Closing Bell - Closing Bell: The case to “let crypto burn,” Outlook for gold prices, Bonds in fashion 11/18/22

Episode Date: November 18, 2022

Stocks moved higher in Friday trading after a choppy session. Bob Michele from J.P. Morgan Asset Management takes a closer look at the bond market in light of fresh comments from the Fed. Barbara Doran from BD8 Capital breaks down the action in equities and where she’s looking for upside. Brandeis Business School Professor Stephen Cecchetti makes the case to regulators to “let crypto burn” in the wake of the FTX crash. The CEO of Barrick Gold gives his outlook for metals prices. Plus the latest on oil’s rough week, the Elizabeth Holmes trial, Grindr’s debut, and big moves for retail stocks.

The stock struggling for direction in a choppy session on Wall Street. The major averages are all pacing for losses on the week. This is the make or break hour for your money. Welcome to Closing Bell. I'm Mike Santoli in for Sarah Eisen. Coming up on today's show, we'll talk to the CEO of Barrick Gold, fresh off the company's investor day, about his outlook for gold prices, which have seen some resilience of late, up about 6% in the

last month. Let's get you situated with how the markets have been acting. Yes, a down week, modestly so for the S&P 500. Came after big gains leading up to it, of course, from mid-October after that CPI report. We did have a rally that peaked at around 15%. Pulled back kind of modestly since then under this 4,000 level. Not really decisively breaking higher out of this lower end of the range, but also hovering still above those October lows.

The bond market really casting kind of a shadow over equities, at least the implied message of an inverted Treasury yield curve. This has been the case for a little while now, for a few months. Here you have, oh, we don't have the S&P, 210-year curve, pretty steeply inverted. This has tended to happen in advance and sometimes well in advance of an actual recession. Here you have it all the way going back to the mid-'80s. So this is 1989. You got the year 2000 in here, 06, 07. So it has happened, but it's usually been farther in advance of when, in fact, the recession has officially hit.

But it's still something that acts as a little bit of something on the shoulder of equity investors that maybe they should not get too over-optimistic about the economic outlook for next year. We'll talk more about that. But it has been a week packed with Fed commentary. Today we heard from Boston Fed President Susan Collins on CNBC. Our Steve Leisman started by asking if she could see a way for the Fed to avoid a recession while beating inflation. I do see a pathway in which we're able to do that without needing to increase unemployment more than some modest amount. And I'm not going to put numbers on that. At the same time, I'm very realistic. There are a lot of risks. There are no certainties here.

Let's bring in Bob Michael, J.P. Morgan Asset Management, head of Global Fixed Income Strategy, to talk about all that. Bob, good to see you. Thanks for coming in. Good to see you, Mike. So I guess what's your expectation about exactly how much farther the Fed will have to go raising short rates, I guess, at what pace? And then how does the economy respond? Well, it sounds to us like the Fed is a couple of meetings away from calling a truce on the market and us beleaguered bond investors. So we think they're going to do a 50 in December, then a 25 in February.

By then, inflation and growth should both be cooling off pretty dramatically. We expect the Fed funds rate at four and a half to four and three quarters percent, inflation to be below that at the core rate. And that will allow them to pause and assess the catch up effects of everything they've done so far. That implies you think they're going to take this pause short of their ultimate assumed target for where Fed funds would have to go to? And notice I didn't say they're going to pivot. I don't think they're going to stop and then start cutting rates. I think they're going to stop.

They've always raised the Fed funds rate above inflation every single time they've hiked rates. So once they get to that point and they're not there yet, then that allows them to catch their breath. And as they say, watch the cumulative and lagged effects. And we're starting to see the impact of that. They're biting the real economy. And when looking at the CPI and PPI, it looks as though they're biting into inflation. They're biting into the economy. I guess how deeply do you think it's going to actually hit? Well, I think they're telling us we're going to have a recession. I love Susan Collins. She sounds very aspirational to me about a soft landing.

I guess it's a possibility, one in a hundred. But they're telling us businesses and households are going to experience pain. The remedy for high inflation is very painful central bank tightening. That almost always causes a recession. So we're going to have one. I think based on the amount of inflation that we've had, we're not going to get away with a shallow recession. I think we're going to get away with something a little bit deeper than that. We should note Susan Collins did characterize it as just one scenario. She was certainly not saying it's her base case that we get to a soft landing,

but fair point, does not seem to be the Fed's primary objective, in fact, to achieve a soft landing at this point. Declining inflation, stable Fed policy, growth slowing down sounds like a pretty friendly environment for bond investors. It's about time, isn't it? For the first time in over a decade, the bond market looks appealing again. And I would say that we're swamped with clients from our wealth management platforms, from our institutional platforms, putting money into bonds again. Some for the first time in over a decade and looking to put money in.

So it should be a good bond market. And when you look at a general bond fund, at the end of last year, they were yielding just below 2%. Now they're yielding just below 5%. That's a big change. It absolutely is. And you don't have to take a whole lot of risk. There's certainly a novelty effect, it seems to me, among investors who got used to not being paid for being conservative. And you can actually get a decent, at least cash nominal yield

for not taking too much risk right now. So it's been my 40-year career, so it's a little bit more than a novelty being in the bond market. But I get the point. I think for a generation of investors, without question, I look around our floor and there's a whole generation of people that have 14 years of experience. They're in their mid-30s, but they've never seen this before. They started after the financial crisis. So where within the bond market looks to make the most sense to focus on? I think sequencing it, you've got to go to high quality bonds. You've got to buy investment grade corporates. You've got to buy a general bond fund. You've got to buy securitized credit. Take that 4.7 percent yield. That will probably fall a lot when we head

into recession. I think it's a little early to buy high yield. High yield generally peaks in yields during the middle of a recession. We think there's another several hundred basis points higher that could go in yield. The other place, very attractive right now, municipal bonds. That's one area that at the end of last year, again, you were looking at yields of just over 1%. Now they're just over 3%. So you're picking up another 200 basis points there. Is your assumption, given that outlook, that the 10-year yield has peaked at this point and that's why we're seeing it having come in already? Yeah, I think so. And when I think about our Fed forecast,

four and a half, four and three quarters, maybe they go to five. I think the 10 years already seen the peak at somewhere around four and three eighths. So I think it will hold there for a while. And, you know, how far down does inflation get, I guess, is the other question, because real yields is, you know, that calculation has implications for valuing risk assets as well. Well, it's something that we're following very closely. And we hear the Fed wants to get back to their 2 percent inflation target. We're watching core inflation. And when you look at the last CPI print, the core print, you can't look at the trailing 12 months because that gives you the wrong picture. You can't look at the trailing 12 months because that gives you the wrong picture. You can't look at the one month. That's the wrong picture.

So we're looking at three-month annualized on a rolling basis. We'd like to see that come down towards 4%. If it starts to get below 3%, then I think the Fed will have paused for a long time. And then they could start thinking about when they need to cut rates. They're in the zone, I guess, of their target. And where is that running right now, that three-month average? Nowhere near there. It's about 5.7%. All right.

Well, it could change quickly, given some of the numbers we're going up against coming into next year. Hopefully it does. All right, Bob. Hey, great to see you. Thank you very much. Bob Michael. Up next, we're digging in on the gold miners. We'll talk to the CEO of Barrick Gold about today's Investor Day

and his outlook for prices in this uncertain market. You're watching Closing Bell on CNBC. Copper and gold producer Barrick Gold is ringing the closing bell today in celebration of its Investor Day. CEO Mark Bristow telling investors the company is projected to see strong growth over the next decade. Gold prices are outperforming the S&P this year and have been on the upswing just in the last month or so. Let's bring in Barrick Gold CEO Mark Bristow. Mark, great to have you here.

Hello, Michael. Congrats on ringing the bell. Thank you. The message in general to investors today in terms of what your expectations are for, I guess, gold prices and how you're able to capitalize. You know, it's a special day for us, Michael, because we did the big merger with Rangold back in 2019. And we back out to engage with our shareholders. It's all about saying we said we would do something and we delivered that over the last just under four years. And what we've done is we've built a real foundation for

the future. And as you point out, gold is doing pretty well in an environment where the dollar's interest rates are higher than normal. That is true. Yes. I mean, real yields have been up. That sometimes creates pressure on gold. Do you expect it to stay in this zone? I know you have to build in some assumptions for what the price might be. We allocate our capital at $1,300 long term. So that's per ounce. And so that's how we allocate our capital. Remember, it's a cyclical business. It's going to go up. It's going to go down. Not necessarily in that order. One thing we can assure investors is that we make money throughout the cycle.

You would be profitable then at $1,300? I see. And part of, you know, in a big picture way, looking at your company, you're converting, you know, gold and copper into, obviously, cash that you then distribute out to shareholders. And you do it in a pretty structured way in terms of the dividends and buybacks. And also, I think the key is that we invest in national assets. Mining, by its very nature, is you're mining a country's assets. So, you know, shareholders are important, but equally the other stakeholders like our host countries. In fact, I often say to the shareholders, our host countries are more important stakeholders because they are the real drivers of our ability to deliver the value that benefits the shareholders.

And so, I mean, that would obviously be necessary to be treating those stakeholders well and to have good relationships there. What about total production capacity and adding capacity in various parts of the world? So we are today we shared with the market that we we are we've brought copper into our portfolio. So we are growing our copper business. We we we have six of the top 12 gold deposits in the world. So we've got very high quality assets in the form of gold. And we've certainly pointed to equally significant copper assets that we're now growing. And so on what we call a gold equivalent basis, if you look at it, dollars per ounce, I mean, ounces equivalent, we will grow to about six and a half million ounces a year. Interesting. The latest little bump in gold prices, I mean, who knows specifically what's what's involved.

But the decline, the collapse in cryptocurrencies, I mean, arguably is playing a role there. How do you view that? I mean, digital gold has been one way of people describing what Bitcoin is or the kind of purpose it might serve as an investment asset. You know, gold is always, through time, been a safe store of wealth. And so it's a currency that you can't create. Politicians can't print it. And so in times of stress or insecurity, gold always outperforms the other commodities, particularly the currencies. And, of course, the U.S. dollar and gold are counter-cyclical. When the dollar is strong, the gold usually is weaker. It's interesting today you've got a strong dollar and a good gold price. So I think it really signals the complexity of the multiple classes, polyclasses situation we are in as a globe and the global economy.

Right. Certainly don't lack for, you know, sources of uncertainty that might be helping on the gold price as well. You say you'd be profitable when you invest capital at the assumption of $1,300 per ounce, but costs have to have been going up. I mean, what's been the impact there? Today, we announced the lifting of our base gold price. We use an input cost price, so we adjust our long-term gold price relative to the input costs. And we see a long-term impact, negative impact on costs of around 9%. And so

we used to allocate at $1,200. We now allocate at $1,300. And that's the reason. And is the overall industry in about that same position or no? No, we would, I would probably suggest that the industry's break-even is more like $1,500 gold. Okay, there you go. So you have that advantage. Well, Mark, it was great to catch up with you. Thank you very much. Always a great pleasure and thank you for having us. All right, appreciate it. All right, let's check out the markets here as we approach the close. You have the Dow actually popping a little bit up about 131 S&P 500 up a quarter of a percent. The Nasdaq still lagging down marginally. The Russell 2000 up four tenths of one percent coming up in the wake of the epic FTX collapse.

Should regulators just let crypto burn? That's the argument in a new piece in the Financial Times saying regulation would make crypto less safe. We'll talk to one of the authors of that story next. As we head to a break, check out shares of Carvana hitting the brakes again today, even as the company undertakes its cost-cutting measures by laying off 8% of its staff. Carvana down almost 7% today, off 97% in the last year. We'll be right back. What's Wall Street buzzing about? Taylor Swift again.

We told you yesterday about how Ticketmaster went down in flames as Taylor Swift fans rushed the website for tickets to her Heiress tour. This afternoon, the New York Times out with a report saying Justice Department officials have opened an antitrust investigation into Ticketmaster, which is owned by Live Nation. Now, that stock, Live Nation, falling on the news. However, sources told the Times their investigation started before the botched Taylor Swift sale. They're looking into whether the company holds a monopoly in the industry. According to one of the sources, NBC News has reached out to representatives for Live Nation, but has not heard back yet. Meantime, Taylor Swift is apologizing to her fans for the disaster. She posted her frustrations on Instagram today, saying,

I'm not going to make excuses for anyone because we asked them multiple times if they could handle this kind of demand, and we were assured they could. All right, two million tickets sold, but not without difficulty, apparently. We are awaiting the sentencing of Theranos founder Elizabeth Holmes, who was convicted on four counts of defrauding investors. Scott Cohen is outside the courthouse in San Jose with the latest details. Hello, Scott. Hi, Mike.

As we've been reporting, there's a huge gulf between what the government wants Elizabeth Holmes sentenced to. They want 15 years. And what Holmes is saying, she should get no prison time at all. Narrowing that gulf is proving to be an enormously complicated task. We're two hours into this now. The government says that she should get that stiff sentence because of her role as the leader of the fraud, because of the size of the loss, and because patients were affected. The defense says that it's not that simple. The company still had value when it went under and that she was acquitted on counts of lying to patients. It'll be up to Judge Edward Davila to sort all that out. The next step is he's going to come up with a calculation under the federal sentencing guidelines of what she should get. But those guidelines are advisory, so then he'll come

up with something else. Federal Probation Department has recommended nine years. Whatever the case, it's almost certain that Elizabeth Holmes will appeal. She is in court. She is listening intently. And she is very clearly with child child as has been speculated for quite a bit the judge has made some sort of oblique references to that making accommodations for her she'll be able to sit if she decides to address the court whether that's going to play a role in the ultimate sentence remains to be seen Mike so Scott the the sentencing guidelines I suppose it's not purely scientific based on the the counts and the conviction, but

where does it seem to be tracking at this point? Would it go in the zone of what the probation department might be suggesting? It's really hard to say because this judge has been very good at holding his cards close to the vest. But under the sentencing guidelines, if you take the government's case for this, she would be basically off the charts. It's 20 years per count. She was convicted on four counts. And because of the size of the fraud, which the government says is in excess of half a billion dollars, she would be subject to some substantial time.

But, again, the defense is saying that that's not the case. The loss is not that simple to calculate. And, again, they point out that she was acquitted of the charges of lying to patients. But the government says that's irrelevant because patients were harmed nonetheless. And so we'll see what Judge Davila has to say. His rulings throughout this trial have been split in a lot of ways. Remember, she was, as we said, acquitted of the patient charges. And some of that has to do with the evidence that he allowed into the trial but at the same time he denied her multiple motions for new trial just in the last couple of months and and so we'll see what he ultimately comes up with but um there's a lot

of talk here about what kind of a message this needs to send to silicon valley uh and the whole culture here where oftentimes hype and hope tend to take precedence over substance. Yeah, it's absolutely fair. And, of course, it's coming at a time when there's already been kind of a comeuppance to a lot of venture capitalists and a lot of founders just because of how the markets have behaved right here. Is the defense essentially saying, look, the investors, they took their risks, mistakes were made, and this is how venture capital goes? Or are they obviously conceding the nature of the count she was convicted of? Well, that's exactly what they're saying.

Making the point, though, there was not venture capital investment per se in this. This was investment funds. And the prosecution always said that that was part of the fraud, that she was not going for sophisticated investors that might understand health care. But they do say that these were sophisticated investors. They understood the risk. And they claim that there still is value left in the company, which, of course, the government disputes vehemently. Yeah, for sure.

And, of course, we know that the Walgreens and such were also thinking that there was some value there perhaps at some point. Scott, well, we'll be back to you as soon as we do have some news on the on the sentence. Thanks very much, Scott Cohn. Our next guest says regulators should, quote, let crypto burn in the wake of FTX's collapse. He'll explain why when Closing Bell returns. The fallout from the collapse of FTX is hitting rival Coinbase. Bank of America downgraded the crypto exchange's rating from buy to neutral today. The bank also slashes price target to $50. That's down from 77. That stock is down 7% today at around 45, as you see there. Analysts at B of A said they're confident Coinbase is not another FTX, but cited several new headwinds, including broader fallout from FTX's collapse and a lack of regulatory clarity.

But our next guest is warning the Feds don't regulate this industry. He says, let crypto burn, arguing regulating the industry gives legitimacy, gives it legitimacy that it does not deserve. Joining me now is Brandeis International Business School professor Steve Cecchetti. He also previously served as executive vice president and director of research at the Federal Reserve Bank of New York, also the BIS. And Steve, it's great to have you here. Just lay out the logic, as you do in your FT piece, about why regulators should resist the urge to try and set some rules for this area. Well, I think it's very simple. It would convey legitimacy on the system. I don't think that the system is doing anything to support the real economy.

And by providing a seal of approval to that activity, what they're going to end up doing is taking some responsibility for it. And people are going to hold, then hold the government responsible, and there'll be calls for public bailouts the next time this inevitably happens. So my view is that allow it to implode under the pressure of unsafe business practices and unsound business practices and the fact that it really just doesn't create any real economic value or use. Are you confident, given how the traditional financial markets and the banking system have behaved through this really boom and bust in crypto, that there are not risks of some kind of linkages or chain reactions that could come of it? Well, it's hard to see them at this point.

I mean, the banks themselves don't seem, banks per se, which are the ones we worry, those are the institutions we worry about the most, don't seem to have exposure to this. And so far as we can tell, there have been a number of surveys done and supervisors do have information about this. Banks are neither holding crypto nor are they making loans that are collateralized by crypto. So, I mean, keep in mind that the crypto system has, the whole ecosystem has fallen in apparent market capitalization from about $3 trillion a year ago to something closer to $800 billion today. And if we take out the rise in stablecoins, which are actually backed by assets in the

real economy, things like bonds and bank accounts and the like, that's what's backing, say, USD coin issued by Circle. Then the decline has not been two-thirds, but probably closer to three-quarters. So you see this huge decline, and absolutely, you know, it's been a yawn elsewhere. My view of this is it's an awful lot like a big video game so far. It's kind of isolated. And the worst thing that could happen would be that we would allow it to become connected to banks. And one of the things that regulation would do is it would allow banks and other regulated financial intermediaries to get involved in this system. And that really worries me. I mean, yeah, I get that.

It seems like it's sort of a completely off to the side type of thing. You say a big video game or maybe some kind of, you know, betting market that didn't necessarily attach itself to economic activity. On the other hand, there's a two trillion dollar loss from the peak. You're going to have people in the public and other regulators and politicians who are, you know, going to say we need to do something about this. You have companies still taking deposits from the public, putting their names on their brand names on stadiums and advertising. So, you know, I think we did actually speak to House Financial Services Chair Maxine Waters about this. And it seems as if there's going to be some movement in Congress, at least. Let's listen to what she had to say.

He was in support of regulations, which is very interesting because he never showed any attempts to deny that regulations were needed. As a matter of fact, he supported along with other crypto companies. And that's what we were moving toward. He there is referring to Sam Bankman-Fried. So perhaps it feeds into what you're saying, that a founder in this area actually wanted to have some kind of boundaries. Well, I would commend the—I would suggest that all of your viewers read the filing from the bankruptcy administrator yesterday about Bankman-ed's business practices, my guess is that he's going to end up not in very good shape. So he may have wanted regulation at some level, but my guess is

that he wouldn't have been able to meet the requirements. In fact, I would say that if you were to force that industry to meet all the regulatory requirements and compliance requirements that exist in the traditional financial system and create a strong, rigorous regulatory system, then I would be for it. And I don't think that that system would actually survive. Instead, what I'm more worried about is that there's going to be the creation of a regulatory light system, and that light system will allow existing traditional financial intermediaries and the like basically to transit into this lighter system. And so I think there's a real concern there. Now, you're absolutely right to worry about things like fraud and consumer protection, But that, I think, is something that we already have the tools to do. Yes, under general anti-fraud provisions and other business law, I suppose that might be the case. Steve, it's a very interesting position. Appreciate you articulating for us here. Thank you. Thanks for having me.

All right. And take a look at where we stand in the markets right now. The Dow is now at about 165. S&P 500 is tacked on about a third of a percent, still hovering below that 4,000 mark, where it's not really been able to close above for a few days now. NASDAQ just about flat on the Russell 2000, ahead by half a percent on the day. Oil, though, having a rough week, falling more than 11 percent. Now, coming up, an energy expert tells us whether a comeback is in the cards for crude. And you can listen to Closing Bell on the go by following the Closing Bell podcast

on your favorite podcast app. We'll be right back. Let's check out today's stealth mover, Ambarella. And the chipmaker stock really accelerating here. Tiremaker Continental, which also makes other auto technologies, announcing it will use the company's chips in its autonomous driving system. Move Wells Fargo is calling a significant endorsement of Ambarella. Now, investors have been sparking a rally in Ambarella recently. Shares now on pace for their best month in more than a year, up about 14% on the day.

Now, investors digesting a mixed bag of retail earnings today. Up next, what those results are saying about the health of consumer spending. That story, plus oil's bad week and a huge SPAC debut when we take you inside the market zone. We are now in the closing bell market zone. BDA Capital CEO Barbara Duran is here to break down these crucial moments of the trading day. Plus, Sankey researchers Paul Sankey on oil and Melissa Repko on retail. Let's get started with the markets. Indexes have actually picked up here into the close of the week, still pacing for a down week.

But the S&P now up about half percent. Barb, your thoughts in general here on the market field position, because there's two ways, I think, to characterize what's been happening. One is just another bear market rally. We've seen a couple of these double digit rebounds when the market got oversold and sentiment got too negative and they have always failed before getting too far and before breaking the downturn. On the other hand, people say bear markets have a knack for bottoming in October year end strength after midterm elections, earnings perhaps not as bad as feared. Either one of those cases make more sense to you? Yeah, I know. I think, you know, the reflex, of course, because of all the PTSD from this year, is to think this is another bear market rally. And at very well BB, people are saying, is this a repeat of the summer? You know, we went up, you know, for two months and had good returns,

just a return back to the lows again. I think there's a big difference now, though. We've had a lot more economic data points. And obviously, the CPI number and the PPI number that came in the last week excited this most recent rally. Because what you're seeing is wholesale prices, consumer prices rolling over. The consumer is weakening. We're seeing that in the savings rate, which is now below trend at 3%. You're seeing a big increase in credit being used. And of course, let's not ignore the impact of everybody seeing their stock and bond portfolios and their crypto. And that tends to be a lot of younger people, you know, involved as well. So things are weakening. And I think that the question here for the market is we've got the CPI, a PPI and a PCE number coming up in early December.

What's that going to be? Earnings are now done. So we pretty much know what's going on there. So I'm really I think the market will will tread water here. I don't think we see a return to the bear market lows until we look at the first quarter and have the company commentary on what's going on. Fourth quarter should still be OK. We're already into almost late November. And what they see then, because there is going to be much more of a bite, is that lagged effect we're all talking about in terms of the Fed hikes. already into almost late November. And what they see then, because there is going to be much more of a bite, is that lagged effect we're all talking about in terms of the Fed hikes. Yeah, there absolutely is a lot of focus on that January reporting season. It might be when

companies kind of turn their sights to what's to come for the next year and maybe have to re-guide investors. You know, one of the themes, though, aside from this, the overall index downtrend has been that the average stock has outperformed the big cap indexes. And you've seen some resilience in certain pockets of the market. It would seem almost to reward a stock by stock approach more than prior years have. Have you found that to be the case, that it's easier to find ideas that are worth acting on and where? Well, I don't think it's easier, but I think that is exactly the approach. And you've done a great job pointing out in the equal weighted S&P what the real performance is. Obviously, the tech, the big tech has gotten killed for the reasons we know very well, overcrowded valuation, etc. You know, but I think, you know, there are still pockets where you look in.

And that's also when things get crushed, like you had meta a few weeks ago. But you look in. And that's also when things get crushed, like you had met a few weeks ago. But you look in health care. You know, there is a good defensive play where things are not wildly expensive because right now that is a problem. Where do you look? Value stocks are up. Utilities are up. The staples are up and they're great and you should hold them for now, but probably not a lot of upside from here. So I think if stock picking is is it right now and you've got to look and but you can find them. But I don't think it's by sector at this moment. Yeah, fair enough. Definitely a change from the five stocks running the whole S&P as we had going into the highs of last year. Let's take a peek at energy oil ending the week deep in the red WTI crude falling to its

lowest level since September, now just above $80 a barrel. That's after about a 10 percent drop this week. We'll bring in Sankey Research lead analyst Paul Sankey to handicap it from here. And Paul, you know, a lot of talk out there that, look, there are ongoing supply concerns. The Strategic Petroleum Reserve is eventually going to stop running off. And, you know, is the price weakness just about demand concerns? Or how do you actually read the recent market action? Late November, we love the setup. We're so bullish. You know, we've got a target for a $120 brand by driving season next year. So that's going to be May 2023. And, you know, late November with a weak oil price, it's a massive buy here. We think it's going to rip higher. And, you know,

that's going to be a problem for a lot of other sectors, further to what your previous guest was saying. What turns from here to make it that much of a clear buy to you in late November? We have a huge month coming up in December. We've got the OPEC meeting on Sunday, December the 4th. And then we have the Russian crude embargo that's going to kick in on December the 5th. So there's going to be a huge beginning to December. And of course, as you know, here in New York, it's cold already. You're going to get the demand pressure as well. So all those things in our fundamental belief that Saudi wants $100 oil makes us very bullish right here. You know, this is a buy here.

Right here, oil and oil stocks are a buy. So has the crude price just been repressed by, you know, China growth concerns? I mean, for a while, the very strong dollars seemed to be a bit of an overhang, although that's weakened up a little bit. Or do you feel as if, you know, the supply issues have not yet come to bear? No, you're on it. You know, China's obviously been a problem that always drives oil. But, you know, they're going to come out of that. Right. And, you know, as you say, the dollar is it's actually incredible if you think about how

strong Indian oil demand is with the oil price at an all time high in rupee. You're dead on the money to talk about the dollar. But demand is still very strong. And it's late November. all-time high in rupee, you're dead on the money to talk about the dollar. But demand is still very strong. And it's late November. You know, one of the key points, and it's kind of Mickey Mouse, but it's like late November. You know, what happens next? It's going to be winter.

Yeah, no, for sure. And just real quickly, you said oil stocks also buy. They have really outperformed crude itself. Does that not already build in that positive picture? You know, we had said short service for two years and now we love service with SLB, we're Halliburton, we're neighbors, we're buying oil leverage here because I think our belief is the market is going to recognize we have an oil supply problem, and they're going to buy service. And it's actually unusual. Originally, when I was saying on CNBC in 2020, buy Exxon, short Apple, the argument was basically these companies are going to be in great shape over the next three to five years.

That worked out. But what the next phase is, is the market realization that we're short oil and we need oil. And to us, that's an oil service trade. All right. Well, Paul, we'll see. We'll check in with you soon. See how it goes once we get beyond late November. Appreciate it, Paul Sankey. Now, busy end to a jam-packed week of retail earnings. Williams-Sonoma beating estimates, but gross margins were weaker than expected. And the company's saying it will not update guidance through next year because of macro uncertainty. Had better news for others.

Gaps swinging to a quarterly profit and revenue beat, while a strong holiday forecast lifted Ross stores. Full locker reporting better than expected top and bottom line results, thanks to an unexpected increase in same store sales. Earlier on Squawk Box, CEO Mary Dillon highlighting strong e-commerce growth. What I see is opportunity, and there's opportunity for us to be even bigger online than we are today. And it will continue to grow. We have about 16% today sales online. Melissa Repko joins us now. And Melissa, next week, we get another batch of retail results. What have we learned so far about the state of the consumer? What are the themes that we've pulled out of this week's reports? Hi, Mike. One of the things we're really hearing

from all retailers is that shoppers are being more thoughtful about how they're spending, and they're really eager for deals. It's a very different environment than the past two years when people were spending very freely. They didn't have other things competing for their time and attention and their wallets. And with inflation kicking in, people are being a little bit more strategic, holding back when they want to buy, they want to see it on sale. And so that's really influencing their decisions. And, you know, a lot of these companies that were highlighting bouncing today in their share price, they were, you know, a lot of these companies that were highlighting bouncing today in their share price, they were, you know, in not a great situation in the setup. So in other words, they've been trying to either shrink store bases or try to rationalize inventory.

So in a sense, there's a lot of kind of chain store turnaround plays in motion as we get these quarterly results. Exactly. It's important to remember that GAAP's been through a really rough time, and it's had a ton of inventory. And so people were looking for progress in its turnaround story. The reason why it surprised to the upside, in part, is because the expectations were so low. They're looking for a CEO at the moment. There's a lot of concern about their direction, if they're on trend, if they have too much stuff piling up in the back room.

So seeing that they're making some progress means that shares are going up higher. Similarly, in some ways, Foot Locker is also changing its strategic direction. Nike has been pulling back from wholesale. And so investors wanted to see some signs that they were faring well, even as Nike makes that change, that it was pairing up with other brands. And so far, it's shown signs of that with New Balance and with Crocs. It's also got a new powerhouse CEO, Mary Dillon, who you just showed. And she came in with experience from Ulta, where she had a great track record of growth. So investors see an upside to that, too. Yeah, looking a little bit brighter, at least. Melissa, thank you. And Barb, have you

been able to read between the lines of some of these retail reports, either what it means for the consumers into next year or if any of these stocks look like opportunities? Well, it is interesting. There is a real bifurcation. I mean, if you look at Target versus Walmart, I mean, Walmart has the grocery segment and a lot of people are shopping because the food price is so high. Target has other issues. They had inventory management, execution, and plus the macro concerns for their consumer. So I think it really goes by segment and also the execution issues. You know, Gap, for instance, is a very interesting report there. But as she mentioned, there is no CEO. They're not giving forward guidance. They also drew down their cash that if you get rid

of the building they sold, that would be a negative cash. So and they've got a lot of discounting to do. So it's hard to know. I mean, you know, particularly going into this macro environment, if they're really going to be able to sustain this turnaround. So that one is a lot of these. Yeah. Yeah. I was going to say a lot of these companies certainly still playing defense, to say the least. Let's get to Grindr, LGBTQ dating app Grindr going public today via SPAC up more than 200 percent. It was even higher earlier, merging with a blank check company, Tiga Acquisition, in a relatively small float, which accounts for some of that huge move. About 98 percent of the SPAC holders redeemed their stake when they voted to approve the deal, therefore did not maintain ownership and create new shares in the resulting company here. We asked Grindr CEO George Harrison about

that on Squawk on the Street today. We actually told everybody throughout the entire process that we didn't really need cash. Rinder makes money. It makes money every month. It's a very profitable business because our users love our business. We spend virtually no money on marketing. So our margins are very strong and our growth is really strong. So we think we have everything we need to do the work for the long term and grow this company. Yeah. And just to emphasize, I mean, an extremely tiny publicly traded float as a result from this company. Yeah. And just to emphasize, I mean, an extremely tiny publicly traded float as a result from this company, maybe half a million shares. So that huge price move you saw is really about the illiquidity in large part. Grindr going public,

though, in a tough retail environment, tough environment for its peers, fellow dating apps, Bumble and Match, both of those stocks down sharply this year. Bob, I don't know if you look at Bumble and Match and just in general, the, I guess, consumer internet, for lack of a better way to phrase it, has really struggled. Was it just about the way the valuation started out the year? On consumer internet, I think so, you know, and also because we had the post-pandemic pull through. And so you've seen usage drop off, whether it's you've seen that in gaming, you know, internet. So it all comes down to valuation and who's gaining share, you know, whether it's the Bumble, you know, or Match. And so, because it's a very competitive

area and continually finding new apps and going after a new target market or the younger people are making it easier to use. So, but I think it starts with valuation for past. It was based on past usage. Yeah. And now we sit here, the market up about a third of a percent on the S&P 500. Do you think the growth areas where I know you've spent some time, you know, looking for things to do. Has it already taken its medicine here,

or would you stay away from some of the either mega cap growth or the emerging growth areas? Well, you know, Mike, two weeks ago I would have said, this is the cherry-picking time. You know, like Meta we've talked about, you know, Amazon, all these names, a lot of them are very interesting, longer run. But after such a big run, I think you have to take a little bit of a pause here and just wait. Again, I don't see a big downside at the moment, but I think we're going to see, you know, you could wait until we get into December, you know, as we start to look forward and see more economic numbers coming in.

So because some of these are still economically sensitive. And what you saw with the big run here was really when yields came down based on that CPI and PPI number. And of course, if interest rates come down, the big tech names, you know, will do well because that's that terminal value issue for them. Yeah, absolutely. Yeah. I mean, and we both know that the growth and the inflation debates are not going to be settled anytime all that soon. So we're going to probably be in this environment for a little while. Barbara Duran, great to talk to you. Thanks a lot. Nice to talk to you, Mike. Thank you. All right. Have a good weekend. As we head into the close, about a minute left, the S&P 500 trending higher, about four tenths of a percent. The Dow up 176. Russell 2000 up half

a percent. The S&P on track for about a loss of three quarters of a percent on the week. Of course, that came after some pretty significant gains leading into this week. You had the the the Treasury yields have obviously just oscillated below their highs. That's been helping out 10 year, the two year, about four and a half percent. But the 10 year at 381, they're up slightly today, but not too dramatically. The volatility index has backed off down at twenty three we have a holiday shortened week coming up next week with Thanksgiving. On Thursday that is often an occasion for the market to calm

down a little bit but it is worth remembering. Black Friday last year is when we got news of the new Omicron strain very volatile day very tough day for the market. And it actually. Set the market up for a tough. Stretch to go from there. That does it now. For

closing bell overtime. Scott Watkins next.