last word, Joe. Healthcare. It offers a little bit of what Katarina wants in a portfolio, a little bit of what Barry wants in a portfolio. And I mentioned a lower dollar. Take a look at a company like Abbott Labs, healthcare company, benefits from a lower dollar. You said yesterday, though, that energy was your number one. Energy in terms of weighting in the Jyoti portfolio, that's the most significant overweight that we have.

Healthcare is second. All right, I got you. Good stuff. Guys, thank you very much. Appreciate the conversation, Katerina and Barry. We'll talk to you again soon. Jyoti, you'll be back in a little bit. We are just getting things started here in overtime.

Up next, more on that big bombshell out of Elon Musk's, the world's richest man, reversing course, reviving his bid to buy Twitter for $54.20 a share. Shares rocketing higher on that news. We've got all the late breaking details straight ahead. We're live from the New York Stock Exchange. Overtime is right back. We're back in overtime. Shares of Twitter soaring today. By now, you know that Elon Musk reviving his bid to buy that company for his original offer price of fifty four dollars, 20 cents a share. Let's bring in platform editor and CNBC contributor Casey Newton. It's good to have you back. Could think of nobody else I'd rather have on this since you've been with dancing with us the whole entire time. Did you have this on your scorecard? No, but I mean, if there's one thing we've learned from this whole situation, it's never assume that you know what is going to happen next.

You think this is it? I mean, do you believe this is it? And you know why I'm asking you that question? Sure. And I mean, no, look, I mean, the truth is, you know, my brain is already playing four dimensional chess. You know, it's like, what is Elon's real game here? The whole thing sort of feels like a trap, right? Because keep in mind, he's saying that I'll go ahead and and buy you for 44 billion, but you have to make this trial go away as a precondition of me settling. That seems like a really weird thing to ask, right? So if I were Twitter lawyers, I'd have a lot of questions right now. Yeah, no question. Speaking of former people who were at Twitter, I did speak to the former CEO,

Dick Costolo, a little bit earlier, and he sent me a comment that I want you to react to, okay? Quote, I always think about the team there. There are clearly a bunch of deal winners and losers today, but this isn't the end for the team. It's the beginning of more uncertainty. What do you make of that from Dick Costolo, who knows this company as well as anybody? Dick is absolutely right. It is the beginning of uncertainty for those employees who have already been through so much this year. But I would also argue it's the beginning of uncertainty for those employees who have already been through so much this year. But I would also argue it's the beginning of uncertainty for everyone involved in this deal, right? Even if you're Parag Agarwal, it's not like you know what's going to happen next. So there's still a lot of question marks and a lot of chaos to come for everyone involved.

Another former, let's say, Twitter insider, I don't want to reveal the name of this person, texted me, will be fascinating to see what happens with Twitter now. Elon has shown he had no idea what he was getting into. In light of that, what is he getting into? What happens from here and what needs to happen? Well, we're still waiting to hear anything from Elon Musk about what changes mind. Like, keep in mind, as recently as yesterday, his lawyers are in court saying, well, the company has too many bots and too many security

issues. It's a national security threat. And now all of a sudden he wants to buy the whole thing. So, you know, if you were to take him at his word, which I don't, you might expect that he's going to spend his tenure as the head of Twitter, getting rid of all the bots and fixing all those security problems while also somehow making it into a much more profitable company. But frankly, all of those things sound like pipe dreams, given how much legal red tape there is to clear up in the meantime. I hear you. But how do they make it into a more profitable company? At the end of the day, that's what he needs to figure out how to do. What's the key? Yeah, well, if you look at the note that he sent his bankers

when he was trying to raise private equity, there were a lot of ideas in there about dramatically increasing the number of paid subscribers to Twitter, selling more premium features, that sort of thing. But it was basically at the level of thinking of written on the back of a cocktail napkin, right? Not a lot of sophisticated financial modeling in there. So, you know, it's really anyone's guess. So I've got to believe he's, if this does in fact happen, he's not going to be the CEO. I mean, he's got like 45 other jobs,

as capable as he is in many of them. Who's the right guy or gal? Who's the right person to lead this company? Because presumably one would think that Parag may not be in for the long haul based on the back and forth that that they've already had through this arduous process. Who's a name out there that you have? Oh, I mean, we know that there's only one sort of person who gets this job and Elon's empire, and it's a yes person, right? So there are plenty of people out there that would love to come on in and do some great things for Twitter. But the reality is that this person is almost certainly going to be somebody who can do Elon's bidding, will put up with his whims, changing every few weeks as to what is

the new priority. So who is that person? Maybe somebody else who's already in one of his organizations. What do you think it means for users? Do you think they gain users or lose them? You know, I don't know. I think everything in social media right now is kind of flat-ish, except for maybe TikTok. So I think Twitter's user base is still going to kind of hum along mostly flat. You know, the question has been, whoever is the CEO of Twitter, can they do something that's going to go out and find those next few hundred million users? It was a really tall order when Jack Dorsey was CEO, and it will be a really tall order for Elon Musk or whoever comes next. Appreciate your insight, as always. We'll talk to you soon. Maybe not about this, because this may be ending, but you never know. We'll see. Thank you. All right. Let's get to our Twitter question of the

day. We want to know, is Twitter more attractive or less attractive with Elon Musk as the owner? You can head to at CNBC Overtime on Twitter. Cast your vote as we always do. We'll share the results later on in the hour. Up next, we have a big call for your money today. Top technician Mark Newton says this recent rally is just getting started. Why he sees another 10 to 15 percent upside ahead. He's going to walk us through the charts, tell us exactly what they're telling him when overtime returns. All right, we're back. It's time for a CNBC News Update now with Shepard Smith. Hi, Shep. Hey, Scott. From the news on CNBC, here's what's happening. President Biden spoke to Japan's prime minister today condemning North Korea's launch of a missile that flew over Japan and landed in the

sea. The White House says the two agreed to coordinate their response. Residents of Tokyo and prefectures in the north got emergency alerts this morning to shelter underground or indoors. The missile launch escalates Kim Jong-un's conflict with the West and tests the world's resolve. A reported explosion at Northeastern University last month was a hoax. The FBI announcing today agents have arrested an employee who said he was injured in the blast that didn't happen. He's charged now with conveying a bomb threat and lying to federal investigators. And 108 people now confirmed dead after Hurricane Ian as crews continue to comb through debris in southwest Florida. We're live there tonight with news team coverage of the recovery and two more shootings linked to a suspected serial killer.

This time, police say there's a survivor. That update on the news right after Jim Cramer. 7 Eastern, CNBC. Scott, back to you. I look forward to that show. Shep, thank you. That's Shepard Smith. The S&P 500 surging more than 5.5% to start this week.

A strong reversal after posting its worst month in more than two years. According to Fundstrat's Mark Newton, the Q4 bounce is just getting started. Mark joins us once again. And not only getting started, I mean, my eyes like blew wide open. I saw 10 to 15 percent more. And I said, really? Hi, Scott. Well, look, that doesn't necessarily have to happen in a straight line.

But the movement over the last couple of days has certainly been very constructive. We've seen, you know, over 7 to 1 advance declines today. We had almost eight sectors that were up more than 3% on an equal weighted basis today. So that's very strong movement at a time when indices had gotten quite compressed to the downside. We saw only about 2% of all S&P issues above their 20 and 50 day moving averages. And so coming into this week, we had a combination of not only some cycles that were due to turn up, but sentiment had gotten very negative, breadth had gotten very compressed, and S&P had pulled right back down to levels that you and I talked about right near June lows. And yes, they were undercut by one day, but generally

most sectors and indices held and now have started to bounce. So I do expect that we'll see some follow through between now and probably the middle part of December. But I think it's going to be a two steps forward, one step back. We've already moved five percent very quickly. Any sort of pullback, in my view, likely is going to be a chance to buy. And a lot of this has to do with interest rates and the dollar finally starting to show some evidence of weakness. Haven't we seen this movie before? That's all I can think of when we see a really powerful move ahead of a CPI print. Makes me nervous for obvious reasons.

I'm sure our viewers who are listening to you are thinking the same thing. Well, there are some things you can put together that do make it correct to try to fight a downtrend like we're seeing. And some of those are just sentiment levels when you get so compressed and then you see a big upward thrust and breadth of the upside. So some of that we did see in June. And yes, that move lasted a short time and we had a little bit of consolidation, but then we continued higher in the middle part of August, and then also higher into September. And so, look, I mean, markets don't move in a straight line. You and I know this. This is still part of a cyclical bear market, which I view as part of a secular bulk. But, you know, in general, people are too bearish. And, you know, we've seen some evidence

now that people are being caught off guard at a time when health care is working very, very well. The second largest sector is part of the S&P doing extraordinarily well. Consumer discretionary on an equal weighted basis has beaten staples. So a lot of moving parts are there under the hood that many people really aren't paying attention to. You say it's a cyclical bear still inside of a secular bull. What ends the bear market? Is it the Fed? That's the ultimate thing that has to happen to say, OK, bear market's dead?

Well, some of it has to do with time and also price. You know, if it were to end now, it would be one of the shortest bear markets on record. I don't completely think that it's possible to rule out that we just move straight to highs. But I think that, you know, for S&P in pure price terms, if we got over 4,200, for me, that would be extremely important. That's a 50% range of the whole high to low range is a huge downtrend from January that extends down. So for me, that's important. A lot of it's going to be we're likely to rally up sharply. Then we'll give a little bit back, and then we'll continue up.

But the time between now and December historically is quite constructive. It's a midterm election year. Octobers tend to be much better in midterms, averaging about 1% versus three-tenths of a percent. And the fact that we were so negative heading into this, we started to see these breadth divergences, a lot of these things that make viewers' eyes roll over, but these were in place. And now we're starting to show evidence of turning up while a time when really nobody wants to believe it or wondering if they should chase. So, you know, I'm constructive between now and December. You know, I'm hoping to get pullbacks to buy into, honestly. What leads us there? What gets us to your promised land?

Well, technology and a continued rolling over in treasury yields which i think will be good for growth and also the non-technical perspective some evidence of inflation starting to to roll off uh... but you know that's all the best those that are there's more to me and economics you know by line is it you know technically we've seen the first part of this bottoming process i think it's very constructive and you know i'm hoping we can build on it. But we certainly

have some of the pieces in motion with regards to healthcare, technology, with a very good comeback in recent days. Discretionary has outperformed on an equal basis over the last month, over the last week. I mean, these are all financials, industrials starting to do well. So there's more to it than just looking at the S&P itself when you analyze, as I said, under the hood, what's working. Yeah. Yeah. I hear you. All right. We'll keep watching under the hood and we'll see where this goes. And I'm sure we'll have you back, Mark. Thank you. That's Mark Newton from Fundstrat

joining us. Up next, going for growth, Cathie Wood's ARK Innovation ETF rebounding in a big way to kick off the quarter. So EMJ's Eric Jackson joins us with his take. Is this turnaround for real? He owns the ARK fund, so we'll see what's up with that. And throughout Hispanic Heritage Month, we are celebrating our CNBC teammates and contributors. Here's Agua Media Chairman Sol Trujillo. The punchline here is that the Latino cohort generates $2.7 trillion of GDP. And when we think about the significance of labor force providing 80% of net new workplace entrance, growing consumption at 2x the rate of the rest of the economy, it's something

that any investor, any executive, any person that's thinking about the rest of the economy. It's something that any investor, any executive, any person that's thinking about the sustainability of our competitiveness in this country should be aware of, think about, invest in, and catalyze. All right, welcome back to Overtime. Growth stocks ripping higher for a second straight day. Cathie Wood's ARK Innovation Fund is up 7% this week. Our next guest says he is positioning for an even bigger rally in the fourth quarter. Joining us now is Eric Jackson. He's the founder of EMJ Capital.

It's good to see you again. I mean, I guess it's nice to say you're positioning for a rally after two monster days. But why do you think this is different than than past attempts to really put something together? Well, to be to be fair, I was positioned for a second half rally, Scott, and that worked for about eight weeks from mid-June to mid-August. But obviously, things have turned since then. And now we see the first two days of October, this rebound. So sometimes you get a three percent move and you say, this doesn't mean anything, and the market changes its mind every day.

But I think if you look at what drove the rally today, the fact that the RBA out of Australia only hiked 25 bps, the jolts number, I think more importantly, and you look at that, you look at what happened in that powerful June rally. I think what this is saying is that at the first sign that inflation is dropping through the floor, and I think there are lots of signs globally to point to that, growth stocks are going to rip, especially, but all stocks are going to move up really well. So I don't think this is a fakeout today. I think there's more to come come and keep. But you think the Fed is done soon or they're going to they're going to make that clear because inflation is rolling over to the

degree that you think? I think they're going to have to relent. I think the data is just going to show that. I mean, look, Canada's had two CPI prints in a row since June showing deceleration. There are lots of signs. You know, There's a buyer strike globally on real estate. We haven't gotten those signs yet in the CPI in the U.S., but I think they're coming because there are all these indicators pointing to the fact that people are just stopping purchases in a big way. So the Fed can talk tough all it wants right now. But once there's real evidence that inflation is crashing, they will have to stand back. I mentioned at the outset you own ARK Calls, so you're bullish, Kathy Wood and ARK.

I want you to listen to her from today on CNBC and we'll chat on the other side. We've gone from 58 names to 33 names in the flagship strategy. And so we're selling the names, taking losses there, but moving into stocks in which we have higher conviction, like the Teslas, like the Zooms, Rokus, Teledocs. Sounds a little bit like what you've been doing over the past several months, getting more invested into the names that you like on the pullbacks that they've had. Yeah, I think it makes sense as a strategy. months getting more invested into the names that you like on the pullbacks that they've had yeah

i think it makes sense as a strategy uh it's the one i'm following but you know basically these names have been beaten down this year and i think at some point they just they get so low that you have to basically shorten shorten your grip on the bat and basically concentrate behind the highest conviction names that you have, the ones you believe in, and believe that those are going to be the ones that lead you out when there is the recovery. So I like names like Friar Battery, which Adam Jonas from Morgan Stanley made his top pick overall of all the names he covers. And he covers Tesla. I like Uber. I like Twilio. These are names that for different reasons and different stories behind each one. But I think they're going to move significantly higher from here. So I've cut positioning in, you know, names that I have less conviction in. And I think those are that's going to serve me well in Q4.

But you feel overall this has become a buy the dip market rather than a sell the rip? Well, you know, the positioning is ultra low right now for a lot of institutions, a lot of hedge funds. A lot of people, I think, were caught off guard with the move in the first couple of days of the month of October and Q4. And then it's like it's like any other time in history. Once enough people start to feel that they're missing out on performance, they'll start to chase the names that they think they're missing out on. So, you know, the move in June was an eight-week rally.

So we're just two days into this, if this is truly a, you know. I still remember the pain of last week. So I don't feel really all that great after a two-day rally. I want to see a two-month rally. But, you know, we'll have to see. But I think there are some signs, optimistic signs, that that could be very well how we end the year. I love your view on Twitter, if you'd be so kind to share it with us.

And you didn't own it. I'm curious as to whether you were tempted along the way because you thought this day was going to come either in a courtroom or out. Well, whenever it dropped to 30 bucks when Elon first announced that he was getting out of the deal, you know, that was probably that obviously was the time now in hindsight to jump in. I didn't, you know, I just wanted to I didn't know that, you know, I didn't expect him to settle a couple of days before his deposition. But bottom line is, I think he's going to be a great owner for Twitter.

I think the investors that got in with him, like the Larry Ellisons of the world, I think he's going to make them a lot of money here over the next three years. There's a lot of fat to cut at Twitter. I'd like to see someone like Emil Michael be CEO of Twitter. He's a name that came up. He's ex-Uber, ex-Telme. He came up in Elon's texts as a potential CEO. I think he makes a lot of sense. He's aggressive.

He's super smart. Elon needs someone like that running Twitter. But there's money to be made here. But you're you're more optimistic on that company's future than say you you were some 24 hours ago it certainly sounds that way well yeah i'd you know 24 hours ago you know it seemed like elon was going to be compelled to have to buy this company but you know you never know how the legal process will play out i think he's a good owner for it i think he's going to be a better owner than the way it's currently being run.

So, yeah. And people have lost faith in this company. So there's there's a lot of opportunity in front of it. Yeah. We'll talk to you soon, Eric. Thank you. That's Eric Jackson joining us once again today in overtime. Up next, a huge rally day on Wall Street. The action, though, is not over. We're tracking all of the top movers in OT. Steve Kovach standing by for us with that. Steve. Yeah, Scott, Elon Musk is still having an impact on a few names after hours. And now Donald Trump is getting roped in. Plus, we'll stick around Silicon Valley and tell you one notable name up after hours after a Wall Street firm initiates the coverage. All that when Closing Bell Overtime returns after this.

Stocks rallying again today. We're tracking the biggest movers in the OT. Steve Kovac is here for us tonight. With that, Steve. Hey there, Scott. Yeah, shares of Digital World Acquisition Corp are kind of bouncing around after hours following its 5% drop during the regular session. Now, this is the blank check company planning to take Donald Trump's Twitter rival, Truth Social Public, in a SPAC deal. Of course, this is happening on the back of the news. Elon Musk changing his mind and saying he'll buy Twitter for the agreed-upon price of $54.20 a share. Now, Musk has already said he'd allow Trump back on Twitter, although Trump has said he would not come back. But with Trump as the primary draw for True Social, it's

obvious investors don't believe he'd reject Musk's offer. Meanwhile, Airbnb shares are up 1% after Bernstein initiates coverage of the stock, setting a price target of $143 a share. That's about 29% over where Airbnb closed today. And by the way, Airbnb was up a healthy 5% in today's market rally. Scott, back to you. All right, Steve, appreciate that. Steve Kovach, thank you very much. Up next, betting on the chips. One money manager is making the case for two names in that space. We break it down in our two-minute drill. It's the last call to weigh in on our Twitter question of the day. We want to know, is Twitter more attractive or less? With Elon Musk as the owner, you can head to at CNBC Overtime to vote. We reveal the results plus our two minute drill right after this break. We're back in overtime to the results now of our Twitter question of the day.

We asked, is Twitter more attractive or less attractive with Elon Musk as the owner? Most of you said more attractive. Interesting. All right. It's time for our two minute drill. Joining us now,ica clower portfolio manager at genesis associates it's good to see you welcome to our program in overtime now you're two of your picks are in a spot that has been really under pressure of late and we just had somebody come on and suggest that this was the place to be if stocks were going to rally from here i'm talking about the chips broadcom and n NVIDIA. NVIDIA has been hammered, as we all know. Broadcom first. Why? So Broadcom is one of the key enablers behind the scenes of enterprise networking technologies,

storage technologies and 5G technologies. And these are some of the areas that we find some very exciting growth over the longer term at jenison and with the stewardship and margin profile of broadcom it makes it one of our top picks and uh nvidia stock's been cut in half uh obviously why now for that one simply because it's come down so far well certainly there's valuation support but what i would argue is that while the stock has come from almost $350 down to about $130, at the same time, the market opportunities for NVIDIA continue to grow. And those specifically are artificial intelligence, autonomous driving, and gaming. Those markets are alive and well and growing. And NVIDIA's dominance within those businesses continues unabated.

You're making kind of a broad market call by liking these two stocks in a space that I said has been under considerable pressure, right? If these stocks work, presumably we're in a better place in the market. Well, certainly at Jenison, we don't generally try to catch the exact market bottom. But what we would say is that in the short term, we've been dealing with two big headwinds for technology stocks in general. One is the COVID hangover, that there was overinvestment by companies and even households on consumer electronics. And then secondly, we have had a broader trend of deglobalization, which pressures margins for a lot of these technology companies. But for us, on a longer-term basis, what really drives our investment decision is the longer-term opportunities for technology companies to

benefit from trends in artificial intelligence, 5G technology, electrification of vehicles, these enormous multi-billion dollar businesses that are alive and well. And so we're really focused on the fact that those businesses appear to be continuing to innovate, continuing to provide investors such as us with opportunity. All right. We will we'll leave it there. American Tower was your final pick. It's great having you on and we'll have you back. Thank you so much. What a day we have had on Wall Street. Really a great two days. I'll see if we can carry it to three tomorrow. Fast Money's now.