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Halftime Report
Analyzing the Huge Week Ahead for the Markets 1/26/26
00:43:50
Scott Wapner and the Investment Committee debate this pivotal week ahead for the markets with Mega Cap Earnings reporting in the coming days and the Fed Decision on Wednesday. Plus, the desk shares their latest portfolio moves. And later, we hit the latest Calls of the Day and how to trade them. Investment Committee Disclosures
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Building a portfolio with Fidelity Basket Portfolios is kind of like making a sandwich. It's as simple as picking your stocks.
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And ETFs, sort of like your meats.
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And other topics and managing it as one big juicy investment.
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Mmm.
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Now that's pretty good. Learn more@fidelity.com baskets Investing involves risk, including risk of loss. Fidelity Brokerage Services LLC Member NYSE SIPC.
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Member not every sale happens at the register before AT&T business Wireless checking out customers on our mobile POS systems took too long. Basically a staring contest where everyone loses. It's crazy what people will say during an awkward silence. Now transactions are done before the silence takes hold. That means I can focus on the task at hand and make an extra sale or two. Sometimes I do miss the bonding time. Sometimes.
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C
AT&T business Wireless connecting changes everything. 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. Carl, thanks so much. Welcome to the Halftime Report. I'm Scott Wapner, front and center this hour. This critical week ahead for the markets as big tech earnings and the Fed meeting are looming. We discuss and debate with the investment committee. Joining me for the hour, Joe Terranova, Steve Weiss and Jim Leventhal. Let's check the markets to see how we're doing to start this week out. We're green across the board except for the Russell, which is giving some back. It's been the standout. But Joe, the big story clearly is what lies ahead. You get the Fed decision on Wednesday, Microsoft Matter and Tesla on Wednesday. Apple's Thursday Friday is the deadline to avert another potential government shutdown. By the way, the prediction markets are seeing a spike in bets on a shutdown with a 78 to 90% chance, depending if you're looking at Polymarket or Kalshi, which we have a partnership with, we'll get to everything around that Big market moves that we need to Discuss. Gold above 5100 for the first time ever? There's an article out today. Gold has overtaken the dollar as the largest global reserve asset. That's certainly notable. What do you make of what's happening within the markets and all of these other areas that are stealing a little bit of the thunder as we look ahead to these critical earnings midwee volatility.
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A
That we expected in 2026? It's here, it's present. We're seeing a lot of the trends that we're building at the end of the fourth quarter. Somewhat parabolic in their nature right now. You mentioned gold. Gold is giving speculators the ability to hedge portfolios and they're getting paid to do so. So it's a combination of a parabolic momentum move and the debasement trade. The concerns that are out there in terms of owning currencies, the dollar continues to sl. Be owning bonds. We see what's going on in Japan and global central banks are diversifying away from currencies and bonds and they are buyers of gold. Just look at what Poland announced recently. One of the largest buyers of gold from a country right now in central bank. So I think it's the volatility that really is the headline. We'll talk about what we're seeing in the Mag 7, the relationship with semis and software. But the volatility is giving you opportunity.
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C
You know, Weiss, it's a lot of focus on Japan. What's happening there? The yen and Japanese bonds, obviously what's happening in gold, what's happening in markets outside the US in terms of stock markets, emerging markets. The EEM hitting an all time high yet again today. The average country ETF is up 6 and a half percent year to date versus the S&P which is up just 1%. That is notable as well.
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E
Yeah. So clearly there's, there's vestiges of the Sell America trade, number one. I think that's part of it. I don't think it's a big part of it, but is also believing that you can get better performance outside the US and you want to diversify a little bit. Look, my diversification outside the US amounts to a position in, in Alibaba and that's it. Ultimately, I think that, that we have reversion to the mean and that with the setup in the US in particular, economic, economically, that, that it's still the place to be to me. Merging markets. Sure, you should have an allocation there. If you're a portfolio manager that expects that clients expect diversification. But if you're pure alpha, or if you're pure alpha and you will like to trade it, fine. But for me, longer term, to me it's always Buy America.
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C
I thought the whole, I mean, this sort of flies into the face of, of what the narrative has been about why people are so bullish about the US stock market for this year. Remember, people have been saying, hey, it's really hard to find bears around. Everybody seems to be so bullish. Yes, almost until Davos. And then Davos sort of reignited this question about Sell America. And now here we are focused on the fact that once again, it's like emerging markets and outside the US Are outperforming after coming off an outperformance period.
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E
Right.
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C
Already last year.
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E
Well, and there it's the time frame that matters. So Joe's point, what I've been saying, increased volatility and that's what we're seeing. The S and P was down for the last two weeks. So that's part of what you're talking about. I do think in near term that there is risk to the market of a drawdown. 5% maybe. I don't think it's 10%, but it could be 5%.
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C
What initiates that, what initiates it are two things.
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E
One I think is extremely unlikely, which is that the Fed taking a very hawkish stance on Wednesday. I just don't see that at all. The question is right now how many cuts are in the market. I think there's one cut reflect in the market.
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C
Yeah. I mean if you look at what the prediction is for, for Wednesday, when, you know, we'll look at the decision, we'll get the news conference, we'll speak to Gundlock and we'll sort of rekindle all of those things in our coverage that we've gotten used to doing, the market's expecting nothing right on, on Wednesday.
- [06:21]
E
So the other thing initiated is if we have a very disappointing reporting period, specifically if we have that in the broadening of the trade. So if we have the big companies like Caterpillar, so, so, well, comes out and says hold on, as we've seen with Deere, where they just can't get it right. But I don't really see that either because I think the setup economically that may cause momentary dip, but that's a buy the dip. Then you have to focus on I. You have to take a look. So if the AI carries of the torch, right, like meta, like Microsoft, they all, and I think it's extremely unlikely also come out and say we're putting the brakes on spending or their quarters are disappointing relative to the cloud, then you could see an issue. I think those are all unlikely. The most likely is continuing to see what we've seen in Davos, what we saw earlier or late last year and last April is policy coming out of Washington. That could be the biggest canary in the coal mine. Just don't know.
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C
Sure. You know, Jim, as you know, we look ahead to these mega cap earnings. Wolf thinks that what these companies deliver to Weiss's point is going to be good. And it's going to be the catalyst for people to go back to tech. Yes, I get that the market can still be broad and these, the so called broadening trade can still do well. But I said last week, looking ahead, we're going to be reminded of something this week. We're either going to be reminded why we've started to diversify away from those names or we're going to be reminded why we should just take advantage of the dips and go right back to them.
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F
Yeah, we are going to be reminded of something. We're going to find out pretty quickly. And just to start with, I agree with Wolf that the reports should be good and there's no reason to expect that any capex plans will be reduced. That would be a big surprise. But I think the question and you just laid it out is how do the stocks respond? To partially answer that, I would say let's note that the three stocks we're talking about this week, Microsoft, Meta and Apple have not traded well recently. They really have.
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C
Metta has met me. Metta had not. And then all of a sudden Meta starts waking up. Metta ran 6% last week, so it's making a move into the print.
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F
I hear you on that and it's a good point. And even today, you know, there is some short term movement to the upside in the other two names as well. But generally over the medium term these stocks have been heavy and it's for that reason that I would think that the trend is actually probably going to continue to be lackluster responses to good earnings reports. Let me just state it again. Earnings reports are going to be good for those three. I would not expect a robust share price response in the three of them just based on recent moves. Not, I'm not disagreeing with you about.
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C
What you Metta, let's not forget about what happened last, last, last earnings period. Metta and you can see it right there on the far left side of the, of your screen. That's a three month look of what's happened. Metta comes in. There are all these expectations that are really high. They talk about spending, you know, enormous amounts of money. The market once again smacks it down and the stock really hasn't done anything since until just starting to wake up in the last few days.
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F
Look at that chart. And if you look at that chart, there's a lot of people trapped in there. There are. And I think you get any short term spike after good earnings there may be some people heading for the exit. Just to be specific about What I believe both short term and through the of this year is that the equal weight small cap international stocks are likely to outperform the S&P 500. Having said that, I don't think the S&P 500 is a sell here. I don't think these stocks are a sell here. I just think you're going to get better relative performance outside.
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E
I don't know what he means by trapped. What does trapped mean? I'm in a permanent compound.
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C
Why are you asking me?
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Ask him.
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Because I need an interpretation. So what do I need to.
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C
I need to be the buffer between you guys? Yeah.
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F
So. Well, okay, so take matter, what's it off from? Its high over the last year I was over 800. Yeah. So 15 odd. Same thing with Microsoft. Roughly round terms, 10 to 15%. There's people who bought at those highs. I mean the stocks were at those highs for quite some time. Now there are some people, and I'll grant you, Steve, there's a lot of people, and I think this is the point you want to make who are long term compounders have been in it for a long time. But there's a lot of people who bought it and are down 10, 15%. They're disappointed. They're seeing the equal weight S&P 500 run. They're seeing small caps run. And they're saying to themselves, boy, I get a little pop here out of Microsoft, I think I'll take my money and go elsewhere with it.
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Yeah, I just don't see it as trapped. So highly liquid stock. I think trap means when you're in a small cap where there's no liquidity, you can't get out.
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Okay, that's not what I'm saying. I'm saying people who are underwater, I.
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Mean I would just question the thesis to begin with that if these reports are good, people are going to use them as opportunities.
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I disagree with that.
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Just saw it with metal, validate their thesis.
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People did not sell Metta because the report was so good and they were looking to deploy financing. Yeah, that was the story. It wasn't like an aside. Oh hey, the people just decided to sell it because things had been so good. I'm not spooked by what Zuckerberg and company had to say last period and sold the stock.
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F
Scott, I don't think I'm saying something outlandish. I hear you. Pushback. There are plenty of times, and I'm saying I think this is one of them where good reports are met with selling. That's what I Mean, that's not outlandish to say that that could happen. I could be wrong. Of course I could be wrong. That's what I believe is going to happen. We'll see. Better you phrased it as we're going to get an answer. I'm telling you what I think.
- [11:48]
A
It would have to rally 18% to get to its Aug. 15 high at 796, the intraday high. Each one of these stocks, as you have rightly identified, these are out of the Mag 7, the names that have underperformed, in particular for Microsoft and for Apple. I disagree with the premise that people are going to be looking to get out. I actually think what you're beginning to see and what you will see further is if these stocks are good enough, good enough in their earnings report. Here goes Mag7 taking the lead once again. Equal Weight steps back into the shadows. I think that's what's happening.
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C
That's the Wolf point. Our sense is they say that these earnings will serve as a catalyst for investors to rotate back into techcom Services as the largest companies continue to provide solid results. We know that the growth rates of these companies and the growth in earnings, they're going to be tremendous. They may not be at the same growth rates that they were. And you'll have to as an investor reconcile that in deciding how much you want to pay up for even the slightest bit of slowing growth.
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A
And then next week you get the all stars of the mag 7, you get Alphabet and you get Amazon, which are performing well.
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C
The All Star like so far this year.
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Remember over the last several months, Amazon.
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All star team last year.
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Over the last several months, Amazon has taken the lead along with Alphabet. And I think collectively there's a lot of people who support the premise that Amazon could have a good year.
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C
Amazon, correct. Amazon was relegated.
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It was last year.
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C
They didn't make the Champions League.
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Absolutely. But more recently it has taken the lead along with Alphabet. So I just think it comes down to the dynamic that exists, the relationship that exists and these relationships are important between Equal Weight and the S And P, the Mag 7. And I think you'll see a turn there. If we could get good enough, good enough earnings and reaction.
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C
Well, the street is positive as usual. I don't know that you would expect anything different, but Amazon named top pick into earnings at Wells. Meta gets upgraded to a buy. The targets a 900 at Rothschild. You have Apple. Target goes up to 315. That's at JP Morgan. Overweight is the rating. Moffett, Nathanson Raises the target to 241 as well. And Wells Fargo suggests that you could get an upside surprise. As a matter of fact, in capex, as this arms race continues. Don't discount that by too much.
- [14:15]
F
Good, good. Because that will flow through to a lot of the stocks that I own, like a Cisco or a Qualcomm that are going to be beneficiaries of increased capex. I'm not sure that bodes well for these hyperscalers. Right. Haven't we seen over the last year, year and a half that heightened capex has at least half the time been met with share price declines. I do want to be clear here.
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C
For everybody who's one, they're not all created equal. That's how the market has been voting. What was okay for an Alphabet has not been okay for a Metta. It depends on the amount of capital that you're deploying and how you're deploying it and how the market judges the return on invested capital to be.
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F
There has been differentiation between how the share prices of the companies have responded. I agree. And. And those ones that are using more debt finance have had a harsher response. However, it has been, in my opinion, more quarter by quarter. There have been quarters that these companies have been applauded for spending more and there have been quarters where heightened capex has not been met with a good response regardless of the differentiation between how it's being financed finance. I think at this point in time, with questions that we've been wrestling about on the edges of debt financing and the reduction in free cash flow that heightened capex is not likely to be reflected upon. Well, in the hyperscaler share prices. I'm making predictions. I could be wrong.
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Microsoft's important. Microsoft's important for this trade that currently exists between software and semis. If Microsoft can come out, surprise the street, reverse some of the negative sentiment, see people return. I think overall that's going to have a positive impact on software.
- [15:49]
C
Well, it's going to have a positive impact on, on semis if these, these companies continue to talk about spending, you know, gobs of money. Obviously the trade that's worked is going to continue to work. I think Microsoft, I don't know that Microsoft's a save the day for all the software stocks that have struggled because.
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There are a lot. Wait a second.
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Have been deemed to be deserving of.
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Be careful with that. We live in a world of passive investing. You know as well as I do that Microsoft is in all of these major ETFs that are defined as software ETFs. So just because of its overall trillion dollar plus size, if they come out, they beat, they perform well. You have an environment where software is dramatically underperform semis. Everyone's looking for the mean reversion. All I'm saying is you may see some of that unfold in the next several weeks. If Microsoft can actually deliver, I think.
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That'Ll be a very brief moment in time.
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Don't disagree.
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They're going to go to what stocks. What Scott's point is about, you know, determining which of the winners and losers in Big Cap, you know, they are also going to continue to determine who's a winner and loser with AI. And so I just don't think you.
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Can answer those questions anytime soon. Soon.
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No time soon. No time.
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C
You can maybe from Microsoft, but I'm not sure that you can fully answer it for CRM or a now or those names. And I'm not necessarily sure though I obviously don't know that. That's a great point that a Microsoft great report funnels down to the names that have struggled dramatically.
- [17:25]
A
We're looking at it through a different lens though. You're looking at it through the fundamental lens of where ultimately the innovation is going to go through the course of time. And that's a great way to look at it. I'm looking at it from the lens of market participants in a highly volatile environment right now. How are they positioned? What sentiment? I think there's going to be a lot of fits and starts in 2026. And I don't, I agree with both of you. I don't think anyone knows the answer for what we're looking for here. But what I do think we know is that because of the way people are positioned, you could get a little mean.
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C
I don't know. Melius today has an interesting note on this very, very question. The divergence that they look at between software and semis and I was, you know, talking to you guys, I wasn't paying attention to the screen as closely did we show the divergence between the, the IGV and smh which we have showed. There it is. Which gives you obviously a real look at what's happened. The divergence, especially as you got later into the summer and into the fourth fall. Melius says the divergence is likely to persist as AI moves beyond the narrow quote, quote unquote SaaS disruption and opens an entirely new total addressable market as agents proliferate and AI becomes embedded across industries. So, you know, I don't know it Kind of flies in the face of some of the things you're talking about.
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A
That's the consensus though right now. And right now going against the consensus is probably the more profitable thing to do. So. So you have to look at these little internal indicators again, I think it's short term oriented in the long term. Steve's right. Fundamentally I want semi is over software. But it doesn't mean you can't get an unwind based off of what we're seeing in Microsoft's earnings.
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C
Well, you bought more Zoom.
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I did.
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C
In any way. Part of it it is.
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That's part of, it's part, it's, it's a way to play. Look, I already had the existing position in Zoom. The ETF also owns Zoom. I bought more Zoom. If we could show a one year chart, you'll see right now it's up 10%. Why is it up? It's up on the news that they have this investment in Anthropic and the investment Anthropic could be valued. If we say Anthropic is worth what, three to $400 billion. That means their investment in Anthropic is probably worth somewhere between two and four billion dollars. So the street is excited about that. It's making a one year high. Can we pull the stock stock back five years and you'll get a real reflection of what this stock has done since COVID Okay. And the stock right now from my perspective is breaking out. You're seeing that positions are being built and I'll tell you, I probably this to me this looks like the xpi. I'm probably going to buy more over the next several days. If it continues to move higher towards 100, I think the stock could go to 125, 130 easily.
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C
All right. Cisco got an upgrade today. That was one of the names I think that was thrown out on this desk here to outperform from inline target to 100 from 80. That's at Evercore they see a number of tailwinds. Jim. I know Joe, you own the stock in the T but Jim, you own it as well.
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F
This has been a great stock. I mean I've owned this for over 10 years. It's given basically just a little bit above the S&P 500, just a little bit but with an 80% beta meaning it gives much less than the market risk and I think that's going to continue. This is a very attractive valuation. It's a company that is selling the hardware into the data centers and it's doing it not just as a component provider but as an enterprise wide accumulator. Not just of hardware but software and security. So it goes to companies and says we can do all of this. That's a very compelling sales pitch and it's working for them. And you're seeing it in the pickup and growth rate. You're seeing it in the pickup and earnings estimates markets. They're on a January 31st quarter so we're not going to get results from them until mid February. But I expect those results to be very positive and I think the analyst community is picking up on that.
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C
Let's talk about the banks as we look at more divergence between some things. Can we look at the year to date? Guys, can you make quick for me JPM versus Goldman. I want to show something as we discuss this trade and talk about something that that Joe's done because year to date there to thank you. So Goldman Sachs there it is. Up 6% year to date. JP Morgan, as I look at it, JPM is down almost 7%. You sold completely?
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A
Completely JPM completely.
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C
That's like blasphemy on trading desks. Why did you do that?
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A
I don't know. I don't look at it. I don't get emotional about this though. The ETF first of all at the end of October sold out of 8 out of JP Morgan at 311. I had an existing position that I initiated in January of 24. That's personally somewhere around 172. I added to the position more recently in early December up around 318. I questioned whether the strategy is right. The problem I have with all of this. J.P. morgan is pulling back. I'm comfortable in my Goldman Sachs position. But it goes back to consensus and consensus going with consensus has been the wrong move over the last 18 months. And think about consensus on financials, myself included. Everyone came into the year all bulled up as it related to the financial sector. Look at the 11 major s and P sectors so far year to date. Am I wrong to say the financials are the worst sector year to date? I think it's probably the only sector that is down or has negative performance year to date. So we're overweight financials in the etf. I'm comfortably long my Goldman Sachs personally it's been one of my better trades the last several years and I just want to neutralize some of the risk in financials. And JP Morgan is not trading well lately.
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F
I just want to say I strongly agree with the concept that there is no such thing As a forever stock. Now, I trim JP Morgan. I'm still going to hang on to the small piece that I have. But there's been a few times, Joe, that I've been in the seat you're in right now where I've sold something and people say, how could you possibly sell it? Scott, just for amusement, I'm going to remind you. Visa. Remember around this time last year, I sold it and there was the question about my education credentials. It was kind of funny, actually. I hope you do remember it.
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C
I don't.
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F
I don't know, really. Jim Cramer said. Remember this? Jim Cramer said, anybody who sells Visa, I have to ask where they went to school. You don't remember?
- [23:39]
C
Okay, I saw you were insinuating that I was the one who had questioned your education credentials.
- [23:43]
F
No, you just took.
- [23:43]
C
When in fact, I did not, and I have no recollection of that in any way, shape or form.
- [23:48]
F
Okay, okay. You just took glee in it. It was funny. It was funny. I'm reminding you of a funny moment.
- [23:52]
C
Don't.
- [23:53]
F
Don't take it as an attack. There are nothing. Nothing is a forever stock.
- [24:00]
C
Shovel too much snow this weekend.
- [24:02]
F
You seem a little.
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A
Oh, the tractor.
- [24:05]
C
Did you have a Red Bull before the show again?
- [24:07]
F
I did.
- [24:08]
A
I did.
- [24:09]
F
I feel restrained. I'm having. This is an intellectual discussion. There is no such thing as a forever stock. There are stocks that get labeled like that. Look at Berkshire Hathaway, okay? And imagine if I had sold it or Joe or Steve had sold it a year ago. We would have been lambasted for how could you possibly sell. Berkshire would have been the right thing to do, relatively speaking. There, no stock is forever.
- [24:29]
C
That's an event driven thing more than anything else.
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F
How about if I'd sold it immediately afterwards, after the announcement, after the announcement of his retirement? I mean, I'm going to. I'm going to stick to the point because I think the point stands. There is no such thing as a forever stock that can lock you into things that you wish you got out of.
- [24:46]
C
Okay. Weiss, what do you think about this move, selling jpm?
- [24:50]
E
Look, I don't think there's anything wrong with. With taking a profit ever. And, you know, everybody's lined up on one side of the straight with J.P. morgan. I think you do want exposure in the group because of the ipo, because of the refinancing, because of the LBO cycle coming up. And to me, that's best situated, obviously, I think, in Goldman Sachs. So I have no problem selling JP Morgan. I wish I owned it for the period. The only other thing I'd say is that Jimmy Soliloquy was a great reason not to do live TV because that would have been cut out in a tape. Like. What are you talking about? I have no idea the point you were making. You know, aside from Steve, there's a.
- [25:32]
F
Lot of things you don't know. And we'll just add this to the list, please.
- [25:35]
E
You know, I would just say.
- [25:38]
F
I.
- [25:38]
E
Would just say that I would call note to this that maybe was Red Bull, but we've heard Jimmy so many times this show take a short term view on things rather than being a long term investor. He is so.
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F
Well, this is a great point. This is great. This is a great point. It's a great point. I am giving you my short term views. This is great. I'm not taking action today. You don't see me selling anything today. All right, I said what I said about the hyperscalers. You don't see me selling Microsoft. I think for a long term investor. Investor, you're supposed to hold them here.
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A
Is it a sin to actually trade in an environment, I mean where volatility.
- [26:13]
E
Volatility skills. Most people don't have the skills.
- [26:15]
A
Okay. But I think 2026, you know, again, you made a great point before. We're not going to find out the answer. I think there's so many things right now that are headwinds for the market that we're not going to find the answers to for many, many months. And I think a market in the interim is just going to spin to a lot of different places. You could take advantage of that.
- [26:34]
E
Okay.
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F
But to the end of the year, profits growing, Accommodative Fed economy growing. I'm just saying. Yeah, short term, long term I'm not making any markets. Long term, I feel pretty good.
- [26:47]
C
Okay, up next, Joe has another move to tell you about. We will fill you in. The energy markets too. We got to talk about that because you obviously had the big storm and it looks like the forecast is calling for more. We're back after this. Hey, Fidelity. Can I get a second opinion on stocks in the Fidelity app?
- [27:09]
D
With Fidelity, it's easy to get an outside opinion from independent experts in a single score. And then when you're ready, trade US stocks and ETFs with no commissions.
- [27:20]
F
That's right.
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D
I am always right.
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A
Investing involves risk, including risk of loss. Online US equity trades and ETFs and retail fidelity account sell order assessment fee not included. Some account types and securities excluded. Details of Fidelity dot Com Commissions Fidelity Brokerage Services LLC Member NYSE SIPC before.
- [27:35]
B
We had AT&T business wireless coverage, our delivery GPS wasn't the most reliable. Once our driver had to do a 14 point turn to get back on route. A 14 point turn. An influencer even livestream the whole thing. Not good for business. Now with AT&T business wireless routes are updating on the fly and deliveries are on time. And the influencer did get us 53 new followers though.
- [27:59]
C
AT&T business wireless connecting changes everything a KFC tale in the pursuit of flavor the Colonel made his $10 Tuesday bucket.
- [28:11]
F
So full with eight pieces of juicy.
- [28:13]
C
Crispy chicken or tenders that it might.
- [28:15]
F
Just last you till Wednesday if you've.
- [28:18]
E
Got that kind of self control.
- [28:19]
C
I mean some people want leftovers, others are more into right nowers. The Colonel lived so we could chicken 10 bucks 8 pieces 1 big deal with KFC $10 Tuesdays prices and participation may vary.
- [28:34]
A
Taxes, tips and fees extra.
- [28:47]
E
All right.
- [28:47]
C
Right. Welcome back. So let's get this other move and it is related to what's been happening in the energy markets. I think.
- [28:53]
A
Yes it is.
- [28:54]
C
I'm not sure that it's a snowstorm related trade. What is it?
- [28:59]
A
It's buying more of the oih. I established a position in that last week. It continues to move higher. Another new 52 week high. I like the opportunity that this diversified ETF gives you with oil field services names, whether it's Schlumberger, Halliburton, Baker Hughes, which is in the etf and their ability to go out and search for oil and gas throughout the world. And I think that's where you want exposure. Energy is starting off the year as one of the strongest sectors is right.
- [29:29]
C
So wasn't it the best right there?
- [29:32]
A
I think materials probably after gold and.
- [29:35]
C
Silver, it's up 11% in a month. Yeah, yeah. Materials is still number one. Barely.
- [29:40]
A
Materials and energy, that really has been the story so far year to date. Kudos to Tom Lee on that by the way. But the OIH I think is the right way to get some diversified exposure to the oil names. And I still see the oil market while getting less short still. You need to see some of that short interest come out of it.
- [29:59]
C
There are some energy stocks in Mr. Leben's neighborhood. See what I did there? Did you get that?
- [30:06]
E
I did.
- [30:08]
A
Mr. Rogers.
- [30:10]
F
Yeah.
- [30:10]
C
Why don't you just show up without the blazer on today?
- [30:13]
F
Well, because it's the New York Stock Exchange. I'm wearing a tie and a jacket. You know, you should make a take.
- [30:18]
A
It off for the seat commensurate with.
- [30:20]
F
The seriousness of this edifice.
- [30:22]
C
Okay, okay.
- [30:23]
F
It's interesting. Crude oil at just under $61 a barrel. I don't know what I missed. Okay. But I'll keep going, going at $61 a barrel. That feels like a breath of fresh air right after where crude oil has been. I mean that's down tremendously over the last year, down 20%. We started out this year with a faintly negative feel on crude oil because of all the bad news that was out there. OPEC increasing production potential, peace in Ukraine, China demand not picking up that much. And they'd already filled their inventories. Now we're seeing what happens. We talk about this on air a lot. When everything is priced in. There was just all the bad news priced in. And it let, it left room for oil and natural gas to move up when something like a winter storm hits or there's, you know, kinetic wars in Venezuela. So I think crude oil can stabilize between 60 and 63 dollars a barrel. And these companies make a lot of money, particularly with natural gas at $6.
- [31:20]
C
This is where the $7. Now this is where the, this is where the story has been over the last.
- [31:25]
F
That will come off, you know, that will come off right when the storm.
- [31:28]
C
Eventually, but, but the storm kind of has passed and it's up 33% today. Why? Because I said as you look at the forecast, it looks like there's more stuff coming.
- [31:37]
F
So if you look at an Exxon Mobil, which bought XTO whenever that was 10 years ago, a major natural gas producer. That's why ExxonMobil is up so much. And they will reap great rewards over the next two to three weeks. But let's not kid ourselves and think that natural gas is going to stay at $7 a month two months from.
- [31:53]
E
Now back down, short covering Joe in the move today, would you estimate.
- [31:57]
A
So here's the dynamic we're showing fed natural gas which expires later this week. Can we pull up March natural gas, please? And you will see March natural gas is trading somewhere around $3.80. What has happened because of the storm which is really sending natural gas parabolic is we've taken the all off estimate somewhere around 15% of natural gas production. So you're going to have certain situations where they'll get forced majeure heading into expiration. And this really unfortunately, by the way, for the viewers, there's not really a short term trade on this. It's not as if your Comstock, your range resources, my equity. If you show those stocks, they're not responding, this is really an opportunity in the futures market itself. That's where the opportunity resides itself. So unfortunately, it's not correlating into energy equities and even some of the natural gas ETFs. And I'm not going to mention them because they're less than. They don't have significant amounts of money. A couple of hundred million dollars, maybe. In those ETFs, they're only up about 4 or 5% as well.
- [33:05]
F
I just, I don't, I don't want to have another storm this weekend. I'm flying out, you know that I can't have, can't have flights canceled this weekend.
- [33:11]
C
Okay, well, it's all about you, Mr.
- [33:13]
F
Schleventhal, on this on next Saturday.
- [33:15]
C
All right, we'll do our calls of the day next.
- [33:23]
D
Thy ticket lady Jennifer of Coolidge.
- [33:26]
F
Well, many thanks, good sir.
- [33:28]
D
Here is my Discover card.
- [33:31]
G
They accept Discover at Renaissance Fair?
- [33:34]
F
Yeah, they do here.
- [33:35]
D
Discover is accepted at the places I love to shop. Geth with the Times.
- [33:40]
C
With the Times.
- [33:41]
D
You're playing the loot. Yeah, and it sounds pretty good, right?
- [33:46]
C
Discover is accepted at 99% of places.
- [33:48]
F
That take credit cards nationwide.
- [33:50]
C
Based on the February 2025 Nielsen report. This episode is brought to you by.
- [33:54]
A
Schwab Market Update, an original podcast from Charles Schwab. Join host Keith Lansford for this information packed daily market Preview delivered in 10 minutes or including projected stock updates, monetary policy decisions and key results and statistics that may impact your trading. Download the latest episode and subscribe@schwab.com MarketUpdatePodcast or find Schwab Market Update wherever you get your podcasts.
- [34:21]
B
Before we had ATT Business Wireless coverage, our delivery GPS wasn't the most reliable. Once our driver had to do a 14 point turn to get back on route. A 14 point turn. An influencer even livestreamed the whole thing. Not good for business. Now with AT&T business Wireless, routes are updating on the fly and deliveries are on time. And the influencer did get us 53 new followers, though.
- [34:46]
C
AT&T business Wireless Connecting changes everything.
- [34:55]
G
I'm Seema Modi with your CNBC News update. The Federal Aviation Administration said seven people were killed and one crew member survived a private jet crash at Amain's Bangor International Airport during the snowstorm last night. Federal authorities say the plane flipped over and caught fire as it tried to take off. The airport will remain shut down until at least Wednesday. Longtime D.C. delegate Eleanor Holmes Norton filed paperwork indicating she will not run for reelection. The 88 year old non voting representative has faced concerns over her deteriorating health. She did not issue a statement after news of the termination notice broke, raising questions about whether she knew it was filed. Ann Rapparye, formerly known as Kanye Yass, took out a full page ad in the Wall Street Journal today apologizing for his history of anti Semitic comments. He attributed his behavior, which caused Adidas to cut ties with him in 2022, to an undiagnosed brain injury and mental health issues. In the advertisement, he said said he deeply regrets his actions. Scott, back to you.
- [35:57]
C
Okay, Seema, thanks for that. That's Seema Modi. Let's do some calls of the day. So Goldman has an interesting gaming call today. They say expect another tough quarter for Vegas. They still name Las Vegas Sands their top pick. They reiterate their buy $80 is the price target there. However, they do Lower Wynn's target to 140 from 148 and they reiterate the buy there as well. Well, Jimmy, we go to you first because I've ended on win and that's your big winner. Yeah, well, has been one.
- [36:25]
F
It has been. I mean it's come off a little bit. I'm thinking of adding to it. I trimmed it not that long ago. But the thought process here is, let's be clear, Las Vegas is not doing so well. In part that's because the comps were unbelievably difficult in the few years after the pandemic. I mean everybody was there and that has died off. There's questions about whether that's cyclical or second. But if you look at Wynne, the reason to own Wynn and also Joe, to your Las Vegas Sands is the Macao exposure and even more than that, the Dubai resort, which is going to open up in less than a year, maybe a year, but should be less than a year. And that's where the real boost in earnings is going to come from. That's why I own it, Joe.
- [37:04]
A
So for us, the better trade is in Las Vegas Sands and that's because of the balance sheet we looked at Wynn on. Fortunately for when you have negative return on equity, negative debt to equity. So for the quality factor, it didn't qualify in that regard. Las Vegas Sands, a newer position established at the end of October. I think it's up some around two and a half percent since then. So I agree with Jimmy. It looked like they had really strong momentum. Each one of these stocks is kind of pulling back right now. From the early December highs. And we'll see where it goes from here.
- [37:36]
C
Okay, let's take Cummins. Take a look at this stock. They've downgraded it to peer perform over at Wolf. It was an outperform. Joe, you own this name as well. They talk about it having materially, materially outperforming over the past couple of years, but they do lower the rating. They expect strong earnings per share growth over the next two years. They still see an improving fundamental backdrop. It's a valuation downgrade more than anything else. It appears.
- [38:02]
A
Valuation's not that extreme. If I look at it, I've got it at 30 times. Look, you could, you could create a basket. It's United Rentals, it's Vertive, it's Quanta, it's Fastenal, it's Cummins. It's all of these industrial names that are performing really, really well. So I kind of take the other side of that one. I see Cummins is doing well in the power gen business. They've got strong momentum and they're delivering on earnings.
- [38:22]
C
Tactical outperform at Evercore for Boston Scientific. You own that one too?
- [38:26]
E
We do.
- [38:27]
A
It's been underperforming recently. A lot of the medical device names have come under a little bit of pressure recently. Thermo, Fisher, Boston Scientific. We'll take a look at it. I can't say much more than that because we do rebalance on Friday.
- [38:41]
C
Oh, okay, good. We'll look forward to that. What about Applovin? Got upgraded today. 700 bucks at Needham. They say buy the dip in this thing.
- [38:47]
A
That's the worst tech name that we own right now. I hope they're right on the dip. I know a lot of people say, well, it doesn't matter where you get, you get in. It does because it leaves us with a lot of room. July of 24 at $76. But the stock has pulled back significantly and it's had several attempts to try and re establish the positive momentum and it just continues every time it fails to do so. So that's indicative to me of a situation where more people are looking to exit than they are to actually enter. One thing to mention, 200 day moving average sits at 489. That would be an interesting challenge if it does get there.
- [39:22]
C
Monster beverage target to 96 from 87 overweight reiterated at Morgan Stanley.
- [39:28]
A
What do you think there three consumer staple names that we own. Monster, Wal Mart and Costco, which is kind of recovering nicely from really a fall of underperformance. I like the consumer staples sector right now. And I think these three names are the names that could be the driving force, force towards a good year in 2026 for the sector.
- [39:49]
C
All right, Santoli, he's next with his midday word.
- [39:52]
F
We're back after this.
- [40:13]
C
All right, senior markets commentator and overtime co actor Mike Santoli joining us now for his midday word. As we get this really important week started.
- [40:21]
H
Yes. And you know, the market is starting out the week essentially wondering whether you know, the kind of non tech cyclical small cap rotation was a little bit overplayed in the short term. So it's migrating back. Maybe the pendulum doing a partial swing in the other direction. That is where the strength, strength is today. Apple for no reason bounces 2%. So that's the kind of action we are seeing right now. What's striking to me too is the way that you have these massive wild spring loaded moves in parts of the, the asset complex and bond and stock volatility are just asleep. I mean you have basically, you know, the S and P kind of hovering at these familiar levels. The treasury move index, the Vixford Treasury Treasuries is like at five year lows. So it's really fascinating that you could have, you know, the yen surge, dollar crack and what's going on in silver and natural gas and yet somehow everything else remains pretty placid and everyone's pretty secure in, in the earnings outlook even if stocks haven't traded well even on earnings beats just yet.
- [41:24]
C
Is there, are you, are you suggesting that there's like a whistling past the graveyard?
- [41:30]
H
I'm just wondering a little bit because.
- [41:31]
C
It'S of all those things you're seeing.
- [41:33]
H
I do wonder if you're going to have these sort of unrecognized linkages or something that's going to just get a little bit too wild and then it sort of like knocks some volatility through the other assets.
- [41:45]
A
Unfortunately, I remember in oh seven the same thing happened and it indicated we were late cycle. Does this mean we are late cycle?
- [41:53]
H
I don't know if it's that to be honest, Joe. I mean I think we're somewhat late cycle in the sense of, you know, you're three years into a bull market. Obviously unemployment seems to have bottomed even if it's not going up very much. The Fed's terminal rate is probably in sight right now. The market thinks so market thinks less than 2 cuts this year and you're probably done. So I think in those respects, yes. But you know, it could stay late for A long time. I think we've all learned that, you know, in past cycles.
- [42:18]
C
I'll see on closing bell. I look forward to that. That's Mike Santoli. Up next. Defense stocks under pressure today. We'll tell you why next, next.
- [42:47]
F
All right, welcome back.
- [42:47]
C
Take a look at shares of Booz Allen as we are right now down 12% today, treasury canceling all of their government contracts, 31 contracts that the Treasury Department has with booze, 4.8 million in annual spending, 21 million in total, total obligations. As they say, quote, Booz Allen failed to implement adequate safeguards to protect sensitive data, including the confidential taxpayer information it had access to through its contracts with the irs. Other defense, defense tech related names are in the news too. I mean Leidos is acquiring a company called Entrust for two and a half billion dollars. Defense names in general are lower maybe related to the contract canceling. What do you make of all this?
- [43:30]
E
First of all, the contract canceling was about a guy who's pled guilty who actually stole secrets that ended in 2020. So it seems kind of irrational to first be slapping at this point. So maybe there's more behind it now. What's been going on is the DoD picked 10 companies, defense companies, and they said to them, you've got to come to us with voluntary reductions in the contracts that we have with you. And Booz Allen had been one that hadn't necessarily agreed to that. I wanted between 20 and 30%. So I think the market's reading into it that this is the way of the government pressuring him to get rid of those contracts as the monetary amount doesn't equate to, you know, reduction of 12% there overall.
- [44:15]
C
I don't know. I mean if you cancel all the contracts with a.
- [44:17]
E
No, I mean doesn't equate to the 21 million cancellation. If you cancel meaningfully meaningful DoD contracts of course is and that's what the market's selling you there. But you take a look at khaki, which is down meaningfully today. It's down almost 5%. They reported a great quarter. The stock popped in the quarter quarter. So it may be a buying opportunity. I personally think the stock's overvalued. But if you go to Lidos, Leidos made a great acquisition day, immediately accretive. They've got their engineering, one of their engineering subsidiaries, this one focused on utilities that's been growing at double digit revenue, double digit ebitda. And now they just doubled that business. So this is an opportunity to buy it. Plus the management team is executed, executed every single quarter. So my view, by the time the company reports or after reports, it's going to be over 200.
- [45:07]
F
I mean, it could be a reason why the defense stocks are down today. But I think that's noise. I think we should pay attention to the core fundamental, which is that we have a president who likes to speak loudly and carry a big stick. And he is saying that in the defense spending that he wants to project, he's saying that in things like the golden dome, which will all of the. This will inure to the benefit of the defense companies across the board.
- [45:29]
C
I don't know. In that neighborhood right there, is it?
- [45:33]
F
No, but it's been a beautiful day in that neighborhood for the last year to date. You know, for the last several months, really. Lockheed Martin, I think is up about 20% over the last three months. There is spending that's going to go on. We need the F35. We need the B21. We need, you know, the F47 for Boeing. That's going to help them. So we're spending on defense.
- [45:52]
E
This could all reverse when we get rtx, I think tomorrow morning.
- [45:55]
F
I actually, Lockheed Martin's Thursday. I don't know when. Rtx.
- [45:57]
E
Rtx, I think is tomorrow morning or Wednesday morning. So it could all reverse on that point.
- [46:01]
C
Okay, we'll step away. We'll come back with finals next. It's time for final trades, boys and girls.
- [46:13]
F
You know, we can sit around the fireplace as the snow comes down. The Blue Jays and Cardinals feeding at the Feeder and by BlackRock, which is going to benefit as everything rallies.
- [46:24]
C
Great stuff, Weiss.
- [46:27]
E
Gld. I think momentum continues in gld.
- [46:30]
A
Joe, wonderful day.
- [46:32]
E
Jimmy Thermo Fisher.
- [46:35]
C
Okay, good. All right. Well, okay. Closing bell, three o'. Clock. Sherry Paul is going to join me from Morgan Stanley. Adam Parker will be with me. Brian Levitt, Doug Clinton and Shannon Sokotia as we size up what's at stake this week. Again, a Fed decision. Mega cap earnings really get going on Wednesday and then the prospects of yet another government shutdown on Friday. We told you what the prediction markets are suggesting could be in store. We'll follow all of it and I'll see you three. You've been listening to CNBC's Halftime Report, the podcast. You can always catch us live weekdays at 12 Eastern only on CNBC.
- [47:16]
D
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 halftimereportdisclaimer introducing fidelitytrader plus.
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