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Halftime Report
The Second Half Setup for Stocks 7/1/26
00:43:56
Scott Wapner and the Investment Committee debate how they're setting up their portfolios for the second half of the trading year. Plus, we hit the latest Calls of the Day. And later, we've got an Options Action triple play on Crypto, China tech and Meta. Investment Committee Disclosures
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- [00:00]
Kiana and Shannon Maldonado
Trading at Schwab is now powered by Ameritrade. Unlocking the power of thinkorswim. The award winning trading platforms loaded with features that let you dive deeper into the market. Visualize your trades in a new light on thinkorswim desktop with robust charting and analysis tools all while you uncover new opportunities with up to the minute market news and insights. ThinkOrSwim is available on desktop, web and mobile to meet you where you are. It's built by the trading obsessed to help you trade brilliantly. Learn more@schwab.com trading I'm Kiana and I
- [00:32]
Scott Wapner
leveled up my business with Shopify. Once I figured out that Shopify was a thing, I never turned back. I can create a site with my eyes closed. Shopify thinks ahead of us, you know, and it thinks about the customer more than anything. Every day I'm thinking about some other new business, but Shopify is doing it to me because it's so easy to use. It's like I can't stop. I'm addicted. To start your free trial@shopify.com I'm Scott Wapner and you're listening to CNBC's Halftime Report, the podcast the most profitable hour of the trading day. We record this live weekdays at 12 Eastern. Listen in. Thanks, guys. Welcome to the Halftime Report. Scott Wapner front and center this hour. Second half strategies, stocks looking to extend their record run. Joining me for the hour to discuss and debate, Joe Terranova, Steve Weiss, Brian Belsky, Bryn Talkington. Check the markets. Here we have the Dow, the S and P, the Russell are in the green. Nasdaq's a little bit red. Dow just clocked its best first half since 21, made a new closing high yesterday. As you know. Russell's best first half since 1991. Let's give you the scorecard here, show you what we've done year to date. Dow's up 9%, S&P's up 10. Nasdaq up 13. Russell up 22. So that's the scorecard, if you will. And history is on the bull side in July. The s and P500 hasn't had a negative July since 2014. How about that, Mr. Terranova?
- [02:04]
Joe Terranova
Well, I think that is going to be the theme for the remainder of 2026, the continuation of what is a bullish trend. What is interesting about today is if you had the advanced knowledge that semiconductors would be down 4%, the advanced knowledge that infrastructure would be down near double digits, whether it's your corning, your micron, your amd you would think and you see the momentum factor down nearly 4%. You think the market would roll over. But the opportunity lies in where the underperformance ultimately has been in 26. And yes, that's taking you to three sectors like consumer discretionary financials which have been the laggard so far year to date. But it's also finding the opportunity in the mag.
- [02:49]
Scott Wapner
So why would you think just how you laid it out, why would you think if all of those things happen that you the market would in your words, roll over? The market has been telling you for the better part of the last month that that in fact is not the case. That what's turned out of tech has turned into other areas over the last month. The dow is up 3%, the Russell is up nearly 5 at the expense of a NASDAQ that's down almost 4. And an S&P 500 as a result of those mega cap stocks not doing all that much is also in the red markets proven that to be incorrect.
- [03:26]
Joe Terranova
The statistic correct. From a fundamental standpoint, I agree with you. From a mathematical standpoint, if you think about the semiconductors and the AI infrastructure, there are a significant weighting of the S and P overall. The advantage that you have is in fact when you identify the underperformance so far in 26, the max 7 fall into that category. So today you're benefiting from Microsoft, you're benefiting from Metta, you're benefiting from Apple, you're benefiting from Tesla. All the MAG7 names are now participating and statistically that's picking up the slack.
- [04:03]
Scott Wapner
Weiss, so what's your outlook here? Tony Pascarello at Goldman says his expectation is quote global equities will trend higher in the second half. This view is rooted in the house call that double digit S and P earnings growth will persist through 2027. Earnings estimates are for 24.3% earnings growth. That's the consensus. On April 1st it was 19.2. On January 1st it was 15.2. In other words, estimates continue to go up which is why you get targets on the S and P that continue to go up towards 8 or at 8, if not above 8,000 by the end of the year.
- [04:41]
Steve Weiss
Yeah, so, so general, I mean it's a bifurcated economy. Forget about that for a second. What's powering the economy should continue to power the economy, which is a spend. And when you take a look, I was looking this morning at, at the individual stock price performance in the s and P500 and through the top 50 names, only eight of them are not associated with AI, so they may not be classified as typical AI plays. Energy, for example, that's been an AI play. So they're. They're the only ones that give some health care companies, biotechs.
- [05:17]
Scott Wapner
Everything now is being looked at as kind of an AI play except for, you know, traditionally defensive ish staple, like so.
- [05:26]
Steve Weiss
Right. So my point is when we talk about a broadening of the market because of the sectors that have performed, if you go into those sectors, you'll see there's not so much for broadening. There is some broadening, but it's an overstatement to say the market's really broadened out. It has. Industrials have been a top performer, but you take a look at some of the industrial names and you'll see again the trade. So that's where I think it's not as clear cut is that while the fundamentals are strong, we don't know when the market or these stocks are going to discount peak performance of those fundamentals.
- [06:00]
Scott Wapner
The market has broadened out. I mean, over the last month. It has, it has. Financials are up 7%. They're not AI plays.
- [06:08]
Steve Weiss
Well, they're not, they're not directly.
- [06:13]
Scott Wapner
No, no. But you're speaking of pure kind of. They're not, they're not AI plays.
- [06:18]
Steve Weiss
I think a lot of us are confident in the outlook for the Goldmans and the Morgans and the cities because of their IPO pipeline.
- [06:26]
Scott Wapner
That's fine.
- [06:27]
Steve Weiss
Well, that's what tried it.
- [06:31]
Scott Wapner
That's in part. But they're not traditional. They're not. They're not place. They aren't. They're not. I mean, let's not act like they are. They're not.
- [06:38]
Steve Weiss
I'm not saying they're 100%, but that definitely has motivated the performance of most stocks. By the way, financials for broadly. Right. They're down on the year as of.
- [06:46]
Scott Wapner
No, but I'm saying the character of the market over the last month has told a different story than one that the quarter played out for two thirds of its period of time.
- [06:58]
Steve Weiss
That is true. That is true. I'm just saying there are some cautionary signs that you should take a look at, which are that the market is more based on AI than any of the indicators would say. It's not just. It's not just technology, it's not just communications. It's forever. Like Caterpillar.
- [07:16]
Scott Wapner
Well, obviously Caterpillar has become an AI play.
- [07:19]
Steve Weiss
Exactly, exactly. So. But most of their business is not AI. So but anyway, I think the point of it is that the market should continue with the strength. Those type of, those types of earnings growth numbers are unprecedented. When it's coming year after year and getting 24%, it doesn't matter if it's 15%, that is still phenomenal earnings performance and that should continue to support the market.
- [07:42]
Scott Wapner
What do you think? You see how quickly he was ready to fight me though? Man, do you see that?
- [07:46]
Brian Belsky
It's so great to be back on.
- [07:47]
Scott Wapner
I mean, it's really quick.
- [07:48]
Joe Terranova
That was a generous debate.
- [07:50]
Steve Weiss
I thought it was a good debate.
- [07:51]
Brian Belsky
It was really good.
- [07:52]
Scott Wapner
Well, it almost went off the rail. It could have gone off the rails, but you know, I just didn't feel like I did. Right.
- [07:58]
Brian Belsky
He never came in with a jab, jab, jab. He could have came in with a
- [08:01]
Scott Wapner
right and he needed an hour, but then he'd be laying on his back over by you on the floor. Go ahead.
- [08:08]
Brian Belsky
So no, we actually do believe in the broadening and you know that. I'm gonna talk about financials. If you take a look, financials up double digits in the S&P 500, up 14% in the small mid cap marketplace in June and in the, in the second quarter alone, that's broadening out. You look at small capital, the Russell 2000 up 22%. If you look at the S&P 600, small cap up 19%, the mid cap up 16% only in the second quarter, that's broadening out. And oh, by the way, performance, performance. But if you take a look at price to free cash flow in return on invested capital and actually dividends, the small cap world, it looks really, really, really interesting. So we've been small cap bulls for a while. We're vindicated in the second quarter. We think this is going to continue. Continue. Oh, by the way, because if you're talking about 24% earnings growth in the S&P 500, small cap earnings is up 28% for the second half. So we, we still like that.
- [08:58]
Scott Wapner
The moral of the whole story here is that tech is the wild card. It's the obvious question mark for the, for the second half. Does it outperform? Do other areas of the market pick up the slack? Brian, I'll throw that one in in your direction. There's no foregone conclusion. I think we pretty much figured that in the first half of the year tech was going to be the story for all of the reasons that we've laid out, build out and everything else. The question is, I think you have to say continue.
- [09:27]
Bryn Talkington
Yeah, I think you have to say, Scott, what part of tech Microsoft is tech matters, tech. They've had a horrible first half of the year and so I think we have to discern that a little bit more and say, well, semis and memory outperformance or will software and those mag7 contingents of software outperform? And so I think that to me is the million dollar question. When I look at software, just look at igv, it looks very clear. It put in a bottom in the, in the mid-70s and now it's making higher lows. It's not making higher highs, but it's making higher lows. And so I feel that there's been a base built within igv. I think you're going to start seeing a rebuild of that which benefits cyber Benefits, Palantir, Microsoft, etc. But I also think when you look at momentum and especially memory, if you look at Micron or the ETF DRAM, really they're just bouncing off the 2021 day moving average, really like clockwork. And so although we've had this drawdown, they're still like right at the 2021 day moving average. And until you get below that, I think that trade actually stays in place. And on top of that, in the next couple of weeks we'll have SK Hynix have their ADR debut in the us. I think that's going to be huge for retail, huge for hedge funds. And so I think you're going to have both trades somewhat working, but just working at different time periods because you really need to see that that 21 day bounce off DRAM and memory and that IGV, which is that basket of tech names, continue to build those higher lows.
- [10:58]
Scott Wapner
And maybe it's not this or that, it's I've heard from some on either this show or closing Bell that you could get everything. Yeah, you get everything rally.
- [11:07]
Joe Terranova
Yeah, I mean if you get into
- [11:08]
Scott Wapner
a point where you know the Fed's really not going to hike and the economy is going to continue to be good and earnings estimates are going to continue to grow, why wouldn't you just get a whole lot of a lot rallying? By the way, on the nasdaq, Krinsky over at BTIG says it's expect fireworks in July on a seasonality standpoint. Nasdaq 100 in July, up 17 of the last 18July since 08 average gain 4.23% patterns. Hardly a secret, he says, which begs the question, why hasn't it Been front run. Interesting question to ask especially after you let go of 2.3 trillion in market cap alone for the MAG7 in June. Yeah, biggest loss ever.
- [11:50]
Joe Terranova
Interesting statistic. But to your point point, I think if you're expecting the character of the market to change very much in the second half, I don't believe that is going to unfold. I think as Bryn highlighted, you could actually have semis and infrastructure pull back. But if you tell me at the same time I'm going to have better Microsoft, Tesla, Apple step forward, it's going to blunt that decline. So I think Scott, the right way to look at this is yes, you're not trying to pick which is going to be the better performer, S and P equal weight or the S and P market cap. The market throughout 26 has done this. It has rotated back and forth. It has tried. At the beginning of the year it was about the broadening out the cyclical story, the S and P equal weight. It was about financials and then on the onset of the conflict in the Middle east it became something different. Where it was was the Mag 7 and technology. Then in June it went back once again and the Magic 7 suffered. So I think that's kind of the dynamic of 2026 where the market's going to kind of vacillate back and forth between these themes and if you're bearish and if you're trying to identify where the peak is, I think that's going to frustrate the heck out of you.
- [13:03]
Scott Wapner
I don't know if there are a lot of people who are bearish at all. I feel like the debate is what you guys are still sort of want to kind of have. Well, there's always some. But the debate that maybe you guys want to have on the broadening story, which sounds like you built your case on early, right when I first went to you.
- [13:18]
Brian Belsky
Yeah, very much.
- [13:19]
Scott Wapner
And Joe, suggesting that the makeup of the market in the second half is not really going to change much.
- [13:23]
Brian Belsky
I think it's going to be less about sector Scott, and more about stocks. And the market has already shown you that the first half of the year. So think about what Microsoft, Google can do the second half of the year. Think about how Apple's position for the second half of the year, think about specific themes with respect to small mid cap are going to do the second half.
- [13:41]
Scott Wapner
We're going to do a lot of that in our B block today by the way because you've got like four firms out today with either their best picks for Q3 or for the entire second half. And there are a lot of names on the list that we don't talk about every day and a lot of names that spread ownership across.
- [13:56]
Brian Belsky
One of the sectors that is massively underperformed is communication services. Scott Netflix has had problems, but so is AT and T. So the barbell of communication services, the defensive side and the growth side, not so great except for Google. So I think that there's going to be some, some stock movement in certain sectors where you're going to be surprised. And like for instance, if you look at consumer discretionary, it's really been skewed by Amazon and Tesla. Tesla's down, was down 10%. And so again, the consumer discretionary sector is actually doing a lot better than almost.
- [14:24]
Scott Wapner
You want to talk services? Met is having its best day since January on this news. They'll build out their cloud business to sell excess AI compute. What do you think about that? Stock's up like 10% last I looked.
- [14:34]
Steve Weiss
Yeah, it's, it's so important to be lucky. So I was, you know, I mentioned show the other day that I don't know what to do with Meta, I don't know what to do with Microsoft, don't know what to do with Netflix. So I re underwrote them and I didn't add to Microsoft. But when I looked at meta 15 times this year, 13 times next year, I mean those are compellingly cheap. Now I thought that all the negative news except for my biggest concern was they announced an increase their CapEx in this quarter. So I bought more yesterday, actually pretty significantly I sold about half what I bought yesterday. The news about the cloud had been whispered, but it took the Bloomberg article to drive it. So, so that turned out to be very lucky.
- [15:17]
Scott Wapner
Well, I did some important business that they didn't have. I mean they still don't have it today.
- [15:22]
Steve Weiss
Yeah.
- [15:23]
Scott Wapner
But when you look at, you know, Microsoft, obviously AWS and Amazon, I think
- [15:29]
Steve Weiss
there's enough compute to store for them and even more. But what I'd say about, about Meta and why it's up to not so much that's new business. Is that the number one question I got when I talked to people about Metta and I debated with them is how are they going to generate a return on that capex spend? It's not natural. They don't have the product line, they don't have cloud, they don't have this, they don't have now they have cloud. So that's why you see it. That question's been answered. We don't know how long it's going to take draw out cloud but they're buying to building tons of warehouses, buying tons of compute so. So there you have.
- [16:02]
Scott Wapner
You can see the reaction to in the market like nebulous show. Give me nebulous core weave please.
- [16:06]
Joe Terranova
Cor weave is another one.
- [16:08]
Scott Wapner
Both of those are down on the, on the meta news today. We can throw those up there.
- [16:13]
Brian Belsky
Look at that.
- [16:14]
Scott Wapner
Brian, you have Nebbyus, right?
- [16:15]
Brian Belsky
Yeah. I mean it's stock that has a fantastic product. I mean it's up 200% the first half of the year. So what it was, it was.
- [16:23]
Steve Weiss
What's your balance sheet like?
- [16:24]
Brian Belsky
Balance sheet is pretty good. Balance sheet is really good. So. So I think this is just a reaction of what's happening today in the meta. So I think it's going to be fine.
- [16:33]
Steve Weiss
Yeah, I think it's overstated because as I said there's more. You think it's overstated?
- [16:36]
Joe Terranova
I don't think so.
- [16:36]
Steve Weiss
Well, I don't know Nebbyus but I think that if you're selling it because of this one event, it's oversafe. But don't they have enough, don't they
- [16:44]
Brian Belsky
have to prove that they can actually monetize this?
- [16:46]
Steve Weiss
And yeah, the answer is yes or no.
- [16:51]
Joe Terranova
It points them absolutely in the direction.
- [16:53]
Brian Belsky
In the right direction. Yeah.
- [16:54]
Joe Terranova
It justifies, it's the justification for monetizing the spend. We had this conversation after earnings where everyone was kind of questioning, all right, you have ad spending, you're spending all time the this money. You had ad revenue, rather you're spending all this money. It's not like your S or Google cloud. So just look as an example, Space X, the relationship that they have with anthropic, it's like a $20 billion deal on compute rental. So if you're telling me now that is stepping forward with compute rental, which is a very powerful demand oriented business to be in. Yeah, I think that's going to generate significant revenue over the coming years and I do think that's a paradigm shift for them because it places them in the position of saying, okay, there's a proof point for the spend. Yeah.
- [17:37]
Steve Weiss
But it's also. No, I don't think they have to prove it out near term.
- [17:41]
Brian Belsky
Yeah.
- [17:41]
Steve Weiss
Because pre orders which we're seeing for cloud and for others to make sure you have that space, that capacity are going to continue driving. So normally you wait for the cloud to be launched, then you book your business. But in all areas of technology that are related to AI, you're seeing pre orders and they've just been historic in terms of the level of them.
- [18:02]
Scott Wapner
Mitchell Robinson going to the Celtics. You got an opinion on that? Say that again. Mitchell Robinson.
- [18:06]
Joe Terranova
Mitchell Robinson.
- [18:07]
Scott Wapner
Celtics, $47.4 million. All right, the Celtics.
- [18:11]
Joe Terranova
That's, that's interesting.
- [18:13]
Steve Weiss
He's definitely gone, huh?
- [18:15]
Joe Terranova
We enjoyed his time here in New York. He delivered a championship. One heck of a player.
- [18:20]
Steve Weiss
Got to fill that hole though.
- [18:21]
Scott Wapner
Just wanted to mention that I think they will for wherever.
- [18:23]
Joe Terranova
You're giving me more free agency.
- [18:25]
Scott Wapner
No, that's, that's a good one.
- [18:27]
Joe Terranova
I mean it's any hockey ones.
- [18:29]
Scott Wapner
I was just on the float. The guy was just on the float up the street. Why would you have here to celebrate the championship? All right, we mentioned the banks. KBE Bank ETF 12.4%. Best first half since 21. It's right into your wheelhouse. For all of the reasons that, that we've suggested. Good earnings, good economy, lower regulations, cap return, capital markets are on fire. Could be a record year in M and A. Need I go on?
- [18:55]
Brian Belsky
No. Plus, if you take a look at the return on what they're making and the return on invested capital and return on equity is just now beginning to turn, literally beginning to accelerate. And we actually think they're still massively under owned. And so I think you have to have exposure to both large cap and small cap banks. And I do think we're going to see consolidation over the next couple of years. I think that's a major theme.
- [19:16]
Joe Terranova
Does anyone want to step out, buy some private equity names? Because we're looking at financials and we're buying the underperformance. That's very clear today. S and P Global is up 7%. Give me a reason why that's up so much. I talked yesterday about the exchanges underperforming. Ice, cme, nasdaq, they are all higher today. Wells Fargo, which was down for the year, that's higher today. So we're buying the underperformance in financials. I'm fine with that. I own some of the exchanges. I'm not there for private equity names. But if you're going to buy the underperformance, that's the one sub industry of financials where you're really.
- [19:50]
Scott Wapner
I want to get Bryn's take on that first. Let me get Bridge take. What do you think about that, Bryn? Because you do, you do have a little bit of exposure, you know, BDC related exposure. Although I think you sold. Did you sell Apollo? Did we do that the other day?
- [20:03]
Bryn Talkington
Yeah, I Saw I sold, yep, I sold Apollo about 128 and I think it got to 117 yesterday and then today Apollo is only up 3/4 of a percent versus everything else in financials is up 2 to 3%. So I think that the, the hangover of these companies, the lack of monetizations, their fee related earnings are going to be great. I just think the sentiment around these names is still going to weigh on the names and you have to respect sentiment. And so I think if like I own Capital One, that name should be so much higher than it is. They had crazy earnings last two quarters and so I think the financials will continue to rebuild but I think the private equity firms are going to underperform the financials and obviously the larger market just because of that overhang of the lack of monetizations as well as clearly what's happening or what happened from the outflows of the BDCs.
- [20:59]
Steve Weiss
Yeah, you know it's funny because I did some work on Apollo and the others. Apollo's where I came out with where I should buy. I didn't buy as 132 at the time. Look at it now until we go a substantial period without them putting gates on their, on some of their funds and Apollo put another one on limited to 5% withdrawals just a couple of weeks ago. I don't see you're going to see them recover.
- [21:24]
Scott Wapner
Plus so you can't buy these, you wouldn't buy any of these now until
- [21:27]
Steve Weiss
you get to the time frame and you don't mind lagging performance because I think Britain is absolutely right. We're not close to return sentiments. But you know, I'm still seeing continuation vehicles which are taking an equity, a stock, a company they own. They can't liquidate in line with the fund's life and just have a separate vehicle for that company.
- [21:49]
Scott Wapner
But don't you want to buy these things when everybody hates and is and where the sentiment is as you express it?
- [21:54]
Steve Weiss
Yeah, don't. The only reason you don't is because you can buy out things and see the performance occur. This is really momentum driven market both on the upside and the downside. So I'm not really, there's not really a debate as to whether the market broadens. My only point is underneath it, it's not broadening as much. So I do think you can go into other sectors and stay there.
- [22:14]
Joe Terranova
All right, I get you to go best and breed Blackstone. That's the one name I would buy. Blackstone more than any Other.
- [22:19]
Scott Wapner
Let's take a look at Nike too. I do want to hit that because it's, you know, for obvious reasons, I mean, let's show the stock, guys, please. Coming off of earnings. Stock was down, has a nice move now up 4%. They beat estimates China down 12%. What do we know? It owns it here. So Brian, I'll go to you. You sold it in February. Maybe people think that now the worst is in. Right? I mean, I don't know how much more negative news a name like this can absorb. It obviously has come down a bunch since the spring. It's done nothing since then. If you didn't, I mean, would this is the kind of thing you'd buy back?
- [22:56]
Bryn Talkington
No. Nope. There's, there's too much competition. The stock has been just like, if you pull up like a five year chart, it's, it's terrible. I just think the turnaround is taking too long. There's too many other names to buy. And so I don't think people care about the stock name. And so I think it's going to really struggle to outperform because people are going to say, well, lulu or on or XYZ or pdq. And I just think it's too competitive right now. I thought originally like the skims relationship would help, the new CEO would help, but it's really not helping the story. And so I think it's stuck in the mud and I would stay away from it.
- [23:38]
Joe Terranova
Brittany, I would ask you to put the trader hat on for a second and consider buying it because I think this supports everything that Josh has been saying in the last couple of days where it is potentially washed out. The bad fundamental news. This is a classic example of bad news and good price action. So the stock during the normal trading hours never took out 40, which was the low from June 26. That your point of reference? I know it's $2.75. That's a very tight area to work against, but you literally could work against that $40 low and look for the stock to move towards a 200 day moving average which sits all the way above $57. And you're taking that perspective as a trader, taking it as a trader looking at the fundamentals and saying it's washed out. Go ahead. I'm sorry.
- [24:27]
Bryn Talkington
Yeah, I mean I think maybe the stock forget 57. That is so far, that is so far ahead with things that have to happen. Maybe go to 44 and then maybe 49. But I would just say, hey, why don't I buy Tesla, sell some calls three months out get about 7% yield and move on. So. So I think from a trade maybe, maybe it goes to 49. That would be a nice return but I think you'd have to have some catalyst to do that. And I just don't think enough people care about the name versus why not buy Lulu, right? That's another washed out name and I think prefer that to Nike.
- [25:03]
Scott Wapner
Dick's Sporting Goods. Weiss owns that. I mean yeah. What do you guys.
- [25:07]
Steve Weiss
Completely different story. Dick's Sporting Goods, you know, has all the shoe companies and actually they've somewhat de emphasized Nike as the others, you know, have come on like on cloud and, and Hoka. But you know, I agree 100% with Brent and you could have told the same story about technicals on Lulu on Gap stores. Pick one. Once fashion loses its appeal, that company's fashion so, so hard to get it back. Particularly I mean think about the stock's gone from like what, 80, 90% market share and in, in athletic footwear to letting all these others in. So it's bound to happen. They had a longer run of it than most people would have thought.
- [25:49]
Scott Wapner
Dick's Sporting Goods today by 260 is the target. DA Davidson. They say the read through from Nike's mixed and then also top large cap pick for the second half at btig.
- [26:00]
Brian Belsky
So if you look at Dick's as a company in terms of how they're operating, by far the best. If you take a look at the price product on has the best product. If you look at, I think from a contrarian perspective, if you're trying to right the ship and get the ship going in the right direction in terms of how you're operating the company. Lulu has a better opportunity because it's a smaller company. They can tighten up their product offering a lot faster than Nike. Nike's already proven that they can't do it and they still we're seeing the insider buying, they're seeing the new leadership.
- [26:32]
Scott Wapner
That chart disagrees with with that thesis though, doesn't it?
- [26:35]
Brian Belsky
Yeah, it does because on a quarterly basis.
- [26:37]
Scott Wapner
But at the quarterly basis that's a year to date.
- [26:40]
Brian Belsky
Well look at all the bottom here. Look at Lulu today. Look at Lulu today. Look at Lulu the last month or so it's been bottoming. So again I think that you have to kind of look forward and exactly what I'm saying. I think Lulu has a better opportunity to tighten up their product first versus Nike.
- [26:54]
Steve Weiss
Lulu's got the same issue with competition now. They were the only players there and we worry about Nike coming in. Yeah.
- [27:01]
Yaoi Founder / Wayfair Announcer
Aloe.
- [27:02]
Scott Wapner
Yeah, yeah, yeah, yeah.
- [27:04]
Steve Weiss
So it's, it's not the same. And, and you just gotta, you gotta be important.
- [27:08]
Scott Wapner
Here we go.
- [27:09]
Steve Weiss
Watch the bus. And see what the logo is on the back of the butts.
- [27:14]
Brian Belsky
Wow.
- [27:15]
Scott Wapner
Just.
- [27:15]
Steve Weiss
Man on the street analysis. It's not my analysis, but I know it's his.
- [27:21]
Scott Wapner
How long you been divorced,
- [27:27]
Steve Weiss
by the way?
- [27:27]
Brian Belsky
The Fiori tag's in the front.
- [27:28]
Scott Wapner
We'll take a break.
- [27:31]
Bryn Talkington
All right.
- [27:32]
Scott Wapner
We're gonna take a break. Just go to break. Just go to break.
- [27:43]
Kiana and Shannon Maldonado
Trading at Schwab is now powered by Ameritrade. Unlocking the power of thinkorswim. The award winning trading platforms loaded with features that let you dive deeper into the market. Visualize your trades in a new light on thinkorswim desktop with robust charting and analysis tools. All while you uncover new opportunities with up to the minute market news and insights. ThinkOrSwim is available on desktop, web and mobile to meet you where you are. It's built by the trading obsessed to help you trade brilliantly. Learn more@schwab.com trading my name is Shannon Maldonado.
- [28:15]
Yaoi Founder / Wayfair Announcer
I'm the founder of Yaoi, a gift shop. From the lens of artists and handmade objects. I chose Shopify because when I was testing other platforms, it was definitely one of the most user friendly. It was important to me to think about where we would be in the future. All of the tools for reading your sales, like planning inventory, they're just right there on your dashboard. For anyone starting a small business, the biggest thing I can tell you, it doesn't have to be perfect. Shopify can help you build upon it. Start your free trial on shopify.com you want to get your backyard summer ready, but you don't want to break the bank. Wayfair gets it. Planning on dining al fresco or relaxing poolside? Wayfair has everything you need to prep your space. Shop now and save up to 70% off during Wayfair's 4th of July clearance. Score huge deals on outdoor furniture, area rugs and more. We're talking thousands of products for every style and budget. Plus surprise flash deals. July 6th. Don't wait. Shop Wayfair's 4th of July clearance now through July 6th at Wayfair.com Wayfair Every
- [29:11]
Steve Weiss
style, every home, foreign.
- [29:25]
Scott Wapner
We're going to clip through a bunch of stocks here. Best ideas for the second half or the Q or Q3. So B of A has Q3. They got names like IBM, Bellsky, own that Spotify you Own that Walmart, you own that Knight, Swift, Snowflake, Lennar. You want to take IBM, Spotify.
- [29:45]
Brian Belsky
I'll take Spotify because Joe will take Walmart. Spotify has been underperforming, but if you take a look at where the cash flows are coming in and revenues are still very, very strong. And we think from the communication services area, I think as the market evolves more, less about sectors and more about stocks, you can have tracking error because it's not on the index and that's how you can outperform.
- [30:04]
Scott Wapner
Yeah, this was kind of caught up for a moment in that whole AI disintermediation conversation, right?
- [30:09]
Brian Belsky
It was. And from a product perspective though, it's still, I mean, you know, I think from a music perspective and podcast perspective, it's actually better than Apple and better some of the other providers. So that's why we own it.
- [30:19]
Scott Wapner
What about Walmart?
- [30:20]
Joe Terranova
Walmart technically looks awful, awful, awful. We had the good fortune of selling Costco at $10.15 at the last rebalance. We stayed with Walmart. I think the value valuation, the rich valuation got the best of both Wal Mart and Costco. So Wal Mart's in the midst of a pullback. There was a note that was out this morning by Cleveland Research suggesting that near term trends are soft. I think that's the reason why it's down four and a half percent right now. Overall, I believe in this company's fundamental business when we will stay with it.
- [30:50]
Scott Wapner
Okay, BTIG goes second half picks Applovin. Joe, you have that Edwards Life Sciences,
- [30:56]
Joe Terranova
Expedia, a little bit of, about a little bit of a bounce today in each of those names. As you see, you're playing the contrarian. The other side, applovin is up 10%. Keep in mind here, this is a reasonable valuation on this company. A lot of people think this is triple digit valuation. It is not. They have to drive the revenue growth back higher above 50%. Once again, EPS growth, get that at least somewhere around 80% you're not going to get the triple digits gains that you got in the past. That's the one name I say you stay with.
- [31:22]
Scott Wapner
They go on holdings which you just talked about, ppl BWX Tech, you own that. Prologis also Expedia there, which, which is you. What do you think?
- [31:32]
Brian Belsky
Expedia we bought because of booking. It was cheaper relative to bookings. The same kind of relative growth there. Prologis is a name that we've owned for a long time. We love the REIT Spectre. Great, great, great Industrial reit and growing. They're in. Their units are growing pretty dramatically.
- [31:48]
Scott Wapner
Palo Alto on the list, Best quarter ever, up 112% in Q2. That made another list from another firm as well.
- [31:57]
Brian Belsky
I don't think Palo Alto is getting credit for some of these great consolidation plays that they've had like Cyber Arc. They're still not getting paid on the Cyber Arc purchase. And I think cybersecurity is a space within AI that has been under, kind of underutilized in terms of the, of the investment. So that's why it's playing a game of cash.
- [32:14]
Scott Wapner
Is it hard to say they're not getting credit? They're up 100, 112.
- [32:17]
Steve Weiss
And look at the multiple in the start.
- [32:19]
Scott Wapner
12%.
- [32:20]
Steve Weiss
They're getting, they're getting more credit than they should.
- [32:22]
Brian Belsky
I don't, I don't know. I mean, I think the cyber. Cyber Arc, it didn't, it didn't work for a long time and then all of a sudden the stock took off. I don't think it's. I think it's still very, very early in Palo Alto. I think the stock is going to be a mega winner.
- [32:35]
Joe Terranova
So CrowdStrike is the name that I, I bought recently. Personally. I think what's impressive about today is that I was talking about leaders going to laggards. You would think in the software industry, as you see names like Adobe and Salesforce working today, you'd see some capital go away from these security names like CrowdStrike, Palo Alto.
- [32:55]
Mike Santoli
You're not.
- [32:55]
Joe Terranova
That's telling you how strong that fundamental tailwind is for all of them. I think they continue to move UBS
- [33:01]
Scott Wapner
likes as they do selections for the third quarter. Cbre, Brian, what you have?
- [33:07]
Bryn Talkington
Yeah, this stock should be so much higher. Back in February, the stock fell from like 170 to 140 because everyone said somehow AI is going to disintermediate that. While the CFO talked about how they are using AI so much for their research. So this company is doing a ton of data center transactions. I think the stock should be so much higher. I think they'll continue to have great earnings. So I think it's a great, great time to actually add to the position here.
- [33:34]
Scott Wapner
Okay. All right, we'll take a break.
- [33:35]
Brian Belsky
Come back.
- [33:36]
Scott Wapner
Calls of the day. Coming up, we start with an upgrade for a big defense. Name City says ready to bounce back. We'll discuss next.
- [33:47]
Steve Weiss
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- [34:17]
Kiana and Shannon Maldonado
Trading at Schwab is now powered by Ameritrade unlocking the power of thinkorswim. The award winning trading platforms loaded with features that let you dive deeper into the market. Visualize your trades in a new light on thinkorswim desktop with robust charting and analysis tools all while you uncover new opportunities with up to the minute market news and insights. ThinkOrSwim is available on desktop, web and mobile to meet you where you are. It's built by the trading obsessed to help you trade brilliantly. Learn more@schwab.com trading you want to get
- [34:48]
Yaoi Founder / Wayfair Announcer
your backyard summer ready, but you don't want to break the bank. Wayfair gets it. Planning on dining al fresco or relaxing poolside? Wayfair has everything you need to prep your space. Shop now and save up to 70% off during Wayfair's 4th of July clearance. Score huge deals on outdoor furniture, area rugs and more. We're talking thousands of products for every style and budget, plus surprise flash deals July 6th. Don't wait. Shop Wayfair's 4th of July clearance now through July 6th at Wayfair.com Wayfair Every style, every home. We're back on the Half Home Report. I'm Seema Modi with your CNBC News update. The Justice Department just sued Virginia and California over state gun bans that were supposed to take effect today. The Virginia ban is focused on AR15 style rifles, while the California measure is a Glock ban for handguns. The department argues that both bans violate the second amount amendment. Several legal challenges have held up the ban. In other news, Metta reportedly explored buying Kalshi before deciding to build its own prediction markets app. NPR reports CEO Mark Zuckerberg met with Kalshee's chief about a possible takeover last year as popularity of that site exploded. But talks never advanced much. Meta is now working to launch its own prediction app called arena and the justice department and 17 states reaching a settlement with three major egg producers over claims that the company illegally colluded to inflate egg prices. For years, none of the companies admitted wrongdoing, but under the settlement, the three companies will donate 53 million eggs to food banks as well as paying $3.3 million to the states. Scott, that's the latest back to you.
- [36:33]
Scott Wapner
Okay, Seema, thank you. Seema. Modi to calls the day we talked about Citi upgrading a defense name. It's Lockheed they go to buy Joe T. I'll give you that one first.
- [36:41]
Joe Terranova
Defense names are not worth working. The industrial names and we have rtx, General Dynamics, Lockheed, Northrop, they're just not working. Steve and I were talking about that before the show.
- [36:52]
Scott Wapner
They, they, they're aware of that. They say that it historically bounces back consistently and sharply after each of these types of moves. Lower. That's the whole play for the upgrade.
- [37:01]
Joe Terranova
Hope is not a strategy. I hope they're correct. I see no evidence in front of me technically or fundamentally to suggest that can happen.
- [37:09]
Scott Wapner
They say cheap valuation, improving fundamentals and exposure to fast growing themes.
- [37:13]
Joe Terranova
Cheap can get cheaper.
- [37:14]
Scott Wapner
I mean, in other words, you say hope you have it. They're trying to lay out the historical trajectory of this particular name or maybe others in the defense space after periods of underperformance.
- [37:28]
Brian Belsky
Two things, and I may be wrong on this, but I think the magic number is 27. 27 consecutive years of increasing a dividend. 27 years. It's like cash flow.
- [37:37]
Scott Wapner
You pull that out of the sky.
- [37:38]
Brian Belsky
No, no.
- [37:39]
Scott Wapner
Have that institutional knowledge.
- [37:41]
Brian Belsky
I used to be an institutional guy and I think at the end of the day you got to look at how Lockheed fits into industrials. So you want to be, you want to have some defensive names, industrials which include waste management. But Lockheed Martin is the creme de la creme in terms of the defense stocks cash flow juggernaut. Guaranteed revenue from the United States government paying a dividend forever. It should be part of your long term core portfolio.
- [38:07]
Steve Weiss
What a TX chart looks great. I mean if you're looking for one.
- [38:11]
Scott Wapner
What about Old Dominion? Upgraded to outperform@evercore.isi.
- [38:14]
Joe Terranova
joe, you had a little bit of a pullback on the news this quarter related to Amazon expanding to less than a truckload. That really affected Old Dominion. I said at the time, I take the other, other side of that. You haven't had the realization of price appreciation since I made that statement. But I still stand by that. I truly believe if you want quality customer service on less than a truckload, you're going to turn to the niche players like Old Dominion.
- [38:42]
Scott Wapner
What about Simon Property Group with a downgrade at Wolf today. Terrific compounder they say. Remarkable track record, all time high, challenging entry point.
- [38:52]
Joe Terranova
What do you think Brian? Is that me or you? That's you, that's me. I'm staying.
- [38:56]
Scott Wapner
You want to pass it to Brian? Brian, you go.
- [38:58]
Brian Belsky
I love selling projects.
- [39:00]
Scott Wapner
Staying with it.
- [39:00]
Brian Belsky
I heard. You know what Joe's gonna tell you is they do an amazing job and swooping in and buying these properties. There's a lot of underperforming properties in the retail space and they have traditionally go back to 2008. They did a great job back then swooping up. So that's why we go in. Simon Properties. Properties continue on the payouts at least
- [39:19]
Joe Terranova
because of the balance sheet of the best balance sheet in the industry. You and I Talked about this two weeks ago and they took advantage in 23 of the stress with some quality acquisitions. Taking a stake in Taubman, got some
- [39:30]
Scott Wapner
targets at airlines going up today. American Airlines to 23 from 20, United to 153 from 136. Bernstein does both. You own both. So why don't you take.
- [39:40]
Brian Belsky
Well, I was on a beautiful United Airline flight last night. It was fantastic to get here. That's great. No, we own, we own American. American I think as a big game. Come on, man. Big good game of catch up. Now this is a small mid cap name, believe it or not. And United's a larger mid cap name. So in terms of looking at that space, this is an area I think that has been under invested in the airlines, especially in small mid cap.
- [40:04]
Scott Wapner
Where'd you fly in from?
- [40:07]
Brian Belsky
Fort Myerson?
- [40:08]
Scott Wapner
LaGuardia?
- [40:09]
Brian Belsky
No, to Newark.
- [40:10]
Scott Wapner
How was the meal?
- [40:12]
Brian Belsky
Fantastic.
- [40:12]
Scott Wapner
That's great. Really?
- [40:14]
Steve Weiss
Yeah.
- [40:14]
Scott Wapner
Step up, Santola. He's next.
- [40:33]
Brian Belsky
Welcome back.
- [40:34]
Scott Wapner
Our senior markets come commentator and overtime co anchor Mike Santoli has his midday word which is what on this first day of the second half?
- [40:43]
Mike Santoli
Well, I think it's recoil, Scott. I mean for as much as people are watching and calling what's happening in the market today a broadening and celebrating it and embracing. And I think there's obviously huge elements of that going on. I think where it's coming from is a momentum liquidation. Yesterday, right after the close on overtime, I looked at the best performing forming quarter to date stocks. So the second quarter leaders, they were all up yesterday about 6%. They were Sandex, Micron, Intel, AMD, Marvell. Today, those five stocks down 7 to 8%. So all we're seeing is this new quarter. Let's turn it over. You have momentum really getting smacked and then really as an echo effect of that other stuff is up a lot. So you guys are talking about the breakdown in Walmart Mart. It does look kind of ugly. It did start with something fundamental. There are some concerns it was expensive, but you also see the neglected staple stocks. Wal Mart's in the Staples sector getting a huge bid today. So I think this mean reversion action is really what we're seeing. If it remains elegant like this, I guess, and the index can stay flat and correlations remain low and the VIX falls, that's great. If semis have to really correct cool off in a faster and more disorderly way or something like that, then I think we have issues here and I'll just keep pointing it out. The S and P first got to this level on May 14, so we're happy, but we're not going anywhere.
- [42:09]
Scott Wapner
You remember an earnings season where the bar will be as high as it is for this coming month?
- [42:14]
Mike Santoli
Yeah, I don't think so. At least not for the core names driving the earnings momentum. And maybe we just got a little bit of a preview of that with Micron. I mean, you know, couldn't be a better quarter, couldn't be better guidance, and the market had kind of priced it in in advance.
- [42:30]
Scott Wapner
All right, we'll see you this afternoon, Mike. Thank you. Coming up in options action triple play. Oliver Renick is at the CBO with some activity on the day's biggest movers. We'll do it next. To some options action on a few of today's big movers. Oliver Renick live at CBO Global Markets in Chicago with more for us. Hi there.
- [42:55]
Oliver Renick
Hey, Scott. We're looking at three big options trades today. The most bullish is in Meta now up almost 10% on selling its AI capacity. It's the third most heavily traded stock in options today behind Nvidia and Tesla. With more than a billion dollars in premium traded so far. Call volume is exploding 20 times the five day average with over 80% of meta options traded on the call side and more than seven and a half times as many calls bought versus puts. Nine of the top 10 contracts by volume are calls and the most popular is the 720 strike call expiring August 21, a $12 trade that needs an 18% rally to pay off. We're also watching crypto with options bulls warming up to strategy stock again with calls outpacing puts and a lot of put selling. Bulls are also showing up in Coinbase. Recall buying is now outpacing put buying a 3 to 1. Some of the energy and strategy cooled off and has shifted towards Coinbase in the second half of the session here. And then lastly yesterday we spotted monster unusual call buying in K Web and it's still going on right now. Keep an eye on the Chinese stocks after their PMI flipped positive on Friday. Options flows here are heavy. 40,000 calls bought versus just 1500 puts. ETF is down huge. Maybe it's trying to claw its way back. Scott.
- [44:16]
Scott Wapner
All right, Oliver, appreciate that as always. Thank you very much. It's Oliver Renick in Chicago. Brin, take the bitcoin one. What do you think here? I mean, the trade speaks for itself, or at least the performance does. What are your thoughts?
- [44:30]
Bryn Talkington
Several. I mean, I looked at the past year, Bitcoin's down 4,43. When I look at the derivatives, like Microstrategy, you know, down 73. And then when I go out five years, Bitcoin up 80%. MicroStrategy is up 50%. So where I'm kind of settling in is I'm very comfortable owning Bitcoin and Etherium. I think owning, owning the derivatives of those have not worked out and I think that as I look forward, I feel very comfortable with owning the direct crypto. The derivatives though, I think have destroyed a bunch of capital and I'm questioning about the long term going concern of those. Just looking at the performance over, I think a very long period of time.
- [45:14]
Scott Wapner
Weiss, what's your take?
- [45:16]
Steve Weiss
Bitcoin, I still, you know, I think it's a legitimate trading vehicle, but I just don't see any underlying value, any intrinsic value. This, you don't need Bitcoin, Bitcoin for blockchain, that's what everybody relies on. You just don't. And with the stable coins and the coins that all the other sovereigns are putting out, it sort of eats into their territory. So I don't see, I don't know why it should move. And it's down 50% since the peak when Trump first got elected. So I'm not there short, I'm not there long. I don't think you can really do either.
- [45:46]
Scott Wapner
All right, we'll take a break and we'll do final trades on the other side.
- [45:52]
Joe Terranova
Are you following the Halftime Report podcast?
- [45:55]
Kiana and Shannon Maldonado
What are you waiting for?
- [45:57]
Joe Terranova
Look for us in your favorite podcasting app. Follow the Halftime Podcast now.
- [46:06]
Scott Wapner
I hope you join me. Three o' clock today. Closing bell. Dan Ives, Dubrovko Lakos, Liz Thomas, Rich Saperstein. So we'll have a good one. We'll see what this first day of the second half actually does as we edge towards that close. Brian, what's your final trade?
- [46:20]
Bryn Talkington
IGV continue to make higher lows. It may take a minute to get over 100. But I think once it does, it's a good trade for the remaining of the year.
- [46:28]
Scott Wapner
Okay, that's going to be a good debate to have in the weeks and months ahead. Brian Belsky, straight off a fabulous American Airlines flight.
- [46:39]
Brian Belsky
Glad we knew about that United Airlines flight. For the record.
- [46:43]
Scott Wapner
United? I thought you said American.
- [46:45]
Brian Belsky
No, United.
- [46:46]
Scott Wapner
He said American, didn't he?
- [46:47]
Joe Terranova
Maybe he's flying back American Unum.
- [46:50]
Steve Weiss
Maybe he just doesn't know.
- [46:51]
Scott Wapner
I don't know.
- [46:52]
Steve Weiss
I mean, that's possibility.
- [46:53]
Scott Wapner
They land at Teterboro.
- [46:54]
Brian Belsky
Yeah, they really.
- [46:55]
Steve Weiss
I don't.
- [46:55]
Brian Belsky
What's your final unum. Unm. Great little midcap insurance company.
- [46:59]
Steve Weiss
Google, I think that's ready to take off.
- [47:00]
Joe Terranova
Also, JM Smucker, what I did there.
- [47:03]
Scott Wapner
Okay. All right, good stuff. I'll see you on the closing bell. Three o'.
- [47:06]
Joe Terranova
Clock.
- [47:06]
Scott Wapner
The exchange starts now. You've been listening to CNBC's Halftime Report, the podcast. You can always catch us live weekdays at 12 Eastern only on CNBC.
- [47:20]
Yaoi Founder / Wayfair Announcer
All opinions expressed by the Halftime Report participants are solely their opinions and do not reflect the opinions of CNBC or its parent company or affiliates and may have been previously disseminated by them on television, radio, Internet or another medium. You should not treat any opinion expressed on this podcast as a specific inducement to make a particular investment or follow a particular strategy, but only as an expression of opinion. Such opinions are based upon information the Halftime Report participants consider reliable, but neither CNBC nor its affiliates and or subsidiaries warrant its completeness or accuracy and it should not be relied upon as such. To view the full Halftime Report disclaimer, please visit cnbc.com halftime reportdisclaimer trading@schwab is
- [47:55]
Kiana and Shannon Maldonado
now powered by Ameritrade. Unlocking the power of thinkorswim, the award winning trading platforms loaded with features that let you dive deeper into the market. Visualize your trades in a new light on thinkorswim desktop with robust charting and analysis tools all while you uncover new opportunities with up to the minute market news and insights. ThinkOrSwim is available on desktop, web and mobile to meet you where you are. It's built by the trading obsessed to help you trade brilliantly. Learn more@schwab.com trading.