Closing Bell - Closing Bell Overtime: What’s Next for your Money? 2/1/23

Episode Date: February 1, 2023

Investors are digesting all of today’s key Fed developments and are looking ahead to some critical earnings reports in the next 24 hours. Ritholtz Wealth Management’s Josh Brown gives his forecast for stocks. Plus, instant reaction to Meta’s results from Hightower’s Stephanie Link. And, DoubleLine’s Jeffrey Gundlach gives his exclusive, first take on the Fed and where he is seeing opportunity in the market.

All right, Sarah, thank you very much. Welcome to Overtime. I'm Scott Wapner. You just heard the bells. We are just getting started from post-nine here at the New York Stock Exchange. And what a show we have for you today. Any minute, Meta reports its earnings. What is certain to be one of the most closely watched reports of this season. That stock has rallied a lot lately. We're going to see if that move is justified or not. And Double lines, Jeffrey Gundlach joining me in just a bit, his first reaction to what the Fed just did and what Chair Powell just said about the economy and the path ahead for interest rates. And of course, what all of it means for the markets. That is our talk of the tape today. What happens now to your money as we digest today's developments and look ahead to even more critical earnings in the next 24 hours. Let's ask Josh Brown. He's the co-founder and CEO of Ritholtz Wealth Management. He is here at Post 9. It's great to have you on a day like this. We're waiting for Meta. There's a lot at stake for that stock.

And then, of course, we just had Powell and what he did and what he said. And you saw the market reaction seemed to take it pretty dovish. He was I agree with what what a lot of the previous commentators have said. He was very calm. I almost like, I was listening before I was watching. I almost expected to look up and see him without a tie on. So this is a different Powell, and I think he feels as though what he's done thus far cumulatively give him the ability to be a little bit calmer. And I think that's the message that the market took away from it. One thing I want to highlight in particular, the homebuilders are the tell about market sentiment surrounding whether or not the Fed believes itself that it's done. And what have they done?

They've ripped. Take a look at the IT. I mean, we're less than 1% from a 52-week high on the ITB, which is pure homebuilders in that ETF. There's nothing else in there. We're up about 15% from an all-time high there. But we're up 42% off the July lows in that homebuilding index. And those are the stocks that can, should, and will rip if, in fact, the Fed is done. And that, for me, is a bigger signal than anything that you would read in the text. It was Powell today from what, you know, those that I've been speaking with just before we come on air.

His answer about financial conditions or leading you to believe in the way he answered that question was that he's not that worried about, you know, financial conditions having allegedly loosened because of the rally in the stock market that we've seen. And that's why stocks took off at the moment he said that. He had every opportunity on multiple occasions today to talk the market down. He didn't. I think there's two dynamics at play. When Powell came out, the S&P jumped 100 points. That's not buying. That's sellers unwinding that. That's, to me, that's very indicative of people who said, let me put the 50 basis point bet on just in case. And they had to unwind that. But the second step to that is the buyers who've been waiting, I don't know, four months, six months for the whoosh lower. Today is the day where it feels as though they said, you know what?

We're not going to get it. Find me something that's decent and I'm going to buy it. And I genuinely feel that there was so much of that this afternoon compressed into that last 90 minutes. And you have to just sit back and say a lot of what we're seeing is not fundamental. It's positioning related. And that's OK, too. The market will will accept that as well. So we're ostensibly two minutes or so away from meta. And we'll get to that in a second. I do have to give a shout out to Joe Terranova, who's been sitting with me in front of you, all of you lately. And even today on halftime suggested that Powell's not going to be as hawkish as they fear. And what's going to rip?

High beta. The Nasdaq's going to rip. Look at the Nasdaq. What happened? Nasdaq's 2% as we finish and look at it here in overtime, a 231-point gain. The question is, is meta going to keep it going? And then we look ahead to tomorrow, Alphabet, Amazon, and, of course, Apple. Boy, there's a lot riding on that right there, which you are watching, 2% a day in the NAS.

Yeah, he's a good kid, that Terranova. You have to almost like separate two things in your mind right now. How much are the NASDAQ giants down because of the macro and or fear of the macro? And how much are they down due to their own fundamental challenge? And in the case of Meta, it's both. And it's no surprise that this stock has rallied recently with the group, but it's no surprise that it is still one of the furthest away from its highs in an environment where a lot of other technology companies have come a long way back.

And tonight is going to be one of those nights where we find out whether or not Mark Zuckerberg cares what his stock price is and what Wall Street is saying. My guess, and I have no position in meta currently, my guess is that he's going to be conciliatory toward the voices urging him to lower the spend. It's not the right macro environment for the way at which he's been pursuing the fever dream that is the metaverse. And if he gets that message and they indicate it in any way, it probably takes a little bit of the weight off of the stock. So the results are out. Julia Borson's going through it. The stock is up, as you see, near 4% here, a little bit more. And I better stop talking about the gain in the stock because it seems to be increasing. The minute I say a percentage gain, it just continues to go higher, as you see, by some 6.5%.

So we're going to go through that. I want you, as we wait for Julia to come on and give us the results, Chris Verone of Stratega says, We can't help compare the sharp rallies in names like Meta or Baba to their distant cousins from the 2001-2002 period. Cisco and Nokia doubled off their 2001 lows before distributing again and being relegated back to a long period of relative performance purgatory. The implication, look at that. I mean, Meta's up nine, almost 10 percent. So clearly, I guess some of the biggest concerns out there did not come to fruition here. But the idea of not to believe the hype so much, these stocks are going to end up going back.

It's just a matter of when. So I think in the case of Meta, you have to then make the case that the deterioration in their business, we have not seen the worst or the worst is yet to come. And I suppose that you can. But at a certain point, if you're calling something a bear market rally, you have to decide how much of the loss does it have to retrace before you are forced to abandon that position. In the case of this stock, I don't think that you have to do that quite yet. Things can change very quickly. They may get on the call later today and talk about the future

in ways that markets right now, just reading the statement, aren't anticipating. So I don't think anybody wants to declare victory here on either side. But if you long the stock into the print right now, at least you have an option. I mean, the stock is up 24 percent into the print. Yeah. And here we pop on another 12, 13 percent or so as we go through it. I know I have a beat on the top line, on the revenue number. We have to get the adjusted EPS as well. But this does nothing to upset this story that began, you know, beginning of the year, led to a good January as we roll over into a new month. Well, no, of course not. And, you know,

I don't think anyone, even the bulls, were looking for record growth for any of these important index names. I think what they've done so far, and I know we have big ones still to come, is like good enough to look at the rally in the Nasdaq and just say, yeah, this is somewhat fundamentally driven in that maybe we were pricing in worst case scenarios last October that so far haven't played out. So Julia got that. Julia Borson's ready to rock and roll here. Is that what we see? We've got a beat on the top line, Julia. I also see DAUs look to have exceeded expectations as well. What do you see? That's right. A beat on the top line. The earnings number is not comparable and daily active user is better than expected. Just to go through the numbers here,

revenues coming in at $32.17 billion versus estimates of $31.53 billion. What's essential here is revenue declined by about 4% from the year ago quarter. Analysts expected revenue to decline by about 6.5%, so better revenue performance than anticipated. The daily active user numbers hitting 2 billion versus 1.99 billion estimated, so better than expected daily active user growth. Of course, in light of competition from TikTok, that was an area in focus. The company also announcing restructuring charges, so this is not a surprise considering the fact that the company did do layoffs in the quarter. So they're taking a $4.2 billion restructuring charge that's related to facilities consolidation, the layoffs, and also what they call a pivot towards a next generation

data center design. They're talking about doing a data center that is going to have a better construction plan to support AI and non-AI workloads. Of course, interesting in light of the ongoing conversation about artificial intelligence. And so just to look at the restructuring here and the impact, the company says here that if they excluded that restructuring charge, the diluted EPS would have been a dollar twenty four higher for the fourth quarter. And that's part of this, the comparison here. There's a lot more on outlook, but I'll be back to you in a minute with that as well. Scott, let me just ask you a question, too. And forgive me for doing this on the fly. I know it's difficult

as you're going through everything. It looks like the guidance on revenue is pretty decent, too. Twenty six to twenty eight and a half billion dollars for the first quarter street was at twenty seven. So, you know, the high end is obviously higher than their their number was. So, yes, that's right. So they're guiding for revenue in the first quarter between twenty six and twenty eight and a half billion. That's important because remember that Snap just guided to lower first quarter revenue than analysts had been expecting. They also are in the CFO Outlook commentary here talking about how the expenses will be lower than what they had previously said. Now they're saying the full year 2023 total expenses will be in the range of $89 to $95 billion, lowered from the prior Out of ninety four to one hundred billion dollars.

So really lowering the expenses there. And they're saying that they now expect to record an estimated billion dollars in restructuring charges in twenty twenty three related to consolidating the offices, office facilities footprint. They also lower the capital expenditures range to between 30 and 33 billion, lowered from the prior estimates of 34 to 37 billion. So while their revenue is continuing to be in the range that analysts had hoping for, they're also bringing down those expenses. And we see that as resulting in the stock popping over 13 percent, Scott. I'm glad you brought that to us as well. Come back on with us the moment you have anything else. Julia, thank you. Let's bring in Meta shareholder now, Stephanie Link. She is Hightower's chief investment strategist. What's your reaction here?

Yeah, I mean, it was pretty good. I was really nervous because the stock rallied 27% a year to date, and it's up 68% from the November 3rd lows. That being said, it's still down 50% from a year ago, Scott. So it still has a ways to go to catch up. And the numbers are good. You guys talked about the revenue. Revenue came basically on the high side of Guide. So the Guide was $30 to $32.5 billion. They came in at $32.17. So pretty close. DAU is certainly happy. I kind of expected that. But it all has to do with expenses at this company, right? We know that they are too high. They have been too high forever. So the fact is that they're lowering total expenses pretty substantially. That's actually more than I

thought, to $89 to $95 billion from $94 to $100. That's pretty impressive. And of course, CapEx, too. By the way, I think I saw that they also are announcing a $40 billion buyback program. So that's also pretty positive. I mean, yes, you did see that. And we're just learning of that, too, $40 billion buyback. But I feel like you kind of got a little bit of everything that you wanted. Right. DAU is better than expected. Revenue drop. Not as bad as feared. And then the spending seems to be coming down as well to the degree that, you know, shareholders have been voicing their their concerns about. And that's showing up to a 15 percent gain. I'm just going to round up here in this overtime move in stock in the stock, Steph. Yeah, I mean, look, there's a lot that they can do on the expense side of things. We know that

they announced a 13 percent headcount reduction or 11000 people. They did that back in November. But Scott, for the last four quarters, they hired 19000 people. So they have more that they can cut across the spectrum, really, right? OpEx and CapEx. And at the same time, looks like revenues are hanging in there and their flagship business is seeing DAU growth. I really do want to see and look at the reals numbers because we have been getting all kinds of signs that ad loads are running, were running better than expected, something to the tune of 14 percent due to better engagement, better engagement than TikTok was seeing. All right. Instant reaction, Steph. Thank you so much. I appreciate that. That's Stephanie Link, of course. Hightower, wrap it up for me because I got gun lock waiting in the wings and

we want to get to that. I'll make this very simple. You heard from Evan Spiegel at Snap last night, used the term extremely challenging. The reason it's extremely challenging is because when people are pulling back on advertising, they don't pull back completely. They pull back to the platforms they know they can rely on. They stop experimenting. And so I actually think the alphabets and the metas of the world benefit from an environment where people are looking at, well, throw out the third, fourth, fifth, and sixth best option. Let's just go with what we know works. And that might have played into some of the strength that we saw out of Facebook's platforms tonight. See what Alphabet says tomorrow along with Apple and Amazon.

It's going to be big yet again, Josh. Thank you. That is Josh Brown with us. Let's get to our Twitter question of the day now. We want to know, will there be a rate cut this year? You can head to at CNBC Overtime, place your vote. We are going to share the results, as we always do, a little later on in the hour. Well, as you know by now, the Fed raising rates today by another 25 basis points, signaling even more hikes ahead. Here with his exclusive first reaction is DoubleLine founder and CEO Jeffrey Gundlach. Jeffrey, welcome back.

What a day to have you. You know, you said you tweeted going into all this today, quote, I suspect Fed messaging will push back against the pivot narrative and thereby current bond market pricing should be interesting. He didn't really do that, did he? He didn't really talk. I don't think he even mentioned the word pivot frankly uh he obviously talked about ongoing rate hikes but there was just something about his

demeanor uh at the after he read the statement he just seems like he has confidence i guess what i'd say he feels comfortable in where he's gotten to. And I think that everybody kind of sensed that. And he obviously did not fight back against market pricing. He almost waved his hand about the disconnect. Somebody asked him a question about the disconnect between treasury yields and the dot plot from last meeting. And he just sort of said, well, bond market, you know, has its own ideas. And it's pretty interesting. So I thought that his demeanor was really the key thing. Remember back in August, Jackson Hole, I think it was, or September, he comes out like Apollo Creed predicting pain for

the economy and lots of unpleasant outcomes as a consequence of the need to catch up on raising rates. And I didn't hear the word pain at all today. I think one of the reasons that he's confident is he knows, as everybody should know, and we've talked about this in past meeting appearances, Judge, that the CPI, the headline CPI, is coming down. And it's came down from 9.1 to 6.5. What a lot of people don't know, over the last six months, the headline CPI has only gone up by 16 basis points per month on average. And if we just postulate that maybe that trend continues and we get 16 basis points for the next six months,

the June number that would be printed in July would come out at around two and a half on the headline CPI. And if we come in more at about 30 or 35 basis points, we'd be down at three for the headline CPI. So I think he's keeping it under a bushel, but he knows that the CPI is coming down, and he's using the word disinflation. The real question mark is going to be, when will the market start worrying about inflation in the second half of this year? Because it's quite possible that the inflation rate does go back up towards 4% in the second

half. We just have such great base effects rolling off. And he's confident that he knows it's going to happen. We're not really going to get a bad inflation surprise before the next Fed meeting. And so he was he was feeling feeling pretty relaxed. And the markets like that. Are you surprised? Are you surprised? Because, you know, the people that I've spoken with to this point, you know, really are hanging on this idea of this this pushback against the financial conditions loosening. Right. The markets

rallied. There's a lot of the high beta frothy stuff that that's rallied. He could have. He could have. He didn't. He didn't. That's right. And it's pretty interesting because, you know, last year was so challenging. And we talked about in September that bond yields were going to peak in the fourth quarter and that markets were going to reverse in the first part of this year. And I expected risk assets to do well during January. And of course, of course, they have. It's odd how people don't really always factor in flows in the way they think about the turning of the year. Last year was so bad that we had tax loss selling all over the place. And so there was no liquidity to buy anything.

And so the market was having a really hard time. And now people are buying things back. And now you're looking at your statement and you've got big numbers. You've got S&P up 8%. We've got the long bond, the treasuries up 9%. You know, we've got S&P up 8%. We've got the long bond, the Treasuries up 9%. We've got emerging market equity up 11%. So unfortunately, I think that we've gotten a lot of return already for the first part of this year. And as we move forward a couple of months, I think we're going to start getting overvalued because I think this inflation narrative that is

so supportive of markets, we're almost, I mean, I always thought that Jay Powell was going to use the word gold, Goldilocks at one point. He seemed he seemed so comfortable with where he was. So weird how he at the same time had this aura of relaxation. And yet he did still talk tough. Jobs not done. Jobs not done. We have to raise rates more. We're not going to stop. We can't stop too early. But for some reason, the mood sort of trumped. And that rhetoric just didn't seem to have the teeth or the intensity that he had last fall. And I think the market was relieved to see that. Because in addition to what you just mentioned that he said, which first came off as a little hawkish that he said, which first came off as

a little hawkish, he said, quote, we think we've covered a lot of ground. Don't want to go too far. Gratifying to see the disinflationary process getting underway. They've got tools. If inflation is coming down faster and the economy's getting weaker, I guess the biggest question now is how many more? You know, eight is clearly not enough for the Fed. Is it nine? Rick Santelli suggested today's it. What do you think? I think one more. I think it's tough to make the statement ongoing increases with an S at the end of the word increase and do zero unless you had very substantial change in economic conditions. We don't have that much time. I mean, we do have two employment reports he pointed out and a couple of CPIs. But I think one more. And Jay Powell said something that was a clarifying statement that I'd like to point out, Judge. He said that real yields are positive across the yield curve. And that's a clarification because sometimes when

people talk about real yields, they compare the CPI to treasury rates. And those are not positive. The CPI is still above treasury rates. So what he had to mean by that statement is he's looking at the tips market, which had a huge increase in yields last year that was a major headwind for risk assets in the stock market. But it's true that the yields on tips across the treasury curve are positive. So that's what he means by real yields.

And they've stopped going up. And I have a feeling that real yields are going to not go up in the first part of this year. So that keeps a little bit of runway, I think, on the risk sentiment. But today feels a little bit euphoric. People are bidding things up like crazy. We have to watch what happens the rest of the week. But I do think we still have some room to run in risk assets as we get towards, I don't know, maybe 4,300 or so on the S&P 500. So do you think that they'll actually cut

this year like the market has been pricing in? Well, that's almost a coin flip for me. It's going to depend upon what happens to the CPI and, of course, the PCE that I like to talk about after the June print that comes out in July. Because I think it's going to start going higher again. And that might, that would almost certainly keep them from cutting rates. And of course, Jay Powell pointed out the labor market's very, very important. He wasn't really talking about pain this time. He was talking about maybe a small increase.

And he even talked about maybe we don't even have to have a real degradation of the labor market. So I really think it's almost a coin flip. But I'm just looking at the trend here. Look what happened, Judge. A year ago, it was 25. The next meeting, it was 50. Then we had 475s. Then it was a 50. Now it's a 25. I mean, we're getting close to the end. It's pretty clear from the content there. But he mentioned this interesting inflation, core services x housing, which is parsing the bologna, slicing the bologna a little thin because you get narrower and narrower surveys. But that's something we should all watch because it's clear that that's what he's looking at.

He wants to see that show the so-called disinflationary trend. Shocking, I'll just say it again, shocking that who'd have thought four months ago that the Fed chairman would today be using the word disinflation repeatedly as sort of a real-time phenomenon. So I kind of think that they'll cut rates in the second half of the year,, which has been really their sort of key metric of what they've been looking at. Powell today describing it as, quote, extremely tight. It remains out of balance. The job, the jolts number today was was more evidence of that. And I thought Leisman asked a great question when he asked Powell whether the Fed was looking at this all wrong, whether they should even be looking at the labor market in the way that they are for evidence that inflation is coming down to the degree that they need it to,

to get to their target. How would you answer that? I think that the wage inflation piece of it is clearly important, whether it should be or not, whether it's the right thing to look at or not, for Steve's question. It's clear that the Fed is looking at it. And it's clear that they believe that the way to get the inflation rate down to 2% and stable sort of a way is to, I think the term was, the labor markets be brought into balance. And that kind of means you need layoffs, I guess, if Joel's numbers are going to be high and you have a 1.9% ratio of job openings to people looking for work and all this sort of thing. I think they're going to need layoffs, which is sort of that pain rhetoric, but he didn't

pull that out literally, verbatim, this time. So they think that the key, he says it in plain English repeatedly, the key is to get the labor market to loosen up. So I guess that's what they're looking at. And we should keep looking at it, too, because that and this core services ex-housing seem to be very substantial indicators. I think it was Gary Cohen was on at the closing bell show, and I thought he made a good point. He said, you know, we're labor dependent. And whether you think we should be or not,

if you'll make the comment, well, the Fed can't create jobs, well, but they can create layoffs, I suppose, is one way to look at it. They can create workers. They can create layoffs. Do you still is one way to look at it. Do you still think that workers, they can create layoffs? Do you still think we're going to have a recession? I mean, that's been your call for some time this year. Do you think that's going to come to fruition? I think the indicators are so severe in so many areas.

I mean, the leading economic indicators is super weak. M2 growth is contracting at an unprecedented pace. You've got so many things, the ISMs, new orders, lots of things that are in flat-out recessionary territory. And of course, the one that is the most recessionary probability of all is probably the yield curve with 2's, 10's inverted by 68 basis points. The strongest indicator of a recession coming in a few months would actually be the yield curve starting to re-steepen out. And that hasn't really begun. It's been a little less inverted in recent weeks than it was, say, last November. But what really tends

to be a very high frequency recession indicator is 2s, 10s actually de-inverting. We have a ways to go for that. But I think that the lags we all know are long and variable. It's up 450 basis points. They're probably going to go up another 25. And Jay Powell knows that that's going to be a sort of a tractor pull on the economy. So clearly, with financial conditions easing the extent that they have, with spreads tighter on junk bonds, with the stock market up, I'd have to say that clearly, I think the odds of recession this year are down, but they're still greater than 50 percent. You know, it was another interesting point that Leisman made, too, when he alluded to the Fed chair using the word extent to what they've already done, as if they're, you know, they now have changed from thinking about the pace

to the damage, so to speak, of what they've already done and what could actually happen there. So I want to ask you one more question. We're going to take a break and we'll get into sort of the investment angle in all of this. And you spoke at the very beginning about this quiet confidence of Powell today. You know, you're somebody who described him not all that long. We've only been on this road for, what, 10, 11 months? You described him before as Mr. Magoo, you know, guy who was on the fence, you know, either paint or get off. What do you assess the Fed to this point having done and the job that Powell has done in trying

to fight inflation while keeping the economy from going off a cliff? Has he done that? Well, he's done a good job, certainly. And we talked about this the past couple of meetings. He's done a much better job since the second quarter of last year when he was so far behind. He seemed to be basically using hope as his interest rate policy method. And when you've been in the investment business a long time, you know you're really in trouble when you're in a losing trade and your methodology is hoping it gets better. That's always you're in the wrong spot. Wishing, hoping, and praying is not a way of dealing with a bad position. And Powell seemed like he was wishing, hoping, and praying 10 months ago.

And now, I somewhat facetiously said they should have raised 200 basis points when they did the 50. In a sense, they almost did. I mean, when you do 475s in a row, that's pretty much, that's almost the same as doing 200 at once and waiting and seeing. So he's followed the two years. I always say he does. The two year is now a little under 410. It was half an hour ago anyway. I kind of think that maybe the attitude regarding the Fed, even the Fed's own attitude about rate cuts may change if the two-year goes below 4 and stays there. I mean, imagine that. The two-year yield is already down like 65 basis points. A lot of people don't know this. The 10-year yield is already down like 65 basis points. A lot of people don't know this. The 10-year yield is already down 80 basis points, 85 basis points from where it was

in the fourth quarter of last year. So the Fed has definitely got in sync with the market. Now the market is actually telling them to slow down, telling them you shouldn't be going any higher. And so that might be the next move in the chess game, that the 10-year treasury actually drops below 4%. And so you might have every single tenor in the bond market with a three handle. And wow, I mean, that would really be something. And what would happen if the 16 basis point average CPI headline for the last six months, what if it repeats

for the next six months? And we're looking at a 250 CPI in July. It would sort of make a 4% 2-year. It would look like kind of a high yield. So I think Jay exudes confidence, quiet confidence. He's in a good place because he's got the rates up. He's got the tips market showing positive yields across the treasury curve. And he knows, and I can't emphasize this enough, he knows, we all know, we've been talking about this for months,

the CPI is coming down. And it's going to continue to come down almost with metaphysical certitude in the next few months. And that's going to create a very interesting environment for people that sold out of the bond market, because now bonds and basically all assets are rallying. And I think it's very difficult to paint a higher rate case, in my view, with M2 having a declining and unprecedented rate. There's very high correlation between this direction of money supply and inflation dynamics. And right now they're suggesting, well, Jay Powell said himself, we're disinflation. Let's do this, Jeffrey, because you left us on a good note. Let's take a quick break and we'll put this into action with some investment advice based on what your view is going to be for the next several months. When we do come back, we will have more with our exclusive

interview, Jeffrey Gundlach of DoubleLine. back, we will have more with our exclusive interview, Jeffrey Gundlach of DoubleLine. Plus, we'll have more on Meta's quarter, obviously, what to expect from Apple and Amazon and Alphabet tomorrow. OT is right back. All right, we're back in overtime. I want to call your attention to shares of Meta. They are ripping higher, to say the least.

On the back of those earnings, the revenue beat, daily active users beat. Company announced a $40 billion buyback. There's the stock up 17 percent. Our own Julia Boorstin wrapping up a phone call with the company's CFO. And she's going to join us in just a few moments with the headlines from that call. In the meantime, let's get back to our exclusive interview with DoubleLine CEO Jeffrey Gundlach as we continue to digest what the Fed did and what Mr. Powell has said. So you said, Jeffrey, during your webcast to start the year that the bond market is, quote, demonstrably cheap to the stock market. You recommended a 40-60 portfolio.

And I'm wondering, did today change that as even you admit that risk could run for a little bit here? Well, when I talk about risk, I'm also talking about parts of the credit market, the non-treasury market, which has done about the same year to date as the stock market. And that was kind of my that was kind of my value assessment that if stocks do well, and I certainly expected risk assets, including stocks, to open the year strongly in reversal of last year, that bonds and credit are about the same as stocks. So I still think that bonds are cheap to stocks. But with every time you match the gain, you probably get a little bit less cheap on bonds versus stocks. So I kind of felt that if stocks went up and bonds went up, they'd kind of have similar returns. I'm talking about

junkie bonds. And I also said that you should balance your junkie bond holdings with long treasuries, because I thought that long treasuries could have a yield decline. And that would not necessarily be inconsistent with the junkie bonds doing well. Because one of the reasons junkie bonds were under pressure is because all bonds were under pressure. And everybody was looking at losses across bonds. But I do think, I still believe in this 40-60. I really haven't changed my ideas since where we were back in December. I really think 4060 is a pretty good idea, the stocks, bonds, and I still think that there's room to run on these asset classes in the near term. And I think bonds will actually offer higher returns, risk adjustments certainly, than stocks.

I also have pointed out, Scott, as you know, that I thought the dollar had turned over. And it's now down about 15 points, the Dixie index, DXY. And with the Fed getting incrementally easier, I think the path of least resistance continues to be down, although it's down so much. I kind of think we should have corrections in almost everything in the very near term. But I think that you're starting to outperform significantly in Europe in stocks. Emerging markets have probably more room to run, because the dollar has yet to really start weakening against emerging market currencies. It's weakened a lot against developed market currencies, but not so much against emerging. So I think in that 40% stocks, I still favor emerging market

equity and European equity. Particularly, I wouldn't even hedge the currency at this point. I'd let the currency translation work for you. If you're a dollar-based investor, you're going to get incremental profit on the currency translation. So I still like that. I still think that there's room to run in parts of the credit market because we've seen very dramatic flow changes in the bond market. The bond market was tortured by outflows last year, basically the worst ever year in every way for the bond market. And this year is starting out with huge inflows into bonds because people realize that they're cheap that they're relatively attractive versus

stocks. And the negative return days are over. I mean, since even September, we're starting to see positive returns pretty much across the board. So investors are much more relaxed. They're almost too relaxed. Jay Powell encouraged their relaxation with his composure today. I was starting to think that maybe we're getting some room to run, but obviously we're nowhere near as cheap as we were in any of these asset classes, say, back in November. So you have to risk manage accordingly. You nailed the dollar weakening EM running trade for certain. It was just a matter of when it seemed, not if that was going to come to fruition. And it obviously has. Let me ask you finally, inside the market's been so interesting this year in terms of what's done well and what hasn't. Right. Last year's winners, this year's laggards, last year's losers. This year's big winners.

You know, ARK, for example, best month ever in January. Tech has run. What do you make of this whole thing? It's so predictable. We predicted it in fourth quarter. We talked about this repeatedly. It's weird how improbable it should be that markets reverse at year end, but they do so because of flows. So it was tax loss selling all kinds of flows, and then the year turns, and now people are

looking forward. They're not looking at 2022's reality anymore. They're looking forward. So it's quite normal for markets to reverse. It should happen. You should have a turning point on any given day, like in a year, 220 trading days or something. It should happen like that one day is repeatedly a term day. It should happen like 1 220th of the time. But it happens way more than it should

from a probabilistic point of view. And that's just because the dynamics of flow. So I'm not surprised at all. It was quite likely that this would happen. And now, as we get these extraordinary valuations that we had in the fourth quarter start to normalize somewhat, it's going to get harder in 2023. Everybody's in such a good mood right now because we don't have the negative signs anymore. And today was a day of euphoria. And so a lot of this inflation decline, which was very observable, is now kind of top of mind for a lot of people that weren't doing the deep dive to the extent they should have before. And that's supporting the markets. Now we're running into resistance, though, on some of these things. And we've got jump bond spreads down to a fair amount from where they were last summer.

EM, a little less so, but they're down substantially as well. So we don't have, I remember talking to you, I think we're in Orange County in September, and I said, this is just flat out exciting time period in financial markets because we actually have opportunities for the first time ever. And it was like top decile type of opportunity. I still think we're sort of borderline first quartile sort of opportunity in the credit markets. And I still think that that's sort of the relative valuation advantage of bonds versus stocks. So I'm sticking with 40-60. I'd point out gold has started to go up with the dollar sinking, too. I did turn positive on gold when it bounced back above 1,800.

But broadly speaking, I'm not really positive on commodities. Even though the dollar is weakening, commodities really are not doing very well. So that's probably because of some of the weakening economic characteristics. One last thing I want to say, Judge, most people don't know there's a thing called the global yield curve, where they take sovereigns across the globe. And for the first time in history last month, it was inverted. The global yield curve was inverted for the first time in history. So maybe this is why commodities are living perpetually below their 200-day moving average. So I'd still stay away from them broadly. But gold, I kind of like. Jeffrey, you've given us a lot to think about, as always. We'll look forward to doing it again next Fed meeting.

Thank you so much. All right. All right. Thanks, Josh. Be well. All right. And you. And you. That's Jeffrey Gundlach of DoubleLine joining us once again. Up next, Josh. Be well. All right. And you and you. That's Jeffrey Gundlach of Double Line joining us once again. Up next, Josh Brown is back. His first reaction to our interview with Jeffrey Gundlach. Plus more on this massive move in meta. And it is that up near 18 percent on those strong quarterly results. We said Julia Borson was on the phone with the CFO. She's going to get off and she's going to come on and tell you what she learned next. All right, let's get back to Julia Boorstin now, who just got off the phone with Meta's CFO. What did we learn here? Well, Susan Lee, she just became Meta's CFO in November,

talking to me about what she called a solid quarter for Meta. Now, in response to a question about the company's effort to monetize Reels, she said that Reels is still a revenue headwind right now, but is on track to becoming neutral at the end of this year or early next year. I also asked her about TikTok. She called the app a strong competitor, but said they are very pleased with how Reels has done relative to TikTok. She said Reels is a big part of what they call their young adult strategy. Now, as for concerns about the ad market, Lee telling me that this is still a uncertain macroeconomic environment and that the ads market is diversified. They still think the majority of the opportunity comes from the shift of offline ads to online ads. And she said they're doing everything they can to be competitive. She stressed that the company is bringing down its expense guide. She called 2023 the year of efficiency, saying that Meta is still looking to identify opportunities for cost efficiency, but they are still investing in the Metaverse. Lee telling me that the company does

expect that operating losses for its Reality Labs division, which includes the Metaverse investments, will increase this year from 2022. She did say they will continue to invest meaningfully in Reality Labs over the long term. Scott. OK, Julia, thank you very much. That's Julia Borson with the very latest there on what is just one heck of an evening for Meta. There's the stock up more than 18 percent. Let's bring in CNBC contributor Josh Brown of Ritholtz Wealth Management. He's back with us here at Post 9. So let's take the Gundlach reaction in a couple of stages. Number one, feels a little euphoric, he suggested. He doesn't. He said the environment. The environment feels a little euphoric today, but he still sees some room to run in risk assets. I think he made

an important point when you asked him about talking about being overweight bonds coming into the year. Stocks have a big rally. But truthfully, if you look at a lot of the areas of credit, there's been a huge, almost equity-like rally there, too. And don't forget, there are areas of credit that are correlated to the stock market. So I think that was a really important point. This year so far looks like a mirror image in the reverse of last year. Last year, there was nowhere to go. This year, it's been really hard to lose money. And I think that you could make that case both in stocks and in bonds. And that is, like you say, like all people are euphoric. Well, why wouldn't they be when you look at the year to date performance and some of the things that they thought they might never make money back again?

So I get why people would feel euphoric. I'm not saying it's justified. I just I understand. Let me ask you this. The name of your firm, right? Ritholtz Wealth Management. So when your clients hear Gundlach say still believe 40 percent stocks, 60 percent bonds and and that bonds will offer higher risk-adjusted returns than stocks. What do you say? I have clients that are 10 years deep into retirement right now,

and they're investing for the next generation. And we have to think about when the money's going to be used. I have clients that graduated college last spring. And so it's very hard. What Jeff is doing is speaking generally about what he thinks the right asset allocation would be. But Jeff works at a lot of firms like mine, and he would concede it's really difficult to have a catch-all investment strategy that's going to meet the needs of every individual household. Sure, but let me say it this way, which is probably a better way to suggest it. He still is suggesting that bonds are going to do better than stocks. Yeah, but if you're on, listen, listen.

Now, if you're under 40 years old. He's a bond king, I get it. If you're under 40 years old, you should not be 40, 60. It's just, it's inappropriate. Yes, it's nice that there is a yield now. There wasn't one last year. And yes, 40, 60 will probably protect you better from run-of-the-mill volatility. But truthfully, that's not going to get you where you need to be over the long term.

And I don't think that even Jeff is suggesting that somebody with a 40 to 50-year time horizon for their investments should be way overweight bonds relative to stocks. I just wouldn't go there. So good having you here today. So much going on. Real quick, real quick. No, they're like rushing me. But it'll, real quick. I know they're like rushing me, but real quick.

Total expenses, $89 to $95 billion, down from $100 billion expected. That's the second most important thing they're saying right now. The most important thing, CapEx down to $30 to $33, from $34 to $37. This is all we wanted to hear. There are adults in the room. I think that brings people back into the stock. All right, good stuff. Thank you again. That's Josh Brown. We're tracking some big stock moves in overtime. Christina Partsenevelis is standing by with that. Christina.

Well, thank you, Josh, for stealing some of my time. But if times might be tough, people still want to look good. Orthodontic trends are expected to improve and people are spending money on beauty products and that's helping health beauty shares soar right now. More details next. Another quick check on shares of Meta as we count down to the company's conference call. Take a look. Up near 18%. We're also tracking some other big moves in overtime. Christina Partsenevalos is back with that. Christina. Let's start with the maker of Invisalign, seeing its shares soar after posting a slight Q4 revenue beat.

You can see soar up 14%. Align Technology warning first that the first quarter clear aligner volumes will be down due to weakness in China from COVID, but the average selling price is going to be higher and they see a more stable operating environment in North America. The company also announcing a $1 billion buyback program could be the reason why we're seeing that jump. Transportation firm CH Robinson posting a pretty big miss on both the EPS and revenue line. Management says shippers are

working through high inventory levels amid slowing economic growth, causing, quote, unseasonably soft demand. You can see shares are down over 4 percent at the moment. And bring on the beauty products. Shares of Elf Beauty are jumping after seeing net sales climb 49 percent year over year. And adjusted earnings per share were more than double what the street on the beauty products. Shares of e.l.f. Beauty are jumping after seeing net sales climb 49% year over year, and adjusted earnings per share were more than double what the street anticipated. The beauty firm also raising its full year outlook for 2023, and shares are over 11% higher. Scott? All right, Christina, thank you very much. Christina Parts of Nevelos still ahead. Santoli's last word. We get his key takeaways from the Fed in our exclusive interview with Jeffrey Gundlach, OT, right back.

All right, our Twitter question. We asked, will there be a rate cut this year? The majority of you saying no. No, there won't. All right, let's get to Mike Santoli for his last word. All right, what do you make of all this now? Well, the Fed deciding not to fight the markets, I think, was the story, at least for today. Again, everything happening in the context of people being on alert for a rerun of what we've

seen before, which was in August a very explicit scolding by Jay Powell to say, don't get too excited. Now, there still is a little bit of a dissonance in this market, because if we're trading in the S&P at 18 times forward earnings, presumably that's not pricing in a lot of further earnings erosion. At the same time, the bond market pricing into potential for cuts later this year, no matter what most people say. So there's still a little bit of a disagreement there. And yes, it could be because inflation is going to crash, as Powell's hinted today.

So I don't think we've necessarily resolved all of that, but you didn't need to. What you needed to was to not think you're going to run into a buzzsaw by simply adding some risk going into a new year when people were very defensive. He certainly didn't, you know, go full at you on the idea of the financial conditions question. And those that I spoke with, you know, a little earlier said that was the moment. Right. You noted that, too. It's sort of the idea these folks said of it's like you go here, take a lollipop. Well, they don't care. I'll take 10. Right. Or if nobody's going to, you know, kind of go after me for stealing a lollipop, then I'm going to take the jar away.

I think that's true. Again, it's it's he's way short of saying party on because the job's not done. We might have a couple more rate hikes. But the thing is, if you're at a quarter point pace, that's easily absorbable, right? You're six or seven weeks between quarter point hikes. You've done most of what's going to get done no matter what. And as I was saying earlier, if he's if they've gone too far, they've already done it. It's not like the next quarter point is going to be the one that's going to change the game too much. So for now, he's open to the possibility and allowing the economy to prove we can have a soft landing. What do you make of what Gundlach had to say in the final 50 or so seconds we have here? I still think, you know, you have to respect the leading indicators and what the bond yield curve is saying to say that you can't rule out recession.

I just don't know what's priced in terms of the cyclical parts of the market, the things that are ripping. And if Meta is racing to 200 based on some cost cuts, who knows who has promised that CapEx? Let's see. Let's wait tomorrow to see what companies actually had that in their numbers. But I do think, as revenue I mean, I do think that we're in a better spot at the moment. Again, we're just back to where we were in August. I think that's important to keep in mind. But you're going to also have some people waking up tomorrow and saying, the next day Fed reaction is often a reversal, and we're into resistance right now, just above 41 we'll see that the news conference reaction often brought a reversal it's interesting today to to see how that check out thank you that's mike santoli's last word i'll see you tomorrow fast money is now