Closing Bell - Closing Bell Overtime: Year-End Rally in the Cards? 11/22/22

Episode Date: November 22, 2022

Investors closely watching the push/pull of the market and the catalyst that could catapult stocks over the rest of 2022. But does one exist? Virtus’ Joe Terranova gives his take. Plus, Fundstrat’s Mark Newton breaks down the key levels he is watching ... and where he sees stocks going from here. And, Sofi’s Liz Young explains her volatility playbook.

Welcome, everybody, 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. SoFi's Liz Young will be with me in just a bit. Whether she thinks today's rally reignites a run for stocks into the end of the year, that is where we begin today with our talk of the tape, the push-pull of the market and the catalyst that could catapult your money over the rest of 2022. The question is, does one exist, a catalyst? Let's ask Joe Terranova, Virtus Investment Partners chief market strategist, a CNBC contributor. As you can see, he's right here with us on set. I mean, is there a catalyst? And if so, what is it? Well, I'm not sure there

is a catalyst right now, other than maybe we've got this period where there's not much Fed speak beyond what we already know. And for the very first time, Scott, today you could say what? You could say you had a very broad-based rally. We haven't seen that in quite some time. So it was energy, materials, financials performing well. And then in addition to that, it was communication services. It was technology. What was good about technology, Scott, is it wasn't the non-profitable component of technology.

It was the mega caps? It was of technology. It was the mega caps? It was the traditional. Yes, the mega caps. Apple was there. Microsoft was there. NVIDIA was there. But you saw some of the semis. The SMH did well.

Microchip did well. Adobe did well. Corning was doing well. So it was really more about today a traditional, profitable technology rally. All right, so it looks like we're going to settle, and we're still settling out. You guys know how this works. Maybe we're going to settle out over 4,000 on the S&P. Do you think we can get 4,100, 4,150, 4,200 over the next six weeks?

I'll stop there because I don't think people, by and large, think it's realistic to maybe even get there, but certainly not beyond that. All right. So the center of gravity is the 200-day moving average at 4062. Whether you pay attention or not, you have to understand that enough people do pay attention to it that it ultimately matters. What happens at 4062? You get several days where you close above it and you're going to see the rules-based non-discretionary funds coming in to buy the market. So you will get at that point to 4100, 4150. What's also cooperating in this environment, and let's not lose sight of this, is fixed income. Fixed income, investment grade, high yield,

municipal bonds, all trading very well right now. And underneath the surface of the market, I think there's something that's somewhat puzzling. If we are going to this period where we're going to see the potential for a hard landing economically, why are financials performing so well? Quarter to date, JP Morgan up 29 percent, Bank of America up 28 percent, Goldman Sachs up 31 percent, Citi, Wells Fargo up 18 percent. What is that telling you about balance sheets? Balance sheets for consumers and corporations must be in better shape than we're thinking. You're thinking that the action you're seeing in some of the areas of fixed income is more of a benefit perhaps for

stocks than fixed income itself. You're saying it's a signal of sorts that, you know, maybe the better performance, less concern in fixed income gives a green light of sorts for stocks. Am I right? I think that's fair. I think it gives a degree of comfort of what? That maybe we're not going to see the type of defaults that we've seen in other recessionary cycles. It indicates maybe a degree of comfort that, you know what, we're not too far away from a distant time where corporations had the ability to extend maturities at historically low private sector borrowing costs. This time last year, if you're a CFO, you're extending maturities because you knew it was coming from the Federal Reserve. So that need for capital maybe isn't

there as much as it was in prior cycles. And corporations probably in a little bit better position. Now, let me ask you this. I feel like one of the reasons, spitball in here, OK? One of the reasons why you haven't been able to get much going is because even though people think that Santa Claus is going to show up, that he's going to drive into a snow bank shortly after Christmas. It's not going to last. So is it really wise to get all bulled up for a matter of weeks if the reality says, well, it's not going to last anyway, so what am I supposed to do, get in and then get out real quick? Okay. So again, I've advocated for active management. I think you have to be active in this environment that active. I think you're picking off five and 10 percent here and there when you can. I think you're trying to find stocks that are going to

allow you to outperform. I agree with you. The calendar turning to 2023 doesn't wash away the inflation problems, the conflict in between Russia and Ukraine, the monetary tightening, that doesn't get washed away with 2023. Not only not washed away, it arguably brings these issues that are there closer, right? As much as we say now the lag effects are legit and powerful for Fed policy, the further you get into the new year, you get closer to the lag effects taking effect. I don't disagree with that. So what does that mean? That means persistent and high, persistent elevated volatility, the lack of liquidity from the Federal Reserve. I fall back upon, look, Scott, you can't just buy an index anymore. You can't be a passive investor

and say, OK, I'm going to buy the S&P 500 because there's a ton of liquidity. The monetary policy is favorable to the environment and we're OK. Just buy and hold. I don't know if that's the right environment. I think you have to very quickly shed losing trades and you have to look for actively opportunistic scenarios for individual equity names. We've got speaking of individual equity names, we do have some earnings that we're on the lookout for. Nordstrom is clearly out. We're going through it.

Stock's getting a little bit of a bump. Not exactly a lot of optimism going into the print, given what's taking place right now across the retail landscape. And HP, Inc., for that matter, is also set to report it has its own issues with what's going on with the PC market, printers, and where that might be heading. So we're going to go through all those. We'll bring the reporters on when they have the news to tell all of you. I've got a note today, Joe, from BTIG's Jonathan Krinsky says,

unlikely that the action today or the rest of the week, for that matter, will provide much resolution to the current range. Right? We've been in a range. We had this nice move, and then we had this great pause. And we're trying to wonder if this is a pause that refreshes or reverses. Maybe today's the start of something. I mean, only time's going to tell on that. Well, again, I go back and say, OK, 4062, center of gravity. You initiate some buying,

non-discretionary buying. It takes you up to 4,100, 4,150. But fundamental conditions don't prove to the extent where you say to yourself, OK, I'm at 4,150. Now I think we can get ourselves to 4,350 or 4,450. There needs to be a lot of fundamental improvement for that to occur. So I think we're getting ahead of ourselves. And again, we're going back to this mentality of, I'm just going to buy stocks and hold them. I don't think that's the environment right now. Yeah, I know. But but but look, but look, the average investor has a hard time coming to grips with the fact. So I'm going to I'm going to buy, you know, these five names today.

And then who's going to ring the alarm bell for me that says, OK, now it's time to to to get out of those. You know, I'm going to have to rely on my investment manager to do all the dirty work and hope that they get it right. You're assuming that when we're ringing that alarm bell, it's because it's a five-alarm fire that's going to take the market down below the June and October lows. I'm not necessarily sure that the evidence as we have it right now would suggest that. I think we could go to the bottom of a range, but I don't think we see a significant price destruction below those June and December lows without a further deterioration in the fundamental conditions.

Well, let's bring in Victoria Green of G Squared Private Wealth and Eugene Profit of Profit Investments. Good to have both of you with us today. So, Victoria, you've been negative on the market. You heard Joe's commentary. Put it into perspective and how it meshes with your own. Well, Scott, you're going to ring the alarm bell, right? You're going to be everything every investor needs, so we don't have to worry about that. No, we're still on this range. The downtrend's intact. We haven't invalidated the bear market. We've done this four times. The June rally came up 17%. We're up about 11.5%, 12% off the lows. We are still range bound until it's invalidated, meaning we come across that trend line Joe was talking about, either the 200-day moving average, the retracement level,

or the downtrend around 41.50. You have a lot of resistance right there around 40.50 to 41.50, so I really don't see the market clearing those hurdles in this type of environment. And typically when that happens in a bear market, you put in lower lows. So we're looking for that 34, 3,200 to come in. I agree with Mitch Wilson over there at Morgan Stanley. I think that's what we'll retest next year. And we're looking at an EPS recession. So I think with those conditions, you really just don't have it in you for this market to rally, especially considering X energy EPS is expected to fall in key for now. You might you might not get an earnings recession. I mean, it's still the jury's still out. Yes. Growth expectations have come down. There is no indication yet that they're going to be negative.

We're just going to have to wait and see. And maybe and this is the greatest wild card of all. Maybe earnings, Eugene, hold up better than people think. But I'm trying to figure out and I think investors are, too, of what are the catalysts that are going to enable this market to have any kind of a run between now and the end of the year beyond seasonality and just suggesting, well, Santa Claus always shows up. So Santa's going to show up again. And that's and that's all we need. Positioning's negative. Maybe that's a positive. Flows, buybacks. That's the kind of stuff that Deutsche's Binky Chad is talking about. Does that make sense to you as to reasons why that could indicate room for the rally?

No, not to me, really. I think that basically that's the psychology. Remaining optimistic is driving the rally in this market it's been as you said it's been very range bound for the last six months i think that um if we get a better than expected inflation um reading going into the next um fed um meeting i think the fed will probably moderate their language a little bit. And I think investors want to remain optimistic and ignoring a lot of headwinds in this market. I mean, the economists are basically saying that there's very little chance of global recession, even though Europe might go into recession, even though China is still not completely open. And I guess the U.S. on its own accord is able to deal with these higher interest rates. And even when earnings being going down somewhat, mitigate all that and still optimistically believe the market is going to continue higher. Hey, Joe, can we say at this point that no Fed speak X, the Fed chair himself can rattle the market at this point. I mean, what are they

possibly going to say between now and the meeting itself in mid-December that's going to upset us? I mean, they're already saying it. Policy moving higher for a long time, blah, blah, blah. We're not pausing anytime soon. Right. You get the point. We're outside the Fed chair saying something I have no idea. I don't I don't know off the top of my head what his calendar looks like between now and then. It's probably a zero because they're in a blackout period ahead of the meeting. You have this two and a half week window where you should be clear of any negative statements being made from the Federal Reserve that would impact the market. I think it is going to come down to what are the economic numbers in early December? What is the inflation reading? What's the response? Does the Federal Reserve not give the market what's already been priced in,

which is 50 basis points in my mind? It feels like that's almost a foregone conclusion. We have not priced in 75. So if we go 75, the market's not going to like it. No, obviously not. The market's definitely not going to like that. Let's see what the market thinks of Nordstrom, which I mentioned is out. Melissa Refko has that for us. Melissa. Hey, Scott. So Nordstrom beat on both the top and bottom line.

But remember, it had taken down its forecast this summer. So it beats on earnings. It was 20 cents adjusted versus 14 cents expected. And on revenue, it beat as well with $3.55 billion versus $3.48 billion estimated. So again, it's a beat, but they're reaffirming their guidance and they had already cut their forecast this summer. Back to you. Yeah. Okay. I appreciate that, Melissa. Thank you very much. You want to comment on this? I mean, backing lowered guidance already doesn't do much for anybody. Right. And the key the key here is is without question for Nordstrom is what the inventory levels are going to be.

The inventory levels need to correct themselves. Pete Nordstrom has said that in the past. So that's critical. It's all about inventory management. And clearly Nordstrom Rack began to see a little price sensitivity from their shoppers. Victoria, we'd like any parts of retail here. I mean, the consumer is proving to be pretty darn resilient. I mean, you can come up with any, you know, bit of excuses that you want to. Well, yeah, but they're spending everything on their credit card at this point because they've tapped their savings. That's not necessarily true, though, because we keep hearing about the more than a trillion and a half dollars of excess savings

that still sits on consumer balance sheets. Do you like any of those stocks? I mean, retail's been a really weird last two weeks. We see you had Bed Bath & Beyond having that beat. You had Nordstrom's or Dick's or any of the other things that come out. I think the higher end consumer has shown more resiliency. So anything that has a little more exposure to high end consumer, I think, has done better. We also saw Walmart, though, outperforms. You kind of have this dichotomy of the consumer is still spending, but I think the consumer is being squeezed and making different decisions. They're spending their money, but they're spending it differently. If you go back to how Amex is tracking their travel spending, it's much, much higher. And

American Express is saying, hey, this is going to work well for us. We think our travel spend is going to continue in 23. But we also saw our target miss while Walmart beats. You have this dichotomy of people are looking for bargains. So I like my Walmarts, my Costcos. But that middle sector, that target, a little bit Nordstrom's with wrap, they're starting to see a little more, as Joe said, price sensitivity. And I think you just have to be cautious in getting into some of these names because this consumer, we do think, is still under pressure into 2023 as savings get depleted. But we are, as you pointed out, have very mixed signals of here we have savings rates, but we're spending on credit and we should be getting squeezed by higher interest rates and higher costs. But the consumer does manage to keep on swiping. It's hard to read into some of these results, too. I mean,

frankly, some of it comes down to execution. I think we've learned that over the last couple of weeks, if not a few months. So, Eugene, how are you positioned right now? Well, I do own Nordstrom's and I do like that revenues beat and earnings beat. They did that last quarter as well when they did more guidance. I'd be very interested to see how much came out of the Nordstrom's brand, how much came out of RAC, because I think that's where the important thing. Right now, I'm positioned with a barbell strategy, essentially. I think health care is probably a safe place to deploy assets, but I'm more partial to Pfizer, even though it's not held up, as well as, say, Mark. And I'm also partial to Abbfizer even though it's it's not held up as well as say mark and i'm also partial abby i also like industrials here right so i think that um if you barbell your

portfolio you give yourself an ability um to participate um f in fact the macroeconomic conditions um basically forecasts are off and the market begins to go down? Are you also able to anticipate if, in fact, it continues to move higher? Frank Holland has HP earnings. I mentioned they're out. Frank, what do we see here? Well, hey there, Scott. Shares of HP falling after a beat on the top line and the bottom line. Profit one cents above estimates, but very soft guidance.

For the current quarter, the top range of guidance is six cents above estimates, but very soft guidance for the current quarter. The top range of guidance is six cents below estimates, but the real headline from this report is what the company calls a future-ready transformation that will include a workforce reduction of 4,000 to 6,000 workers by 2025. That would be as much as 12% of the current workforce. They're also implementing some cost-cutting measures. They're expected to save the company about $1.4 billion by 2025 and then $1.4 billion annually by fiscal year 2026. I actually spoke with CEO Enrique Lórez. He said the company expects to see some softening demand in the near term, but he expects he believes this transformation plan will set up HP for the next demand cycle. Remember,

PC sales, they really pushed forward during the pandemic as people worked from home and were learning from home as well. Again, shares falling after top and bottom line beats, but weak guidance. The company has plans to lay off four to six thousand workers by 2025. Back over to you. I appreciate that, Frank. Colin, thank you very much. Can you buy, Joe, anything with a large amount of exposure to PCs right now? Would you? You said it's a stock pickers market. I would not. Can you stock pick there? No, I would not. And I think you shouldn't be

surprised by this result. Dell's revenue down 6%. We learned that the night before. Here comes HP down 11%. Even the raise in the quarterly dividend is less than the street was expecting. This is obviously not a good report. No, you cannot right now have investments that correlate to PC exposure. So, Victoria, you like IBM. Cloud stocks are down like five days in a row. Not that people are going to necessarily lump this in with some of the other pure play cloud names that have taken an especially big hit and that one's beaten the market this year anyway joe mentioned jp morgan uh what you like trying to explain why are financials up if the situation is so bad uh and then there's costco which is obviously um having a pretty good go of it as well

can you tell me um why you especially like those yeah absolutely ibm everybody's forgotten about i i feel like everybody's surprised that stock's still in the Dow, but it's transformed itself into a hybrid cloud after it required Red Hat and it had a new CEO. So we really like it. We like the big old ugly cash cows right now. There's nothing sexy about these names, but they produce earnings and they have reputable earnings and they have strong leadership. And as you pointed out, it's not a rising tide lifts all boats. We want leadership that can make hard decisions, that's not going to be reactive, that can put their company in the ability to succeed in a tighter margin area. We think Costco is well run. We like Jamie Dimon. I think it's funny every time before earnings, he tries to downplay about how terrible it's going to be. And then yet his

company still does very well. And then I think IBM is a very undervalued gem because it's reinvented itself again. And I think people have missed this new investment thesis with AI, with hybrid cloud and with how it connects in. It's not a competition for AWS or Azure. It's a collaborative system for them. So, yeah, is IT spending under pressure? Sure. But I think IBM, they got rid of Lenovo. They're not in the PC market. They're a different company than they were 15 years ago. No, sure., as I said, very much a cloud company because of the Red Hat acquisition. And speaking of tech, Eugene, last thought on this space. What about tech, since we're talking about it here? Would you put anything, any new money to work in tech? Yes, I would.

I mean, the large cap tech names that you're familiar with, I think. But remember, my time frame is three to five years. I mean, if you're tech names that you're familiar with, I think. But remember, my time frame is three to five years. I mean, if you're looking over the next six months, it's hard to decide where to invest in that time period if you're a longer term investor. But, you know, believe it or not, Intel earnings were the biggest surprise in the semiconductor space. And it's up 3% today. And no one wants to own it, of course, because they're spending so much money on fabrication. So I think that you really have to stick to discipline. And yes, if you have a three to five year time window, large cap tech is a great place to invest right now. Right. But if you're looking at the next six months now, you know, you can throw a dart.

Yeah. All right. That's fair enough. We'll leave it there. I appreciate it so very much. Everybody have a great Thanksgiving. Victoria, Eugene, we'll see you again soon. Joe's going to be back with us before the end of our program today. We're just getting started here in overtime, though. Up next is a year end rally in the cards. Joe said you have to respect the technicals. Well, top technician Mark Newton, he'll be here laying out his key levels. He is watching as we round out 22. That brings us to today's Twitter question as well. Do you think the S&P 500 will finish the year above or below 4000? That's right where we are now. Head to at CNBC Overtime on Twitter. Cast your vote. We'll share the results coming up a little bit later. We're live from the New York Stock Exchange. As always, overtime is right back. All right, we're back in overtime. Stocks pushing higher today with all three major averages finishing in the green. Our next guest says this rally could, in fact, have more room to run, at least in the near term.

Joining us now, Mark Newton, head of technical strategy at Fundstrat. Welcome. It's good to see you. Thank you, Scott. So this is the pause that refreshes and we get something going finally because we really have paused. We did pause for about seven, eight trading days. Today was a day, I think, that leads us higher up to near 4,100, 4,120 by really the first part of December. Why was today the day? I mean, and if we didn't get it today, what would you have said? Well, we had a very defensive rally over the last week. Today was different. And then we saw leadership out of technology, out of materials, out of financials.

It was a lot more broad based. And markets did close at new multi-day highs. That is all important. Yields also have not shown any evidence of trying to recover. And that's also good news for stocks. So 41 what? 41.20 would allow the move off the October lows to equal the most recent. That's also where a giant trend line is from January. So that intersects right up above 4,100. Okay, so we get over the 200-day moving average, right? And then we can put a little bit more together because, technically speaking, that's a buy signal for some? Honestly, the 200-day has less relevance in my work than these longer-term downtrends. Okay.

And that's going to be important. Look, breadth is in very good shape. We're seeing over 53% of all stocks are above their 200-day moving average. That's the highest levels we've seen since January. However, technology has not worked as well, and that is an important part of the market. So what do we do with that fact that the biggest part of the S&P 500 hasn't worked, and we still think we can go further? So everything else is going to pick up the slack for tech? It certainly has picked up the slack, and that's what we've seen over the last month. So financials, materials, discretionary, they're all up over 10% for the month. I'm not saying avoid

technology, just be a lot more selective in what you buy. What's that mean? Stocks like IBM, stocks like OM Stomach Inductor, they're phenomenal names. Even Apple has held its ground. It hasn't really lost substantially off the highs. That's relatively a good pick. But you have to really be where the strength is right now, which is energy, which is recently healthcare, pharmaceuticals, biotech, industrials, whether that be a late cycle type move or whether they're sniffing out and eventually rolling over the dollar. You've seen phenomenal movement in the majority of that group. Do energy stocks divorce themselves from the price of crude at some point? In other words, the genesis of that question is, well, for the last few days, crude's been below 80. Wondering what that means for oil stocks. Crude goes above 80 today. Does it make that much of a difference for where the equities

themselves may go? That divorce happened a number of months ago, and crude stocks have held up much better energy in general than WTI crude, which went from 125 down to nearly 75. Meanwhile, XLE, XOP, OIH, the majority of energy has continued to outperform on almost every time frame, one month, three months, six months. So there is a little bit of a disconnect. I think, you know, crude is in a new bull market, which began two years ago. And I think that, you know, I still think that crude is going to stabilize and energy is still the right place to be, I believe, heading into next year. And even so, I mean, the answer to the question is yes. I think you're suggesting that these

stocks can go up despite the fact that if crude sits right here, the stocks can still work. Look, trends and charts have certainly shown that. I mean, look at what's happening with stocks like Marathon Petroleum or Hess or, you know, anything. Look at the refiners. Look at Valero. Look at, you know, any of them have been really phenomenal outperformers. They're really one of the few places to be. OK, it's good seeing you here. Thanks. Likewise. Happy Thanksgiving to you and your family. We'll see you soon. It's Mark Newton. Up next, SoFi's Liz Young is here at Post9. We're going to get her outlook for stocks, plus where she is seeing strength right now. OT is right back. It is time for a CNBC News Update now with Contessa Brewer. Hi, Contessa. Hi there, Scott. Here's what we have for you right now. The Supreme Court has cleared the

way for former President Trump's tax returns to be handed over to a congressional committee. That decision ends a three-year-long legal fight over the documents. The court order contained no dissents. The Biden administration is extending the pause on student debt repayments, possibly until June 30th of next year. The president says those payments are on hold because Republicans are trying to block his student debt relief plan. They've sued over it. He says this pause will give the Supreme Court time to hear the case challenging the debt program. And Dr. Anthony Fauci has given his last White House news briefing

after 54 years in public service. He used the opportunity to once again urge Americans to get their covid shots. He also reflected on what his legacy may be. I'll let other people judge the value or not of my accomplishments, but what I would like people to remember about what I've done is that every day for all of those years, I've given it everything that I have, and I've never left anything on the field. 54 years is a long time to serve this nation, Scott. It certainly is. Contessa, thank you very much. Contessa Brewer. All right, stocks finishing higher today. As you know, all three major averages closing at session highs. So is today's rally a head fake or the beginning of an even

bigger breakout into year end? Joining me now, Post 9 SoFi's Liz Young. She also is, as you know, a CNBC contributor. It's good to see you. Good to see you too. Here's the question, right, the pause that refreshes. I've been trying to frame it that way. Is that what this is? I mean, we've seen this a couple times already in this otherwise downtrending market. And remember, the rally that we saw from the June low to the August high took two months. And then the downtrend from that August high to the October low took another two months. We're only a little bit more than a month into this. Unfortunately, I do think that this is another bear market rally. So we're still in a downtrending market, to use your words.

Yes. And look, we talk about seasonality a ton at this time in the year. We do. And I think it has some predictive power. But in an environment like this, I don't think the regular seasons do have predictive power. But what you can look at is actually more of a unique take on seasonality. A lot of times you see these big momentum shifts or momentum reversals in October and November. And we've seen that this time. So we had the low

on October 12th. And we've gotten these high volatility stocks that have really outperformed since then, which is different than what we saw stocks that have really outperformed since then, which is different than what we saw earlier in the year. Then usually what happens, though, is in December, it goes back to what it's been, back to the status quo, back to that trend. So you could see a sell volatility environment again in December. Assuming the Fed doesn't surprise us in any way, I don't think they're going to surprise us necessarily with the move itself of 50, which seems to be well telegraphed, or at least at the stages of being telegraphed. Assuming the rhetoric doesn't upset anybody, is that good enough for the Santa Claus rally to

take hold and maybe cross into the beginning part of the year? Look, it could. And we kind of obsess over these levels of failure points on the S&P, right? Everybody's talking about 4,100 or so on the S&P. 4,120, Mark Newton, who just got off the set a few minutes ago. Right, right. And as that being the possible failure point, we've failed at the 200-day moving average a couple times already this year. I would tell people, look at the VIX, too, and look at the levels that it's trading at right now or that it's at right now where we're trading. We're approaching 20 again. And there have been a couple other times this year where the VIX has dropped below 20.

It's been right around a bear market rally top. And it doesn't stay there very long. Then it spikes back up again. As we approach 20, we're going to probably also approach 4,100 on the S&P. That's no accident. And I don't know that we stay in either of those places very long. I don't necessarily believe in a Santa Claus rally, especially because I don't expect retail spending to be that strong this year. So I'm not too optimistic that we're going to see what we

would normally see. Also, remember that in 2018, when we were in a hiking cycle, the market corrected until December 24th, and the Fed had to pivot in order to bring it back out of those lows. We are in a hiking cycle now, and that should not be lost on investors. I'm curious as to why you don't think that holiday spending is going to be good based on what the retail numbers have been of late. Maybe it's going to be the last burst, if you will, for the consumer before reality starts to hit on the other side of the year. Isn't that a fair assumption? I think I think that is a fair assumption, but I don't know that it's going to be more than what we expect it to be. So and who knows about the timing of this?

But if you just think about what we've heard in the last month or so, yes, retail sales came in good for October. But that doesn't mean they're going to come in good for November or so. Yes, retail sales came in good for October, but that doesn't mean they're going to come in good for November or December. And as we continue to hear about layoffs, also that October data was pre all these layoff announcements. Consumers stop spending when they're worried about their jobs. I know, but a lot of the layoffs at this point have been centric to, you know, tech. Tech. They're contained in tech. Big tech. Right. Yes. Big. Well, some little tech too. But if that starts to bleed into other parts of the economy, and we do have other parts of the economy showing a lot of weakness, and we've got leading economic indicators that have been contracting all year with the biggest month-over-month contraction just having been reported last week. So things are not pointing in a good direction. And with a yield curve as inverted as it is, we can't look six months out and say things are going to be fine. It's going to be the overhang.

Right. It's going to be that it's going to be that that storm cloud that's hanging over, whether it, you know, rains on on everybody. We just don't know. Maybe it'll pass over, but we're not going to know that for a while. So in light of that, where do we hang out? Where are we supposed to hang out? Well, first of all, right now, again, rates are up. Right. Cash is an asset class. And at a point where, you know, we've talked about the Nasdaq hitting its anniversary of its all-time high today. Yeah, it was today, the intraday high, right? We're down, what are we down? More than 30, 34 percent? 30-something percent?

Yeah. Well, and hopefully rest in peace, one of the worst years we've ever seen in the Nasdaq, right? But the valuations right now are still just below 25 times forward earnings on the Nasdaq. At the end of 2019, so pre-pandemic, they were about the same level. But at the end of 2019, the Fed funds rate was at 175 and falling. Today, the Fed funds rate's at 4 percent and rising. I think that's still too much. This is not a time that I would be putting money into tech or those high growth areas.

I would still be hiding in the lower valued parts of the market like financials, health care. And even in this environment, I think utilities is an OK place to be now trading above the market on valuations, but below something like consumer staples. There are a lot of people who think some of these defensive plays are too expensive. You just said relative to staples, but still, it's starting to get a little frothy in the most defensive of areas. Yep. Where it's not frothy is the short end of the treasury curve. So looking at the two year in particular, the one year in particular. Yeah. A couple of weeks ago, I talked about buying the 10 year on halftime. Now I think I would look at the two year and put

some money to work there and hang out in that space until we hear from the Fed. If they do surprise us with something more hawkish than what the market has already priced in, you want to make sure that you have defensive things in the portfolio. Now, the two-year might spike up higher on that news, but at some point, we will near the end of the cycle, and we're getting closer now than we were before. At some point, the two-year comes back down. I can't imagine that it gets much higher than its previous peak already. Have a great Thanksgiving. It's good to see you as always. That's Liz Young, of course, with SoFi.

Coming up, a billionaire's bet against GameStop and why the retail reaction could be a major sign of the times. We'll explain in today's Halftime Overtime. And don't forget, you can catch us on the go by following the Closing Bell podcast on your favorite podcast app. Overtime is right back. All right. In today's halftime overtime, a billionaire's bet against GameStop. That billionaire, in fact, Carl Icahn, learning through a report that he's been short GameStop for the last couple of years. I can confirm that he wouldn't comment at all when I spoke with him today. But it's my understanding that it's a reasonably large position, though, given the size of his

portfolio. It's not exactly meaningful, but that he still is short and that he's traded around it at times. The shares are down 60 percent from their highs. Josh Brown thinks the game is over for what was a highly involved cohort of retail investors. Somebody was doing a story about the Reddit reaction overnight to this news that Icon is still short in GameStop. There's almost no reaction at all. A lot of people that were part of that uproar have moved on to other things. I think people in general get bored when they're not making money. And when they're losing money, they very quickly look for a different activity. All right. Joe Terranova is back with us on set.

There he is. What do you make of this? I mean, you can have an opinion on the short itself, but also the fact of retail's presence in the market and what the current state of it is. Well, I think retail is always there, but there was this splintering in which part of retail went in the direction of do-it-yourself. And let's, in order to do-it-yourself, let's utilize what? Let's utilize leverage. Let's utilize leverage and let's utilize capital. And in both of those instances, that was readily available

coming out of the wake of the pandemic while everyone was sitting at home. You think that cohort's gone? I think that cohort, unfortunately, has left in a disappointed, frustrated and arguably less favorable economic position. Yes. You know what else I'm thinking of would have undoubtedly had an impact is crypto and the destruction that we've seen in crypto. The same cohort in some respects, don't you think? The same cohort. But again, remember, to fund the activity, you needed the cost of capital to be cheap. Wherever you were, wherever you were sourcing the capital, it required it to be cheap. Wherever you were sourcing the capital, it required it to be cheap. It's not cheap anymore. It's expensive. Leverage levels have

been reorganized and are far more conservative than where they were in the fourth quarter of 2020 and in the first quarter of 2021. And remember, listen, excessive leverage is the root cause of any financial market imbalance. And if you look at where we are right now, we had a financial market imbalance in crypto, NFTs, SPACs, and the hyper growth non-profitable equities where this do-it- yourself crowd was spending most of their time. I wonder, I know this, you know, I don't know if there's a better way to say it, but is it safe to be short again, right? You know what I'm alluding to, right? If you were publicly short some of these stocks,

you were potentially blown out of the water, like we witnessed through the me-mania, okay? Now, again, he wouldn't comment whatsoever on this on this position, but it's out there and he certainly doesn't seem to care. And knowing him, he'll probably be short for a much longer period of time because that's generally speaking what he does. So I am laughing. I'm amused by not so much the potential outcomes here, but thinking to myself, if there was that battle, if there was the re-engagement by the do-it-yourself crowd going up against Carl Icahn, well, you have your second book. That really ultimately becomes your second book. I don't think Carl Icahn would be concerned in any regard. I think really what it would come down to is really what a lot of it was in the first quarter of 2021, where

there were hedge funds very quietly joining alongside the do-it-yourself crowd. And let's not mistake for a second, or let's not pretend that they didn't do that. There were hedge funds that actively went in there and were against the other hedge funds that were shorting like Melvin Capital. That's clear as day. I like the characterization of yours. It's like the DIY investor, right? People who figured, you know, they, again, that works in an undeniable uptrend and a raging bull market when all the tide is going in one direction. When you have the tide start to come in from different directions, the current starts to, you starts to hit each other. You get these waves and you get people thrown about.

And it's just not that easy to do that anymore. You left out one part. And when you have fiscal stimulus and monetary stimulus that's basically messaging, go buy stocks. Right. Now the message is just the absolute 180. We're talking, we're using words like pain. We're actually talking about we don't want you to be in stocks. Yeah. All right. Good stuff, Joe. Thanks.

Happy Thanksgiving to you too. I'll see you before then. All right. Coming up, we're tracking the biggest movers in overtime today. Christina Partsinevelis is standing by with that. Christina. We've got another share buyback announcement from a software firm and some major news from Manchester United. Could a sale be coming?

Of the details next. We're back, and we're tracking the biggest movers in overtime. Christina Partsenevalos is also back with that. Christina. Let's start with cloud computing firm VMware reporting weaker than expected earnings and sales for its third quarter. And that's sending shares down about 1% right now in May. Keep in mind, Broadcom announced it would acquire VMware for $61 billion, but now UK regulators are looking into whether this deal will reduce competition.

Shares of software from Autodesk, I'm jumping the gun there, moving lower in the OT after posting revenues and earnings in line with expectations. But subscription revenue came in light, as did the outlook for Q4 EPS as well as revenues, because these shares are down almost 8%, Autodesk announcing, though, a new $5 billion buyback program. And for all you footy fans out there, Manchester United is looking at ways to improve the, quote, future growth of the club, even if that means a sale or partial sale of the 144-year-old soccer club. American owners, the Glazer family, who also own the Tampa Bay Buccaneers, bought the club back in 2005, but frustrated fans have been pushing for

a sale for a while. Earlier today, though, the club also confirmed that superstar Cristiano Ronaldo would be leaving the club immediately by, quote, mutual agreement. You can see shares are up over almost 3.5% right now. Scott. Yeah, major falling out in that relationship, to say the least. So you're a footy fan, right? You're a soccer fan? I am.

Good. Oh, yeah. Good. Yeah, very big. All right, thank you. Take care, Christina Parts Novelist. Still ahead, Santoli, his last word. It's next.

All right, it's the last call to weigh in on our Twitter question of the day. We want to know, will the S&P finish the year higher or lower than where we are now? We'll call it 4000 even. Head to at CBC Overtime. Cast your vote. We'll bring you the results after this break, along with Santoli and his last word. Let's do the results of our Twitter question. We asked, will the S&P 500 finish higher or lower than 4,000? There's the winner higher. 58% wins the vote. Santoli here with his last word. Yeah, I guess the trend is your friend if today's the trend.

I guess if today started it. If the last five weeks are your trend. Yeah, I mean, look, it's interesting. We surmounted the average or the median strategist year-end target today. It's 39.75, which was hacked away from a well above 4,000 coming into the year. The average target's a little above. So in other words, nobody's expecting much more out of this market, I think, on balance. You said the Goldman Sachs hedge fund survey today said equity, long-short hedge funds are very, very low exposure. That's been a story for a while. It doesn't mean automatically go higher. You have the corporate

buyback window wide open right now. So there's a lot of things in the near term working in the market's favor, obviously. That's what makes seasonality is right. The incentives to actually do some buying at this time if you're not really sell into it. I still think it's it's a pretty good fight if we get a few percent higher from here. As everybody keeps saying, you can't take anything for granted. But I like the fact that people don't expect a lot out of the market rate. What about technically speaking, the debate over, you know, one stop that people always reference the 200 day moving average, which which Joe Terranova did 40, 67 or something like that. Yeah, it's less than two percent up. Mark Newton said

not a big deal, though, this time around, although he thinks you can get to 4120 before it's time to maybe think it's out. Obviously, you're kind of splitting hairs, right? Remember, the all time high is about 4800. So between here and there, there's a lot of slopping around to do. I think it's easy to make the case that the market is capped well below the old highs just because of all the things we know. You're not going to have a verdict on soft or hard landing for a while. The Fed does not seem to want to be overly generous. They're going to give you a target, but they're not going to necessarily prematurely try and back off the tightening story.

So I think there's a reason to say the market's capped. But what's getting us below the October lows? Right. You have to really see stuff fall apart beyond housing. You need to see kind of corporate stress show up. And look, arguably there's shoes to drop. Right. We have corporate downsizing underway, but maybe not in the very near term. I'm trying to think, you know, Fed speak, as I discussed, you know, on the desk. What's really going to surprise us now? You're going to get in the blackout window. Powell's not going to say anything before the meeting. The others are already talking in the markets like, yeah, we get it. We know it. We priced it in.

Very near term. That's very near term. That's very true. Look, I mean, December 13th and 14th is the next Fed meeting, I think. So you have a few weeks. CPI the day before. Exactly. And you do have another jobs report and another CPI. Tomorrow, we get the Fed minutes. Keep in mind, it's stale. It's a few weeks old. But it has the knack recently in this cycle for actually being relevant to how the market trades. So we've gotten relief on long rates for a while right now. I mean, 3.7 or 3.8 on the 10-year. So I guess the point is, you've had a few breaks that got you to this point and nothing says they can't continue for a little while. Nice broad base move today, too, which people are pointing out as a positive. Good to see you. All right. You have a good

Thanksgiving. You as well. I'm not going to see it before that. All of you to fastest now.