Closing Bell - Weighing a Risk-Off Atmosphere 9/22/22

Episode Date: September 22, 2022

Former Dallas Fed President Richard Fisher said we are likely to stay in a risk-off environment. Cantor’s Eric Johnston joins us with his own crash call for stocks. Plus, Hightower’s Stephanie Link is breaking down some recent buys. She explains where she is seeing opportunity in this market. And David Albrycht of Newfleet Asset Management discusses how to play the boom in bonds.

All right, Mike, thank you very much, and welcome, everybody, to Overtime. I'm Scott Wapner. You just heard the bells. We are just getting started here from Post 9 at the New York Stock Exchange, and we have a very busy hour ahead. Costco earnings, they are imminent. We're going to get you the numbers and the stock move and everything else, as always, that you need to know right now.

We begin, though, with our talk of the tape. A risk-off atmosphere, that is what former Dallas Fed President Richard Fisher told me we are in now, and it's likely to stay that way. Our first guest, he agrees. He just doubled down on his crash call for stocks. Let's bring in Cantor's Eric Johnston. He's with me once again, and that's really what it is. It's a call that stocks are going to crash from here, that they have a lot more downside, right? They do have a lot more downside. I think, you know, our conviction at this level is as high as it was when we were 1,000 points higher

when we were bearish at the beginning of the year, bearish at 4,300, and now at 3,780. And the reason why, even though price level is down and our conviction is super high right now,

is based on what's going on in a number of areas, including the rates market. So I think yesterday was very important Powell backed up his his Jackson Hole comments with action not only going 75 basis points but also saying the Fed funds rate is going above 4% and he understands that could cause a recession he actually probably wants a recession in order to get inflation down and I think we take a step back and really understand the magnitude of how a recession, he actually probably wants a recession in order to get inflation down.

And I think if we take a step back and really understand the magnitude of how important this rate move is. Over the last 12 years, the Fed funds rate has been above 1% for only one year. So this economy, investors, businesses have become accustomed to interest rates at suppressed levels for the last 12 years. Now we're talking about a Fed funds rate of 4.5%, the highest in 15 years, real yields, which is what dictates how much risk people take, the highest in 15 years, and the two-year yield is surging.

So what are the implications of this? And I don't think at all they have been, that they've hit the equity markets yet, because all of the downside in the equity markets has been due to higher rates, not due to the implications of what I'm about to say, which is that when you think about the impact of these higher rates, it's from companies refinancing as their debt comes due, they're paying the higher rates, the access to credit, the ability to actually find the ability to borrow. They're thinking about doing a project. The whole calculus around whether to do the project or not is going to be impacted by rates.

And then my final point here, just before we move on, is that looking at money market funds. Money market funds right now are yielding almost 4 percent. They're about 3.3. I know where you're going with this. I know I know you're going with this. But I mean, if we get if we get everything out at the first, we don't have a conversation. I mean, I want to go through some of the points that you make, not to lay out your whole case and then we have nothing to discuss. I find it hard to believe that you're as bearish today with as much conviction as you had when we were 1,000 points higher.

How can that possibly be true? And also, if everything you say is so crystal clear to seemingly everybody, why didn't the market get destroyed today after what Powell said yesterday and what the Fed did and what they're likely to do moving forward? Sure. So in January of this year, when the S&P was at 4,700, we were still doing QE. The Fed funds rate was at zero. And the economy was still very strong.

And so we made the prediction and bet at that time that those things were going to roll over and those things were going to happen. But the magnitude of where we are now is far greater than what I think anyone really could have expected in terms of where the Fed funds rate is going so quickly. To your question around why hasn't not been reflected in equities yet, in my view, when this information is known, I think it's a great question. One of the things that has held up the equity markets is that the individual investor still has not sold. Institutional investors have. And I think we talk about one of the risks to the upside is that institutional investors are very underweight now equities. But the individual investor who piled 1.7 trillion dollars into the market has not sold yet and as price starts to continue to to go down and as money market yields go up i think that's going to change so i want to try and have a conversation too about the other side

of the coin right scott just to be fair is like if you know if you ask me based on this current information where the s p would be i would i would tell you that we should be much lower. I'm very surprised that we have not sold off as yet, but I think it's coming. Yeah. The flip side, right? The bear case is very, very easy to make. You don't have to go that far to find it, right? I want you to think about the other side, though. Barry Bannister says S&P 500 is in a bottoming process with positive catalysts in the fourth quarter and into the first quarter of next year. P.E. is bottoming. Lower inflation, he sees, and many, in fact, see lower inflation. A renewed plunge in the S&P like you're talking about might be unlikely until the mid part of next year,

that it's going to take a while. And that has a window of opportunity for investors before that that takes place. And I want you to listen to what SoFi's Liz Young said this morning on Squawk Box about some of the very investors that you're talking about who haven't sold yet. Then we can react on the other side. You know, honestly, I would be buying all the way down. I think you can drip in, and this is a time where you try to do it methodically rather than try to put all of your money in and call the bottom. All right, so those two points, Bannister and Liz Young. Yeah, so I think in terms of thinking about a bottom,

you know, first is if you're thinking about buying a bottom in a stock, you want the earnings estimates to have been fully cut and to think that we've gone through a number of cuts and now that may be over. The conventional wisdom from economists in general is that it takes six to 12 months for rate hikes to hit the economy. We've gone from zero to what's gonna be four and a quarter percent in one year. We haven't even seen the implications from this rate move on the economy yet. So, and then from a valuation perspective, anything, any valuation that you look at,

related, you have to take into account rates, suggests that stocks are very expensive right now, right? There, you can't just look at the P multiple in isolation and say, oh, 16 times is cheap. 16 times when the interest rates are zero is cheap. 16 times when we're at a 15 year high in rates that happen really quickly is not cheap. And so we are, I think to say that we're close

to the bottoming process is, I would disagree with. The other point that I would make on that is the idea that inflation is coming down, which I agree it's gonna come down, and that the Fed is gonna eventually pause. I agree the Fed will eventually pause probably somewhere around four and a quarter, four and a half percent. So if you look back at the other times when the Fed has paused after rate hikes,

it was 2007, after that rate hike cycle, they paused and they started cutting in late 2007. And then in the year 2000, we had a big rate hike cycle. They stopped hiking in early 2000, started cutting in late 2000. So how did that work out? It's not a cure-all for stopping at a 15-year high in the Fed funds rate at 4.5%. It's great that they're done at that point, but we are now living with that interest rate

for a long time. And that is a problem for this economy. But what happened, I know, but are you saying that, okay, you obviously think that stocks are going much lower, but what happened to the guy who popped up momentarily, who thought we were going to get a rip your face off rally at one point only to change his call a very short time later? Why can't that happen again at a time when some people suggest that the conditions are ripe for a counter trend rally from here, that the knowns are known that, you know, OK, so Powell was was incrementally more hawkish yesterday. Tell us something we don't know.

So we're always looking for when we're going to get that type of rally, because if we can identify it, we want to be there for it, because if there's going to be a, you know, seven to 10 percent move, we want to be we want to be there for it, if the risk-reward lines up. And I think right now, could we get a squeeze? It's certainly possible because of institutional positioning. However, I think the magnitude of that squeeze will be far less than it has been before because what we know is the higher the market goes, the more aggressive the Fed is going to be. And the same token, the lower the market goes,

the less aggressive they're going to be. But the bottom line is that it's a lose-lose situation. If we go higher, the Fed gets more aggressive. If we go lower, then obviously we're going lower and it's not going to be profitable to own stocks. So I think your point, could we get a squeeze? It's possible. Would I bet on it based on the risk reward here? Definitely not.

All right. Let's bring in a couple others into the conversation. Victoria Fernandez of Crossmark Global Investments and Federated's Steve Chivarone. Guys, so I want to ask you, where, Victoria, do you come down in this in this conversation? Do you agree with Eric? I agree with certain elements that Eric is saying. I do agree that we're going to continue to see probably the equity market go lower. There's going to be a tremendous amount of volatility going forward because I don't think investors really have a clear vision

of what the repercussions are going to be of the rates that we've seen. And look, it's not just us, Scott. I mean, we've had almost 650 basis points of rate hikes this week from central banks around the globe. So rates are obviously going to move higher. That's going to cause volatility in the equity markets. But we typically don't have a bottom until two-year yields have peaked. So have they? Well, I mean, not if you listen to what what pal saying and they're going to continue to hike rates

Fisher was on your program at the halftime report today what did he say that he sees a continual move higher in rates so I think there's going to be continued volatility you're going to need to position yourself and stocks that focus on quality and can withstand the volatility that's going to be there and I think you can even put a little bit in fixed income. I know rates are going to move higher and people then want to avoid fixed income. But at the rates that we're seeing, especially on the short end of the curve,

I think you have some benefit there. So, Steve, Victoria references what Richard Fisher told me earlier, of course, the former Dallas Fed president. I want you to listen to a soundbite, what actually he said about the environment he sees right now. And next year, that'll be the real test. Have we bent the curve on inflation or not? This is what it all comes down to. So be careful. It's a risk off atmosphere. It's going to stay that way as long as there is this uncertainty.

Now, Steve, I said when I heard him say that, when a guy who's been in the room where it happens said it's a risk off environment and he knows what his former colleagues and those in those chairs can do to make it a risk off environment, then you got to stand up and pay attention, don't you? I agree. I think yesterday, Scott, was the culmination of a real hawkish pivot by the Fed. And it was one where they said, look, we're expecting pain. We recognize how much pain. I think maybe some of their estimates are still a little optimistic in the dot plots. But but it's painful. It's in the dot plots.

And we're going to hike anyway and we're going to do whatever it takes. That was a very, very strong message and one we have not gotten from the Fed yet. Fed doesn't like to use the word pain, just like a doctor. Doctors tell you it's going to be painful. They say it's just going to be a little pinch. Well, pain is a very important word, and so I think it's right. I think we probably will at least see or retest the prior lows of the market from June. I think we certainly could plumb new lows and and i would agree that at some point there is an entry point here in a longer term fixed

income i don't think it's yet i think right now that uncertainty that the market had or that residual uncertainty that it had you know will the fed really get hawkers will they really deliver on this i think that left to some degree yesterday And that's why you're seeing the outside move in the bond markets today in terms of yield. And I think that will have repercussions on on the economy. That doesn't mean you can't get a sharp counter trend rally. That'll make us all kind of doubt ourselves. I think you very likely will. But I think the medium term trajectory is one that does not favor risk. And I agree with the comments there that this is a risk-off environment. I mean, it may, Eric, to part of your point, favor risk, just not in stocks. And it depends what part of the fixed income spectrum you want to start taking a little more

risk in. But you make the point that we've gone from there is no alternative to there is an alternative, right? From Tina to TIAA is the better opportunity for investors now. It's not in stocks. It's in fixed income bonds. That's exactly right. You know, if you graduated from college in 2008, for the last 14 years that you've been adult and investing, your alternative was not there.

Rates have been zero. You were getting zero in your checking account, zero close in money market funds. And the world, it's not that money market funds are 1% or 1.5%. There's been this drastic change and it's happened so quickly. So if you think about owning stocks

versus the money market funds, money market funds are gonna be currently yielding 3.3%. They'll be 4% probably in like two months. That's daily liquidity, it's zero volatility, it's a zero risk. So you can do that or you can try to make 10% in the equity market or you might lose 20%. You're gonna have massive volatility.

That seems like at least portion of your portfolio should be going to those money market funds and I think that will happen. It just takes time because we live this every day. But the individual investor, you know, has to get used to this other alternative. And I think they will. So what do you think about that, Victoria? This idea that there's just better game somewhere else. Take your ball and go play somewhere else. Yeah, I mean, I think you do have opportunity now that you didn't have before. I mean, we're talking about the fixed income market. You can get an investment grade, high

quality, 10, 15 year corporate bond at a discount. We haven't been able to do that for years. And I'm generating a 4% coupon on that. I mean, I think that's something, especially for our clients that are looking to kind of match their assets and their liabilities they're looking to just generate some cash flow as long as you're buying smart right you're buying at a positive yield to maturity you know worst case you get your bonds back at par you get that principal back then i think that's a good alternative for you and then you can use your equity market for a little bit of your risk component as long as you focus on quality names those names that have quality management teams quality balance sheets quality earnings i mean obviously earnings is going to be key here starting in a couple of weeks

then i think you can build a balanced portfolio for your clients that will withstand what we're going to go through over the next couple quarters i mean mean, Steve, I literally got a text yesterday as all this was going down from somebody I haven't heard from in a long time, somebody who deals in munis. It's like the sun came up and it's going to shine for a while. It speaks to exactly the kind of conversation that we're talking about. What are you recommending to your clients outside of the equity universe? Yeah, look, I think we've got to be very careful for folks that are listening. You know, we can't just paint, you know, bonds in a broad stroke here. It's not all bonds that are attractive at this level. It really is that short end of the yield curve. I think on that very short end, the muni space is in particular attractive here. So

kind of money market strategies, the very short end of the kind of ultra short space in the muni space, I think is attractive. I think as you go further out, you got to be a little bit careful still, right? There still is duration risk. There's the risk that higher yields will cause price losses on longer duration bonds. I think we're nearing a point as economic growth deteriorates where, yeah, the interest rate risk might not be as high, but spread risk can become high as credit comes under pressure. And so I think the story right now is short duration, fixed income. You can take some credit very short, but the further out the curve you go, you want to be in higher quality, more defensive bonds, treasuries, communities, things of that nature.

So, Eric, I want to circle back to where we started. I want to bring it full circle. And because we have a lot of long term investors who are watching our program right now, just not short-term thinkers or actors who are in here for 10 seconds. They're in here for 10 years, if not longer than that. And if I'm one of them and I still believe everything you say, as like I said, it's difficult to push back against the bear case. But if I'm a long-term investor, why wouldn't I take Liz Young's advice?

You know, honestly, she says, I would be buying all the way down. Who cares if you pick the exact moment of the bottom if you're buying stocks that have already gotten destroyed and the opportunity is just too good to pass up, even if you miss a few ticks. So I would say that right now the risk of missing it on the upside is fairly low. Could we get, you know, again, could we get a short-term squeeze? It's possible. But I think over the next six months with what the Fed is doing, with the risks that are out there, the idea that the equity market could run away from you on the upside, I just think is not there, especially because the Fed will get even more aggressive.

So the reason to wait for lower prices is because if you wait six months, I don't think you're gonna be, in your best case scenario, I think you're gonna be where we are right now. And in what I think is the base case scenario is that we're much lower. So that's why i think it makes sense to uh you know to to to wait and sometimes you know these prices when

you're talking about you know 3 700 to 3 200 that's you know that's a lot especially in a lot of individual names that probably move a lot more than that. As I listen to it, I'm just thinking sometimes getting paid to wait has a different meaning. It's simply just waiting. You'll feel like you're getting paid because you're not losing. We'll continue this conversation. I appreciate it so very much. Eric, Victoria, and Steve, thank you. Great, Scott.

Thank you. We'll see all of you soon. All right, let's get to our Twitter question of the day now. We want to know, what's a better bet right now, stocks or bonds, as we just were talking about? You can head to at CNBC Overtime on Twitter, cast your vote. We'll share the results a little bit later on in our show. But we're just getting started here in Overtime. Up next, Stephanie Link.

She's breaking out her post-Fed shopping list. She has a few names on her radar, too, that look like good buys here. You get the other side of that conversation. What is attractive right now? We're live from the New York Stock Exchange. Overtime is right back. Welcome back, Costco. Their numbers are out. Courtney Reagan here with that for us. Court. Hi there, Scott. Yeah, so Costco is reporting $4.20 per share. It's unclear if this one is comparable. The revenue is coming in about in line just a hair over $72 billion. Comparable sales. Now, this is for a 16-week

quarter. Total company up 13.7 percent. The United States very strong when you're looking regionally up 15.8 percent. E-commerce comparable sales numbers up more than 7 percent. The membership revenue, Scott, up above last year by a nice amount at 1.327. It was 1.234 billion dollars last year. And inventories are higher, as we've seen with many other retailers, for a value of 17.9 compared to 14.2 last year. But we'll have to see exactly in the call the nuances therein, because, of course, we know the price that they're paying for the cost of these goods is higher as well. So we want to know what portion of that number comes directly from inflation. Shares of Costco are down a bit here in response, and we'll get more details on the call, because, as usual, the Costco release is pretty light on the details of the quarter.

Scott, back over to you. If you hear anything we need to know, you pop back on and we'll look forward to that. Courtney Reagan, thank you so much. Let's bring in Hightower Stephanie Link. She's made her way here to Post 9. Traffic has been an absolute disaster this week in the city. I really appreciate you making the effort to come here. Happy to be here. Yeah, thank you. Costco, you don't own it, right? But you did. I did. I have owned it for many years. Every time I sell it, I hit myself because it's such a good company. It's a value proposition story. It has a loyal customer base, 90% renewal rates.

So we knew the same source sales numbers because they release them every month. That was a good number, I think. Yeah, we'll look at margins for sure. But traffic, I want to look into the traffic numbers because in August it was 2.9 percent, which was weaker. The weakest since February of 21. We know we've seen traffic weak across the board in retail sales. But Target and Walmart, believe it or not, had good traffic numbers. So we'll go through the numbers.

If this were to pull back, this is absolutely a candidate to be a core holding. It's just still too expensive. OK, we'll follow. What you see, the stock is down slightly after reporting here in overtime. So let me get your reaction here now to what happened yesterday with what the Fed did and perhaps more importantly with what they said. Because they out-hawked the hawks is what Steve Leisman characterized it as right afterwards. Is that how you saw it? Yeah, absolutely.

There was nothing positive from his commentary yesterday. Really hawkish. And we were expecting hawk, right? As you said, I think that their revisions to Fed funds was really eye-opening at 4.6%. That's an average, right? So it might even go over that. It could be 5%. Unemployment going to 4.4%. GDP coming down. And all this inflation talk. They don't expect inflation to get better until 2025. So I know a lot could happen between now and 25, but there's just still so many unknowns. And we've talked about it all year long. This is why the market has been in a choppy range, because there's a lag on the Fed and their moves.

Right. What does it do to the economy? What does it do to earnings? Oh, no. By the way, we had 17 central bankers this week raise rates. And we have another dozen next week that are meeting. But see, for somebody who always tries to see the glass as half full. I do. Has this forced you to switch? Is there too much negativity out there to be constructive in the market right now? If the market wasn't down 21% year to date, I would be nervous.

But we're already pricing in a lot of bad news. And as we talked on halftime on Tuesday, I'm not as crazy about the overall market, right? It's not that compelling, but there are some companies that I've actually been nibbling at, bought back into GXO yesterday. That was a name that's down 55%, trades at 14 times earnings, the top three logistics companies in the world. I was going to say, you want to be buying a logistics company now? One that can execute? Sure, I do. And their sales pipeline at $2.5 billion.

It's a shot across the bow at FDX. It should be. Because they haven't delivered in a very long time. But I also added to Accenture. And Accenture had a really good quarter today. Total revenues of 15%. Margins in line. Guiding a little light just on currency, though.

So I think there are places where I feel confident in the earnings. Maybe they come down a little bit, but I still feel good about the long-term stories. So do you believe or you subscribe to what Liz Young was telling people this morning on Squawk? I'd be buying all the way down, is what she said. I think you can drip in, and this is a time where you try to do it methodically. I'm reading her exact quote for you since you might have missed it earlier. Rather than try to pull out all your money and call the bottom. If you're a long-term investor, what about that strategy right now?

I think that's exactly what I've been doing all along. I had a little extra cash. We talked about having a little bit of cash and patience. And this is exactly why you have those two things, right? Because you don't know how to time the market. I've been doing this for 30 years. I can't time the market, but I can focus on fundamentals. And if they remain strong, maybe they soften a little bit, but if they remain strong for the long term, absolutely. You want to find number one and number two companies at this point in time that are truly

on sale, that get thrown out with kind of baby with the bathwater. And that's kind of what I'm trying to do. We owe you one for making the effort to get here, which I know personally was not easy. It's my pleasure. I think you're coming back later. I think we'll see. Thank you. That's Stephanie Link. Up next, it's your rising rate playbook where investors can find value in the bond market. Right now, we'll talk to one of the best bond fund managers on the street when we come back. Well, welcome back. It's time for a CNBC News Update with Shepard Smith. Hey, Shep.

Hey, Scott. From the news on CNBC, here's what's happening. Secretary of State Tony Blinken blasting Russia today at the United Nations General Assembly and urging, I should say, the U.N. to send a clear message to Vladimir Putin, stop making nuclear threats. The Russian foreign minister appeared just to give his speech and then abruptly leave. He accused the West of covering up Ukrainian crimes. Iran's security forces trying to crack down on nationwide protests there. They started last weekend when a woman was arrested for not wearing a headscarf. Then she died in custody of the so-called morality police. In the protests that followed, at least 17 people have been killed,

according to our NBC News Tehran bureau. And the Artemis test mission to the moon may soon be ready to blast off. The launch scrubbed twice already because of fuel links. But NASA now says the rocket passed a critical test just yesterday, potentially clearing the way for a launch on Tuesday. Tonight, the new pressure on Moscow as Russians flee the country. The latest on a growing storm that could threaten the Gulf of Mexico and a potential break in a 40-year-old

cold case known as the Tylenol murders. On the news right after Jim Cramer, 7 Eastern, CNBC. Scott, back to you. All right, good stuff, Shep. Thank you. That's Shepard Smith. With stocks still volatile and the path forward highly uncertain, some say the best opportunity in the markets now lies in fixed income. Double line CEO Jeffrey Gundlach telling me right here yesterday that finally there's value in bonds. And our next guest agrees. He's adding selectively to joining us now, Dave Albright, new fleet asset management, the president and the CIO. Welcome back. It's been a while. Hey, Scott. Good to see you. Good to see you. I mean, the sun comes out for bonds. You got to have the bond managers on. Right. This is your moment in the sun.

Absolutely. It's actually looking good. Value has been restored to the fixed income market. I heard Jeff Gundlach talk yesterday. And when we saw coming into the year, treasury yields on the two-year last November sub-20 basis points, now we're over four. And virtually across all sectors, if you look at investment grade, went from 2% to 5%. If you look at high yield, 4% to 8.8%. Bank loans up to 7.6%. Value has been restored to the fixed income market. I want to ask you about, you know, so you mentioned high yield. I want to talk about

investment grade corporates, too. The degree to which an investor wants to take too much risk on the risk curve in high yield at a time when rates are rising, right? So the hunt for yield isn't as dramatic as it's been in the last 12 to 14 years because rates have been to zero. So you'd perhaps be willing to take a little more risk in high yield. How would you answer that question? So with the high yield market, you know, you have to look at what the Fed's trying to do. They're raising rates aggressively. They're moving on inflation. They're trying to slow the economy. So we took a hard look and said, you know, who's going to suffer from that type of move in the high yield market or who's going to benefit in the investment grade market?

You know, on the IG corporate front, you can get double B names that you have listed, Church, Pentair, Motorola, those yielding five and a quarter to about 6%, you're really not taking a lot of credit risk. Corporations, especially in the IG market, have taken down leverage, improved their interest rate coverage. Most companies, if not all, have termed out their debt. The maturity wall is far behind. And you have, I think, a nice little opportunity now to add some higher quality investment grade assets. From a high yield standpoint, we like to do up in quality. We've been selling a lot of the names that we thought were too risky.

Those with like seven times leverage, one time coverage that would be vulnerable to inflation and a slowing economy. Names like a Michael's store, a Carvana would be another. Rocket software I'd throw out there triton water maybe in the loan space you know a via genesis uh care those would all be vulnerable names that we'd either sold or we avoided and they were all trading at much lower levels so definitely moving up in credit quality you're getting paid to move up in credit quality uh you know we all something that we also thought about was adding duration you know if you think that uh typically after the fed moves three to four times long rates stabilize as the

short rates continue to go up and the curve inverts further why not look at uh some of the double b high yield names out there like a you know a fortescue which is an iron ore company you could look at square uh you know that does payment processing nordstrom's which is a high-end retailer dt midstream which is a lng pipeline in louisiana and then another way that we can add value scott uh you know through adding duration uh is munis have gotten awful cheap so we've looked at a lot of the uh essential service revenue bonds double a triple a 10 and 30 year that made sense two that we added would be Florida, Broward County, Water and Soar, Metropolitan Transportation of New York, a AA, and then New York City Water.

Those were all at a multiple. Typically the 10 year will trade at about 80% of the treasury. The 30 year will trade about 90%. We were adding those names at about 112 to 115% of the equivalent treasury. So great value. It's funny.

I saw a muni the other day. I think I mentioned it on halftime. Five percent coupon, but, you know, 35 year duration. So, I mean, it just gives you an idea of the array of product that's out there and attractive to some people because of the yield that it presents. Lastly, how long does this opportunity last? Yeah, well, I mean, you know, depends on when the Fed's going to pivot. And that's when you'll start to see things come back. You know, it could get a little weaker, which we know.

You know, if the Fed, I think they made it pretty clear that in the summary of economic projections, they're going to move the median dot moved higher, 4.4 this 4.65 uh you know terminal rate however the economic forecast didn't really jive with that if you looked at it they said gdp would be 0.2 this year and then it's going to increase to 1.2 that made no sense to me and unemployment was only going from 3.7 to 4.4 so you know we have to see if they can orchestrate a soft landing they haven't been too successful in the past uh if they're going to have to pivot and, you know, do an about face, then we think it's a great time to get into the fixed income market. Right now, you should be dollar cost averaging in at the current yields that we see. They haven't been this attractive, Scott, going back to 09.

Yeah. Yeah. That's what a lot of people are saying. Smart investors, too. Dave, it's good to talk to you. It's nice to see you again. That's Dave Albright. Thanks a lot. Joining us today in overtime. Up next, Netflix is seeing some serious losses this year. However, one halftime committee member says now is the time to buy, and he did just that. We'll debate it in today's halftime overtime.

Don't forget, not too late to sign up for CNBC's Delivering Alpha conference. It's less than a week away, a huge lineup. Some of the biggest names on Wall Street, including Citadel's Ken Griffin. Can't wait to speak to him live, which I will be doing. You got to be there to see it in person. Register now. DeliveringAlpha.com. We're right back. In today's halftime overtime, Josh Brown buying back into Netflix after selling that stock just over a month ago. Shares have lost more than half their value this year. However, Josh believes improving technicals and the pivot to ads is bullish moving forward.

Netflix technically looks like it wants to go higher. There's accumulation even on down days and the catalyst, the fundamental catalyst is in front of us. Also, keep in mind, this was a stock that was $700 not that long ago. So I think here at 238, I like the risk reward. I do have a stop loss in. There is a leash on this trade. All right. So that's Josh Brown there buying back into Netflix. Stephanie Link of Hightower is back with us now. What do you think of this move?

Well, it's interesting because it's down 61% year-to-date, and it does trade at 23 times forward, down from 60-some-odd multiple. But there's a reason. Business is in a transition, and it's going to take a long time to see how the whole ad market works for them. Subscribers are slowing. Remember they lost a million subs last quarter, and that was a content-heavy quarter.

And now they're actually reducing their content expenses as well in a time when there's so much competition. So I think that translates into total revenue growth of upper single digits versus 25% over the last several years. So there's multiple contraction for a reason. So I think there's just a lot of questions, I think at 23 times not that compelling even though okay it's cheaper than it has been but I'm not taking the fight I'm kind of smiling I'm taking notes and you said business in a transition I know somebody who likes businesses in the transition and who's willing often to wait for the transition to take place. One Stephanie Link,

who happens to be sitting to my left, which reminds me, I'm looking at an email that just crossed from the home team here. Kramer, Meta is a buy as the social media giant embarks on plan to slash costs. That's what the investing club just said. You own Meta. Talk about a business in transition. Are you willing to buy and hold that one? I don't need too many of these businesses in transition, though. But also, I think that they are going to, Meta is going to get reels right. And I do think that they have the subscribers. They have the eyeballs. They have the ROIs for digital advertisers. It may be slowing, but they still have the size and the scale. They

have a ton of cash. And yeah, they have a lot of room to slash costs. So I like that story. Netflix is not a bad story. I just think that we don't know how their business in transition, how it's going to work in the face of so much competition. I mean, everybody is pouring money into streaming and this sort of thing. So I just think that Meta is a little bit easier of a story for me to get behind, especially at 14 times forward estimates. It's crazy looking at the high in Netflix, the year high, as we put on the screen with the chart, 700 bucks. You see it with a two handle right now. Jim, who I referenced, also said today tech's horrible. Tech's a horrible place right now to be.

It is hard. How do you counter that? You don't. I mean, I've been underweight tech all year long, but I am starting to add a little bit because there are pockets of tech that are still really good. Which ones?

Well, I added to the Accenture. I still like IBM. They made another cloud acquisition today. I lost count how many acquisitions they've done. Another business in transition. With a 5% yield, trading at 13 times earnings. You get paid to wait for the transition. You get paid to wait. I like cybersecurity still, but Fortinet is not cheap. That's one that kind of keeps me up at night, but I like that one very much. And then as I said, Meta and Broadcom, I mean, that's the one semi that I own. Again, it's very attractive.

We've talked about it a lot. They have AI. They have cloud. They have data center. They have software that they're actually building out. And also a 3% dividend. All right. Good to see you again. Good to see you.

All right. Stephanie Link joining us once again here in overtime. Up next, we're tracking all the biggest movers in OT. Steve Kovach is here with that action. Steve? Hey there, Scott. Got two names for you. One is a struggling software company signing on a new CEO, sending shares higher after hours, and another name flying

a bit higher after hours as it nears a major legal settlement. We'll tell you all about it when Closing Bell Overtime returns after this. We're tracking the biggest movers in overtime. Steve Kovac is here with that. Hey, Steve. Hey, Scott. Yeah, here's one you don't hear too often from me. Shares of DocuSign are up nearly 4% after announcing they have a new CEO. The one-time pandemic darling has seen shares plummet 64% so far this year

as it faces headwinds from people heading back into the real world. The new CEO, Alan Dyskin, will take over effective October 10th. He comes to DocuSign from Google, rather, where he managed the ads business in North and South America. Meanwhile, Boeing shares rising after hours following a Wall Street Journal report the company is close to settling its case with the SEC over alleged misstatements the CEO made about the 737 MAX plane back in 2019. The SEC investigation focusing on whether or not Boeing misled investors about when the MAX would return to service as investigations into the causes of those crashes continued. It's unclear what the terms of the settlement will be,

but the journal reporting we could find out as soon as this week. Scott, sending it back to you. All right, Steve Kovach, thank you very much for that. Up next, trading the health care space. Why one money manager see some big upside for a key pharma name. He makes the case in our two minute drill when we come back. It's time for our two minute drill. It's bringing Wall Street Alliance Group partner Adil Zaman. Welcome back. It's good to see you. I'm looking at your stock picks here, and I'm kind of surprised, to be honest with you. Alphabet, Microsoft, new 52-week lows today. You got to tell me a reason other than the fact that they're down

a lot to buy them now when someone like Jim Cramer says tech is terrible right now with rates going up. Great to be with you, Scott. So obviously, Alphabet is down about 30% year-to-date, and the fear is that, you know, because if the economy slows down, advertising spending is going to slow down, which will impact Alphabet because more than 80% of their revenues come from advertising. We think that at these levels, this fear has gotten a little bit overblown, because if you look at the second quarter earnings year over year they still reported about a 13 percent increase in their revenues in spite of a challenging macro environment and we actually see this as a recovery play because in our opinion

eventually the economy is going to improve eventually spending is going to increase on advertising and this will benefit Alphabet. I know, but Microsoft, I mean, I remember the day that Microsoft came out and warned about FX, right, and said it was going to be an issue. The dollar's only gotten stronger since that day, hasn't it? Great, great point, Scott. But Microsoft is a stock on our watch list that we like here because in this environment, it's very relevant. With inflation being at a 40-year high, Microsoft is actually enabling businesses to be able segments, which we see as being relatively recession resilient, which is cloud and cybersecurity. So irrespective of whether the economy goes up or whether the economy goes down, businesses do have to prioritize cloud spending. And that's anticipated to increase about 16% year over year.

And Microsoft is a big beneficiary of that because they have 24% of that market. Okay, and finally Pfizer. Why do you like it here? So Pfizer has hit it out of the park with their COVID-19 vaccine and with their COVID-19 antiviral. And because of that, their revenues are at a historic high.

Yep, the stock is down more than 20% year to date. And the fear here is that eventually when COVID subsides, 2023 onwards, Pfizer's earnings are going to go down. We again feel that this fear is a little bit over-exaggerated over here because Pfizer has an extremely robust pipeline with over 100 projects and clinical development. So we see the earning continuing to be stable over the years. And Scott, this company pays a three and a half percent dividend, which is more than double that of the S&P 500. So this is a stock on our watch list that we really like here. Talk to you again soon. Adil, thank you. Adil Zaman joining us now for our two minute drill. Up next, Santoli is back for his last word.

We'll see you in two minutes. To the results of our Twitter question of the day, we asked you, what is a better bet right now? 55% of you said stocks. So the other side of that in bonds. As that debate rages, Mike Santoli is here for his last word. I mean, that is kind of the topic of conversation, at least one of them. You're forcing people to choose one. Yeah, it's a little better than a coin flip. No, it is absolutely a big piece of the conversation in

terms of, you know, if you're assembling a portfolio from nothing, if you hadn't ridden stocks and bonds down from here, how would you put it together? I think there's an opportunity here to get those pieces in place where you had a little bit more of a cushion than you had eight months ago. It's not saying very much. I think what's interesting now is, I mean, for all practical purposes, in terms of stocks, the retest is underway. Now, the index isn't back to where it was in June, but semiconductors are, transports are right there. You've seen things like Microsoft and Alphabet crack through their June lows. So, you know, what do you look for in that instance, I guess?

I would say you call it a retest because you could pass it or fail it. It's not just that you touch it and you're okay. You look for fewer stocks making a new low, not quite as much urgency and momentum on the downside as you had the prior time, all this other stuff. And so we'll see how it goes from there. Fridays have not been great. I think five of the last six Fridays market has been down. I think maybe that's one reason we were apprehensive going into the close here today. OK.

Eric Johnston, your guy, right? You heard him, I think, like doomsday is coming to stocks. He's not the only one saying that. What do you just make of calls like that? Look, it's there's a lot to back up those calls. Right. Because there's not a lot of you look in every direction and you see a reason why you're not getting clearance to take on more risk. We know that. And it reminds me a little bit of when people are bullish in an uptrend and you say, you know what? A lot of people say by every 5% pullback.

A lot of people say, you know, give the tape the credit until it fails. I think it's the same thing right now. At some point, that's going to be wrong. We're going to run out of bad news or it's going to be priced in. Well, that's what people say, right? Just try and play the other side. I think the key is to keep in mind what happens when the market is really in a desperate spot and at its lowest. Whenever the low is, whatever you think that target index level is, it's not going to spend a lot of time there. It never does. In 2009,

you spent no time under S&P 800, even though you bottomed at 666. You know, it's that kind of thing where that doesn't help you if you don't know the low in advance. But the point is, you can't just get comfortable with the idea that you should be aggressive on the downside, especially when you're seeing sentiment get to these short-term extremes. Striking to hear someone like Richard Fisher talk about this being a risk-off atmosphere. Yeah. I mean, when a former central banker talks about it, it just kind of puts you closer to the room of where they're making these decisions, which create these environments that he talks about.

It is not unintended the way markets are acting right now. I will see you tomorrow. That's Mike Santoli with his last word. We'll be back here again. Legendary energy trader Mark Fisher will join us to fast monies now.