Closing Bell - Closing Bell Overtime: Where Does the Rally Go From Here? 2/9/23

Episode Date: February 9, 2023

“Too soon to declare victory over inflation” – that’s what JP Morgan’s Jamie Dimon says. So, where is the rally really going from here? Bryn Talkington of Requisite Capital Management gives her take. Plus, instant reaction to Lyft, PayPal and Expedia results. And, Mike Santoli explains what he is watching as we head into the final trading day of the week.

All right, Michael, thank you very much, and welcome to Overtime. I'm Scott Wapner. You just heard the bells. We're just getting started for Post 9 here at the New York Stock Exchange. We have more earnings imminent. We're waiting now for PayPal, Expedia, and Lyft. Our reporters standing by to break in with those reports. We, of course, will show you the stock moves as they happen. Star analyst Dan Ives is waiting in the wings as well to tell us whether ride sharing is a winner take most business with Uber shares. The best way to play it, we shall see. We begin, though, with our talk of the tape.

Too soon to declare victory over inflation. Those words today from J.P. Morgan CEO Jamie Dimon. Rates have been moving higher. That's weighing on stocks again. So where is this rally going from here? Let's ask Brent Talkington of Requisite Capital Management, also a CNBC contributor, right here with me at Post Nine. That's what Diamond said. People should take a deep breath on this one before they declare

victory because a month's number looked good. It's perfectly reasonable for the Fed to go to 5% and wait a while. That's what he said. What do you think? That's what Powell said. That's what everyone else said. It's just the market doesn't believe it. And I think that investors really need to understand this year is that nothing changed with fundamentals so far. It's been pure sentiment and positioning. And Scott, 2022 was all about don't fight the Fed, right?

The Fed was well behind inflation. We started the year with zero Fed funds and ended the year close to 4.33. What happened? Do we have amnesia or something? We forgot? Well, so what changed? So if you remember late last year, the two-year went from close to 470 to almost four starting this year. And the Fed follows the two-year and all of a sudden positioning change in sentiment because sentiment tells you that the Fed follows the two-year, and all of a sudden, positioning changed in sentiment, because sentiment tells you that the Fed is almost done. And so positioning is this.

The CTAs, the hedge funds, and the ALGOs had massive, massive short covering. Two Thursdays ago was one of the biggest short covering in over a decade. And guess what they covered? High beta tech and tech. And so you've had this huge whoosh on the upside of that short covering. But once again, go back to where bonds now, the two years back to what, 445? I just looked at it. It's like 447, almost 450. I mean, the bond market has moved more into alignment with the Fed. So you're saying the stock market is still in denial? Is that what

you're saying? Well, you're starting to see it not being in denial. And so as the dollar goes higher, as the two-year goes higher, that's going to call into question this. Once again, this short covering can't be understated. And so I think investors need to be really careful of crowding into names that have already run up, especially the high beta tech. There are a few names that didn't deserve to be that low. But I do think we're going to end up trading down lower. And a lot of these names, like a Coinbase today, I think was down 10 points. But you think that's all this has been? Fair market rally, bunch of short covering, and reality is going to hit us pretty good. It's just a matter of time, right? I mean, that's the Eric Johnston view from Cantor,

who I'm not sure if you heard the conversation with Mike Santoli. And he's been on with me numerous times. And the last few, my conviction's very high. Don't pay attention to what the labor market says now. I get it. It's really strong. But it's not going to be nine months from now, given what the Fed's done. So here's what's changed, though, because last year, the Fed was not data dependent. They were rushing to do 75, 75, 75. Now Powell Powell has come out and said, we will be data dependent. So there is a shift in Fed policy from being very aggressive to being data dependent. So that is a positive for the market. But I think that a lot of stocks, tech stocks, and certain high growth, just high growth names have gotten well ahead of themselves,

because ultimately, earnings and fundamental are what will drive these companies higher mid and long term. So you don't believe the hype in that part of the trade thus far this year, right? The highly speculative names, the highly shorted ones. You own ARK. So you obviously had a very happy month of January. It was Cathie Wood's best month ever. Well, we actually sold it. You know, we sold our final position late last year.

The whole thing you don't have anymore. And so, but there are some names that she owns that got overdone. I think Tesla was idiosyncratic. I think Tesla got way overdone on the downside because of the Twitter. I don't think we're going to see Tesla back at 120. I think that was a unique circumstance. Wait, wait, wait. You're telling me that so this move from 100 bucks to 200 bucks in a month, that's justified, but the others are

not? I think that you have individual names get overdone. And so Tesla has real earnings. They have real catalysts. So I think that's what's really frustrating for a client, for investors, is to be able to discern the two. So, I mean, you know, I bought Tesla, but then I sold calls against it, right? Because this is an uncertain market. But I do not think we will see Tesla go back to those 120s unless you have like a market shock that brings everything down. Okay. So we are waiting, as we said, for a bunch of earnings. Lyft and PayPal still to come. Expedia is out. Seema Modi. Scott, it's a miss for Expedia. $1.26 adjusted versus the Wall Street estimate of $1.67. So a big miss there. And that is why the stock is falling here in overtime. Let's get you revenue

numbers. 2.62 versus the estimate of 2.69 billion. So clearly there are some questions here around capital expenditure going to 2023, how that's going to impact cash flow. We know it's become an increasingly competitive landscape with the likes of booking holdings and Airbnb all spending more on marketing and digital ad campaigns to really get after that travel customer going into a year where we're still trying to understand if this is going to be a soft or hard landing. We're looking at the stock down about eight percent going into this year. We should point out all the travel stocks have been the best performing names on the S&P 500, Scott. Expedia, prior to today's release, up 36% in the first five weeks of the year.

So there's been a lot of optimism building around this travel recovery. But clearly questions here around how much it's spending and how that's going to impact profitability going forward. The conference call will begin in less than 30 minutes. We'll hear from Peter Kern, who also tends to provide some indication as to how Q1 and the first few weeks of January are faring. So that will be a big interest for Wall Street. And then he will sit down with me first on CNBC tomorrow, 11 a.m. on Tech Check. We'll get you more details as the call starts, Scott.

We're looking at Expedia down 8%. Yeah, I appreciate that, Seema Modi. Thanks so much. Right, Discretionary has done great to start, Scott. We're looking at Expedia down 8%. Yeah, I appreciate that, Seema Modi. Thanks so much. Right. Discretionary has done great to start the year, as Seema was saying. This stock has really ripped. Good example. Not justified to you. Not justified. Things got underdone. And then these are big short coverings. And now when you're seeing earnings come in, and if those earnings don't match the stock move, you're going to see these names sell off. And so do not chase these names just to feel because you're getting that FOMO. You don't like anything in the travel space, the consumer space. I mean, look, the consumer is one of the reasons why the economy has hung in there. Before you answer that, Lyft is out too. What do we see here?

Deirdre Bosa. We are seeing Lyft shares absolutely crater in the after hours. They are down some 20 percent and this likely has to do with the guidance. But let me give you the top and bottom line numbers first. It's a very small beat on the top line. Revenue coming in at $1.18 billion versus $1.16 expected. We've got an adjusted EPS of 74 cents. Unclear if that's comparable, but it is a bit of a messy quarter when it comes to that guidance as well, which is likely what investors are trying to sort through right now. The revenue forecast falling short of estimates and adjusted EBITDA guidance between $5 and $15 million. Again, unclear if this is comparable to street expectations because it includes a change to insurance renewal timing.

I did get a chance to speak to co-founder and president John Zimmer not long ago. He said that the supply side recovered faster than they expected. And that is actually weighing on the P&L as they sort out the dynamics. He said, though, that prices are coming down for consumers. This is a stock, Scott, that is up more than 50% year to date, coming from a very, very low base, but clearly a disappointment here, especially after Uber raised the bar just yesterday. Yeah, no doubt about that. And that's a great point that you make, dear Jabosa.

Thank you. You come back on when you have more information. Let's bring in Dan Ives, though. I said he was here. The star Wedbush analyst. He covers Lyft. He has an outperformed rating and a $17 price target. Wow. OK, what's your reaction? I mean, Lyft continues to be the little brother to Uber. And I think this is a dog ate the homework type situation in terms

of what we're seeing from an EBITDA perspective. We got to evaluate what happens in the call. Our viewers stock was way overdone. It's half a set, a huge rally to date. I still believe Uber is the best way to ultimately play ride share. And for Lyft here, I mean, this is a fork in the road in terms of this quarter, the next quarter. Can they navigate and do it profitably? What leads you to believe in any way, shape or form that they can do that? I'm just not going to let you off the hook that easy. I mean, because our view is that we are seeing a massive recovery in terms of just overall rideshare. Drivers come back, and that's been a big issue from a supply perspective. Now it comes back to the heavy liftings ahead for Lyft. Uber's already done it. Dara's sitting

there with champagne popping, watching these Lyft numbers because of what Uber's done. Lyft, now they need to be able to do this. Otherwise, do they not have the things that they, they don't have the same levers that Uber has. They don't have the Eats business. They're not global. You don't have free money. You can't burn cash like you could in the past in that environment.

What's the pushback on that? Yeah, and I think now it's really, can they be able to navigate a profitable ride share business domestically clearly they don't have the levers that an Uber has but I think a lot of this guy has really been execution even like what Deirdre was talking about managing team being surprised by you see in terms of a supply Uber saw that from a mile away. So Brad Gerstner, who is a big Uber investor, said this as an industry, okay, the ride-sharing industry is a winner-take-most business at this point. And Uber is the one that is going to take the most. You agree with that? Oh, 100%. Couldn't agree with Brad Moore. Okay. So how in, you know what's name, can you have an outperform rating on Lyft?

If you believe what you do about Uber. I don't get it. It's relative to what valuations was, if I look back over the last four or five months, to where I believe Lyft was way oversold. Stocks had a huge rebound here. But like we've even told investors, this was a pivotal quarter for them to navigate. And if they ultimately cannot get through these next few quarters from an EBITDA profitability, then the story changes.

To date, I think it's been a nice, you know, significant sort of oversold rally that we've seen. But just like you were talking about, you need to prove it in numbers. We've seen a better than feared earning season across the board. But clearly, there's going to be ones that fall by the wayside. So you as you sit here with me right now, you're not thinking like, OK, I need to go back and seriously get out the pencil and think about downgrading this stock? Because outperforming the target that you have of 17 doesn't feel real good for the people who are watching and may own this stock. Yeah, I think a lot of it really comes down to like, we're still confident on the overall

opportunity in terms of ride share. But this call in terms of sharpening the pencils, how they ultimately give comfort. Just go back to, let's say, Apple. Aftermarket stock sold out big. The Hall of Famer Cook gave the ultimate confidence, and that's why that stock is where it is today. With this is a confidence call that they need to do. Otherwise, you know, there's going to be some darker days ahead. I'm just trying to figure out what could they possibly tell you? It seems like a fundamental situation. As you said, the little brother to Uber, the stories seem at this point so disconnected. One is profitable. One has no, pardon the pun, road to profitability in sight, it seems. Yeah, it seems. And that's really going

to be the call with the focus. Can they ultimately, as they get into the second half of the year, what does the profitability look like? Is this of a one-quarter issue that ultimately hurt? Profitability if they give that confidence then we can see this thing recover as we've seen with aftermarket moves so I mean, I don't know lift or uber and both companies have been Horrible investments last five years. I mean lift is down 60% over the last five years. I mean, Lyft is down 60% over the last five years. Uber's down 11%. I don't think Uber's ever still gotten over its IPO price. And so I think when you have this duopoly, both companies are incredibly labor intensive. They're never going to get rid of the drivers. And so I don't think they have that much operating efficiency

and leverage. And to me, it's like these are good examples of two great companies. We all love the experience. But to me, it's more like a Peloton where it's a great company. You could even have great management, but that doesn't always translate into a great stock. And so for that, it's like I think if I'm going to, neither one of them have earnings. And so five years is a long time. The S&P is at 57. They're both down significantly. I think it's like you have to question the space as well as a stock and separate those from the company themselves. How do you respond to that? It's a penalty box space, but I will say that Uber, the story's changed dramatically. In other

words, that was more of a, what I've used almost a Jalen Hurts-like type quarter in guidance relative to going forward. And that's why I think Uber, better days ahead, Lyft clearly in the penalty box. This is a key moment for them to sort of prove themselves. Do they deserve to have the same rating at this point? Do they deserve investors to treat them equally as stocks? Because that's what you're asking people to do. Yeah, I think you have to ultimately in order ways to play it. I think Uber is the best play. I think Lyft's really been more of a valuation call relative to the sell off and to play ride sharing if they could get profitable and show the path.

And you have some other, you know, ultimate partnerships that they have going down the road. But for Lyft, this is a this is the moment of truth in terms of this is either a stock where they could turn from this. Otherwise, you know, it ultimately goes down the wrong path. Do you think this is possibly an acquisition target, as some have suggested? I think even our own Joe Terranova has these other levers to pull to continue on its road to being even more profitable. What do you make of that? I think if you're Lyft, you're the board, you're watching the situation. If you can ultimately get in the green and profitable next quarter or two, then you're going to have to ultimately pick up that phone strategic or

financial buyer. And I think that's really the theme we're going to see across this ultimate tech landscape. There's going to be a lot of consolidation. There's no doubt lifts the consolidation play. I want to use this opportunity as well to get to Salesforce, since I know you cover that too. And we have this story now and sources have confirmed to me about the lobe stake in Salesforce. So what do you have, five activists at the party? What happens now? Well, I think right now there's going to be pressure on Benioff to ultimately potentially do a spin. We already know about the margin pressure that ultimately is really there from

a profitable perspective. You look at the businesses, they've announced cuts. You got key earnings coming up over the coming weeks. And I think Benioff, for the first time, is really going to have to make some tough decisions. Now, from a stock perspective, everyone threw this thing out. Now, I think activists put a floor in it. I believe it is a $200-plus stock. You have a core franchise. But this is ultimately a situation that could get a lot nastier if Benioff doesn't read the room. No Salesforce for you, right?

No, I own other names that are expensive. I do think that this is one of those companies, like I wouldn't count Mark Benioff out. He's a great CEO. He's a visionary. So that's where people are going to say, hey, I think ultimately this works itself out. And if it does, the stock is not trading where at 173 would be much higher. Yeah, we are ready on PayPal. You said, right? Kate Rooney, you have that? Oh, we're not ready on that. My bad. Yeah. We are ready on PayPal. You said, right?

Kate Rooney, you have that? Oh, we're not ready on that. My bad. Well, we're going through it. We're going through it. I'm sorry. We have like a million a million things going on. But as we await PayPal, that is yours. Yeah. And where are your hopes here? I think this is another example where activism has worked with Elliott stepping in. I think they've definitely focused the board, focused the C-suite on that operating efficiency. Last quarter, they said they're going to continue to do a billion a quarter in buybacks. They want to give long-term 30 to 45 percent of their free cash flow back to shareholders through those buybacks. I think you have Braintree, Venmo, Buy Now, Pay Later, what they're doing with Apple. They are like clicking on all cylinders

and it has a low multiple. So I think it's like it's their quarter to lose. I think there could be some good optimism this quarter with these numbers that come out. What's the right valuation here? I mean, that's where we can circle everything back to the kinds of things that you were saying about these stocks that have run a lot out of tech and it's undeserved and you know they're way ahead of themselves what is the right valuation for a stock like this so i think it has a ford multiple of 18 first of all so it's not even in the stratosphere with the other companies but i've said this before pes are a horrible horrible metric to use to value future one-year returns there There's almost zero correlation. The question is, what multiple will the market pay for these earnings in general? If the Fed is done,

if we go back to a decent economy, multiples across the board will go higher. And so it's like it's not answerable. And I think the analysts that come out, these precise analysts based on multiples, that to me is a fool's errand because the math doesn't work out that way. Okay, I jumped the gun earlier. Now, Kate Rooney, I'm coming to you now. I didn't mean to scare you. That's all right, Scott. We're ready now. PayPal with a beat on the bottom line, at least, in raising its full-year guidance for EPS. Also getting news in a separate release here that President and CEO Dan Schulman does intend to retire from PayPal at the end of the year. Active accounts

and payment volume looking a little bit light here. Let's start with the EPS number. This is the adjusted EPS, a beat, Scott, by four cents. Revenues were up at 7% year over year. This is roughly in line, $7.4 billion for the fourth quarter. Total payments volume was a slight miss here. Active accounts, $435 million. That was a miss. Only about 2% growth year over year. Q1 guidance is looking mixed here. A beat on adjusted EPS. Revenue looking a little bit light here. I mentioned that raise on full year EPS guidance. They're now expecting about 18% growth. That's up from 15% growth, not getting full year revenue guidance. The take rate is also looking better than expected. Scott, the stock up more than six percent here after hours. Back to you. Did you give me did you give me payment volume? Yeah, I did. So that yet TPV, as we call it, total payment volume was a slight miss. So that was three hundred and fifty seven point four billion. Wall Street looking for $360 billion.

That was the consensus. So a little bit light for the fourth quarter on payment volume, Scott. But you said coming in, because I heard you last hour, that you said that was the real key number. You think, I mean, first of all, is the Shulman news surprising to you? We're obviously thinking about activists that are involved there, and maybe that's related to it. But how would you characterize and color some of that? Yeah, that's interesting, Scott. That caught my attention when you were talking about Elliott. That's been a big part of the PayPal story. Some of the discipline on the cost side when it comes to PayPal. Dan Schulman has been in the payments business for

a long time. He's been seen as a stable CEO at PayPal. But this company has come under a lot of pressure. Last year, it really completely changed the strategy, the way that they account for user growth. And he has faced a little bit of pressure in the last year or so. He has worked with Elliot to turn this around. It could be part of that activist pressure, as you mentioned. But he has been seen. I've been talking to analysts for a while about this, that there are Bill Reddy before he took over. Pinterest was seen as his heir apparent. He left. So it'll be interesting to see if not Dan Schulman, who is the person to step in at PayPal?

It doesn't seem like Wall Street at least thinks that there is an obvious next in line. So that could be adding to some optimism here, some some new blood over at PayPal. But we'll see who actually steps in at the CEO role. And the payments volume is interesting here. The guidance, I think, will be important, Scott. It's interesting that they missed here because that is such an important part of PayPal's business. I would say the other thing to watch, that account growth. We talked about it in terms of the preview and what to watch for.

There's been a lot of competition out there and talk about things like Apple Pay really eating into PayPal here. The fact that they didn't grow accounts as robustly, it was about 2% year over year, and it also looked like a miss. So interesting to see how they frame this on the call. I got you. Good stuff. Kate Rooney, thank you very much. Let's bring in CNBC contributor and PayPal shareholder Jason Snipe of Odyssey Capital Advisors. Nice pop. What's your reaction? Yeah, so obviously for me, I mean, you know, Bryn mentioned it earlier. I think Elliott being in there has obviously had an impact. Last year, they talked about $900 million in savings, and this year they plan on $1.3 billion in savings.

So I think that's obviously been a positive for the stock. It's a beat on the bottom line. You know, total payment value, total payment volumes and missed there. I think there's obviously been some deceleration in retail, retail sales. You know, so I think that weighs on the stock. I also mentioned, which is important, you know, Apple pay. There's other players in this business, you know, which I which I also think weighs in the stock. But I think this year has all been about efficiency. And PayPal is a part of that story, like a lot of other tech companies in the space. So I still like this stock. The multiple has come down dramatically. I think it's trading around 19 times. The market's at 18 times. But I still think there's opportunity here,

you know, from an efficiency standpoint. What about the news? And quickly, if you could, Jason, on the CEO retiring at the end of the year. Yeah. So obviously, you know, Dan Shulman has been a star here in the industry, period. So any time there's there's a shift, you know, that could be concerning. But I think they have a strong management team and a strong activist in there as well. You know, so I'm not terribly concerned. I think they have decent leadership going forward. And I think, you know, that won't weigh on the stock terribly. All right. Good stuff, Jason. Thank you. Dan Ives, thank you for being here, too, and answering all the questions that we were we're throwing at you.

Bryn, I think we'll see in a little bit. We're just getting started here in overtime. Up next, declaring victory, activist investor Nelson Peltz dropping his proxy battle with Disney. That company launching now a major restructuring. Our own David Faber sat down with Disney CEO Bob Iger earlier today. He joins us straight ahead in what was no doubt the story of the day. We're back're back in overtime. It's no doubt been the story of the day, and it played out right here, live on CNBC. Disney CEO Bob Iger addressing his major restructuring plan with our own David Faber. Then moments later, activist investor Nelson Peltz calling in to make a stunning announcement of his own. I don't think you should look at it in terms of accomplishing everything in a period of time.

It's setting the company up for long-term success and what happens thereafter. So my goal is, in talking about a transformation, is to set it on the right course for what could be many years, years beyond my tenure. And that's the goal. This was a great win for all the shareholders. Management at Disney

now plans to do everything that we want them to do. We wish the very best to Bob, his management team, the board. We will be watching. We will be rooting. And the proxy fight is over.

All right, let's bring in CNBC's David Faber now. He's out in Los Angeles deservedly with a big smile because it was quite a moment. You know, David was one of those one of those moments. It was extraordinary. But in many ways, it's just the beginning, isn't it, for Bob Iger and what he really needs to do now once you get these, you know, this dramatic moment out of the way from today? Oh, yeah. There's no shortage of challenges that he faces, Scott. And as you well know, though, having a proxy fight included when you're doing all the things he needs to do and focusing on all the different areas, a proxy fight is distracting. So I am sure I know there was a sense of relief on the part of Disney, its management, its board when Mr. Peltz made that dramatic announcement with Jim Cramer

right after our interview. Really quite something. But you're right. You know, Scott, whether it's direct to consumer or the linear cable networks, I would put those two as the key sort of areas of concern, question. It's early days still in terms of whether they're all on the right path and what the right path is. You know, are you surprised in any way that Peltz ended his proxy fight, quote unquote, so soon, given that it is the early days and we still have to see if this reorganization plan is going to work. You know, yes and no. I mean, I actually question why there was a proxy fight at all. And frankly, from both sides, I think you and I may have even talked about this perhaps on air, sort of was it worth the time and effort of Disney to say no? And I did ask Mr. Iger about that.

And why was Peltz persisting in the way that he chose to? That said, I think after last night in particular, you could look at Peltz, who was already up nicely on the position. And that's kind of the key here, isn't it? And could at least say that, hey, they listened to me. They're bringing the dividend back or whatever else it might be. Disney may disagree with that, but he can say it and sort of walk off. So it's it's not surprising in that sense. But to the extent he's going to be a long term holder, you know, and he clearly indicated perhaps that is going to be the case, then he'll be there to to question them in the future or at least to to be in touch. I understand he has been in touch already with Iger. We'll see whether they have a kumbaya moment or

at least a good relationship from here. All right. You know, you mentioned this already, of course, that one of the biggest challenges, if not the biggest, is the direct to consumer deal. And I wanted your reaction to Iger telling you today that Disney was, quote, intoxicated by its early subscriber growth and whether you think they thought whether the implication of that statement is they thought it was going to continue at this incredibly breakneck speed and that they were going to be able to make it profitable at a faster clip. Yeah, I mean, there's so much involved in that question in a way, Scott, the one you just asked, but also the larger question of did they start out the

right way? And I pushed Iger on that. The six ninety nine price should have been higher to begin with. I can still remember sort of people's breathtaking away when they heard that price because it was so low and it did what he claims they wanted to do, which, of course, was get as many subs as possible. You know, they were aiming for 4 million for the year. They had 10 million in 24 hours. But that said, many of those subs were taken on at a price perhaps that was simply too low for a business where it's still very difficult to discern where profitability fully lies

and at what price. Obviously, it's gone up from there. But we still have that question. They are cutting costs substantially, 5.5 billion overall for the company, but $3 billion of content non-sports related cuts. You know, where will that come from? General entertainment seems to be a key area of focus for the company. But we're going to continue to ask this question, Scott. And we can look back on those early days of great success with the subscriber

numbers, but wonder whether they became somewhat intoxicated because of Wall Street's intoxication with those ever rising numbers and a willingness to pay for them. And then, as you well know, one day that ended and suddenly everybody had that same question. Yeah. But what about some free cash flow? Yeah, you you covered this guy for a long time, right? You know him as well as anybody. And you asked him about this. Do you really think this is a two-year thing? And will he be satisfied if some of the things that he wants to have accomplished haven't been to still leave within that time frame? It's a, you know, I, again, I focused on this right at the outset of the interview in part because so many of the other executives at very senior levels at other media companies have said to me uniformly, two years, there's no way. There's no way. He's staying for five. He says no. Two years is what he wants. It's what

the board has said to him. It's what he has told the board, and it isn't his intent. But Scott, you and I, two years from now, will be here, and I guess we'll know the answer. Bob is saying that he's clear on that. There is a succession plan now, or I should say process, in place to find a successor led by Mark Parker and the board. He will be involved in that, will Mr. Iger. But again, you know, you're not going to get people to stop doubting whether that two years will be the case, in part because of what you just said, which is so many of the things he has put in place will not have come to fruition as of yet. A long but great day. David, I appreciate you sticking around for me. Thank you. All right. That's David Faber out in Los Angeles for us. Let's get to our Twitter question of the day. We want to know, are Disney shares a buy after Iger's restructuring plan and Peltz ending

the proxy fight? It's a simple yes or no. And you can head to at CNBC Overtime on Twitter to vote. We'll share the results coming up a little bit later on in the hour. Up next, searching for upside. Despite today's negative close, Dan Greenhouse is highlighting a silver lining for investors. He's going to tell us what that is after the break. It's time for a CNBC News Update now with Christina Partsinevalos. Christina. Hi, Scott. Here's what's happening at this hour. A man who carried a Confederate flag into the U.S. Capitol during the January 6th riot

has been sentenced to three years in prison. That's about half of what prosecutors had sought. Kevin Seyfried was convicted on five charges, including threatening a black police officer with his flagpole. Photos of Seyfried, which you're seeing on your screen right now with his flag, became some of the best known of the attack on Capitol Hill. Minnesota Congresswoman Angie Craig was attacked in the elevator of her apartment building in Washington, D.C. this morning. Her office says Craig is OK, but suffered bruising as she defended herself. A suspect has not been apprehended so far, but there is no evidence either

that the attack was politically motivated. And in the Florida Keys, 114 migrants from Haiti came ashore after a dangerous open sea voyage in an overcrowded sailboat. The migrants were given medical screenings by local first responders before being taken to a border patrol station

for processing. Scott, back with you. All right, Christina, we'll see you in a little bit. Thank you, Christina Parts and Novelos. Markets fading throughout the session today. NASDAQ ending off by more than 1%. However, our next guest says the technicals present reason for optimism. Joining us now, Solus Alternative Asset Management Chief Strategist,

Dan Greenhouse, here at Post 9. So there's a silver lining here? Yeah, it's like I'm not a technical analyst, but why are you talking about the technicals? Because there are observations to be made here to counter some of the more bearish narratives, a narrative that I myself have pushed for quite some time. But I think the important thing to observe here is when you look historically, it is really unusual to see the S&P 500 itself get this far above the 200-day moving average, this deep into a bear market, and have it not be the end.

Now, admittedly, every new market is a new spin of the roulette wheel, so to speak. But as of yesterday's close, obviously a bit lower now, we're 5%, give or take, above the 200-day moving average, that would be a larger level than was realized in either the 08, the 02, the 74, those long-term multi-year secular bear markets, 69. You just don't see that historically. So it is worth observing. How do you counter the more bearish narrative, which you cited yourself here? Eric Johnson is on the last hour.

He's been on this show numerous times. He's like, it doesn't matter what's happening right now. Positioning is, you know, got so, you know, one directional, if you want to say that. Now it's come back a bit. But this is prolonging the inevitable labor market. Who cares what it's doing now? It's inevitable that it's going to roll over because of what the Fed's already done. Yeah, listen, far be it for me to push back too much on that position since I share most of it. But obviously, to be intellectually honest and look at this without rose-colored glasses in either direction, you have to observe that the landscape is better. And we can argue that sentiment is following price or price is following sentiment.

That's a separate debate. But you do have the prospects of a European recession off the table, thanks to the warm winter and the lower not gas and electricity prices. You do have the prospects of China opening up and the boost that will provide presumably to global growth, however minimal or large it might be. And then here in the U.S., any number of companies have reported like if you look down the list of the industrials that have reported, I find it hard to find particularly negative commentary about North America, the U.S. specifically, in the earnings reports from Honeywell, from Caterpillar, from United Rentals, which is doing quite well.

When you put all that together, you can justify why the market has done what it's done without pushing back too hard on the bearish narrative. What is it? Is the market too blind to what the Fed might still do? You know, sort of what Jamie Dimon was talking about today, too soon to declare victory, could go above 5%, stay for a while. Others have suggested they could do, you know, several more cuts, not just the one or maybe two that the market is thinking about. How do you counter that? Yeah, no, I wouldn't counter that.

I think in general, both the equity and credit markets are discounting something resembling a soft landing and a return to a more normalized rate policy that is increasingly unlikely. I mean, I know that everyone is probably aware that CPI is next week. It's going to be 0.5 on the headline, 0.4 at the core. Both of those monthly numbers are completely unacceptable from the Fed standpoint. And add fuel to the fire lit by the jobs report that the Fed is going to certainly go to 5 percent, perhaps even higher, and then leave them there for a long time. Something that is increasingly being discounted or priced in the futures market appropriately, I would. What about what's been leading this year? Does that make you even more skeptical in a way? Well, yes and no. On

the one hand, we know the short basket is up 25 percent. We know the unprofitable tech's up 30 percent, far outpacing the stock market. I would also observe one of the best industries this year, as you well know, are the homebuilders. And the commentary from the homebuilders that have already reported about January activity has been meaningfully less negative than people thought. There was clear observations made. Now, granted, corporate commentary always has to be taken with a grain of salt. But there were clear observations made that the pullback in mortgage rates from 7% to 6%, let's say, spurred activity continuously over the course of the quarter. And I'm not saying that where the builders are is justified. What I am saying is one of the best performing industries,

the builders, have had pretty positive commentary about one of the weakest parts of the economy, and that's the housing market. I believe it there. Dan Greenhouse, thank you very much. All right. Coming up, backing off the banks. That group has seen sizable gains to start the year, but is there still further upside ahead? We debate it in today's Halftime Overtime. That's next. All right. In today's Halftime Overtime, backing away from the banks. That group has been outperforming to start the year, but Steve Weiss of Short Hills Capital believes there's not much more upside ahead. He thinks there are better opportunities elsewhere in that sector. Listen.

But if I were putting new money into the sector today, it's unlikely that B of A or J.P. Morgan, frankly, any of the banks are where I would go at this point. That's Steve Weiss. Now Bryn Talkington is back with us. How about that comment? And that's from somebody who owns bank stocks. Yeah, I agree. And so better opportunities elsewhere. You agree with me. So two reasons. First of all, I still think we're late stage economic cycle. And so that basic playbook is that you would underweight financials. Second of all, I think what people don't understand also is deposit rates.

So right now you can go to a Fidelity or Schwab and get like a 4.3, 4.4 on a money market. The banks, the average deposit rate the banks are paying is about one and a quarter. And so J.P. Morgan did $37 billion in net income last year. On their call, they said every basis point increase in deposit rates cost them $250 million. So a quarter point, if they moved up a quarter point, that's a $6.25 billion expense. I think they're going to need to do that because investors are taking their money out of those bank deposits to put them into high-yielding treasuries or money markets. But I mean, you own Goldman Sachs. What do you think about that one?

I think that Goldman is a different bank. And Goldman will only start to do well once M&A comes back. And so if we got M&A to come back, I don't think this first six months. But over time, I like David Solomon. I think they execute. But I'm very underweight. That's the only bank exposure I have in the portfolio. But if they're such bad stocks and bad places to be, why are they, they're not having a bad start to the year by any stretch. No, no, they're not a bad place to be. They're not bad stocks. These are wonderful companies that are generating a lot of cash. I'm just saying that I think that if I'm allocating new capital, I would rather allocate to companies with free cash flow, health care, energy, because also don't forget this, Scott,

people expect the analysts for banks to have a 13 percent earnings growth rate this year. So I think that's stretched. And if those start to come down, I think those those prices will come down alongside with it. I got you. OK, thanks for sticking around. That's Bryn talking. And coming up, we are tracking some big stock moves in overtime. Christina Partsenevelos is standing by, as always, with that for us. Christina. Bryn, I'm not going to point out who wore it better, but let's move on. A weak advertising market not hurting Yelp and one cloud security firm seeing even more high paying customers and shares are now soaring.

I'll tell you which company after the break. Bryn wins. All right, let's give you another look at this afternoon's big earnings movers. You can see Lyft there is just plunging by some 25 percent after that miss there. PayPal is flat this hour and Expedia giving back about 4%. We're tracking some other key movers too. Christina Partsinevelos is doing that for us tonight. Christina. Hi, Scott. So Yelp shares jumping on higher Q4 revenue despite the weaker advertising market that we saw hit others like Meta and the parent of YouTube, Alphabet. Ad clicks on Yelp were actually down on the year, but costs per click were up 27%. So that means advertisers

are paying more despite fewer eyeballs. And you can see shares are up 6% full year guidance, basically in line. Cloudflare, that's the company I was talking about in the break. Shares soaring after the cloud-based security company saw revenue jump almost 50% in 2022. In Q4, the company says they added more than 2,000 large customers, paying over 100K per year each. And so, of course, that's helping margins, full-year guidance, topping estimates as well. And you can see shares almost soaring 11% higher. And then finally, let's talk about something fun.

Shares of Topgolf Callaway moving higher right now in overtime. I know we have a lot of golfers that are listening right now. Fourth quarter revenue coming in nearly 20% higher year over year. The CEO is saying performance was driven by both new top golf venues and same venue sales growth. Also saying for the first time ever, for the first time ever, I should say off course participation topped on course participation. So I guess people are going more to those indoor locations.

I don't know. Clearly you can tell I'm not a golfer. Like, you know, those dads that are at parties and they're like, yeah. All right. Yeah. You even attempted it. I'm proud of you for that. Okay. That's Christina parts of Nevelos. Still ahead, Santoli's last word. We'll find out what he is watching into the final trading day of the week. All right. We get more now on PayPal's results. Kate Rooney just caught up with the CEO. Kate? Hey, Scott.

So I just got off the phone with PayPal CEO Dan Shulman. I asked him about what we were talking about earlier. Was there pressure from activist investor Elliott, which took about a $2 billion stake in PayPal? Last August, he said none whatsoever. He said we actually haven't spoken much this quarter. Talked about Jesse Cohn, a partner there. He said Jesse and I are good friends. He's been incredibly supportive. I'm sure this announcement comes as a real surprise and shock

because he's been so supportive. He also said he wanted to give the board enough time to search for someone new, stepping down to the end of the year. I also asked, is it going to be internal, external? Who's your successor here? He said they're just looking for the best candidate. They are hiring a search firm, so they're looking internally and externally. Said he's going to work closely with them to make sure it's a smooth transition. He is staying on the board. Said the timing was right.

He's led PayPal for nine years. Wanted to make sure the company was in a good place financially. Says that's the case this quarter. Call kicking off in about five minutes here, Scott. Back to you. All right. Good stuff, Kate. Thank you. With that update, Kate Rooney up next.

Santoli is here with Scott. Back to you. All right. Good stuff, Kate. Thank you with that update. Kate Rooney up next. Santoli is here with his last word. Let's get the results now of our Twitter question. We asked her, Disney shares a buy after Iger's restructuring plan and Peltz ending the proxy fight. The majority of you saying yes, it is. Fifty three. Well, fifty four. Forty six. All that. All right. Mike Santoli here with his last word. Interesting day. Interesting finish. You know, Diamond talking about can't declare victory yet. Yeah. It feels a little nervous, I think, where we are. I think it feels it's definitely a little hesitant. It feels like people rush to grab, you know, a lot of exposure on the way up. You know, we came into the week saying, look, the S&P is not going to compound at 120 percent annualized rate as it has in the first six weeks, five weeks of the year. So you knew this was was on the way. The question is, at what point does it really lose the benefit of the doubt if it falters further? Not yet. I would

say four thousand thirty nine hundred in the S&P is where you have to say, wow, this looks familiar. It looks like we're rolling again in a familiar spot. So for now, it's OK. And I keep talking about the stuff that got really overheated, the speculative stuff. To me, that doesn't disqualify this rally as being real, but you really want that stuff to settle down. And it has to a fair degree. You see how race was taken apart. Yes. Reformed. And we're we're we're watching Lyft tonight. And obviously, even some of the meme stuff, you start to see it really come under some pressure. So that's fine as long as it, you know, more or less is a pressure valve that can release.

Are we, I feel like we're going to be watching rates again every moment of the day. And that is now going to decide yet again the direction of the stock market. To a degree, yes. I still think we're in a zone where you don't have to be hypersensitive to the level. But if it starts to look like, look, the dollar bounced pretty nicely. It curled over today. So it was friendly. But yes, yields have firmed up. And I think the bond market has gotten much closer to the idea like, well, it looks like we're still on the treadmill. We still have to add some potential hikes down the road.

What's interesting to me is that the stock market has become less sensitive to every little whisper and hint from the Fed. Now, is it because it's oblivious or because it feels like we got this, like we more or less know where it's going? And, you know, the economy, look, the city economic surprise index just crossed over into positive territory. So whether that's good or bad, it's underpinning certain parts of this market. Well, I think it's going to wait and see what happens with CPI, which is the next great hurdle. You can't have any more conviction. No conviction level can supersede what the inflation numbers are actually going to show. Yeah. All right. We'll see you tomorrow for the final trading day of the week.

That's Mike Santoli with his final word. I'll see you then. Fast monies now.