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Halftime Report
Are Stocks and the Fed on a Collision Course? 8/14/25
00:44:11
Scott Wapner and the Investment Committee debate whether stocks and the Fed are on a collision course. Plus, Kevin Simpson shares his many portfolio moves. And later, the desk discuss the latest Calls of the Day. Investment Committee Disclosures
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- [00:00]
Edward Jones
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- [00:31]
Multicare
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- [01:03]
Scott Wapner
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 of Scott Wapner. Front and center this hour, records and rate cuts and whether stocks in the Fed are on a collision course. Now we'll ask the committee how to play the markets after a much hotter than expected inflation print. Joining me for the hour today, Joe Terranova, Shannon Sakosha, Kevin Simpson and Bryn Toffington. We will check the markets right now and we are read reacting to that news of the morning on the PPI Hotter, the largest monthly increase in some three years. It throws a bit of a wrench into the no inflation narrative, if anything. The question really for all of you, I think for us here on the desk is does it wreck the September rate cut narrative? If anything, it kills the 50 idea. Probably. But what about the whole thing?
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Joe Terranova
I think it takes 50 off the table and I think the market effect of that is the optimism that everyone had yesterday. We began the show citing the recovery that you were seeing in biotech and small caps and homebuilders. So that's being priced out. Today you're seeing once again the mag 7 the large caps named leading the market higher. I still think you're going to get 25 basis point rate cut in September. I also think that that potentially is all you might get in 2025. December might be taken off the table. So the opportunity for us to come on the air over the next several months and say, okay, well, the market is, you know, broadening out. We're getting the dispersion effect that to me is a little tentative.
- [02:49]
Scott Wapner
Well, Shannon, Joe paints the picture of a hawkish cut. Right. Leisman declares today that the conversation has changed. It's not about 50 or 25, it's 25 or nothing. And if you listen to some of the Fed speakers, another One Muslim from St. Louis came on the network this morning with him and said he's still open minded. There are risks on both sides, so it remains to be seen. But I think Joe rightly points out what's happening in the market today and where it's most acute. If you throw up, for example, the xhb, if you throw up, you know, the Russell, the Russell's up 5% this week. Why rate cuts? XHB, the homebuilders are up almost 5% this week heading into today. Why rate cuts and now maybe the sizzle is taken off that trade.
- [03:40]
Shannon Sakosha
Well, I think, you know, as you know we've talked about this before, we have been fairly constructive on small caps and we felt like lower interest rates were just one of the many catalysts that could potentially propel small and mid cap stocks to perform better in 2025. And I think the challenge here, Scott, is that, you know, if you're looking for those catalysts in terms of this deregulatory impulse, lower taxes, some of this accelerated depreciation that we see coming out of the one big beautiful bill, you're also have in your mind that, that some of that investment is probably predicated on a more accommodative rate environment because they're still going to need to be borrowing, particularly for smaller businesses in order to make those investments. And so I think the challenge here is that it's not just higher pie, higher services costs within that PPI that's really kind of put a little bit of fear in terms of the market as to how much we get in terms of lower rates. And so I think if you're looking at the small cap trade in particular for those of you who are invested in it, a lot of cyclical names in there. But again looking at that, the underlying momentum we've had over the last couple of weeks, it has been very inextricably tied to this rate cut.
- [04:50]
Scott Wapner
Well, I don't think scenario I'll take issue I guess with your using the many catalysts around small caps because there really haven't been any catalysts other than the idea of rate cuts. It's the only thing that has gotten the small cap trade to work lately. And it's quite obvious if you're going to take a jumbo off the table and you're going to debate 25 or nothing that there's going to be a fairly sizable pause in the idea that those stocks can work now.
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Shannon Sakosha
And I take issue with your questioning the transmission potentially of things coming out of the one big beautiful bill and and the fact that from a valuation perspective much continue to be much more attractive than the large well in to.
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Scott Wapner
The believers in that trade. They're, they're cheaper for a reason. Their valuations are lower for a reason. The small cap trade didn't get totally ignited when the big beautiful bill, as you say was passed. If the market believed that that was a catalyst for that trade, it would have already started working. It didn't do anything until we got the idea of a bad jobs report, the tremendous revisions that we had and then the belief that you're going to cut that's the only thing that started this trade.
- [05:57]
Shannon Sakosha
Admittedly, there's some additional overhangs in that universe, Scott, that I don't disagree with you on. You talked about health care, biotech in particular. You mentioned the fact that homebuilders are a big part of those are two areas where there admittedly has not been strong or even relatively strong investor sentiment over the last couple of months because.
- [06:14]
Scott Wapner
Rates have been too high.
- [06:16]
Shannon Sakosha
But there comes a point when those trades are going to become more attractive. There's going to get we're going to get more clarity on health care policy. And Scott, at event eventually there is going to be an understanding acceptance and digestion of where rates are going to be and that is going to ignite a second, you know, a wave of additional home prices.
- [06:36]
Scott Wapner
You need the earnings growth.
- [06:37]
Joe Terranova
You don't have small caps don't have the earnings growth that mid and large caps do.
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Scott Wapner
That's the so Kev Wells Fargo today their investment institute to downgrade small caps to unfavorable. They look at the rally. It's taken the Russell they say to levels where the slowing economy and still high borrowing costs put risk versus potential reward out of balance. You agree with that? I mean if you look at what's up this week, Russell's up five. Homebuilders up four and a half. Biotech up for retail up three. And health care in in general is up 2%. Are many of these trades now put on hold after today's print?
- [07:10]
Kevin Simpson
I think they have to be. I mean there was tremendous enthusiasm for breadth of the market. We run a diversified portfolio. So we like seeing health care up. We like seeing retail up, we like seeing homebuilders up. Although we own Home Depot and not a traditional homebuilder. And I think the PPI number today, to Joe's point, really puts that a little bit on the back burner. So I see no reason to own small caps ever. But I say that as a large cap manager, so at least take it with a grain of salt.
- [07:34]
Scott Wapner
But what about Brin, the broadening idea in general? I don't know if the market got well over its skis on the idea that 50 was going to be legit, despite the Treasury Secretary saying it a couple times on television this week, despite maybe others speculating that okay, maybe they actually will do a jumbo cut. That seems to be a narrative that's going to be buried for the time being is the broadening trade also?
- [08:03]
Bryn Toffington
I think, I think that was just a narrative. I don't think there was any. A 50 basis point rate cut at this point would signal something's wrong. And so I think where in the 70s and 80s the Fed had this stop, start, stop start mentality of raising and lowering rates, the Federal Reserve today wants to start cutting and be cutting consistently, not doing this 70, 1970, 1980s type of rate cut, rate hike, rate cut, rate hike. And so I think that by the end of the year we will have one or two rate cuts. But I think that this trade about small caps, about homebuilders, I think structurally rates are just going to be higher than they were the past 10 years. And I think that's going to take some time to work that through those specific, the homebuilder sectors. Because really the long end is what decides home affordability, not the short end. And we see the long has been coming down. I mean the way we've been playing it and it's been fine, it definitely hasn't performed. The S and P is we've been playing rsp, which is the equal weight. And so there you get, you know, diversifications against the Mega Cap. But you're not taking this huge swing and a miss with small caps, which I think is somewhat of a broken sector, a broken asset class. It just doesn't look anything like, it looked like, like in the, in the 90s, 2000 and even 2010. So, so that's been our way. RSP is up about 6% year to date. So it's done. Okay, but I still think we get a broadening and RSP could actually do a catch up trade to the S.
- [09:38]
Scott Wapner
And P. I feel like this is another question mark as to whether you will get a kind of pick up in the, in the RSP if you think that now you're going to rethink rate cuts, I just feel like there's going to be yet another movement back towards the tried and true mega caps. Although if you look Joe, at retail activity and some of the long onlys, JP Morgan's retail investor radar, they're selling growth within single stocks. So there was some believability I think in their cohort of retail that okay, maybe it's time to sell a little bit here and take advantage of some value elsewhere. The long only is according to Citi on their sector flows show the exact same thing.
- [10:18]
Joe Terranova
So I think what it does is it pushes out on the calendar, it delays the potential for you to see that broadening out. I don't think it happens in the intermediate term. I actually think in sitting here myself thinking about what will be a very fast week in front of us, Remember, Jackson Hole is not far away and I think the risk that you have is that potentially the chairman throws a little bit of cold water on the premise that 25 basis points is guaranteed.
- [10:51]
Scott Wapner
So well, that's the Leastman perspective. 25 or nothing is the new conversation.
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Joe Terranova
So I look at where we are right now and volatility is pretty low on a relative basis to where we've been over the last 18 months. Something that you could do, you could go out and you could buy, buy some volatility just as protection against your overall portfolio. I have no problem with that. You're hoping you're wrong. You want to be wrong because you want your portfolio to work for you. But I see that in terms of just how you're thinking about reshaping risk, that's probably makes sense to do ahead of next week.
- [11:26]
Scott Wapner
It ups the ante, no doubt on a speech that the chair is going to give at the end of the week from Jackson Hole amid data that's already come in. And we're going to still get retail sales, by the way. We're still going to get that and that's going to be critical. So in the idea you're a large cap manager selling growth retail, selling a little bit single stock, long onlys are selling a little bit. You're buying more. You bought more Meta, right? Meta?
- [11:55]
Kevin Simpson
We did, Scott, and I bet you that that number changes next week, that retail flows back into the big five. The reason we were buying Meta, it was a number one pick going into the the year. It's up 30, 40% on the year. And you wonder like, why are you chasing this as a large cap dividend portfolio but the truth is we had some meta called away recently. Sometimes when you write covered calls, the position gets called. This is a name we want to have a full allocation to. So we're getting back into it the shares that we lost. It's just portfolio size management on a name that we really love.
- [12:24]
Scott Wapner
You sold covered calls on Apple and IBM. You sold covered calls on Oracle and Roblox. Tell me more.
- [12:30]
Kevin Simpson
I think a lot of this has to do to Joe's point about just hedging in here, but I'll focus on the Apple trade because you guys had a great conversation. Scott, you, Joe, Kramer yesterday I agreed with the entire thesis of the conversation and when we look at this, Joe, you brought up a 240 ceiling as.
- [12:45]
Scott Wapner
The conversation just for those who, who didn't hear it was the idea that Joe has been adding consistently over the last week or so to Apple against the idea that, you know, Kramer has always pushed of own it, don't trade it now. It's obviously a different environment around Apple shares today than it was over the course of however many years that Jim had made that argument. And he sat in the chair next to Kevin yesterday and said that he agreed with, with Joe's move that he thought it was a good move. So just to let everybody in on the secret here, that's what the conversation was.
- [13:17]
Kevin Simpson
Yeah. And I, and I also thought his article over the weekend about some of the reasons the stock is, was recovering was, was really valid and insightful. But looking at the stock having come from such a low base, we bought it at 177 in April. The last buy was at 209. I think that was maybe three weeks ago. So we wrote a 245 call and this only goes out for two weeks. So to Joe's point of a 240 ceiling, if we can get out of this at 245 in two weeks, I'll take the trade. I'll take the win.
- [13:43]
Scott Wapner
So Apple's having its best month since May of 24. There's a report report today that Apple plots expansion into AI robots, home security and smart displays. So they're, you know, trying to figure out how to flex a little, a little muscle with what they've got. You bought more yesterday. That's sort of the moral of this story in what has been a, what you've called a mountain of momentum lately around this name.
- [14:07]
Joe Terranova
It's a, it's a momentum tsunami and it's rebuilding of position from growth manager. Today is the first day I'm a little Discouraged by the price action.
- [14:16]
Scott Wapner
They want to go up every single day.
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Joe Terranova
Well, 235, 236. 235. 236 might be a little bit of a ceiling. So I've said 240. I could be a little bit off. Look, I'm going to make money on it. I've got to stop down below. So I'm okay with that and I will maintain a position because I think ultimately it blows through 240. We're talking about a company that is going to appreciate significantly over the coming quarters. But I'm just acknowledging from a trading, from being a trader here, I understand today's the first day you do you.
- [14:44]
Scott Wapner
Have like a gecko on a loop. You know, greed is good and no and all. All is well. I mean, okay, the stock's down. Not even though I worked on the chart.
- [14:52]
Joe Terranova
You know, I worked with Mark Fisher for 18 years. I know if Mark's looking at Apple, he's saying the same thing to, you know, maybe you have a little bit of exhaustion. I will tell you this one Amazon, okay? I gave Amazon as a final trade yesterday. I think Amazon's the next mega cap to go. It's going to blow through. 242.
- [15:10]
Scott Wapner
All right, there you go. We'll interrupt it for a second because there's a big crowd here for yet another New York Stock Exchange IPO. It's Myax. It was priced at 23. You see it opens at 30 and change. We'll continue to watch that. It's an exchange business. Miami, a big part of it, thus the title there. And we'll watch that in what has been a pretty good pickup in new offerings and certainly here at the New York Stock Exchange playing a role in that as well.
- [15:40]
Joe Terranova
So it looks to me like the momentum is beginning to build and will accelerate over the coming days and weeks in Amazon and make that push towards 242. I'm staying with Apple. I'm just acknowledging at a certain point when everyone's rebuilding positions. Okay. You get to a moment where they've rebuilt.
- [15:58]
Scott Wapner
No, I hear you. I mean there's, there's talk about Amazon today as well, reiterated by Wedbush on the grocery announcement that they made earlier this week. You know, major expansion in, in that regard. Goldman talks about that as well. Kev, you on Amazon too?
- [16:12]
Kevin Simpson
Yeah, 20, 20, 300 US locations with same day deliveries.
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Scott Wapner
Is this the next one to go, as Joe said?
- [16:18]
Kevin Simpson
Well, Netflix, I mean, excuse me, Nvidia has earnings pretty soon, so I don't want to ignore that one but I.
- [16:23]
Joe Terranova
Like that's already gone.
- [16:24]
Kevin Simpson
Yeah, I like, I like this set up for Amazon a lot. I believe in the multi aspect of the company from robotics to everything that you're doing in delivery and the retail is not the driver of this. So the news yesterday, as exciting as it is, it's still small potatoes in terms of what this company can.
- [16:40]
Scott Wapner
I'll tell you what's been interesting of late is the idea of software and the role that AI has played in the reversal really of many software names from their 52 week highs. We talked a lot about that yesterday as to whether AI is killing software. I thought that was an interesting note out of UBS today which talks about a tech rotation in part in that area. Investors, they say should quote, seek a more balanced positioning in the near term across the AI value chain including exposure to AI laggards such as Internet and software companies and China's tech sector. We can take it Brin from a software perspective. Citi today says Microsoft's their top software pick. 680 is the target. This, this is not a conversation about Microsoft though. It's about the laggards within that universe. The Adobes of the world and there are many other names that we could tell you are off 30 and 40% from their 52 week highs. Is now the time to lean in?
- [17:44]
Bryn Toffington
I think it's the time to look at them. I mean I haven't added to, I haven't, I don't own Adobe, I don't own CRM. But I think this is more of a narrative and this is a thesis, it is not necessarily reality. And so I definitely, I'm looking at these names because they are getting very cheap and I don't see any of this happening yet. I don't see it even remotely happening soon. And so I do think investors need to understand like I'm sure hedge funds are just pounding these sectors, this sector every day. But if you take a step back and say hey, well what's not exciting, expensive and what's mispriced in the market, I do think there's an opportunity to look here. Obviously Microsoft, we're not going to talk about it has obviously Cloud which separates them from a CRM or Adobe.
- [18:28]
Scott Wapner
Can we get a week to date on the IGV guys please? Which, which, which tells the story we need to tell. Go. I'm sorry Brenda cut you off. I just want to look at a chart that is going to show what we're, we're really talking about here. And there you go. I mean, I mean, there is poor of the conversation here, right? From what's happened to the IGV has had a decent positive move over, you know, months, but it looks to be in jeopardy.
- [18:58]
Bryn Toffington
Well, I mean, it's, it's, it's. I think it has to base out here, but like, look at Adobe is like, do you think Adobe's just sitting on its hands, not doing anything and Figma and Canva are all of a sudden just going to leap frog over that? I just think there's a lot of anticipation that's going to happen and that's where there's opportunities in a market, you know, to buy stuff that's out of favor. And so I do think investors like myself, I am looking at the sector, but I haven't pulled the trigger on any names yet.
- [19:24]
Scott Wapner
What do you think about Cyber in the software conversation? That's been a bit mixed.
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Joe Terranova
So Cyber has been on the retreat like most of the, the software names. This is, this is a great conference. Listen, we have significant software exposure in the strategy.
- [19:43]
Scott Wapner
Well, I mean, from, from a cyber place, you've got check point fortnet, Palo Alto, elsewhere, you've got what so elsewhere.
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Joe Terranova
And it's interesting because I'm looking at all the holdings right now. We don't have Adobe, we don't have Salesforce. I agree with Brin. If you're looking to take a moment to buy the platform, pull back the correction, I think you want to stay high up in quality and go with those larger cap names. But what's interesting about it is the names that we have purchased so far in 2025 believing that momentum would show up. It has not shown up at all. That would be Zoom, that would be Cadence, that would be Datadog, that would be DocuSign. It has not shown up. The winners that we have are where Momentum appeared in 23 and early 24 and it built from there. And that's your Autodesk, your checkpoint, your Palantir, your Oracle. So it looks as if to me that you've had this false start in momentum for software. And I think a lot of what's going on right now is you're seeing this all or none between software and semis. People come on and they say, okay, time to go with the semis. Okay, time to go with software.
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Scott Wapner
Been at a record high, right?
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Joe Terranova
And what we're seeing, what we're seeing most recently is that you're getting the shift back into the semis to the detriment of software. But Remember nine months ago it was let's go out of semis into software.
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Scott Wapner
How about Cisco today? Anybody following that? Jyoti?
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Joe Terranova
Yes, I am.
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Scott Wapner
The earnings and revenues beat inline forecast 7 analyst target hikes today. As we just touch on some other names that are moving that we want you to know about. Anything about this?
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Joe Terranova
I think the earnings were in line. You had solid AI orders but the challenge was the cautious guidance. And the cautious guidance I think is a little bit concerning for overall IT spending. What's going to happen to IT spending here as we move into 26? Is it going to decelerate or is Cisco just being conservative here? So I didn't think there was a big reaction to the stock. I thought relative to how much it had appreciated so far year to date in in line earnings report. Yeah, this is what you're going to get. This is the response you're going to get. But I'm most focused on just from a macro standpoint that cautiousness surrounding IT spending that could permeate through the entire industry.
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Scott Wapner
We reached out to farmer Jim today to find out if he was doing anything with Cisco. He said he wasn't. Not so there's nothing to tell you about in terms of updating any sort of portfolio move there. Deere. Deere's getting smoked today. I thought of you just because you still own cat, right? You have owned deer.
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Kevin Simpson
We have and luckily we rotated out of it. At one point late last year we owned both names for the first time.
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Scott Wapner
Yeah, I remember you talking about it.
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Kevin Simpson
So we just looked at the discount between cat and deer and decided that, that the caterpillar was a better investment for us longer term. The deer numbers were decent, they weren't bad. But the problem is grain prices and what farmers are paying. And when deer lowered their guidance, much like Joe talked about with Cisco. So much depends on what's about to happen, not what did happen. And you saw a sell off in Deere, still think cats better at 21 times forward versus 25. But if you get a sell off in John Deere that's deep enough, I think it's something to look at again for sure.
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Scott Wapner
Shan, what about industrials since we're, we're on that, that topic and that sector has been near or at a record high.
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Shannon Sakosha
Well, I think that speaks to the fact that I think that there's still some crowding into these sectors that are continuing to support, that are continuing to, to exhibit some earnings growth. But I also think that this is a, you know, a derivative of this expectation of continued Capex investment in areas like manufacturing. So it's a, it's a way to put play that without having to be very specific on where that's going to play out.
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Scott Wapner
I mean you're talking about, you know, the powering and energy electrification build out of data centers and stuff like that.
- [23:39]
Shannon Sakosha
Those are real drivers. But I think that you're going to continue to see some dispersion amongst these names depending on where those end markets are in particular.
- [23:48]
Scott Wapner
Go ahead.
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Joe Terranova
Deere is a name to watch. I agree with you. But I think ultimately what you have to do wrestle with is is it farm fundamentals or is it the tariff headwind or is it a little bit of both? If it's a little bit of both, that means that the inflection point for this company is going to take a little longer than we think.
- [24:04]
Scott Wapner
Maybe a little bit of the latter. Some tariff headwinds.
- [24:07]
Joe Terranova
Oh for sure. So than farm fundamentals, lower grain prices. That's fundamentals for sure. There's, there's definitely a tariff effect in agriculture.
- [24:17]
Scott Wapner
All right, how about crypto records? Record highs today. Bitcoin did hit a record high earlier. It is down now. But we tell you what's already happened today and maybe you can track where it's going from here. Ether about 200 bucks away from its own record high with the first since 2021. Bryn, you have an interesting move on a day when your Robinhood is reiterated by at Barclays. You bought Bit mine. Tom Lee was a Tom Lee play.
- [24:46]
Bryn Toffington
Yep, yep. Well, so you know, I have a basket of names that I will call High Flyers, whether it was Roblox or Hood or Palantir Ethereum. And so where, you know, obviously this is a derivative of Ethereum, that they're an Ethereum treasury. But the call premium and Kevin will like this is so massive. So I bought it at 60 and I sold the September like one month out, 75 calls by $15 of capital appreciation and got $9 of premium for a month. And so this is a good way for me to get into the name. I don't know, it's still so early and it's trading. Should this be trading at 40 or 80? And so I want to watch the technicals more as they build out longer term. But I felt, I felt confident because the call premium was so high. It was a good opportunity for me to step in, kind of get to know how the stock is going to trade and I can build up a position around that or if it gets called away next month, that's a great. Total return.
- [25:41]
Scott Wapner
Yeah, Kev. Speaking of Robinhood reiterated by at Barclays.
- [25:44]
Kevin Simpson
And Deutsches today, I was going to say to Bryn how great the COVID call rating is on Robinhood, but I may have to look at Tom Lee's ETF here. It's an amazing edge. We love Robinhood because of what they own and what they control with the Gen Z and the Millennials. That's why we love Roblox, American Express, Robinhood. I agree with the call and I love the name.
- [26:00]
Scott Wapner
All right, we'll take a quick break. We have some several more committee moves to tell you about. Kevin Simpson has more trades for you next.
- [26:12]
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Scott Wapner
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- [28:14]
Scott Wapner
All right, let's talk about more moves. Kevin Simpson's busy man. You bought more McDonald's. Why'd you do that?
- [28:20]
Kevin Simpson
Looking for a diversified portfolio and broadening out. We've seen a lot of analysts up in the their price targets on McDonald's to 333, 40. You know, that would be wonderful. Whatever happens. I see the stock kind of go up to 310. Lag rollover, amazing dividend, strong dividend growth. And they really understand their consumer. They're bringing things online, bringing back the snack wrap. I think there's a lot to like about McDonald's. It's a tepid price target for us but if it goes to the higher end, we'll be thrilled.
- [28:45]
Scott Wapner
What do you think about the commentary that's been had certainly of late within restaurant stocks? Because it's been overwhelmingly horrible. The stock movements. You take Brinker out and maybe here, there another name. What you're hearing from these companies, what you're seeing in terms of their comps.
- [29:04]
Kevin Simpson
Very specifically, I think that McDonald's becomes a beneficiary of that. So if there's a trade down, it's a lower end consumer. They know how to price the product and I think people enjoy the french fries. Not that that's a reason to buy.
- [29:17]
Scott Wapner
A stock, but that's a really great fundamental analysis. Kevin, thanks so much.
- [29:21]
Joe Terranova
It's a trade down. It's clearly a trade down, that's for sure. You have to, you have to believe in inelasticity surrounding these tariffs and the effect on consumers not to be present. The effect on the consumer is real. You're seeing it services beginning to spike and quick serve is going to be challenged if that's going to.
- [29:40]
Kevin Simpson
In all seriousness, there's an international component to McDonald's also so where they're seeing an incremental increase in sales. So this is a global company that I think is something that they benefit.
- [29:47]
Joe Terranova
Clearly it's idiosyncratic. They benefit in this environment. But the others, the Cava's, the Chipotle, even Shaq is pulling back.
- [29:55]
Scott Wapner
But there are others who are in the fast food universe who have seen their comps come in disappointing and the commentary hasn't been great. So what do you how you square that this is not McDonald's Cava and.
- [30:09]
Kevin Simpson
That'S Chipotle and that's a higher price.
- [30:10]
Scott Wapner
I said fast food. I'm talking about others in the Shake Shack, Wendy's. Yeah.
- [30:16]
Joe Terranova
When you could ski down the.
- [30:19]
Scott Wapner
That's what I'm Talking about, you're right, Shake shacks, a higher price point than McDonald's or Wendy's. I'm talking about the Wendy's of the world and others in the fast food space. We're not talking about McDonald's versus I.
- [30:30]
Kevin Simpson
Think Wendy's is maybe the only competitor that you can really think of, and they're doing horribly. I think it's the global footprint and just the ability for McDonald's to understand the lay of the.
- [30:39]
Joe Terranova
You're absolutely right. I mean, if we could pull up. Can you pull up Jack in the Box? You look at that.
- [30:43]
Scott Wapner
That's what I'm talking about.
- [30:44]
Joe Terranova
Like, it looks like, you know, again, you could ski right down that slope. So there. Clearly, that's value. There is an effect right now for sure.
- [30:52]
Scott Wapner
Do you want to own McDonald's?
- [30:54]
Joe Terranova
I don't own McDonald's. I do not own McDonald's.
- [30:57]
Scott Wapner
Do you not like the buying more of it?
- [30:59]
Joe Terranova
I think from a technical perspective, McDonald's.
- [31:02]
Scott Wapner
We're trying to have a debate here whether this is a good buy or it's not. McDonald's we want to have it or we don't.
- [31:07]
Joe Terranova
McDonald's to me, looks technically in a better position than all of the stocks we've spoken about. Kava. I think shack looks okay. Relatively good. I agree with Kevin that if the consumer trades down, McDonald's maybe benefits slightly from that. But I also 100% agree with your point that overall fast food is going to be challenged over the next several months if what we are seeing in the economy with labor and with tariffs continues.
- [31:38]
Scott Wapner
Because I'm not saying that McDonald's won't be a beneficiary of any of that. I'm simply asking you, how do you square it with what we've heard and seen from some of the companies that play in that same exact universe?
- [31:52]
Kevin Simpson
I think I own the best of breed, and I try to do that with every name that we own.
- [31:56]
Scott Wapner
Okay.
- [31:57]
Kevin Simpson
I think it's that simple, Scott. I just think that they're head and shoulders above these, of kind, competitive.
- [32:00]
Scott Wapner
Okay, yeah, you bought more rtx, which is interesting. Jyoti just sold some of his defense exposure. What do you think?
- [32:10]
Kevin Simpson
So we had it called away at 160. We're building that position back out. But I don't think the world's going to become less complicated over the next few years. So if the LMT or the RTX is losing some momentum, I have no, no argument there. But I think longer term, we've got defense stocks that are going to Benefit from global stock, defense spending. And this is a name that I just, I love the name and I.
- [32:29]
Scott Wapner
Feel very passionately about two new buys. You have Altria and Hasbro. Let's talk about them because we're talking about straight up buying new names. Go Hasbro first.
- [32:37]
Kevin Simpson
So here's what's really fascinating about these two names. These are not in our dividend strategy. These are in our growth portfolio. And it's Altria and Hasbro. So you can look at me cross eyed and be like, how could this be possible when you've got the opportunity to own mag7 names? But in the Russell 1000 growth or the S&P 500 growth, there are other stocks in there. And we wanted to broaden this out. Now, if the PPI number had come in better, I think that would have looked nicely. But Hasbro, you get a 3.6% yield. Yes, it's in our growth strategy. 18 times forward earnings. Yes, it's also in our growth strategy. But they control so much in the gaming part of the world. And we love the, we love the, the millennial trade, the Z generation, Wizards of Coast. This is not a game I'm playing, but it's up 46%. Final Fantasy, just blowing it out of the water. So these are companies, you know, all three. I don't want to get involved with the smoking or the non smoking, but it's a perpetual compounder, a cash flow machine. And they're moving away from the smoke tobacco into the other alternative products. But these are companies that I think are set up very nicely. If you look at the charts and you look at the guidance, you've got good opportunity here.
- [33:41]
Scott Wapner
All right. Good stuff. So Vana now has the headlines for us today. Hi, Silvana.
- [33:44]
I
Hey, Scott. Good afternoon. Florida Governor Ron DeSantis announced today the state is planning on opening a second detention center to house undocumented immigrants. DeSantis said the detention center, dubbed Deportation Depot, will be in a state prison located near Jacksonville. The announcement comes after a judge issued an order last week to temporarily stop construction at another Florida detention center, nicknamed Alligator Alcatraz. A Utah jury on Wednesday found a man accused of faking his death and escaping from the US to avoid rape charges guilty of sexually assaulting a former girlfriend in 2008. The trial is the first of two in Utah for Nicholas Oliverdian, known in Utah as Nicholas Rossi, who was arrested in 2022 under the name Arthur Knight. That was two years after an obituary said he died of cancer. And Target and Ulta Beauty are parting ways the companies announced today that they are ending a deal to open Ulta shops within Target stores next year. Target said it added more than 600 of Ulta's many stores since the partnership began in 2020. The announcement comes as Target has been struggling to turn around declining sales.
- [35:00]
Scott Wapner
Scott all right. So I want to thanks Ivana now connect calls the day we got a price target hike for stock that Mizuho says could be the comeback kit of the year. Joey owns it. We debate it next.
- [35:17]
Silvana
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Joe Terranova
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Scott Wapner
There's no time like now to start building your personal brand.
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Joe Terranova
Register now@cnbcmakeit.com Personal Brand.
- [36:03]
Scott Wapner
Welcome back. I love the tease we did heading into this segment because Mizuho is wondering today whether Square, I'm sorry block is the comeback kid of 2025. They believe the market's overlooking a key positive development. Our proprietary analysis points to a market improvement in Square's point of sales volumes. We believe this is just the beginning. Joe T. Is it comeback kid 2025?
- [36:31]
Joe Terranova
I like that you said square because that's where the catalyst is for this company. It is the volumes that are growing now. I want to believe that it can be the comeback kit. First of all, if it's going to be the comeback kit, don't give me a price target at $88. Is what they did in this report. Give me a price target above the high for the year which was 94 and a quarter back in January. In fact, last week after earnings, the stock went into the mid-80s and actually reversed and went lower. So this stock has a lot to prove. If you're going to take a position, you have to be taking a small position. But for us to call it comeback of the year, you got to see this as a triple digit number in 2025.
- [37:10]
Scott Wapner
You have high expectations that give me.
- [37:14]
Joe Terranova
You got it. You have to get above what was already the Highest level in 2025. 94 bucks. Okay, 84 for a price target. Come on, you can do better than that.
- [37:23]
Scott Wapner
Piper Sandler on Energy today. Bryn, two of your names, Viper added to top Energy picks. The Target goes to 68 Diamondback. The target is cut to 222. They do reiterate it as a top pick today. It was cut on their updated estimates. What do you think?
- [37:43]
Bryn Toffington
I mean understand Vipers at 37 and Diamondbacks at what, 138. So let's, let's hope this analyst is right because these would be monster moves. So you know Viper is a subsidiary of Diamondback. So on the earnings call they talked about with Diamondback how rig count is down, crew count is down and at these prices their capex is going to be flat. They're not going to drill as much. From a Diamondback perspective, what they're going to do with their free cash flow is pay down debt and continue to buy back stock. So I think as long as the administration wants cheap oil prices, they're going to get cheap oil prices. And so somewhat these energy companies are in the penalty box. But from like a valuation play, these are two high quality companies. Excellent C suite A time to be probably adding to these names. We just need a catalyst and that's what gets tough about energy is finding that catalyst to move past these low energy prices which doesn't seem like that's going to happen anytime soon.
- [38:44]
Scott Wapner
Yeah, I mean it's the underperformance sticks out like a sore thumb on the chart this year. Shannon Kosher, who has that as an you were trying to hide over there. You're trying to hide in plain sight there. Try to hide in plain sight site. You're like don't call me, please don't follow me. Energy, you have energy as an overweight.
- [39:05]
Bryn Toffington
We do.
- [39:06]
Shannon Sakosha
I mean, you know, speaking to the valuation question, it's certainly there. Our view is also it's tied to the electrification tied Some of the other things we talked about in terms of natural gas. Natural gas futures have been under a ton of pressure and so you're not going to be able to alleviate the supply considerations for energy next year. But our view is that some of the demand concern will be alleviated. And, and you know, at these valuations, Scott, if we start to see some movement towards a bottoming of earnings growth and start to see that acceleration as we move into 2026, these are, these are, this is a good time to start building positions.
- [39:37]
Scott Wapner
Let's talk Ulta today, Joe, because Ulta Beauty and Target are announcing plans to end their partnership in 26, 2026. The price target got raised to 580 today from 500 at Ray J. They're bullish after that company's acquisition. Acquisition of a British beauty brand Space.
- [39:54]
Joe Terranova
Nk So again, this is a company that has to prove itself as well. This is a recent buy that we added to the strategy. The concern here is their ability to lift growth and number one, work down a lot of the promotions. They've been offering a tremendous amount of promotions. They're pivoting in the direction of wellness and vitamins and some other things. The analyst community and the recent price action is reflected. Think an inflection point that's coming over the next several quarters. All right.
- [40:21]
Scott Wapner
We have a big week coming up of earnings with names you need to know about. We'll do the setup next. Setup time. We got some names reporting next week, Kevin. TJX is Wednesday before the bell. There's also a considerable conversation being had not just about restaurants, but retail too. What about this one?
- [41:01]
Kevin Simpson
Yeah. And again, the same theme. Sticking with Best of Breed. This isn't a tariff story because it's an off market retailer. And I would say they are the best off rack retailer. Same store sales were up 3% in the first quarter. A pivot to earnings per share growth. We're expecting 5.4% for the second quarter. If they deliver on that, it's going to be a nice, nice bump in the stock.
- [41:21]
Scott Wapner
Okay, Walmart, what's your story? Jyoti with Wal Mart?
- [41:25]
Joe Terranova
Well, it looked to me like it was going to go through the highs from February at 105. And then the story came out surrounding Amazon, Amazon stepping into grocery look and Walmart has had a complete lock on grocery now for the better part of the last 15 years. So I expected that this would be a strong report. I still believe that it will be a strong report. I think this is an example of you have to watch do they deliver good earnings and then you get the bad price action because this is a candidate for that type of scenario and we've seen a lot of that in this quarter.
- [41:59]
Scott Wapner
How about Intuit? We talked about software obviously next Thursday after the bell.
- [42:07]
Joe Terranova
So I think, you know, in line is not going to be good enough here in particular for software. It's pulled back. I'm looking at it right now. It's sitting right at the 100 day moving average year to date it's up 13%. One year it's up 12%. But what does that mean? To me? It looks to me like more recently the deterioration in momentum is something that is going to negatively impact the stock moving forward unless they report an earnings beat and they come out with a raise. And it's something that is beyond what the analyst community is expecting. In line will not be good enough.
- [42:42]
Scott Wapner
Okay, what about Zoom, which you did call out a little bit earlier in the program today? That's next week as well.
- [42:48]
Joe Terranova
And that's been a complete struggle. They've been trying to diversify the business model. Again, this is a purchase that we had earlier in the year. It's clearly not working out. I will acknowledge that.
- [42:59]
Scott Wapner
Well, wait a minute. I'm going to stop you right there. You own this in the Jyoti.
- [43:02]
Joe Terranova
Yes.
- [43:03]
Scott Wapner
You purchased it earlier in the year. It's obviously not worked out. Why is it in the ETF, which is on momentum and quality?
- [43:12]
Joe Terranova
So we're ranking 1 through 125, and literally it was right at the bubble. And what we've witnessed is throughout the year, it has moved down from where it was somewhere in the 40s, then it dropped down to somewhere in the 90s, and now I think it's sitting 121, 122.
- [43:32]
Scott Wapner
You sure somebody didn't, like, sabotage the rules for this month or something like that? Look at the chart.
- [43:37]
Joe Terranova
No, it looks terrible. It looks terrible. I acknowledge that it looks terrible. It's a reason.
- [43:41]
Scott Wapner
I know, but I just don't understand how something like that. I don't understand how a chart looks like that. You acknowledge it's terrible and it stays in a momentum ETF that you just literally rebalanced. Right. So again, I'm sorry, but I just. I can't swear the two in my head.
- [44:01]
Joe Terranova
Well, here's what you have to understand.
- [44:03]
Scott Wapner
Talk to me like I'm an idiot.
- [44:04]
Joe Terranova
Okay, we're using different time frames. 12 months is really important to us. And over the last 12 months, the stock is up 26%. So the contribution of up 26% from the one year time frame is supporting the stock we're seeing that is deteriorating in the near term. And eventually what will happen is it will fall out because the calendar will roll forward and that one year price appreciation will wash away.
- [44:38]
Scott Wapner
That, quite honestly, was an outstanding explanation. And I mean every bit of that. Even though you're looking at me like I'm full of it, I do actually mean that. Joe. Thanks.
- [44:48]
Joe Terranova
Warms my heart.
- [44:48]
Scott Wapner
We're back after this. Mike Santoli here for his midday word. 50s in the. In the can now, right? 50. 50 basis points. Yeah.
- [45:01]
J
I mean, unless we really tanked the jobs report, I suppose, and somehow you see moderating inflation somewhere else. And so it's just a minor plot twist. I mean, I think the 50 talk was the market's way of saying, okay, now that we have an apparent consensus on 25. They're always going to push for the next one and see if it gives. I do think what's interesting today is the question wasn't going to be are we going to rethink the last couple of days worth of action, it's just going to be rotation or is it going to be a full on retreat? For now it's a little more rotational. Russell is taking the brunt of it and the, the, you know, the deep rate cut trade is, is unspooling a little bit. But I think it does tell you though that we are going to be stringing from data point to data point priced in a lot of good stuff.
- [45:43]
Scott Wapner
Yeah, no doubt. I'll see you on closing bell. It's Mike Santoli. We'll do finals next. Closing bell, three o'. Clock. Tom Lee, the venture capitalist Rick Heitzman will be with me. Stacey Rascon, Alicia Levine, I hope you will be as well as we track the final hour of trade. Brent, talking to your final trade today is what report?
- [46:04]
Bryn Toffington
McMurray, Port Macmoran FCX and you can sell a November 45 calls.
- [46:08]
Kevin Simpson
All right, Kevin Simpson, American Express. The Stock's down about 10% over the past month and Gen Z and millennials love the name.
- [46:15]
Shannon Sakosha
Okay, Shannon, so Kosha Financials continuing to see a pickup in M and A activity which should translate not only for private equity but but also traditional big banks.
- [46:25]
Scott Wapner
And finally, Joe T. I'm going to.
- [46:26]
Joe Terranova
Give you a just in case trade and that is to buy some volatility just in case. Hopefully you don't need it.
- [46:33]
Scott Wapner
All right. We will see what happens the rest of this day and I will see you in a couple hours on the closing bell. The exchange begins right 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.
- [46:52]
Edward Jones
All opinions expressed by the Halftime Report participants are solely their opinions and do not reflect the opinions of CNBC, NBCUniversal, their 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 an 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 Is it time.
- [47:33]
Silvana
To reimagine your future? The right business skills may make a difference in your career. At Capella University, we offer a relevant education that's designed to focus on what you need to know in the business world. We'll teach professional skills to help you pursue your goals like business management, strategic planning, and effective communication, and you can apply these skills right away. A different future is closer than you think with Capella University. Learn more at Capella. Eduardo.