← Halftime Report
Halftime Report
Back on Track 1/17/25
00:44:06
Frank Holland and the Investment Committee discuss the Dow and S&P as they head for their best weeks since November with rates falling and big tech popping. Plus, the desk making some major portfolio moves, we reveal them all. And later, the Committee discuss the latest Calls of the Day. Investment Committee Disclosures
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- [00:00]
Scott Wapner
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- [00:29]
Frank Holland
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@capella.edu.
- [01:00]
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. Sarah Mike, thank you very much. I am Frank Holland. Welcome to the Halftime Report. I'm in for Scott Wapner today, front and center this hour. Back on track, the day in the S and P they head for their best week since November. Rates are falling, Big tech is popping, the committee making a whole lot of portfolio moves as well. Joining me for the hour, we have Bryn talking to Steve Weiss, Brenda Vingelo and Kevin Simpson. We'll get to the markets in just a moment. But first, we have some breaking news out of Washington. Let's get right to our Megan Casella with those details.
- [01:42]
Megan Casella
Megan Frank, new estimates from the Congressional Budget Office out just now. They say the federal deficit will hit 1.9 trillion in 2025 and that it's set to climb to about 2.7 trillion but by the end of the decade. Now both of those numbers just slightly smaller than previous estimates from the summer. CBO says that's because tax revenue will now be a little higher than they thought due to expected growth in wages and income. That is about where the good news ends, though. In this report, total debt held by the public is set to nearly double over the decade and as a share of GDP, it'll climb to 118% from about 100% now. It'll keep rising as both mandatory spending and interest costs are on track to outpace revenues. And the U.S. they say, is on track to spend more on interest over the decade than it does on defense. The economic outlook looks okay. GDP is set to average 1.8% over the decade. PC inflation to stay around 2%. The unemployment rate to climb a little bit to about 4.4%. Not terrible numbers there overall. But what is clear, Frank, is that this debt and spending trajectory that we're on is forecast to continue. We'll see if this next administration with its focus on major spending cuts will be able to make a difference.
- [02:51]
Scott Wapner
Frank, Meghan, thank you very much. Our Megan casella live from D.C. all right. Time now to turn to the markets. Taking a look. Very strong day on Wall street right now. Strong week, a winning week overall. Take a look at the markets. We see that the Dow is up just about 1%. The S&P up just over 1%. The NASDAQ composite the best performer up one and a half percent. Also important, no bond yields. They certainly have eased, making a lot of this possible. This rally that we're seeing on Wall street, the 10 year treasury right now checking in at 4.617. It's fallen about 15, 20 basis points this week. Kevin, I want to come over to you. The fall in bond yields, it seems to be a mechanical reaction when it comes to investors. Yields fall, people get a little more bullish about stocks. As we're looking ahead to Monday, a new administration. What are you thinking about when it comes to the markets and the impact of bond yields?
- [03:36]
Kevin Simpson
Well, I think that higher bond yields are an impact, an absolute headwind against equities. And to your point, Frank, we see it, yields come down, stocks go up. And the big fear for the markets is not like will the 5% 10 year happen, but when will it happen? And heading into the week, I think the CME Fed futures had just one cut for the Federal Reserve in 2025. That's why midweek we had such euphoria. Pie came out first, which is kind of unusual than cpi. Not that the inflation numbers were just massively positive. The markets reacted to the fact that they weren't massively negative. And the Fed needs inflation to at least hold and modestly come down so they don't have to talk about rate hikes again. So I think that the market could continue to celebrate a lower yield on the 10 year.
- [04:18]
Scott Wapner
So Brenda, coming over to you is kind of a head scratcher. At least year to date, bond yields have risen and tech has been impacted. Second worst performing sector year to date. I thought, you know, tech supposed to be immune to the rise in bond yields because they don't really borrow money. What do you make? What we've seen in tech and the fact that following that slightly, very slightly cooler than expected core CPI number that we've seen tech continue to rally.
- [04:39]
Brenda Vingelo
Well I think we've seen a no tech does not have to borrow but valuation there is high. Relatively speaking it's the most one of the most expensive parts of the market. So I think that is where the sector is does have some impact from yields rising. But I think outside of that we've also had as, as Kevin mentioned, good economic data coming out. Fourth quarter GDP is now estimated at 3% from Atlanta Fed and we've had a string of really good early earnings reports which really is supportive and I think for the market continue to rally. We need earnings to definitely come through. We won't know about tech really for another couple of weeks but I do think that the fundamental story is positive. That's great news for large cap tech. Although I do think that valuation is a little bit limiting and I will say even though they don't need access to capital, they are planning to spend a whole lot this year in terms of CapEx and I think that could could ultimately weigh on the multiples that they're afforded as well.
- [05:39]
Scott Wapner
Yes, certainly you know Microsoft $80 billion in capex. Speaking to your point about earnings, earnings so far it's early, it's very early but EPS up 11% year over year. Steve Weiss, I want to come over to you, I want to talk to you about not only earnings so far. Again we want to emphasize it is very early but also the income and administration. What's your view on what happens next week when investors they actually see the reality this is new administration. Of course after the election we saw a big surge in equities and then we saw kind of a cooldown in recent weeks as well.
- [06:09]
Steve Weiss
Right. Well first of all in expectation of new administration, I would tell you Scott Besson's testimony yesterday, his confirmation hearings was pretty good. It was very strong. And if you didn't have confidence in it before and I did, I know Scott back from his days at Soros in London many years ago. You should have that confidence. Now he said that he's going to proceed in an apolitical way which is very, very positive because I had big concerns otherwise and also that he's very focused on the deficit. Now what's up for debate going to your question is what impact tariffs do have And I do believe that tariffs will have an inflationary impact. That's to me inescapable because companies that are operating particularly with narrow margins aren't going to be able to absorb the costs. So and the manufacturers certainly aren't going to absorb the core costs any more than they have already. Now, China did cut costs, of course, but you know, with the last Harris, they may do it again and that'd be positive. So that's the best case scenario. But before that, I think you've got to look forward optimistically in terms of what the new administration is going to do, because the Biden administration did hold back business, did hold back commerce and fun and frankly wasn't focused enough on cyber except in the last couple of days. All those things damage businesses. All those things add to business costs. So you've got to be optimistic at this point. So it appears today the Trump trade is back on. Nowhere more obvious than in bitcoin.
- [07:50]
Scott Wapner
All right, so you're saying Bitcoin is a clear sign that Trump trades back on. We're going to get to bitcoin in just a minute. Brent, I want to get over to you as well. Are you feeling optimistic? A data point that I saw earlier today. If you want to look at money market funds, over the last seven or eight days, about $51 billion has been withdrawn from money market funds. Think some questions about where that money goes. Do you think that's a sign of investor optimism that they're getting out of those cash positions and potentially putting that money to work in the markets?
- [08:16]
Bryn Talkington
No, no. I mean, I would ignore these money market flows. It's like people keep saying there's trillions and trillions in money market that's going to come into stocks or. And that's just like has it manifested. So I think it's just a small crumb of data. So I think it's furious. And pay no attention to it. I think as it relates to one point about technology, you know, you and Brenda were talking about, you know, tech starting off with the tech. Tough year. If you look at XLK, Apple is 15% and Apple's down 8 and a half percent, almost 8 and a half percent year to date. That has nothing to do with rates. That has to do with Apple's own weakness. The concern about China, the lack of AI, the concern about revenue growth. And so I think that we're going to continue to see within these mega cap names a really big dispersion of return as investors get much more specific on which companies are actually growing revenues, growing earnings, and where do we see a line of sight. So I think that although the aggregate for the MAG7 are expected to grow 18% in Q4, you know, year over year. That is not equally distributed between those seven names. It's like Nvidia Metta. I think Amazon make up the majority while Apple comes in the rear of really not having much revenue growth relative to the other six peers.
- [09:37]
Scott Wapner
You know, Bren, to your point, Apple shares down more than 9% over the last month. I want to come over to you, Kevin. You actually recently bought some Apple. So I think the question for you is did you buy because of the weakness? Were you essentially buying the dip or was there some other reason to add to the devo portfolio?
- [09:52]
Kevin Simpson
No, Frank, we were buying the dip. This was a stock that we sold out of in its entirety back in December for the valuation concern that maybe it's just not worth 240, 250 got up to as high as 260 almost around Christmas time. So we were out of the position completely. That was the 10th time that we've sold Apple over the past 13 years. And everyone freaks out when we sell Apple but sometimes, you know, it's a little expensive so we try to sell high and buy low. It's not a perfect science, but down here at 230, 12% off those highs, it gave us an opportunity to just start to slowly rebuild that position. But to Brin's point, this is not the most growth centric of the Mag 7. But we like to share buybacks. We believe in the Apple iPhone 17 product. The service model is great. So with patients between 230 and 200, we'll rebuild that position.
- [10:39]
Scott Wapner
So people are freaking out when you sold Apple. Are people freaking out that you bought Apple? I mean, some recent reports that Canalis 1 in particular about the decline in iPhone shipments in China. Apple now in third place in China. Double digit declines for 2024. Are you freaking out a little bit that maybe the narrative that we saw last year about weakness in China and some people said it's been speculation that could may actually be a reality.
- [10:59]
Kevin Simpson
Yeah, I think that their China sales are going to continue to decrease. They can't put the AI on that product at all. And you know, who knows China, I think their GDP came out at 5% today. Like how perfect is that? So you can't always trust their economic numbers, but you can trust the sales that we see out of Apple and we know that that's decelerating. So if you're into the stock or getting into it like we are, it has to be a thesis outside of a China play.
- [11:22]
Scott Wapner
So Brent, you're also an Apple Share shareholder. Are you concerned about some of the issues that Apple has in China? And do you think it is possibly indicative of this whole Mag 7 basket that maybe we've seen the best days from these Mag7 names? Nvidia comes to mind. I mean just incredible blowout earnings reports. I think the law of big numbers is how much longer can it last, right?
- [11:42]
Bryn Talkington
Well, I think Steve and I actually on the same day cut. I cut my Apple position in half in December of last year. Really because of just like valuations, I think there's other opportunities. I bought more Robinhood, bought more Uber. I just think there's other companies where I see earnings growth. I see positive sentiment in the market. And so I think Apple, once again we all use Apple products. I think Tim Cook is one of the most amazing, you know, CEOs. I just think that there's a time and place for me to have a bigger position in Apple. That place is not today because I really do want to see not their earnings growth because that's financial engineering from buybacks. You want to see some revenue growth. And I just don't see any signs of that to be picking up. And so that's why I reduced the position to add to other names where I see clear growth. And I saw much more opportunity to have capital appreciation in 2025.
- [12:34]
Scott Wapner
So I'm hearing a lot of skepticism just by the way Apple named a top pick by Citi, outperformed by Evercore. Raymond James also has it as outperformed. Brenda, you're also a shareholder of Apple. The street seems to like the name a lot here on the desk. Some questions about valuation and things like that. How do you deal with. I think it's also important to note that CEO Tim Cook, he seems to have a very good relationship with the incoming president and I think that's going.
- [12:57]
Brenda Vingelo
To be increasingly important as we're seeing all of these tech companies really becoming much more Washington centric more recently. But as regards to Apple, I do think valuation is still rich. As we've talked talked about. I do think that revenue growth is going relative to the other names in the mag 7 is going to be limited here. We think it's a positive that they have new product coming out with it with AI but so far reviews have been mixed on the product. I think it's further out in terms of a replacement cycle, but we think one is coming. So that being said, we are at neutral weight position. We do own Apple, but don't think it is the right time to add more exposure. Exposure here. But we are sticking with the exposure that we have.
- [13:41]
Scott Wapner
Weiss, any, any thoughts about Apple, the Mag 7? The idea that we may have seen the best out of this group, especially as we come into earnings, a lot has come as kind of a lot of weight on those Nvidia earnings, especially coming up on February 20th.
- [13:54]
Steve Weiss
Yeah, first of all, I want to call out something that Bryn said and she's absolutely right. These numbers like the flow show and all the other stuff they cite, it's cherry picking per, you know, specific data points to get eyeballs on your written research in terms of how you invest. Those should come into it. Not at all. You should look at the fundamentals, momentum, whatever your strategy is, that's not part of it. Now in terms of Apple, Apple is, is expensive. It's been expensive for a while. It hasn't had revenue growth. It hasn't had real fundamental earnings growth as opposed to balance sheet manipulation. So those that come out and say Apple, you have to own it, you can trade it. Kevin's done the exact right thing. You do trade it because it is expensive. So I do believe you can get better stock performance and better growth elsewhere. And in those names are in the Mag 7. So we've seen them under a little pressure and I think pressure is an exaggeration. While we're talking about big dollar moves, you're not talking about big percentage moves. That's still where the growth will be. They still are recession resistant. As a matter of fact, they grow during recessions. So why would I want to give up my positions there? But I would consider something else. Apple. You might as well own just the S and P index or the NASDAQ index instead of owning Apple because you get the same performance without worrying about the volatility when they report earnings.
- [15:21]
Scott Wapner
Speaking of earnings, we have Netflix coming up in just a few days. Steve, I know you want to talk quite a bit about Netflix, but those earnings coming up, they're going to kick off big cap tech. A lot of again weight when it comes to earnings for mega cap tech, but also for the communication services sector. I'm looking at the numbers right here. The estimate is for 22% EPS growth year over year. What are your expectations for Netflix and do you think that sets the tone for the entire sector?
- [15:46]
Steve Weiss
I don't think it sets tone for any part of the sector aside from Netflix and perhaps Disney. That's really it because the model is so different than the other companies. This isn't really a technology company. It's a consumer facing company with a unique brand and a unique product offering. Nobody can match their content. So look, quarter to quarter, it's very difficult to understand what Netflix is going to report. So they've missed some, you know, they've made some, they've surprised business. Big to the upside, big to the downside. But here's what I do know. What I do know is if you've ignored the quarters and you've just held onto the stock, you've done very well. If you've used the quarters when they miss as opportunities to buy more trading position in addition to your core position, as I've done, then you've done exceptionally well. So that doesn't work with every stock, but it does work with Netflix. And if you look at their content, you monitor the content. Their cliffs said the other day they're going more after with their content non us speaking countries. So that increases their subscriber growth. So everything about Netflix is going in the right direction, including sports. And let's not forget there's still one of the cheapest, one least expensive streaming services out there. So why wouldn't you want to own here? They've still got not only the pricing levers but the content levers to pull.
- [17:16]
Scott Wapner
So yeah, recently bought more. But it sounds like it's a long term hold. This isn't a trade because you're seeing volatility quarter to quarter and again after earnings. It is one of the most volatile stocks on the street following earnings. But you're saying it's a long term hold, you can't hold it quarter to quarter. It's not a trade, Kevin.
- [17:32]
Steve Weiss
Also as one more thing, Frank, Frank, one more thing if I could, I don't look at volatility as risk. I look at volatility as opportunity. And the opportunity is if you want the stock moves quite a bit, really skyrockets, take a little off. If it goes real low, then buy a little. So volatility can be your friend if you know how to manage around it.
- [17:52]
Scott Wapner
Speaking of shares up about 2% right now, Kevin, you also own Netflix.
- [17:56]
Kevin Simpson
Yeah, if they had a sell off here, Frank, I would be a buyer into any type of weakness. Steve talked a really, really long time about Netflix. So I won't go into all the detail, but I think the live sports and the advertising is the key that we really want to focus on moving forward. The Tyson experience, the NFL on Christmas day and Raw is Netflix. I mean if you've got Rhea Ripley, this isn't a company you want to bet Against.
- [18:17]
Scott Wapner
All right. I think you're also a big fan of the World Wrestling Entertainment and it's not sports exactly, but it is live programming.
- [18:23]
Kevin Simpson
Raw is Netflix, man. Wwe, let's go.
- [18:26]
Scott Wapner
Speaking of mega cap tech, you're also also you're buying more Meta. So obviously we had some big news today when it comes to TikTok potentially getting banned on Sunday. Did you buy the Meta in anticipation of that decision or was there some other reason?
- [18:38]
Kevin Simpson
No, we didn't, Frank, and we're not of the mindset that that's really going to happen. It would be a great catalyst for the Meta and some of these other companies if it does. But much longer term. And talking about some of the Mag 7s that have lower valuations, cheaper companies and as good as this stock stock has done and it's amazing how well it's performed over the past 18 months, it's still relatively cheap. They're spending a lot of money on Capex. You touched on this earlier Brenda, but this is a stock that makes a lot of money. It's very diversified. They have another opportunity with advertising and YouTube that they haven't touched. Really tapped into like Netflix. And lastly their hardware is incredible. It's affordable, it works really well and I think it's as good as anything that Apple puts out.
- [19:18]
Scott Wapner
Brenda, you also own Metta. Do you think they're a beneficiary of either a TikTok ban or just the threat of a TikTok ban? So many people going on TikTok to use the TikTok shop and use what people call social commerce. Do you think Met is just a beneficiary? Just the threat of disruption leads to more buying of Meta potentially.
- [19:36]
Brenda Vingelo
You know, the company definitely stands to benefit if they're suddenly we don't have access to TikTok anymore because it's become such an important means of advertising and of social Trends happening on TikTok. So certainly you could see that some of that pick up with Reels or Instagram. So I think there could be a potential benefit there. But I do think to Met as benefit in general, even if there isn't a tick tock ban, is just that the company has really been able to utilize AI and really push through great content to the users of the platform there that is as welcome even though it's advertising related. So they've done a tremendous job on that.
- [20:14]
Scott Wapner
On that front, you know, while we're talking mega cap tech, you have pretty broad ownership. Apple, Microsoft, Nvidia also owning the Triple Q. Some notes out about the triple cues, I want to get your take on the triple Q first and then get your reaction to some of the notes out about moves in the triple Qs.
- [20:31]
Bryn Talkington
Yeah, sure. I mean, yeah, sure. I think that first of all, as we come out with earnings this quarter, I'm going to reiterate, I think there's going to be a lot of disruption version when you look at Microsoft, which I think got an upgrade, an upgrade recently to over 500, you know Microsoft is going to grow revenues around 11% so I don't think that copilot we've seen real adoption. I question that we use Microsoft Enterprise and I just think at $30 it's really expensive. That being said, on last quarter's call they said that the cloud, the corporate cloud revenue was going to reaccelerate in the back half of the year. And so I think for that Microsoft continues to get a bid and probably does well through this earnings if that reacceleration in Azure actually starts to come true because that's the majority of their returns. And so I think that as you see Amazon, Microsoft, you're going to have strong numbers. I do question, as I said before, I just don't think Apple is going to be reflective of the performance of the other six names this year.
- [21:33]
Scott Wapner
All right, what about the overall basket of the NASDAQ 100? Any, any thoughts they might be hitting an area of resistance? Btig putting out a note believing that they may be hitting resistance at the level that they're at right now?
- [21:43]
Bryn Talkington
Yeah, well, I mean the Nasdaq, you know, the QQQ has been one of the best performing asset class over the last 20 years. So for me it's a core holding and I think that if you want to be defensive, you can buy JPQ which is the Qs and sells calls against it. And so I think, you know, they added palantir, they added MicroStrategy inside of the NASDAQ 100. So I just think this is an exciting asset class, exciting ETF to own because you get the best growth companies in the world in one one simple low cost ETF.
- [22:13]
Scott Wapner
Yeah, right now triple Q is up about one and three quarters of 1% when you get some more committee moves. Brenda, you sold amd, American Tower and Mondelez. You also trimmed your Adobe holdings.
- [22:25]
Brenda Vingelo
Yes, we were pretty active yesterday, much more than usual. But you know, when we look at AMD to start, you know the stock has as lagged certainly the broader market they do have about 50% of revenue is coming from PCs. PC chips think there is an opportunity in GPU which has been growing. But when you look at something like a Broadcom, we think it's much more apparent how Broadcom is going to win in this environment and how they are winning in terms of they're much more specific platform related offerings where it's chips and software and really catering to companies that are going to really develop their own chips in this market. On the consumer staples side, we did exit Mondelez really moving away from processed foods. Even though there is a growth story there internationally. I think some of the trends in the US could spill over to international, but Kimberly Clark, which is a much more traditional staples company. But there is a story there with some reorganization that they've done internally which should drive margin improvement and overall earnings growth in the double digits. Also trimmed Adobe. Adobe has been I think in part misunderstood, but gave some really conservative guidance.
- [23:43]
Scott Wapner
Is it a trim? I mean, you cut half the position. That's a bit more than a trim.
- [23:46]
Brenda Vingelo
We got half the position. I think still a very viable, important company within the document space. But when we think about overall growth, management gave guidance for high single digit growth this year, which is a disappointment. So we felt it was made sense to trim the position and establish a new position in Snowflake with the proceeds.
- [24:08]
Scott Wapner
You were very busy. I want to get to all your buys. Kimberly Clark, you mentioned Broadway. You just mentioned. You alluded to it at least Snowflake and also Wynn Resorts. So you're getting into the gaming space.
- [24:17]
Brenda Vingelo
We added to Wynn Resorts. We already owned Wynn. We increased the position size there. So of the brand new names to our portfolio, Snowflake was a new one. Broadcom and Kimberly Clark were the three brand new ones.
- [24:31]
Scott Wapner
Just curious about Wynn. Why Wynn right now? I mean so much it seems like geopolitical shifting going on especially with the new administration coming in. Obviously you know when has casinos all around the world, but a big part of their business is over in Asia.
- [24:44]
Brenda Vingelo
Yeah. So there's been, you know, Macao is still in the process of recovering from the pandemic time period. We do think that is going to continue. Meanwhile, the company has a new property that's going to come online in 2027 in the UAE. The Vegas properties continue to do relatively well. Stock is really undervalued and has not performed well. So hence our decision to add a little bit to the position size there. But we do still think there's an opportunity. And in our portfolio and the way we construct our portfolios, we certainly want to have some exposure to names. That are down and out where they just the market has not recognized the value there and think that Wynne definitely falls into that category.
- [25:23]
Scott Wapner
So Kevin, you've also made some news covered calls in Caterpillar, Freeport, McMoRan and UnitedHealth.
- [25:29]
Kevin Simpson
We had very limited volatility in 2024. So the option premiums the that we generated were a little bit on the lower side. If we expect higher volatility in 2025 and certainly we've seen that out of the gate, we should be able to take advantage of that for time purposes. Bryn, I'll just highlight our UnitedHealthcare trade because you'll love this one. We wrote a covered call on Tuesday on UnitedHealthcare. So it had a three day expiration expiring today. Frank. It's a 545 strike price. So the stock would have to go up to $545 before today's closed to get it called away. And we brought in $10.80 a share. If you annualize that out, it's a 1500% annualized premium. And even on a real return basis just for a few trading sessions, Frank, 2.86% real yield. So cover calls are great when there's volatility.
- [26:15]
Scott Wapner
All right, coming up here on halftime, our calls of the day, including a top pick for one stock that Kevin Simpson is making a move on with the call and his trade that comes up next. Halftime. Back in just two minutes.
- [26:35]
Frank Holland
Is it time 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.edu weekdays at 5am.
- [27:07]
Scott Wapner
Be first on world markets, first to the global business conversation. Get a jump on the investing day every day with Frank Holland. Success starts early. Worldwide exchange, 5:00am Eastern, CNBC. And welcome back to Hat Time. Listen to our calls of the day. We're going to start off with Robin. You can see shares are up over 5.5% right now. Named a top pick at Morgan Stanley. And Kevin, you bought more of this stock. So good on you today.
- [27:46]
Kevin Simpson
Listen, we bought this stock last Friday at $40 and it's almost 49 today, so nothing to sneeze at right there. But we think there's A lot more potential for this stock. There's a maturation that's going on within this company. This isn't kids running around trading NFTs on their phone, although that's the infrastructure that's there. They made an acquisition for Trade PMR, which is a custodial platform, but a lot of RIAs are using. They're building out education within their site, retirement plans. This is a company that's, it's amazingly growth oriented. And when there's a transfer of generational wealth, it's the folks on Robinhood, they're going to be the beneficiaries of that transfer. We really, really like the stock and our growth.
- [28:26]
Scott Wapner
Kevin. In all fairness, you've all known this great wealth transfer is going to happen for quite some time. Is this a deregulation play in your mind, the idea with less regulation that this company has more room to grow, more room to expand into new markets and new businesses like one you just mentioned?
- [28:38]
Kevin Simpson
Well, I think that they're going into the right businesses, not sports betting. So deregulation is going to help lots of companies within this space. But you want companies that are growing and it's a huge, huge market share and they only need a small portion of it.
- [28:50]
Scott Wapner
All right, Brent, you also own Robinhood. I want to get your take on what Kevin has to say. The idea is that they're growing into the right businesses and also want to get your take. Do you believe that deregulation, is that a tailwind for this business long term? Of course. Again, it seems like the elephant in the room, the inaugurations on Monday.
- [29:06]
Bryn Talkington
I mean, I really think crypto, the crypto market specifically around the regulatory framework within crypto. So maybe it's not a deregulation, it's a regulatory framework which we didn't have before. And so I think that will benefit both Coinbase and Robinhood. But because I think Robinhood has so many more public assets that are like stocks, stocks and they are doing so much, they're giving like money back for IRAs, giving you a, like a bump. I think it actually is going to infringe on Coinbase and they can both be winners. And so I think the regulatory framework around crypto will be incredibly positive for Robinhood longer term.
- [29:45]
Scott Wapner
Weiss, coming over to you. While we're talking about crypto, you made some moves on crypto recently. You actually trim some of your crypto position. Just curious why, as we go into the inauguration, the administration of Donald Trump expected to be a very good one for crypto, expected to have an executive Order on crypto potentially on day one as well.
- [30:03]
Steve Weiss
Yeah, so that was just over 10% and that was just triggered by a stop. It's actually still my largest position at this point, but it's still speculative. So I keep tight stops on on the market. But those stops, unlike on stocks, have to have a wide berth because of the volatility in it. But look, you got a president who's got interest in crypto and we've seen that he will work in his self interest. So on that alone, now when he, he says day one, he's going to announce a federal stockpile in crypto, doesn't make any sense. I don't think it's a store of value. I don't even know what that means in relation to crypto. But the animal spirits here are alive and well. The momentum will continue. You still have halving where you cut the capacity, it's available to buy. So everything is working right for momentum trade. I can't tell you what my target is, as I've been asked in the past, but you know, I'm going to be there. And Robinhood, frankly is where I first started trading crypto because they weren't charging versus Coinbase charging 5% per trade. So to me it made infinite sense. And as far as Robin, who goes in generational wealth, if Kevin keeps putting lids on my stocks like UnitedHealthcare, I hope that generational change in the wealth ownership will happen sooner than later.
- [31:28]
Scott Wapner
Always switch gears a bit going from crypto to CRM. Upgrade of Salesforce today from buy to a buy from a hold at TD Cowan. Brit, I want to come over to you. You own Salesforce. Just your thoughts on this, the whole agentic. Excuse me, Brenda. I'm sorry about that. Brenda. You own Salesforce. Just the whole shift to agentic AI and this upgrade from TD Cowan also price target raised from 380 over to 400.
- [31:52]
Brenda Vingelo
Yeah, I mean, I think that Salesforce continues to be really well positioned and you know, with their agent force, which I think we'll see more and more adoption as companies really look to leverage their existence, existing salespeople and their ability to service customers and bring in new business. So I do think that Salesforce is well positioned and there were some questions about that not too long ago, but I do think that they've really taken great measures to be competitive and offer really interesting tools for their client, their customers to use.
- [32:22]
Scott Wapner
You know, we heard Mark Benioff, he actually spoke to our Sarah Eisen about the difference between agentic AI and AI co pilots. So he, he seems to be maintaining there's a big difference. But when it comes to adoption, do you see a different story because co pilots, they just never quite took off.
- [32:36]
Brenda Vingelo
No. And I think if you have a co pilot that's actually adding value and it's very apparent in how it's doing it or even taking the place of a person along the process of the sales process that is much more valuable and tangible for companies to be able to see and use.
- [32:52]
Scott Wapner
All right. Salesforce shares up just about two and a half percent right now. Time now for the headlines with our Bertha Coombs. Bertha, good afternoon.
- [32:58]
H
Good to see you. In a post on Truth Social, President elect Trump said the inauguration ceremony will be held indoors in the Capitol rotunda due to a frigid weather forecast for Monday. Trump added that the Capitol One area will be open for a live viewing of the event and to host the presidential parade. The last time the ceremony was held indoors was for Ronald Reagan's second inauguration back in 1985. President Biden said today that he considers the Equal Rights Amendment to the Constitution is, quote, the law of the land. Congress passed the 1970s ERA amendment, but it took until 2020, when Virginia finally ratified it, for it to reach the required threshold of state approval to be added to the Constitution. The National Archivist still needs to publish it for it to go into effect, but legal challenges are sure to follow. And the Biden administration announced the next 15 drugs for Medicare price negotiation this morning. Combined, the Drugs cost Medicare $41 billion over 12 months, according to the agency. The lion's share of that on Novo Nordisk, Ozempic and Wegovy. Medicare says it spent over $14 billion to cover 2.3 million beneficiaries, up nearly tenfold from 2020 just on those drugs. Novo Nordisk tells CNBC it disagrees with the decision and it already has a pending lawsuit from last year's drugs that were selected. Frank.
- [34:37]
Scott Wapner
All right. Bertha Coombs. Bertha, thank you very much. Coming up here on halftime, your energy playbook. It is the best performing sector this month. The committee debates if you should be in it. Halftime back right after this.
- [34:52]
Frank Holland
At Capella University. Learning the right skills could make a difference. That's why our business programs teach you relevant skills you can take from the course room to the workplace. A different future is closer than you think with Capella University. Learn more at capella.
- [35:06]
Scott Wapner
Edu weekdays at 5am Be first on world markets, first to the global business conversation. Get a jump on the investing day every day with Frank Holland, Success starts early. Worldwide exchange, 5:00am Eastern. CNBC. Welcome back. Energy is the leading sector so far in January on pace for its best week since November 8th. Kevin, you own Texas Pacific Land and you're also adding to that position.
- [35:36]
Kevin Simpson
Yeah. This stock is almost as fun to talk about, Frank, as Robinhood. We first bought this in the end of the third quarter last year and it had been up 100% when we got into it. So it started the year at 450. We finally made a position in our growth strategy at 900, but then got included into the S&P.500. Immediately ran to like 1600 and we trimmed the position up there. I mean, at some point it's okay to take profits. So just this week we added to the 1300 range some of the shares that we had exited around 1600. They own about 830,000 acres in the Permian Basin. Bryn knows this company far better than I do, but it's a royalty play. Water, natural gas, solar energy, oil, minerals. It's an incredible landlord and a wonderful stock.
- [36:20]
Scott Wapner
Shares up 26% year to date. So big rise there just in 2025. Weiss, coming over to you. You also made a move. You bought slb.
- [36:28]
Steve Weiss
I did. So I bought it this morning.
- [36:29]
Scott Wapner
Morning.
- [36:30]
Steve Weiss
I paid up for it, but I'm not concerned because it's still an expensive stock. Look, Trump's been very clear he's going to open up federal land offshore to more oil drilling. I don't want to worry about whether that's going to be absorbed by exporting it, on whether the market internally in the US can absorb it. So why not be agnostic, really somewhat agnostic to fuel prices, prices, to oil prices, energy prices, and buy one of the service companies. So I think the service companies are the way to go. Now, of course, if the commodity drops to a certain level, then drilling drops, but in the short term, that's not going to be the case. So they've got big buyback. Lot of buybacks are announced and they're not executed on. I think theirs will be. And again, I think it's cheap stock and start a position. Got to do a lot more work on it before I really size it up, but I'm comfortable with it.
- [37:22]
Scott Wapner
Yeah. To your point, it's about 13 times forward earnings today, up about seven and a half percent. Brian, your thoughts on energy, the leader this year so far? I know it's only early in the year, but still by far the leader when it comes to sectors.
- [37:35]
Bryn Talkington
Right. So earlier you were talking about deregulation so this is really, I think in the crosshairs of deregulation, you have streamlined the permitting process, increase federal lands and then increase production. So when I look at those three, to me, like from a first principles, I'm saying the pipelines, pipelines, we're going to have more oil coming through the pipelines. Better, less, less, less regulation, more oil going through, more gas and oil. And so I think energy transfer, Kinder Morgan, which both had really banner years in 2024, you know, unlike some of the other names. And you also get a nice distribution yield. So I think if you want to just to, to keep it down the fairway, stay with the pipeline plays. And those are my two favorite ones.
- [38:18]
Scott Wapner
All right. Energy up about 9 and a half percent year to date. Coming up next. Mike Santoli joins us with his MIDDAY word. We are back right after this break. And we are back on halftime. Senior markets commentator Mike Santoli joins us with his midday word. Mike, obviously, day before the inauguration, we're seeing a bit of a bounce back here on Wall Street. What do you make of all of it?
- [38:57]
I
I think it's a big exhale that we've had this week. And I remember we got clenched up because it seemed like treasury yields were going up too far too fast. Good economic news was hard to celebrate because of that. People were afraid that the bond market was really going to test the ability of the economy to absorb that. And we went six weeks and the average stock took a pretty good little pullback in that time. And that is reset expectations, reset price action and valuations enough so that we can kind of get back in there and say maybe not that much has changed. I mean, I think that's fundamentally what we're doing now. Interestingly, yes, yesterday you had a better market breadth, more stocks up versus down than you have today. It's just that Yesterday Apple was down 4%, covered up strength, and you still have a pretty decent bid in the average stock out there, Even though NASDAQ 100 type names are leading. Today, you have had this subtle broadening of strength that people have been calling for.
- [39:52]
Scott Wapner
Yeah, I got to join you on closing bell. Yesterday you pointed out the S and P equal weight outperformed the regular S and P. Yesterday, S and P actually.
- [39:58]
I
Went lower and by an alarming degree. Like the S and P was up by 8, 10 of a percent, S&P down a quarter of a percent. You almost never see that spread. That's the result also of having a hyper concentrated index.
- [40:08]
Scott Wapner
All right, Mike Santos with the Midday Word Mike, thank you. Coming up, we're taking you inside the quantum computing race. These stocks, they've seen some big runs despite a kind of recent crash. Our Kate Rooney is standing by with a behind the scenes look at the tech and its potential. Halftime back right after this. And we are back on halftime, listening to our Julia Boorstin with the news alert.
- [40:34]
Brenda Vingelo
Julia, TikTok CEO Shochi responding to the Supreme Court ruling upholding the ban on TikTok show to posting a video on TikTok in which he thanks President Trump, saying we're grateful and pleased to have the support of a president who truly understands platform. Take a listen.
- [40:52]
J
On behalf of everyone at TikTok and all our users across the country, I.
- [40:56]
Scott Wapner
Want to thank President Trump for his.
- [40:59]
J
Commitment to work with us to find a solution that keeps TikTok available in the United States.
- [41:05]
Brenda Vingelo
Chu saying that Trump's defense of TikTok would be a strong stand for the First Amendment. He also says stay tuned. So we are awaiting more obviously from incoming President Trump as well as from the company itself, which may have to decide whether or not to suspend the app as it awaits executive action from the incoming president.
- [41:26]
Scott Wapner
For Frank, Julia Borson with the very latest on TikTok. Julia, thank you very much. Turning back to the markets, the rally in the recent crash in quantum computing stocks, it's really brought this tech into the mainstream. But what exactly is it? Our Kate Rooney is standing by with a behind the scenes look. Kate.
- [41:43]
J
Hey there, Frank. Yeah, so we did go behind the scenes at Psi Quantum. It's a venture backed startup here in Silicon Valley. It's building high powered computers that investors expect to be the next transformational technology after generative AI. The hype around this industry, as you mentioned, it's been based on its potential to solve complex problems that wouldn't be possible with classic computers. It all hinges on quantum physics, hence the name quantum. It uses quantum bits, also known as qubits, to make it possible to explore multiple problems at once, which would really be groundbreaking for complex math problems, for example, could also be applied to drug discovery. Think of things like aerospace, encryption, material science, energy genomics, and a lot more. And in order to make the physics I mentioned work, these machines need to be stored at some of the coldest temperatures on Earth. They use liquid helium to get these to around negative 455 degrees Fahrenheit. That's just about as cold as it is in deep space. And the cost of building these, as you can imagine, is also stratospheric. You got Amazon Intel. Google also racing for a commercially viable quantum computer. And Google's recent breakthrough in the fall did spark some of this mania we've seen in public markets. Names like Rigetti and Ionq were up as much as 1000% last year. And then it is. Jensen Huang took some of the air out of that, saying that it's as far as 30 years away from actually being impactful. The co founder of this company, Pete Shadbolt, thinks the timeline, he says it's more within the current decade. And while the opportunity is huge, these computers aren't actually live. The consensus is that in order to have a working version, it's going to take 1 million qubits. Today, for a little bit of context, the most advanced quantum giants are closer to 100 qubits.
- [43:35]
Scott Wapner
Frank, wow, wow. Our Kate Rooney there in the field. Interesting stuff. Kate Rooney, thank you very much. Weiss, want to come over to you. You have some thoughts about quantum computing? Do you have thoughts about the trade or the actual technology?
- [43:50]
Steve Weiss
Both. So in terms of technology, you heard Kate lay out what the barriers are to this happening now, of course those will come down. And it's probably not 30 years, but what I've heard, what I've read, it's at least 10 years say that comes down. But so many of these companies that are there now won't be around that because they are capital intensive, number one. Number two, if you do believe it, play through Nvidia, play it through Taiwan semi. So there are same ways to play it.
- [44:21]
Scott Wapner
All right, Weiss, thank you for that. Two cents on that. All right, stay with us. Final trades here on halftime coming up. We'll be right back after this break. Foreign, we are back on halftime with final trades. Bren, you're up first.
- [44:41]
Bryn Talkington
Nvidia, as you know, I like to sell calls against the position. So here's an idea. You can sell the May 160 calls, you get $7.45. If it happens to get called away, you have a total return of 21% for around four months.
- [44:55]
Kevin Simpson
Kevin Robinhood, we own this in our growth ETF, QDIVO, also a great name to write calls against. You want to go where the money's flowing and it's flowing here. The fact that Steve Weiss has a Robinhood account almost makes me want to double down today.
- [45:09]
Brenda Vingelo
Brenda, I'm going to go with Snowflake. So really well positioned from a fundamental standpoint to benefit from all the data that's moving to the cloud.
- [45:16]
Scott Wapner
The aforementioned Steve Weiss, last word.
- [45:19]
Steve Weiss
Okay. Actually, I don't have an active Robinhood account. I did my filing trace crh I added earlier in the week as rate starts come down all right, that's going.
- [45:28]
Scott Wapner
To do it for halftime. We have the exchange coming up 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.
- [45:44]
Frank Holland
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 halftime reportdisclaimer@ Capella University, learning the right skills could make a difference. That's why our business programs teach you relevant skills you can take from the courseroom to the workplace. A different future is closer than you think with Capella University. Learn more at Capella Eduardo.