Closing Bell - Closing Bell Overtime: Your Q4 Playbook 9/30/22

Episode Date: September 30, 2022

What lies ahead for the final three months of the year? Solus Alternative Asset Management’s Dan Greenhaus and Victoria Greene of G Squared Private Wealth have a heated debate about their market forecasts. Plus, Fundstrat’s Tom Lee seems to be one of Wall Street’s last bulls standing. He makes his case. And, it was a tough week for Apple. Capital Wealth Planning’s Kevin Simpson breaks down why it’s actually a great buying opportunity.

Welcome, everybody, to Overtime. I'm Scott Wapner. You just heard the bells were just getting started here from Post 9 at the New York Stock Exchange on this busy Friday. In just a little bit, I'll speak to FundStrat's Tom Lee as we enter a new quarter for stocks. Is he wavering at all on his positive position, which some might call the last bull standing? At least one of them, with all due respect to Brian Belsky. We begin, though, with our talk of the tape. What lies ahead over the final three months of the year? More pain or a push higher as so many remain so incredibly negative on the market? Let's ask Solis Alternative Investment Management's Dan Greenhouse. He is here with me at Post 9. It's good to see you. An ugly close to an ugly day,

an ugly month, an ugly quarter? Is this just going to continue into the final three months of the year? I mean, listen, you have two competing arguments here to make. The first is, yes, the data is worsening. We saw that with the Chicago PMI today. Obviously, the housing market isn't particularly very strong. You have companies like FedEx, like Nike, they're starting to accumulate. So on the one hand, you certainly have downward pressure on risk assets of all stripes. On the other hand, you have to balance this against the immovable force that is seasonality. I always like to remind clients and investors, the market was even up in December of 2008. So you certainly have something of the strongest period of time for the market working in your favor.

But again, there's a uniqueness to 2022 that I think sort of trumps all historical analogies. So the short answer is I don't have any idea. Do we have more central bank or added central bank risk, mistake risk, that we didn't have a couple weeks ago? I mean, we're always wondering what the implications of these rate hikes is going to be at the end of the day on the economy. But now this week, that morphed into a real worry that something big is going to break. And I'm thinking about what happened in the UK, right, and the intervention there. Marko Kalanovic, you know, we cite him all the time, J.P. Morgan. He says he's increasingly worried about central banks making a policy error.

And this is one of the guys who was more bullish than most, or at least trying to keep his head above water as everybody else was sinking. He's worried about geopolitical tail risks following the destruction of Nord Stream Pipeline. Are these new risks that we have to worry about now? Well, whatever's going on with the pipeline, I guess, is new. But I would take issue with the idea that the risk now is a policy mistake on the part of the Federal Reserve or the central bank community at large. The mistake, the error, has already been made, and that was allowing inflation to get as high and as durable as it did and has become.

What they have to do now to curtail it is not the risk but the appropriate response. Now, again, part of the issue here is imbuing a sense of not immortality, but supremacy on the part of a group of humans sitting in a room trying their best to try to bring inflation back down. The error, so to speak, ignores the repetitiveness. And we've discussed this for 12 months now throughout history of error after error after error being made, not because someone does something wrong, per se, but because humans are fallible. You over tighten, you overstimulate, and the result is the same every time. But the issue that I think we're speaking of, the risk is compounding your mistakes, right? You compound your error by doing too much too quickly because you were too late in the first place. And then you come in like the BOE did in the UK and make everybody even

more nervous a moment of hours, right? Where you had a relief rally on the day we were at delivering Alpha this week. Well, this is the issue with monetary policy. It's very much like a water faucet in an old motel where you turn the water on hot and it doesn't come out right away. So you make it a little hotter

and it doesn't come out right away. And the next thing you know, you're in the shower with third degree burns and you have to go back the other way and overstimulate, so to speak, towards cold. That's monetary policy. It doesn't react right away. Not that Jay Powell and Lael Brainard don't know this, but it is an illustration of the

idea that monetary policy works with long and variable legs. And because of that, it is very difficult to calibrate policy in real time with any semblance of honest perfection. How many Targets and Walmarts and Nikes and FedExes and Carnivals do we need before we say, Houston, we have a problem? And earnings are going to be challenged at best. There's too much inventory, OK? There's too much inventory everywhere, whether it's sweatshirts or cruise ship seats. Carnival told you that today, right? They have to do heavy discounting.

Another thing is, it seems to me, that a lot of companies have lost pricing power. Now they have to eat it, and that means margins go down. Listen, I agree, but to the point about how many do you have to see before blank, I mean, we're finishing the year down 25%. I want to stress for the viewers at home, a 25% decline in the S&P 500, granted from relatively elevated valuations, is an exceedingly large drop in stock prices. There's this idea that if you're not down 50%, it's a cakewalk. A 25% drop in stock prices is a real deal. And as we know, any number of stocks beneath the headline are down 67%, 60 or 70%, having topped out in December of last year or perhaps even earlier in the case of some of those

low-profit tech stocks. But I would argue the market is reacting appropriately to the combination of the worsening fundamentals in corporate America and the consistency with which Federal Reserve and central bank individuals are reminding people that it is not risk assets that is their primary objective, but the controlling of inflation. Right. But if you think that they may break something and the economy is going to be worse off as a result of that and earnings projections, there's still 8 percent earnings growth for next year. Hasn't even been taken down yet. So if I tell you the economy might be worse because of the Fed, and earnings may be worse than we think for all of the reasons that I just told you.

Oh, by the way, the dollar is a problem too. Is the stock market adequately pricing all of that in? So first of all, I don't think so. I've made the case that I think we're probably going to make lower lows. We're in the process of making lower lows. But with respect to earnings, and I know everyone comes on and says this, nine of the 11 sectors have lower earnings estimates today than they did in, say, March. Nine of the 11 sectors are lower. Part of the problem for the headline is despite its small size, the energy sector has enormous earnings expectations, at least for this year. Next year, obviously, not quite so much. You are seeing that start to happen. I don't know that we need to have EPS estimates go down 200, 190. Some people are positing.

I don't know that you need to go down that far. But you're in the process right now, and perhaps third quarter earnings season will accelerate it. You're in the process of reevaluating what things are going to look like over the next four quarters. And so when you say, well, we're trading at 15 times the next four quarters, 16 times next year's earnings, whatever it is, that probably has to come down a little further, which again, to reiterate, results in the S&P ending up somewhere in the 3,000 to 3,500 range, give or take. What about tech? NASDAQ 100 below the June, mid-June low. Tech's got a problem okay it's rising rates it's slower growth it's stocks that were goosed more than any other stocks by free money and low rates and now it's a come back to earth moment the

problem is you don't know how far you have to come back down to earth for some of these stocks what do you think the biggest ones in the market by the way yeah well listen i mean you've discussed and you're well aware that that perhaps the last, by the way. Yeah, well, listen, I mean, you've discussed and you're well aware that perhaps the last man standing, the Googles and the Microsofts of the world are now breaking down. The Apples of the world are now breaking down to new lows. I don't know where tech ends up. Obviously, there's a lot that goes into tech valuations, both on a multiple and a growth standpoint, that makes it very difficult. What I would also argue, though, is it's not just tech that's bringing it.

I mean, we talk a lot about the semiconductors breaking down to new lows and obviously the big gen. SMH is a new 52-week low today. But I would also add tobacco, health care equipment names. Some of the consumer staples sectors are starting to make new lows as well. So you do have a broadening out of the weakness, so to speak, beyond those generals to which everybody pays the most attention. Let's bring in Victoria Green of G-Squared Private Wealth and CNBC contributor Jason Snipe of Odyssey Capital Advisors as we broaden out our conversation. Victoria, you've been negative. Everybody knows that, at least if they've watched you on this program. Now, you know, as I said, ugly close to an ugly day, an ugly month, and an ugly quarter. Does it just roll into October?

Do we have relief in sight in any way? Yeah, that last 15 minutes wasn't fun at all. It's like they couldn't even let us get out of September. Where we were, we had to drop another 100 points, it felt like, in that last 15 minutes. I do think you can see a little bit of a rebound in October. We're hitting oversold on RSI. I do think we're still going to push lower to 34, 3500 on the S&P 500. There's just too many, as you discussed earlier, the dollar is a huge headwind. And kind of some of the thought right now is the dollar is going to

break some people's Q3 earnings. You talk like on Microsoft and how much they're going to have issues with currency translation. You know, Nike talked about it and you have to listen to your Nikes and your apples of the world and realize that there is some concern about glowing. There is concern about slowing global growth. What's going to happen with China? You know, their COVID zero policy is so hard to predict. And generally, the whole European mess, especially the energy crisis over there. I just look at this and say, I'm not a buyer yet. I want to stay defensive. I like my cash position. I like my three to six month treasuries. And we're really waiting a little bit. And we are going to see a capitulation and we're getting a little close.

JP Morgan capitulated this week. They're bullish. They're very bullish viewpoint. They mentioned now they're pulling back on that at the same week that Uber bear Morgan Stanley came out saying, well, we're almost done with the bear market. So now that you see everybody starting to give up their positioning, typically that's closer to the bottom. You know, Jason, we as we were discussing with Dan, I feel like we have a flock of canaries.

Now, what was Target became Walmart became FedEx and then you had a micron and now you got Nike and then you got Carnival. I mean, at what point do we really stand up and say we may have a bigger problem than we thought with earnings because inflation has remained sticky for too long. Pricing power is evaporating in front of our eyes and margins are going to get hit as a result. And then ultimately those stock prices are going to go down. Yeah, no doubt, Scott. I mean, obviously, we saw a PCE earlier this morning that was hotter than expected. Now, albeit still moderating some. But inflation is a genie that's out of the bottle and it's hard to put back in.

Right. So obviously, we also heard from the Fed this week a lot of commentary. They're going to stay engaged as they should because inflation continues to be a problem. The other thing I would say as it relates to margins, we heard from Nike, as you mentioned, Walmart, Target, inventory is absolutely a problem. We have a supply glut. Supply chains have began to ease. So there's a lot of inventory that was bought up in Q1, Q2, that now we have to get rid of and unload. And that's clearance pricing. So margins are under pressure. So I think a lot of that will show up in earnings, unfortunately. And as Victoria mentioned, FX is just a major problem.

That's gonna hit a lot of the tech names that we've all so loved over the last decade, which I think a lot of these names will start to feel some pain with demand slowing globally. So there's a lot of headwinds that I think still remain in the front view that we're all going to have to contend with as we go through the rest of the year. Down to even 500, it looks like we're settling out as we still come to the end of this day and month and quarter, all in crescendo, really, of the negative sentiment that's existed for so

many weeks now. Victoria, if you think we're going lower from here, let's say we're at $3,600 because we're just shy of that. What's a reasonable place you're looking to put some new money to work in, figuring you're a long-term investor and at some point you're just going to do it, you're not going to be able to pick the exact moment anyway? Sure. I'm tempted at $3,500 really like it at $34, and I'm buying the hell out of it at $32. $32? Hey, Victoria, I mean, if you're a buyer, and I don't mean this disrespectfully, but if you're a buyer at $3,500, we're at $3,585. Is that not close enough? No, and that's what I talked about. We're near capitulation, right? You're seeing the general start to fall. Your Apples, your Microsoft, your Googles, your untouchables have become

touchable this year. And so when that starts to happen, your generals fall, you have 90% plus down days. You have this sentiment that has soured so much. You have analysts capitulating and giving up their positioning. That takes to be closer to the bottom. Also, historically, when we have a bad month, as we had in September, that's closer to the end of the bear market. And so I look at all these signals and I'm getting a little bit excited that that Q4 is probably going to be the end of the pain. I don't think the Fed puts coming in Q4. So that's still that role right there. But I think that they could be seeing the pain.

And the one thing I really, really want to see, and I know this sounds counterintuitive, but if unemployment starts to creep up or unemployment keeps up quickly, that is going to be a signal that things have gotten bad enough that it's going to get good for the Fed. And that's the signal the market's looking for. So when I talk about starting to buy at $3,500, I'm not putting all in. But as you talked about, dollar cost averaging on your way down is a tried and true strategy of how to make money in a bear market. And I always remind investors, similar to what Warren Buffett says, investors make their money in a bear market, but it's very difficult to pull the trigger because you're pulling the trigger when the world feels the darkest since the markets are leading indicators. You're going to buy when earnings leak, when analysts are adjusting down, when downgrades are happening, when credit spreads are blowing out.

That is the time to start to be a buyer, and I think we're getting very, very close. I got to interrupt. I'm going to disagree for a second here. Like the idea that I would be a buyer when the unemployment rate is going up is what's confusing to me. And I know there's a lot of people out there making the case that the Fed's going to stop at some point and the stock market's going to rip. And I think inherent in this is the confusion that I feel, at least speaking for myself, that I feel in the market right now. We've sold off 25% in front of the broad economic weakness that I think is a foregone conclusion at this point.

Why would I be a buyer of stocks as the ISM starts moving below 50, as the unemployment rate starts turning up, as corporate earnings estimates start worsening? That seems counterintuitive to me that I want to buy as that starts, as that stuff, which is for 100 hundred years of market history been negative for stock prices why would I start buying them right now some some have been negative but you have to think about this we're at historically low unemployment so it's going to come up and that's the only thing that's going to stop the Fed and the moment the Fed puts any type

of capitulation out there any time change in verbiage any change in the way they're speaking you know the market's going to rally on that so no no, I don't want to be super early. I'm not buying the very growthy sectors. I'm staying a little defensive. But if you have dry powder, and I liked a stock when it was trading at 100 and it's trading at 75 now, I think you start to average your way back in. And some of those are very, very lagging indicators. And so they're going to move late. Think about the best time to buy in 2008, March 2008. Numbers were terrible. What was the best time to buy in 2020?

March 2020. Numbers were terrible. Everything was getting better in March. The reason why the market rallied was because... No, it wasn't. Oh, my friend. Oh, my friend. Please go check it. Instead of losing 700,000 jobs, we lost 600,000 jobs.

We lost 500,000 jobs. The second derivative came into play. And that, along with the Fed buying everything and the suspension of FASB, I think it was 157. It's been 20 years since I thought about it, was ultimately what made for the bottom. Jason, if I could just shift this over to you for one second. Are you a buyer as the unemployment rate starts going up and starts worsening? I'm just going to sit back. I'm going to move out of the picture. You can just go ahead. So what I would say, Dan, I mean, I think what I'm just going to sit back. I'm going to move out of the picture. You can just go ahead. So what I would say, Dan, I mean, I think what I'm extracting from what Victoria just said is, you know, it's really about the Fed. So if unemployment starts, so if I look at claims as an example this week, it was at a five-month low this week, right?

So obviously the labor market is extremely tight. You know, but if it starts to loosen up some, maybe that's a shift in gear from the Fed. And I think that's what Victoria is talking about. So for me, I'm firmly in belief of dollar cost averaging into this market because you can't just sit on the sidelines and just wait for brighter days. You have to be engaged. I mean, that's the opportunity where, you know, into the long run. So for me, I think that's really the point is if unemployment starts to creep up moderately, so

maybe the Fed pauses. I'm not talking about cuts, but maybe they pause and the markets start to move a little bit. I think that's my perspective. You got another one? Can I go? No, please. Jason, are you looking at opportunities now to do that, to start wading into some of the areas that you've been looking at? Or are you too afraid because you think that the market has another leg lower and you're just going to wait? Yeah. So we've been relatively defensive all year. You know, we're still patient on growth. I mean, the market's trading at 15 times. You know, growth is trading around 22 times. So I think there is still a leg lower. But again, we have an abandoned growth, to answer your question, Scott. So we have been dollar cost

averaging slowly into some of the more cyclical areas of the market. Like, as an example, I think the semis start to look attractive right now. They've really gotten beaten down beaten down you know so from my perspective i think there there is an opportunity there again not creating a full position but starting to leg in slowly you know victoria i'm looking at some of the things that you like in this market and um ibm is an interesting one you want to tell our viewers why you like it here it's it's not the big old blue of old the new ceo came in when they bought Red Hat, they really repositioned themselves in the hybrid cloud space. As well as it's a very reasonable value stock. It's well below the industry average. I think it's right around 10 times.

You've got about a 5% dividend yield. And the services that it provides, we also think there's a very good moat. And so we should see them continue to get revenues. They're continuing to expand their services. Because the hybrid cloud is very interesting. As people have moved from off-site data centers into the cloud, you still have to have some connection into your system. And that's where Red Hat and that's where IBM really shines. And they continue to make technology acquisitions.

So this is a changing company. They've done this before when they sold off the NOMO. They got out of PCs. They've repositioned themselves. And it takes a while. It's like turning a battleship. It's not something that happens overnight but i do still believe this is a good turnaround story as well as a defensive position right now with revenues that can hold up if we see companies starting to look to cut corners there's still a lot of spending you

have to do in it to keep your system secure and running and ibm's well positioned to get that corporate spending lastly costco since we began by you know mentioning nike and retailer were thinking about consumers inventories and all the like of why do you like this right here dot fifty hot dog no i think there's more to it than that but they are very u s focus on the other side i'm with i'm with you on that but but i need more and so they're about seventy five percent u s so they're less exposed to the dollar for

the where the revenues come from as well as as Nike has problems with a lot of inventory some of these wholesales like a Costco like a TJ Maxx actually get to buy that inventory cheaper so one they have loyal client base to there is discount shopping and so as people feel the pinch they tend to be looking for where they can maximize their dollar and Costco has a great reputation for that and then I do like the fact they're less exposed to the looking for where they can maximize their dollar. And Costco has a great reputation for that. And then I do like the fact they're less exposed to the dollar for where the revenues are coming from. So if they're about 72% U.S., they've got one in Iceland. I always like mentioning that, that they've expanded to Iceland. But then they're about 15% in Canada. And yes, the dollar versus

Canadian dollar has gone up, but it's not been quite as bad as companies that are more exposed to the euro, the yen, and some of the other currencies. So I think it's a resilient stock and has very good historic defensive properties. And who wouldn't go there for the $5 rotisserie chicken and the $1.50 hot dog? So as people look for those bargains, they go to Costco. Gloomy day, but you guys livened it up. That's for sure. I appreciate it very much. Enjoy the weekend. Victoria Jason, of course, Dan Greenhousehouse sitting right next to me. That was fun. Thank you. Thank you, sir.

Always fun. That was a pleasure. All right. Let's get to our Twitter question of the day. Netflix has been one of the best performers of the quarter. Is the next stop for that stock $300? Or is it $200? Maybe it depends a little on what the market does. We can head to at CNBC Overtime on Twitter.

Cast your vote. We'll share those results later on in the show. We're just getting started, though, here in overtime. Up next, one of the last bulls standing. Fun Strats' Tom Lee is with us. We'll find out if he's sticking with his big year-end breakout call. We're live from the New York Stock Exchange on this Friday OT. Right back.

Welcome back. Stocks ending this week, month, and quarter on a sour note. Inflation, as you know, still red hot. So what's in store for your money as we kick off the final quarter of the year? Joining us now is CNBC contributor Tom Lee. He's the head of research at Fundstrat. What some might say is why, well, certainly is one of the last bulls standing. The is tom is that going to change anytime soon oh scott i mean i i think the bull case has been really bloodied uh this year i mean it's been three quarters of disappointing market performance um but for reasons that we've been explaining to our clients i think a lot of these headwinds that have been really tough on stocks, especially inflationary pressures, I think the odds are going to favor a big term in the fourth quarter.

And I heard the debate in the prior segment. I think 1982 is really an important analog. In 1982, the market's focus was almost solely inflation. And it was really when the inflation pressures broke in a way that convinced markets is when stocks bottomed it wasn't a Fed pivot it was really when the market viewed a pivot as being realistic and it's a reverse checkmark rally I mean the market goes vertical in fact when people talk about unemployment unemployment rate in August was 9% it still jumped to 11% by December but the stock market rose fifty percent I think ultimately if inflation breaks in a way that's convincing the next few

months you don't have to wait for the Fed pivot and that's what we think is going to happen in the next few months. I mean the the oft criticized Fed and their members who have been speaking publicly continue to come out and say, look, we're talking to corporate executives and leaders and board members, and they're telling us that they don't see inflation subsiding the way that you might suggest. I mean, yeah, if you look at the gas pump, OK, gas prices are down elsewhere. They're not coming down. Carnival today. Carnival comes out. Food's up.

Energy's up. You know, they can't raise their prices enough to deal with that anymore. So they have to discount, which is a hit on margins. And Nike comes out and says, we have too much inventory. And they're going to have to discount. And that's going to be a hit on gross margins. That's the real story, isn't it? Are we ignoring what's about to take place throughout corporate America and in earnings and then how that funnels through to stock prices, Tom?

Scott, I mean, just to be clear, like when Carnival's discounting, that's disinflation to the consumer. When Nike discounts, that's a disinflation to the consumer. So that's actually taking out inflationary pressures. It is correct that these earnings come down. But again, in 82, the 82 to 90 stock market boom, which was up a 223% stock market rise, was not even earnings driven. Earnings only rose about 9% in that eight year period. When inflationary pressures break, and I think we're still working through that, investors are going to view that as almost taking out the biggest tail risk from equity risk premium. I think that's why stocks can recover far faster than earnings, because you're now basically vanquishing the biggest threat to stock markets. So I think if inflation breaks, and I think a lot of leading indicators argue that,

you're really going to create a condition for stocks to do well for quite a long time. And I think even Powell's made that same statement. We just have to defeat inflation. But again, I just think when you look at ISM prices paid or underlying inflation gauges, leading indicators, consumer UMICH surveys today, inflation expectations have really improved dramatically. In fact, even Fed fund futures is below the Fed's dot plot. I mean, the market is now below where the Fed is expecting rates to be. That's a reverse reward right after the September

FOMC. So I think it's gloomy. I just think the probabilities of a lot of this coming together next three months is huge. And the market's reaction is going to be pretty explosive. So margins don't matter. The only thing that matters is inflation coming down and the Fed ultimately being able to pivot off of their most aggressive and hawkish stance in decades? Scott, markets don't bottom when PEs are low. They bottom at high PEs because earnings, you know, the earnings sort of delivery isn't going to be on the delivered earnings. It's really the expectation of earnings. And so, yes, I'm going to make the statement that I think 1982 is still the best way

to look at what will drive markets in the next few months. And it's going to be less about the E and it's more about the PE reflecting the elimination of inflation. You know, the other point that I want to make that made me think of you immediately was this note today from Marko Kalanovic of J.P. Morgan, who has on every occasion, like you have, at moments of apparent peril, puts a note out that suggests we remain more positive. This too shall pass. Today says, quote,

We're increasingly worried about central banks making a policy error and of new geopolitical tail risks following the destruction of Nord Stream. Right. To me, that sounds like he's ready to throw in the towel or at least getting awfully close. You're not swayed at all, worried that despite what you think is happening in inflation, that the Fed's not going to break something along the way? Scott, every day that markets lose liquidity and volatility rises, the risk of an accident grows. I mean, it is a race against time that way because we know the Fed wants to defeat inflation. They have to be very tough. And they've been stalwart. And I think markets respect it. But it's also been a difficult time for the Fed because the deliver inflation,

you know, the hard print hasn't supported anything that would, as you're pointing out, make them at all more comfortable. So it is a race against time that way. I think there are cracks happening, you know, in whether it's in the loan market or in European sovereign bonds. This is going to test the will of central banks. But again, I think that's why third quarter was pretty miserable. I mean, you know, in the third quarter through mid-September, the S&P was up close to five percent and the last two weeks have been uh utterly savage but i think that's reflecting everything that marco's actually pointing out the the last thing i want to ask you about before we go is you continue to recommend to our viewers

uh and the readers of your research mega cap tech and it's been an awful place to be over the last month at minimum. Why is it going to get better anytime soon, given the environment that we seem to be in? And you have a lot of these stocks hitting new lows. Well, yeah, unfortunately, MegaCap Tech is liquid. It's widely held. So it's a source of funds um they're gonna have some sensitivity to the business cycle whether it's ad spend or you know capex but they make bank of cap tech is the solution out of inflation if the world is short human labor which is really what's being exposed uh since the expansion right that's really what's driving inflation. You need to have digital human capital. I mean, that's what tech companies solve. So the U.S. is really set to become the

exporter of human digital capital or, you know, digital labor for the next decade. I would say that that's going to be a huge earning story. I mean, how else are we going to solve labor shortage globally? And that's mega cap tech. So, I mean, it's a tough time to solve labor shortage globally? And that's mega cap tech. So, I mean, it's a tough time to own it, but I'm sure you're going to have a lot of fundamental guys say, well, look, these are great stories. They just got 20% cheaper on a PE basis or 30%. But their earnings, once we're out of this cycle, are going to grow even faster. I mean, I would be a buyer of that. So, yes, again, the bulls, including us, have not really had much success this year. But, you know, there's a lot that could change. And I think it could change almost in a pivot.

Just doesn't make that the last. We'll make that the last word. Tom, I always appreciate your time. Thank you. Thank you. That's fun. Strats Tom Lee joining us. We have a news alert on Disney here in overtime. Julia Boorstin with that for us. Hi, Julia. Disney has appointed Carolyn Everson to its board. Carolyn Everson was most recently president of Instacart. And before that, she was Meta's advertising chief. And what's most notable here is that Dan Loeb of Third Point says that they are happy about this appointment, saying we are pleased with our productive and ongoing dialogue with Bob and

Disney's management team going on to say the expansion of Disney's board of directors to include Carolyn Everson will add an important new perspective to an already accomplished group. Now, just want to remind here that Dan Loeb, activist investor, he had been pushing for various changes at Disney, including the addition of some new board members. And there was an 8K that was filed as part of this whole announcement saying that Third Point has agreed to certain standstill provisions, including among other things, agreeing not to acquire beneficial ownership in excess of 2 percent of the company's then outstanding shares of common stock, and also to seek the removal of any member of the board or propose any nominee for election to the board. Also saying they've agreed to not present any proposal for consideration at a stockholder meeting or solicit any proxy or written consent of stockholders.

So it really seems like this appointment here is an essential piece of these two sides, Dan Loeb and Third Point and Disney coming to an agreement of how this company is going to be run and who's going to be part of that, who's going to be on the board. Back over to you. Yeah, sure. Sounds like, you know, a settlement is really the best word to use, I think. Also, you mentioned, you know, what Third Point's been involved with here. It seems as though their desires, if you want to use that word, have evolved as well of, you know, pushing for that ESPN spinoff and then reversing course on that with Mr. Loeb suggesting that he had a better understanding of ESPN's role within Disney. And perhaps that's all a precursor. Who knows to what happens today

with this board appointment and the ultimate settlement, Julia. Yeah, ultimately, and looking at this announcement here, the fact that this is really a joint press release from Third Point as well as Disney, and there are quotes from both Bob Chapek and Dan Loeb in this announcement announcement shows that the two sides have been in very close not just talks but in collaboration and putting this together so it does seem like uh you know a compromise an agreement and moving forward looks like Dan Loeb has has gotten what he wants at least for now from that Disney management and from Bob Chapek in particular he tends to uh to get what he wants.

Thank you, Julia. Julia Borsten with the news update on Disney. Time for a CNBC News Update with Shepard Smith. Hi, Shep. Hi, Scott. From the news on CNBC, here's what's happening. Hurricane Ian made landfall in the United States for the second time this afternoon, coming ashore between Charleston and Myrtle Beach in Georgetown County, South Carolina.

Storm surge flooding beach areas and neighborhoods and washing out roads. Authorities on Pawleys Island calling their seven-foot storm surge and resulting flooding catastrophic. A giant pier on that island destroyed by the pounding waves. The Ukrainian President Volodymyr Zelensky with a surprise announcement today in Kiev submitting an accelerated application to join NATO. It's largely a symbolic move because it would require unanimous NATO support. It comes in response to Russia's illegal annexation of four regions in Ukraine just today. And Vladimir Putin holding a grand signing ceremony in Moscow this morning. Russia then vetoed a U.N. resolution condemning the sham

referenda that led to Putin's land grab. Tonight, we're live in South Carolina and southwest Florida with the latest on the aftermath of Hurricane Ian. And we'll hear from a neuroscientist about the concussion suffered last night by the Dolphins quarterback to attack tag of Iloa and what that whole situation could bring on the news. 7 Eastern, CNBC. Scott, back to you. That was tough to watch, that injury last night, Shep. Look forward to the broadcast tonight. That's Shepard Smith.

All right, up next, playing the pullback. Apple shares down more than 12% in September. Our next guest, though, says time to get in. Capital Wealth Planning's Kevin Simpson breaks down his strategy. He'll do it next. Apple putting in its worst month in three years, and our next guest is using that pullback to buy more shares. Joining us now is Kevin Simpson, founder and CIO of Capital Wealth Planning. It's good to see you stepping in here. You don't you think the most of the selling's over then? Not yet, Scott, but how much fun have we had talking about Apple since May? We tried to sneak another buy order in today at 135. We couldn't get it filled. But if you

remember, it wasn't that long ago, maybe three weeks, four weeks ago when we sold out the entire position. Of course, it went a little bit higher thereafter. And two weeks ago, we started reentering the position. I think we got in around 153. You and I talked about it that day. This week, we were able to acquire a few more shares between 148 and 150. Then with the late week sell-off, like I said, we tried to sneak in at 135. We couldn't get filled. But the last time we entered the position, we were in between 122 and 133. So, P.E.'s coming down to about 22. Certainly, there's lots of dry powder within their corporate coffers for share buybacks. The entire markets are under a lot of stress. So, I think we'll still see some weakness in here. But that's the whole beauty of this conversation that you and I have, because it's really teaching viewers and educating how we think about accumulating positions, not trading, but really giving what the tape, taking advantage of what the tape gives us. Unless the tape is going to give you more pain, right? I mean, you had the downgrade yesterday on concerns of a weakening consumer and some, even though the, you know, the valuation has

come down to, let's call it 23-ish, 22, 23, they would suggest it's still expensive at these levels. How do you counter that? Yeah, I mean, people, I think, will always pay up for growth, but I'm in the camp that multiples need to come down. We talk so much about multiple compression. I don't know if we always explain it, but when you have zero interest rates and free money, you can have crazy multiples. You don't even need an E for a PE. Stocks can go up. But when interest rates go up, and they've gone up at an amazing clip this year in 2022, multiples have to come down.

So where we ultimately get to, I think, has a lot to do with interest rates, which at this point show no signs of stopping. But if we think back over history, maybe multiples are going to end up for next year somewhere between 14 and 18. If you want to give Apple a little credit, a little boost into that 20 to 22 range where we think it's still OK, then then you can be accumulating shares here for sure, but not for the next two to three weeks, really for the next two to five years. I got you. We'll make that the last word. I got bounce. Kevin's fun as always. Thank you. That's Kevin Simpson. Capital Wealth Planning, joining us today on Apple. Up next, the PayPal

pop. The payment stock, a big winner this quarter. So will that rally continue into year end? We will debate that in today's Halftime Overtime. In today's Halftime Overtime, PayPal snapping a four-quarter losing streak, its best quarterly performance now in more than two years. And while requisite capitals Bryn Talkington is optimistic on the company's future, she's still slightly cautious about adding more shares just yet. This is the first quarter that I feel like they had their act together. I want to wait till this quarter, see if that continues, see if sentiment continues before I add to it. It's done well this quarter but it's still an expensive stock and as i said earlier i don't think we're gonna i think you

just have to be patient here odyssey's jason snipe is also a paypal shareholder he's back with us now how do you feel about it right here given the what it's been chopped in half absolutely scott i mean it's been a tough slate. It's gone south for about 19 months. You know, it's February 2021. It was above $300. So it's at 86 now. I agree with Bryn. It's still expensive stock trading at 22 times. But I would say this, you know, they announced a $15 billion buyback. They're going to cut costs about $1.3 billion in 2023 at the least. So I think they're also, I would say Venmo is a juggernaut. It was up 9% in the latest quarter, you know, not off those crazy numbers through the pandemic where a lot of demand was pulled forward.

But I think the stock has been has gotten hit for a while. It's down 54 percent year to date. I think there is an opportunity for this stock, but you've got to be patient here. You know, I wouldn't chase it, you know, but I but I do think there's an opportunity right there. I mean, there were some who would who would come back and say, you know, a stock stock prices decline even by a lot isn't reason enough in any way to get in, not in a market like this. Agreed, agreed. And I think the other part that I would say that's been a catalyst for the stock is Elliott has gotten involved and took a stake in the company. They've had a really great reputation

in kind of turning companies around. So I think that's going to be a positive catalyst for the stock going forward. And they also have a new CFO. So I think with cost cutting and the opportunity with Venmo and other strategic verticals, I think there's an opportunity. But again, be patient here. It's an expensive stock. Growth is still struggling, but it's my favorite payment stock in the space. Oh, it is. That's interesting, too. And I was going to ask you, I'm glad you mentioned, Elliot, the idea of simply thinking that, yes, I think the stock has responded since they've gotten involved. You know, because prior to that, especially with the new CFO, you know, there was some discussion and also concern around just where the stock was going. What are they trying to do with the existing using base? What are they doing as far as new business?

And costs had gotten a little bit out of control. So I think with the new CFO, Elliott getting involved, I think a floor has been set, and I think it could continue to move from here. All right. We'll talk to you again. Jason, thank you. We'll see you soon. That's Jason Snipe joining us. Up next, your rapid recap. Kate Rogers is standing by with some standout stats from the quarter. Kate? Scott, it's been a rocky quarter. We're going to break down the winners and losers after the break on Overtime. We are wrapping up a big quarter on Wall Street,

a disappointing one, let's be clear. Kate Rogers is here with our rapid recap. Hi, Kate. Hey again, Scott. The market closed out an ugly quarter today, the third straight negative one for the major averages. The Nasdaq was the relative outperformer, but still down nearly 4%. Digging a little deeper here, only two S&P sectors positive in Q3, consumer discretionary and energy eking out a 1% gain.

On the less rosy side, real estate and communication services, the major sector underperformers down over 11%. Turning to the Dow, Intel, Verizon and Nike, the laggards this quarter. Intel by far the worst, down some 31% in the past three months. Nike down nearly 19%. Much of that coming today when the stock slid 12% after earnings. And some monthly stats for you, Scott. The worst September Nasdaq since 2008. the Dow's worst September since 2002. But we'll end on a positive note here. What worked in Q3? Some health care names. Biogen, Cardinal Health and Molina Health all posting big gains in Q3. Back over to you. All right, Kate, appreciate it. Kate Rogers up next, the top energy play for your portfolio. One money manager says this stock is one of the

better bargain buys in the market. We're going to bring you the name in our two-minute drill. We'll do it next. All right, to the results now of our Twitter question. We asked what you think about Netflix. It was one of the best performers in Q3. We want to know where it's heading from here. 200 or 300? And the majority of you said more likely heading back down to 200 before reaching 300. Not so high hopes for Netflix. There's your vote. Wow. Nearly 60 percent. Two thirds. All right. Up next, our two minute drill.

O.T. is right back. All right. Welcome back. It's time for our two minute drill now to end this week. Joining us now is Dori Wiley, CEO of Commerce Street Capital. It's good to see you again. Let's talk some stocks. I mean, it's hard to pick stocks in this environment, but you're going to try to anyway. And Microsoft, you know, that's one of these stocks we've been talking about hitting 52-week lows. Tough to look at. Why is now the time to get into this one? And it needs to be more than just the fact that it hit a 52-week low.

Well, the fear is building up, and you're right, it's hard to get your nerve up. But if you look at the VIX, it's been over 30 for the last five days. The last two times it did this this year, we got nice bounces for the next 30 days, and you made good money. So we are probably going into a recession. We got more rate hikes. But what's that VIX number? And that tells me I can buy a good blue-chip stock like Microsoft under a 20 PE with the you know massive margins and the position they have. I've been looking for a chance to get into this stock. So you buy this

stock and you just close your eyes and you'll either make money next month or for sure in the next three years. I mean when FedEx did what it did it made you want to close your eyes. Why should I open them for UPS? They got to deliver packages and UPS is trading at a 52 week low. And UPS, one of the things that the market's not paying attention to, everyone's been adjusting on the street, their earnings numbers down. They've not been doing that for UPS. They've got a rock solid track record of hitting their earnings numbers and they're trading at 52 week lows. And I think that's another one in three years. You'll be glad you bought it. All right. We got less than 30 seconds. Pioneer play on natural gas. Well, and oil as well. They're the best position in the

Permian. The whole market is worried about oil prices because of demand. But it's a supply problem. Every single person in the industry says we have a structural supply problem. Pay me 15 and a half percent on a PXD, Pioneer Natural Resources, while I wait for it to get sorted out. It's extremely cheap, and very few individuals retail have discovered it like the institutions have. We gotta go.

Dori, thank you very much. That does it for us. See you next week.