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Halftime Report
Bulls vs. Bears in a Choppy Market 8/11/25
00:44:03
Scott Wapner and the Investment Committee debate the current state of stocks and whether they are overvalued at these levels. Plus, the desk debate the latest Calls of the Day. And later, the Committee share their latest portfolio moves. Investment Committee Disclosures
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- [00:01]
Scott Wapner
When work gets crazy, I like to.
- [00:03]
Jim Cramer
Stop by the bar after, have a few cold ones.
- [00:06]
Scott Wapner
I don't drink at all until 4 o'. Clock.
- [00:09]
Liz Young
We limit ourselves to one bottle of wine a night. Excessive drinking has a way of sneaking up on us.
- [00:15]
Steve Weiss
A few drinks, a few nights a.
- [00:17]
Scott Wapner
Week, it can add up.
- [00:18]
Steve Weiss
And suddenly we're at greater risk for.
- [00:21]
Scott Wapner
Long term problems like heart disease, cancer and depression.
- [00:24]
Liz Young
Reason enough to rethink the drink.
- [00:26]
Steve Weiss
More more@rethinktodrink.com Noche Initiative.
- [00:30]
Joe Terranova
A rich life isn't a straight line to a destination on the horizon. Sometimes it takes an unexpected turn with detours, new possibilities.
- [00:40]
Scott Wapner
Cheers.
- [00:41]
Liz Young
Cheers.
- [00:41]
Joe Terranova
And even another passenger or three. And with 100 years of navigating ups and downs, you can count on Edward Jones to help guide you through it all. Because life is a winding path made rich by the people you walk it with. Let's find your rich together. Edward Jones, Member, SIPC I'm Scott Wapner.
- [01:03]
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, thank you very much. Welcome to the Halftime Report. I'm Scott Wapner. Front and center this hour, the latest on how investors are feeling about the current state of stocks. Some new results that might surprise you. We'll discuss in debate with the investment committee. Joining me for the hours a day, Joe Terranova, Liz Thomas, Jim Leventhal, Steve Weiss. We'll show you the markets here on this Monday to get things going. NASDAQ did hit a new record high today. Got a little bit of work to do on the Dow, but we've got a mixed action today. We do have a big week of data ahead, as you heard from the prior program, cpi, we got ppi, we have retail sales and City Joe has raised their S and P target for the end of the year to 6,600, up from 63, as they suggest volatility should be expected and bought into. You agree?
- [02:02]
Steve Weiss
Yes, I agree with that. You know what's interesting about all of this here we are approaching the midpoint of Q3 and it's a quarter. And if you remember at the beginning of the quarter I said to you, Scott, I think flat to lower is what you're going to get this quarter. Well, that has been the big surprise. We haven't got that. You have the S and P up 3%. You have very, very strong earnings growth, eight consecutive quarters, 11% earnings growth overall for the S and P. Staggering results from these technology companies, semiconductors with 20% earning earnings growth. So it's defying the premise of the logic that the, the, the other shoe is about to drop for the market. Now we have CPI this week and everyone's talking about, well, if you get a hotter reader there, you take off the table the potential for a September cut. I don't know that I necessarily agree with that. And I will tell you, I still think Apple and we'll talk a little further about it later in the show. Apple is evidence of when you have to chase and I think there's a lot of people chasing the market right now.
- [02:57]
Scott Wapner
All right, so I mentioned at the top of the program that we have some new data on how people are exactly feeling about this market which been a bit choppy lately. I think we'd all admit that many saying the trend is still higher. Liz, Tom Lee has said it's the most hated V shaped rally ever. What we're learning is it might be hated but people are buying it anyway. Bank of America's August global fund manager survey I thought was really interesting and I want you to know about this. 91% say US stocks are overvalued. However, the survey was the most bullish fund manager survey since February of 25. Why? No recession. Probability of a hard landing is the lowest since January. Cash as a percentage of assets under management at historically low levels. Equity allocations are on the rise, but those aren't extreme either. What do you make of that information?
- [03:56]
Joe Terranova
Well, first of all, when you look at The S&P 500 compared to its own history, it's in the 93rd percentile of valuations compared to its history since 1995. So not surprising at all that, what was it, 91% of Americans say it's overvalued.
- [04:10]
Scott Wapner
91 overvalued, but people keep buying into it.
- [04:13]
Joe Terranova
Okay, because at the 75th percentile we were saying the same thing and then people watched it go from 75th to 85th and said, okay, you know what, I missed it. Not going to miss the rest. So here we are.
- [04:23]
Scott Wapner
Is that what a wall of worry kind of looks like? You keep climbing. Yeah, they're overvalued, but I'm buying this one, that's overvalued, but I'm buying that one because I don't want to miss out if the market continues to go up.
- [04:32]
Joe Terranova
Well, so there's some interesting stats too that you can add into this, even just earnings season as a whole. And listen to what CEOs and CFOs are saying the recession siting in earnings calls. According to facts, that is down 87% quarter over quarter. So compared to Q1 in Q2, 87% fewer companies are mentioning recession. That could signal some complacency. Maybe everybody is a little bit too eager to say we're in the clear. But at the same time, you still have a lot of proof. I mean, you've got the s and P up 8ish percent this year, and more than half of that is coming from earnings growth. We just had the third quarter in a row of double digit earnings growth. So it's not just multiple expansion. We certainly are at risk of the multiple expansion coming down if we hit the skids a little bit. And I think this week has high potential for doing that. But it's difficult to make a case right now with the data we have that we're headed into some terrible bear market just because of valuations.
- [05:28]
Scott Wapner
Tony Pescarello, Goldman Sachs Jimmy sums this up pretty well, I think as well. Risk rewards fickle, but the bulls retain the higher ground. When I toss all of that in the blender, it's not easy to have a huge amount of confidence in the short term balance of risks. But here's my expectation. August will bring more doses of consolidation and the September technicals set up to be tricky. I think everybody kind of agrees with that. But I believe the primary trend is still higher over the second half of 2025. I feel like most people agree with that sentiment.
- [06:01]
Liz Young
Well, that was extremely well put. I mean, it entirely encapsulates how I feel, which is to say we will probably have some trickiness from here through the end of September. But you know, if I take, Liz, what you just said and put some numbers to it, we entered this second quarter earnings season expecting 4%.8% year over year growth. It's now looking like 11%. That's not a trivial beat, that's a humongous beat. And it's now showing up in the earnings estimate, full year estimates for 2025 and 2026. So one of the rubs that has been against this market is it's too expensive. Now, all of us on the desk know that's a dangerous reason to try to sell the market. And none of us have suggested that. But what I would say is now 2026 earnings estimates are above $300 a share puts that multiple at 21 times next year's. What that means is what Mr. Pascarello said is exactly right. As you look to the end of the year, and you start pricing in those earnings. That's not a bad place to be as far as August and September. Hey, there's a lot going on just this week. Whether it's inflation, whether it's retail sales, whether it's obviously the Alaska summit between Mr. Putin and Mr. Trump. There's a lot going on that could add to volume volatility. I still think it's a good time to have a little bit of dry powder. And I'll just close this by saying to Joe, your comment about how you felt about the quarter entering into it. I'll quote the late Jack Palance, or I'll paraphrase it. The quarter ain't over yet.
- [07:23]
Steve Weiss
All right, well, 91% think the market's overvalued. Okay. I think the value of my house is beyond what it should be. I'm not going to sell my house. I have to stay in my house. And for the overwhelming majority, I know Steve's response. This is going to be where you go into cash, and some people can be nimble enough to do that, but 91% of the general public just can't move into cash. So what's the alternative? Yes, the market is overvalued.
- [07:46]
Liz Young
It could stay overvalued for years.
- [07:49]
Steve Weiss
Where are you going with your money? You want to invest in something. What's the alternative?
- [07:54]
Scott Wapner
The valuation thing is one of those deals, Weiss, that you often look at after the fact. Alan Greenspan famously warned of irrational exuberance four years prior, of course, to the dot com rollover. This is one of those deals where if something happens in the market, you look back. I told you it was overvalued. I knew it 22 and a half times. That was crazy. I told you guys that stocks shouldn't be trading where they are. But in the here and now. Well, I don't know. Maybe earnings are going to justify the valuation of the market. And despite risks, despite people thinking it's overvalued, you still have a good number of people who don't want to miss out on what could happen between now and the remainder of this year.
- [08:40]
Adam Parker
Yeah, that's right. And you know, the interesting thing is that valuation alone never dictates that a correction is coming. Valuation alone doesn't dictate that the end of the upside is here. It's always another event that does it. If you shorted Tesla because you think a Capital Intensive Company 110 times P E is overvalued, you could have, you know, you'd be saying to the cleaners, year after year, which is why I'm not shorted. So it's really. What are the events that are out there that can upset the market? Well, we're going to get September. September is much overstated in terms of decline. The average decline since 1945 has been.6%. That's nothing. That's no reason to sell. If you look at specific companies. Well, there maybe you can have some issues, but the ones that are the most overvalued, Tesla side, Apple aside, which I think Apple's purely momentum trade without fundamentals to support it. The fundamentals, the others are all working. So it's kind of difficult to go and raise cash. And we take that in conjunction with what I've continually referenced over the last year is the new investor base that is used to V shaped recovery is appropriately, appropriately not scared out of the market. Then you know what, you'll go through a normal period of time where that exogenous shock could happen. Now that could happen this week. If you have not just one event, but cpi, PPI and then all the economic numbers on Friday coming in way too strong, which I don't think will be the case, then you could see that. But you know, right now it's really steady as she goes and, and you can still look for opportunities even if.
- [10:24]
Scott Wapner
CPI comes in like hotter this week. I can, I can already sense people would say, yeah, but this just may be that one time jump in inflation that everybody has assumed was going to happen as a result of the tariffs. We need more information to determine whether inflation is really going to be an issue. So what's another thing that could keep the market or stocks from selling down in any meaningful way? I don't know. Buybacks. Joe, you like buybacks?
- [10:52]
Steve Weiss
I love buybacks. I think buybacks are.
- [10:54]
Scott Wapner
We're at a record pace.
- [10:55]
Steve Weiss
We are.
- [10:55]
Scott Wapner
A trillion dollars worth of buybacks come in this year. Airbnb, Uber, Schwab, jpm, Newmont, Southwest Airlines, Novartis, they've all announced buybacks recently. That's a stimulus for stocks, isn't it?
- [11:09]
Steve Weiss
Absolutely is a stimulus for stocks. What's interesting about it is again, I love what you said before for. Because it's so, so true when you think about. You repeat it the next several years, the next several years, when the market eventually rolls over, right? And people are going to say, I told you the market was overvalued. They're going to say the same thing about buybacks. They're going to say, oh, all these foolish companies were buying back their stock of 6400. Well, they've got a lot of cash. In the case of Uber, it's a company that's had a dramatic transition to being free cash flow positive and they want to reward the shareholders for buying back the stocks. So I think that obviously is a tailwind behind the market. I also think potentially in Q4, a little bit of an uptick in M and A activity is also going to be a benefit for the markets. And I think, as I said before, I think we're setting up very nicely as we head into the end of the year. Cite whatever reasoning and catalyst you want behind where we're going to go as we move into Q4. But without question, higher seems to be where the trend is.
- [12:08]
Scott Wapner
What if you have also Liz, A new cohort of dip buyers. As the Wall Street Journal suggests, today a new generation of buy the dip investors is propping up the market. We talk a lot about so called low quality names, culty names, retail favored names. The Ark Innovation Fund is up almost 50% in three months. You've got names that have just gone crazy. Super Micro, open Door, Carvana, Joby. Now last week they showed signs of a little bit of a roll which got the concern of some people up that you're going to have maybe a more meaningful turndown in names that have just gone parabolic. Robinhood's target today gets raised. Now, I don't know what category you want to put this in. I'm not calling that a low quality name. I am calling it a retail favored name. I think for obvious reasons. The target goes to 60 from 50. Now it's reiterated sell at this particular Firm, Rothschild & Co. Redburn. But the commentary I feel like is necessary for a conversation. They say, yeah, the fundamentals have improved, but the rally appears more reflexive than earned. And I wonder more reflexive than earned if that can be used to describe other stocks in that universe which certainly feel like they've had a, you know, bang, then bang the hammer thing on the knee and then, you know, your leg shoots up because that's just what happens.
- [13:42]
Joe Terranova
Well, retail, the retail investor base has changed over the last, let's call it decade even. So it's made up of different types of buyers than what we called retail buyers 10 years ago, 15 years ago. The newer cohort of buyers and at SoFi, we serve a lot of these people.
- [13:59]
Scott Wapner
You do.
- [13:59]
Joe Terranova
The newer cohort of buyers, a younger generation, they want the disruptors. They want the names that are disrupting industries. And that's not just technology. They want the Disruptors in all the industries. They want the headline makers. They don't want necessarily the old school financials. They don't want the old school, old school energy companies. They're looking at the things that are changing the world and they are looking I think more long term than we give them credit for and they have more resilience than we give them credit.
- [14:27]
Scott Wapner
I think they've proven that they're still.
- [14:29]
Joe Terranova
Willing to buy even in the face of a downturn.
- [14:31]
Scott Wapner
Robinhood record high today, by the way.
- [14:33]
Joe Terranova
Yeah. So here's what I think would happen. Yes, I do think there's a new cohort of DIP buyers. I don't think buying the DIP is a new concept by any stretch but if we have some of those little corrections and I do think that this week has the potential for starting one because of cpi, because of PPI and because of how much this market wants a rate cut. I do think there's potential for volatility to pick up this week. There are technicians that I respect a lot who are saying that there's really good support on the S and P at 6100. I think it would be easy to get to 6100 if we had some bad macro data on the heel a diplomatic.
- [15:07]
Scott Wapner
It's an interesting phenomenon if you consider the knock on retail in some respects was the minute stocks start to have a little bit of a turn, you get nervous, you sell out. If this is a sea change in behavioral activity where you have these same one time sellers who are now buyers of a little bit of uneasiness that helps your overall market.
- [15:32]
Liz Young
Scott, we're four and a half years into this. It was March of 2021 that the meme stock investing phase first showed its head. When first knocked Goliath off of his perch with regards to GameStop. And four and a half years is a long time. It shows no sign of abating.
- [15:46]
Scott Wapner
I don't know. Adam Parker says the junk rally is going to end soon. Now again you can determine whatever stocks you want to characterize as junk or low quality or meme or cult or whatever you want. We generally mention certain names within that universe, but he thinks it's going to end soon. If he is right, what does that mean for the market, if anything?
- [16:06]
Liz Young
Well, I don't think it necessarily means anything. I mean and if we step back from just the meme stocks and look at what's really driving most of the markets, it's mega cap tech. And if you look at the earnings growth for mega cap tech, frankly it is justifying the multiples and the rallies that have occurred within Mega Cap Tech. So by no means am I saying, look, the idea that retail is dumb money has been retired. That is gone. We're now in the fifth year of retail, basically showing that it has the gumption to hold, hold on through downturns and add, that's what the big sea change has been. So if there is a downturn in whatever we think is the junk rally, and like you, how are we going to define it? We're going to define it by Palantir. It's a real company, 200 times earnings. Okay. I'm not sure if that's the definition, but nonetheless, it's more likely that the dip gets bought. So what I'm saying here is much like my call on the markets, any dip is likely to be shallow and quickly bought. But it doesn't mean that it can't happen. And when it does, people will feel a little nervous.
- [17:03]
Scott Wapner
I want to move and talk about, since we, since you mentioned sort of Mega Cap Tech, why the money continues to go there. Nvidia did get its target raised today. The stock's been trading around a new high. But the news today of what the president just referred to in his news conference called a restrictive covenant regarding Nvidia and AMD and these 15%, the pay of China chip sales, the revenue to the US Government is really an extraordinary development. Eamon Jabbers is following that for us as well as another story today that's been of interest in the news. But let's address this Nvidia and AMD part of it first, because it really is new, almost uncharted territory. Is it?
- [17:49]
Jim Cramer
Yeah, it is, Scott. It's a new territory tax of sorts on American companies who want to get export licenses from the US Government. We had a fascinating discussion live in the briefing room by the President. He explained how he came to this deal. He said he was meeting with Jensen Huang here at the White House and Wang wanted permission from the federal government to sell these chips in China. The president said he asked him for 20% of the revenue, said, if I'm going to do this for you, I need 20%. A strictly, you know, transactional approach to sort of what the federal regulations are here. He said Wang came back to him and said, well, can we make that 15%? And they were willing to cut a deal on that. And so that does raise the question, Scott, of sort of how much these export licenses will cost other companies if that's going to be the US Government's approach. To sort of any kind of regulatory interaction with companies. If the US government is doing a deal that benefits company, does that company have to kick back a certain percentage in tax back to the federal Treasuries. So the President also talked about the reasoning for this and some other chips that he might do deals on in the future, including more high tech chips. Take a listen to what he said.
- [19:00]
Liz Young
The chip that we're talking about, the H20, it's, it's an old chip. China already has it in a different form, different name, different. And Jensen also has a new chip, the Blackwell. Do you know what the Blackwell is? The Blackwell is super duper advanced. I wouldn't make a deal with that, although it's possible I'd make a deal a somewhat enhanced in a negative way Blackwell, in other words, take 30% to 50% off of it. But that's the latest of the greatest in the world. Nobody has it. They won't have it for five years.
- [19:39]
Jim Cramer
So the President there saying he'd be willing to negotiate the release of those higher end Nvidia chips, although he wants the Blackwell chip to be degraded by 30 to 50% before he'd authorize the sale of that in China. No indication from the President there of what percentage of Nvidia's revenue the federal government should take in exchange for that release. But clearly this is a new approach by the US government, Scott, that we haven't seen before. And we'll wait and see what other companies might end up looking at this as a template for them to do deals, to be allowed to export goods.
- [20:15]
Scott Wapner
That's almost what I feel is the most important takeaway here. It's not about the chip H. Fill in the blank. It's about the precedent that this whole thing sets. Stacy Raskin, who's probably the foremost semiconductor analyst over at Bernstein, raises this issue relative to chips. But he's trying to think bigger picture what he says feels like a slippery slope to us. Will other companies be required to pay to sell into the region? He asks. I think those are all legitimate questions and concerns.
- [20:47]
Jim Cramer
Yeah. And you look at the President's approach here, Scott, across the board and it is transactional. The President feels if the US government and himself are going to be involved in any kind of deal, he wants to see some kind of return for the taxpayers that is either it's financial or equity. He's done these golden share deals now involving shares in companies that he feels he's been able to benefit. This is a president who views himself very much as a dealmaker and he wants a piece of the action.
- [21:17]
Scott Wapner
The other story that I don't want to get glossed over today because it's of interest, given what happened last week. Intel's CEO is going to be at the White House meeting with the president, we understand, today. And that's after President Trump said he needs to resign immediately. Talk about awkward.
- [21:37]
Jim Cramer
Yeah, it is going to be awkward. We don't have exact timing on when that's going to happen, but you can imagine that the Intel CEO is sitting there with his team over the weekend looking at all these deals that different companies are cutting with the administration, whether that's Apple or Nvidia or whoever, and you say, what do I need to offer this administration to get on the right track? Is it some large number of investment? Is it some percentage of revenue? Is it some equity stake? Can I bring some, some goodies to the meeting, so to speak, to put on the table? We saw Apple with, you know, a deal Chotchki that they presented to the President. He, he loves those moments. And so you wonder if you're intel coming into this meeting, what exactly you have to tee up in terms of an offer to the US Government.
- [22:22]
Scott Wapner
We'll see. And you'll let us know what happens with that. Eamon, thanks so much. It's Amy Jabbers, north lawn of the White House for us. White Weiss, I'll get a quick comment from you on. On the Nvidia AMD side of things, the idea of it being a slippery slope now, wondering if you own a company that does a significant stock in a company that does a significant amount of business in China, if there's going to be a toll.
- [22:48]
Adam Parker
Yeah. Look, I've thought about this quite a bit, as I'm sure everybody on the, on the show has. It really depends if it's to, you know, look, first of all, these companies MD in particular, their tax rate is about 14% versus the corporate tax rate of 21%. So I don't care if they pay more. I'd love them to pay more.
- [23:07]
Joe Terranova
More.
- [23:07]
Adam Parker
But if we're doing this as a penalty for doing business elsewhere and for doing it in China and foregoing our security concerns for compensation, they have an issue. So I really don't know the answer to that. Otherwise, raise revenue, I've got no problem.
- [23:23]
Scott Wapner
Jimmy?
- [23:24]
Liz Young
Yeah. You know, I started this morning clutching my pearls when I saw this news. And then I thought about it a little bit further and I remember I didn't clutch my pearls when the Biden administration as the CHIPS act came out started to enact regulations on that and saying that you have to hire, you have certain hiring quotas and you have to provide childcare and stuff like that. There are benefits that these companies are receiving and it doesn't matter what administration. There are some attributes that are going to come back to the government for those benefits.
- [23:49]
Steve Weiss
Nvidia, 13% of its business in China, 24% business for AMD. If you think about really what's going on here, they're being charged to acquire an export license, and that's what this is. So for Nvidia, it gets them back in $7 billion, potentially a quarter billion dollars gets kicked back to the United States. Okay, if you're thinking about what's the effect on the stock, probably not so much. But it does set a precedent. It sets a precedent for other companies that want to do businesses or need to negotiate with the White House. And they have to understand that over the next three years there's going to be a negotiation that's going to have an economic consequence.
- [24:26]
Scott Wapner
20% of its revenues from China, they do not think about that in any sense.
- [24:30]
Steve Weiss
And Tim Cook was in the Oval Office with golden gifts.
- [24:34]
Scott Wapner
Golden gifts.
- [24:35]
Steve Weiss
So that's what it's going to be.
- [24:36]
Scott Wapner
I mean, that's stock. Speaking of. I mean, it's down a smidge today. Don't even count that given what it's done in the past week. It had a crazy week last week, one of its best in years, since 2020, as a matter of fact. So you've been buying the stock personally, don't own it in the etf, but you've been buying it personally and you.
- [24:56]
Steve Weiss
Bought more, took the big bite last Wednesday at 206. Have been nibbling Thursday, Friday, even today. I think it's the right thing to do. The momentum factor is the strongest factor in the market in 2025. That's just what it is. And you know, we talk about Robinhood and we use the word reflex reaction. No, it's momentum. That's what's going on in the marketplace right now. And if you think about the significant market cap weighting that Apple has, and you think about growth managers that looked at the stock over the last six months and saw dramatic relative underperformance to its MAG7 peers. They moved away from it. They were positioned at underweight. They are rebuilding positions and they are rebuilding positions very quickly and pure and simple. That's all what's going on right now. But that is a very strong driving force. And it's not over.
- [25:42]
Scott Wapner
All right. Let's take a quick break. When we come back have more on today's biggest movers. Our top calls of the day as well. We're back in just two minutes.
- [25:56]
Joe Terranova
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- [26:59]
Scott Wapner
If your small business is booming and ready to expand, you might say something.
- [27:03]
Joe Terranova
Like it's happening.
- [27:07]
Scott Wapner
Crushed it.
- [27:08]
Joe Terranova
But if you need someone who can.
- [27:10]
Jim Cramer
Actually help protect your growing business, just.
- [27:12]
Liz Young
Say, like a good neighbor, State Farm is there.
- [27:15]
Scott Wapner
And just like that, your State Farm.
- [27:17]
Steve Weiss
Agent can help you get the coverage.
- [27:19]
Liz Young
You need for your new space for.
- [27:21]
Scott Wapner
Your small business insurance needs.
- [27:23]
Joe Terranova
Like a good neighbor, State Farm is there.
- [27:27]
Liz Young
Comcast Business helps retailers become seamlessly restocking, frictionless paying favorite shopping destinations. It's how nationwide restaurants become touchscreen ordering quick serving eateries and how hospitals become the patient scanning data, managing healthcare facilities that we all depend on. With leading networking and connectivity, advanced cybersecurity and expert partnership, Comcast business is powering the engine of modern business, powering possibilities. Restrictions apply.
- [28:12]
Scott Wapner
All right, we're back. Let's hit some stocks on the move today. Tko. That's an interesting one to watch. It's up big today after agreeing to sell its UFC rights to Paramount. Joe, you own tko.
- [28:21]
Steve Weiss
It's a knockout today. Scott.
- [28:22]
Scott Wapner
Joe, you're good. So good. Joe, we're moving on now.
- [28:26]
Steve Weiss
We added this to the we added this to the strategy at the end of the most recent quarter quarter and it's been the balance sheet improvement, significant revenue growth acceleration and the momentum obviously is clear. This is a big deal. I mean this is takes it back to cbs. It takes it to an environment where entertainment can be now bundled and purchased. And Jimmy, I'm sorry but it appears to me that entertainment, this is what entertainment is for those people not going out west of the desert.
- [28:55]
Scott Wapner
That was a dig at his casino play.
- [28:57]
Steve Weiss
Absolutely. This is the new entertainment. This is what the younger generation wants.
- [29:01]
Liz Young
There were many shots on goal there, I will be the first to admit. Where do you want to go Scott?
- [29:06]
Scott Wapner
We'll go with Cummins which was upgraded today to outperform at Wolf Research. Jyoti owns that. It's an all time or it's a record high.
- [29:12]
Steve Weiss
Today it is revenue growth of 19% participating in the AI story. If you think about the data center build out power generation can be present there. It doesn't actually have to go out and be acquired and that's where this company excels.
- [29:25]
Scott Wapner
Let's give Jim one. I don't want him to feel left out.
- [29:28]
Steve Weiss
Why would you do that?
- [29:29]
Scott Wapner
Let's talk about Adobe which was downgraded today to a cell from hold at Melius Research. Quote, the world is coming around to the reality that AI is eating software. It could actually get worse. We're downgrading Adobe to sell. We're cutting 26 and 27 estimates our target of 310. Jimmy.
- [29:51]
Liz Young
So I'm going to give this one more earnings.
- [29:53]
Scott Wapner
World's coming around to it. Farmer Jim is not.
- [29:57]
Liz Young
Yeah, well here's, here's my take on it. The stock, the company has outperformed in terms of surprising on earnings for many, many quarters in a row. They have been buying back shares at this relatively cheap price. Now 16 times forward earnings for a software company that's kind of, you know, an asset like company that is really cheap. And so in my estimation it's pricing in what the analyst has said. I don't think it's real news that AI is what's troubling this stock. What I'm saying though is so far it actually hasn't shown up in the results. Now all that said, you know, it's one thing do you want to be right or do you want to make money? So if we go through one more earnings season where the company outperforms in terms of its earnings and underperforms in terms of its share price, think that.
- [30:41]
Scott Wapner
The questions of AI impact on Adobe have have shown up at all in any of the earnings reports. Since those questions were asked whether earnings reports not as strong as they otherwise would have been. I'm not asking you as a rhetorical question. It's simply asking you what feels like a normal question.
- [31:00]
Liz Young
Yeah, but it's a good question, but it's difficult to answer because here's why has the growth rate in the top line for Adobe slowed over the last several years? Yes. It.
- [31:09]
Scott Wapner
You suggested yourself that it hasn't shown up in the earnings, so you apparently don't feel like it's a difficult question to answer.
- [31:17]
Liz Young
I'm sorry, let me rephrase it. Thank you for repeating it back to me. What I'm saying is that this is. Yes, thank you, your honor. That this is overly priced in. In terms of the negative impact to Adobe's business. The AI impact is overly priced in. And it shows that to me when every quarter, quarter after quarter, they outperform in terms of revenue and earnings. All that said, whether I think, whether I'm right or not, that it's overly priced in, you know, there's only so long that I can go on with this. This is, this is Adobe. It's not a hill I want to die on. End of story.
- [31:50]
Scott Wapner
Well, I mean, you've rolled down that hill.
- [31:54]
Liz Young
Yes.
- [31:54]
Scott Wapner
Do you have any injuries?
- [31:57]
Liz Young
I just, you know, I just.
- [32:00]
Steve Weiss
No, no, but I listen, you're exerting a lot of mental capital in the strategy software. Revenue growth for S and P software companies is, is literally the strongest it's been ever, especially relative to other sub industries. So the idiosyncratic challenges that this company has, you're staying anchored to a position there in such a good, good environment where you have so many other alternatives. What's like the number one reason? What's the turnaround here? Is it an activist? Is it that they're going to come forward with some.
- [32:32]
Liz Young
Let me address, let me just address it, okay? Because, just. All right, Sales. That's what I'm saying. Let me, let me address it. I mean, sales, the last one year, up 11%, last three years, up 11% annualized last five years. But. Okay, no, I got you. You're saying that because it's reflecting in the share price. What I will say back to you is, you know me well, all of you do, right? I mean, think about Google. I was, it looked a couple of months ago like I was getting punched in the face for the exact same reason. Right. AI and new AI mechanisms are going to eat the core business of Alphabet.
- [33:02]
Scott Wapner
That was, that was more speculative versus fundamental proof. Proof.
- [33:13]
Liz Young
I kind of See what you're saying, Scott. But I will tell you that at the time. Just let me do this right. The Alphabet discussion we were in that day having discussions about this is an existential risk. That's the thing that I.
- [33:24]
Scott Wapner
Well, because that's not a deal. Like Eddie Q made these comments about search.
- [33:29]
Liz Young
Yes.
- [33:30]
Scott Wapner
So we asked the question, okay, is this the moment, is this the existential moment that we need to pay more attention to?
- [33:38]
Liz Young
I think it's the same question here. I think it's the same question. You don't think it's the same question?
- [33:41]
Scott Wapner
I don't. I feel like that was more speculation. This has been a little more.
- [33:47]
Liz Young
So the reason I don't think it's.
- [33:49]
Scott Wapner
Speculation based over a longer period of time.
- [33:51]
Liz Young
I don't think it's fact based. That's where we're differing and that's where I'm seeing. And I come back to this.
- [33:56]
Scott Wapner
Well, the stock speaking a language here.
- [33:58]
Liz Young
You know, I can't control what the stock does and the company can't control what the stock does.
- [34:03]
Joe Terranova
The.
- [34:03]
Liz Young
The company can only execute on its business plan. And from that perspective, the facts say that they are outperforming. Not from the share price. And at the end of the day, this whole everything we do is about the share price. And I'm not going to go one more quarter with this. I want to get one more earnings report. If we don't see a share price reaction that reflects the fundamentals or to. Maybe this is the point you're making. Maybe the multiple fundamentals deteriorate and justify.
- [34:28]
Scott Wapner
Has a multiple compressed.
- [34:30]
Liz Young
Heck yes.
- [34:31]
Scott Wapner
Because of these questions.
- [34:32]
Liz Young
Heck yes.
- [34:33]
Scott Wapner
Right.
- [34:33]
Liz Young
So that's why it's trading at 16 times forward earnings. I mean, 15 times forward earnings. Yeah, I'm not, I'm not making that face to you. I'm making the face 15 times. It's a software company. It's not a factory. It's not like we're churning out cars or something here.
- [34:48]
Scott Wapner
Well, I mean, then it should trade it like six times. You walked into that. Hi, Silvana.
- [34:55]
Joe Terranova
Hey, Scott. Good afternoon. All right, let's give you the headlines. We start with protests which are underway in the nation's capital today as President Trump announced the federal government will take control of Washington D.C. and deploy national Guard troops there to fight crime. You know, the President said Washington was becoming a place of lawlessness and said he would get rid of what he called slums. In the Capitol. Violent crime is down 26% compared to last year, according to D.C. police data. German officials say European leaders. Ukrainian President Volodymyr Zelensky and President Trump will participate in an emergency call on Wednesday. And it comes ahead of Trump's scheduled Friday meeting with Russian President Vladimir Putin in Alaska on ending the war in Ukraine. Europe and Ukraine have expressed concerns that Kyiv is being frozen in out of the peace talks. And SpaceX launched Amazon's latest batch of 24 satellites into orbit this morning to join the company's satellite broadband network. The launch will bring Project Kuiper constellation to 102. That's below the FCC threshold of 578 to offer limited service and far below the more than 1600 required by July 2020, 2026 to maintain a full license. Scott?
- [36:15]
Scott Wapner
All right, Silvana, thank you very much for that, Silvana. Now up next, today's ETF edge and the big rebound in the IPO market. Halftime's back just after this.
- [36:25]
Liz Young
Parents of tweens, if you're familiar with.
- [36:27]
Scott Wapner
Far off drop offs, dad, stop. Stop.
- [36:29]
Joe Terranova
Stop right here or get DMs about what's for dinner. You may be experiencing tween milestones for your son or daughter. These can start at age 9. HPV vaccination, a type of cancer prevention against certain HPV related cancers, can start then, too.
- [36:43]
Scott Wapner
For most, HPV clears on its own. But for those who don't clear the virus, it can cause certain cancers later in life.
- [36:49]
Joe Terranova
Embrace this phase, help protect them in the next. Ask their doctor today about HPV vaccination brought to you by Merck 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@capella.edu.
- [37:16]
Scott Wapner
We'Re back. We send it to Leslie Picker now who has today's ETF edge. Hey, Les.
- [37:20]
Liz Young
Hey, Scott.
- [37:21]
Joe Terranova
Yeah, there's been a big resurgence in the IPO market and that has the Renaissance IPO ETF hitting highs not seen since February of 2022. Joining me now is Matthew Kennedy, senior strategist at Renaissance Capital. Matthew, thank you for being here. What do you think is behind this kind of return of enthusiasm that we've seen behind these IPOs themselves?
- [37:44]
Scott Wapner
Sure.
- [37:45]
G
So, you know, we're calling it the great IPO rebound and it'll be a return to maybe three to five deals per week. It'll start off as kind of a return to the mean. And then heading into 2026, I think we are going to see that really that year we've all been waiting for. But first it'll happen in the fall. Now, a lot of us were calling this before the tariff sell off. So at the risk of sounding like the boy who cried out ipo, I think we are going to call it the great IPO rebound. First and foremost. Foremost markets have made a more than full recovery since the tariff sell off. As you mentioned, the IPO index tracked by the IPO ETF ticker IPO is beating the S&P 500 year to date is beating the NASDAQ. So we've seen a lot of promising signs there. Investors are making money, issuers are getting the valuations that they were hoping for. Avoiding that down round. Growth is good. Again, not growth at all costs. I think we saw Figma was able to go public at 20 times sales. That was a first since 2021 as well. So the IP market moves in cycles. This is just a textbook case of an upcycle. There's palpable excitement, animal spirits are back and many, many IPOs are lining up to take advantage of that. I do, I do want to emphasize too, sorry, this is a rebound that is years in the making to the pipeline after a three year bottleneck for the backlog of tech IPOs is just bigger than we've ever seen before. There's hundreds of companies waiting to go public.
- [39:12]
Joe Terranova
Yeah, the supply side of potential IPO candidates is certainly there. How fragile do you think this market is though? You mentioned what we saw after Liberation Day in April where a bunch of companies paused their IPO plans due to the volatility in. Do you feel like kind of given that backlog that you mentioned and given the recent performance of the IPO as we've seen over the last few weeks, that there is some more stability here?
- [39:37]
G
I think so. The tariff sell off was unpredictable and it was massive. I think that we could see some pullback and we'd still be fine. You know, people often talk about the big names, Spot space, X stripe, OpenAI and you know, when are these companies going to go public? And I will say, you know, just because Wall street rolls out the red carpet doesn't mean they're going to walk down it. But there are hundreds of companies in the pipeline. Those big names often represent just a fraction of the overall market. So, you know, it's hard to say. I mean, as you know, private markets are very generous and companies are more than willing to play the waiting game, but they haven't had an opportunity this good in years and I think they're just ready to take it. They filed confidentially. They've prepared for this IPO for years. So I think they just want to get it over with.
- [40:32]
Liz Young
Absolutely.
- [40:33]
Joe Terranova
Matthew, thank you so much. We're going to continue this conversation over at etfedge.cnbc.com Matt will be joined by Nathan Gurachi, president of Novodias Wealth Management. We'll also talk the latest in crypto and fun fact flows. I'll send it back to you.
- [40:47]
Scott Wapner
Scott helped. Thanks so much. Up next, is one of this year's worst performing sectors so bad it's finally a buy? We'll tell you what it is and we'll debate that question next. We're back. Health care is the worst sector over the last three months and year to date. Is it so bad that it's finally good? That's what Jonathan Krinsky is asking today at BTIG. It's underperformed the S&P by 42%. 42% since late 2022. Weiss, is it so bad that it's finally good?
- [41:24]
Adam Parker
Yeah, you know what, that's a lot of underperformance. Look, I started buying you and H last Thursday, Friday had it a little today and basically I'm agnostic as to what it is. It's a stock that I sold higher soldiers the 470 sold the remaining tag end on the 30th lower than that. But to me the market wants momentum. As Joe's pointed out time and time again, I don't see this as any different than Apple. Maybe the fundamentals are a little worse but I'm just hoping to capture some momentum on a trade and then I'll assess from there.
- [41:56]
Scott Wapner
But that seems to be talking about UNH relative. You're comparing UNH to Apple and saying that the fundamentals are a little bit.
- [42:05]
Adam Parker
I smiled. I smiled.
- [42:07]
Scott Wapner
Scott, to give you. I just want to make sure that the people saw your smile because first and foremost it's so rare in and of itself. But I just want to make sure we it wasn't a serious thought because I don't know what to do.
- [42:19]
Adam Parker
Well, I over delivered with a laugh as well.
- [42:21]
Scott Wapner
You did, you did, you did. Like only you can Wes.
- [42:25]
Adam Parker
Exactly.
- [42:25]
Scott Wapner
Liz, what do we think about that question? Healthcare is a value trap, says Oppenheimer.
- [42:33]
Joe Terranova
I don't agree actually, and especially this week. First of all, if you look at health care valuations wise compared to itself over the last 25, 30 years or so, it still could get worse. I'll be clear. But compared to the S and P, so In Krinski's note pointing out the dispersion between health care and then the overall index.
- [42:51]
Scott Wapner
That's crazy too, right? 42%.
- [42:54]
Joe Terranova
It's crazy. It doesn't get much worse than that. And percentile wise, that's like the second percentile spread in health care versus the overall index.
- [43:02]
Scott Wapner
Is it a falling like I mean I hate to even use falling knife. It's like a samurai sword.
- [43:07]
Joe Terranova
It has fallen. So this is a point especially this week when you look at what's to come with CPI and ppe. You want something. If you're looking for something to buy at all time highs in these, these big valuations. Look at something like health care because one, it's insulated from rate volatility. I think we could see rate volatility although short lived this week. Health care shouldn't feel the brunt of that. And if you're too scared because you've got an administration that's unfriendly to pharma, make no mistake, I'm not saying anything change still unfriendly. Then you can look at things like just health care equipment and services and buy an ETF like I Jimmy falling knife.
- [43:42]
Scott Wapner
What do you think?
- [43:43]
Liz Young
Not a falling knife. I think you have to be a stock selector here. I think we paint way too broad of a brushstroke when we say hey, health care is down. Whatever, it's down. It's down that because the biggest names in the sector and they are big are down big. So UnitedHealthcare is down 48% year to date. Eli Lilly's down 16 odd percent year to date. And these are big, big weights in the sector. But you can look and you can find good stocks. I'll give you two right now, AbbVie and AstraZeneca to really I think attractively priced mid teens multiple 3ish percent dividend yield, pharmaceuticals. You have to pick stocks. I don't think it's the same sector that you go into en masse.
- [44:16]
Scott Wapner
Santol is next with his midday word. Senior markets commentator Michael Santoli is here with his midday word. Talking about what you think is an unflappable. Get it? Market.
- [44:36]
Liz Young
Exactly.
- [44:36]
Steve Weiss
Yes, indefatigable market is next week.
- [44:39]
Liz Young
But really, you know, it's finding a way.
- [44:42]
Steve Weiss
I think that's really the takeaway is that the majority of stocks have actually settled back the way almost everybody said coming into August that the market probably would. You know, we thought, and maybe some people still think there's room for the s and P500, even the NASDAQ 100 to go back and at least test the first quarter highs. Well, guess what? The bank index has done that. Equal weighted discretionary has done that. Equal weighted industrials have done that. But because the economy and earnings are sort of so skewed toward AI, that's what's keeping us afloat here. In terms of the bond market, it.
- [45:13]
Liz Young
Doesn'T feel as if there's much discomfort.
- [45:15]
Steve Weiss
About the CPI number tomorrow getting built in. Yields are kind of settling down. Maybe there's a high bar for changing.
- [45:21]
Liz Young
The September rate cut story in terms.
- [45:22]
Steve Weiss
Of an upside surprise to cpi, but that remains to be seen. It's just the way the market is.
- [45:26]
Liz Young
Idling ahead of it.
- [45:27]
Scott Wapner
Yeah. Retail sales the end of the week.
- [45:30]
Steve Weiss
Yes.
- [45:30]
Scott Wapner
We get enough. Necessary look at the current state of.
- [45:33]
Steve Weiss
The consumer interplay between is the economy resilient enough to get to September and is the Fed going to be empowered to cut in September? That's going to get filled in.
- [45:41]
Liz Young
Yes.
- [45:41]
Scott Wapner
All right, thanks Mike. I will see you on the closing bell. That's Mike Santoli will do finals next. We'll see on closing bell, three o' clock Eastern. Dan Greenhouse, Doug Clinton, Ayako Yoshioka, Brian Levitt and the CEO and co founder of Vulcan Elements. They did a new raise, $65 million today, led by Altimeter and Brad Gerstner. Rare earth magnets, that's what they make. Drones, EVs. Can we be a bona fide player in that market and not rely on China? We'll ask him and I hope you'll join us. Coming up, three o' clock Eastern. Weiss, what is your final trade?
- [46:20]
Adam Parker
Netflix. Momentum is going to continue. It's come back from the recent lows.
- [46:25]
Scott Wapner
Thank you very much.
- [46:26]
Liz Young
Farmer Jim Wynn Resorts. Joe, your your little dig was not unnoticed. One of these days you are going to have to.
- [46:34]
Scott Wapner
Wow, that's a big Zinger. It's up 1%. It's flying. Feeling the heat.
- [46:37]
Steve Weiss
Oh, it's flying.
- [46:38]
Liz Young
It's up like. It's up 25% year to date. 48% in a year. Like. Okay, that's. How's that for a zinger?
- [46:45]
Steve Weiss
Palantir.
- [46:47]
Scott Wapner
Palantir in 10 seconds. What's your final trait, Joe?
- [46:50]
Steve Weiss
Final trade. The buckle.
- [46:51]
Scott Wapner
Okay.
- [46:51]
Joe Terranova
And Liz, against Jimmy's better judgment, the sector of healthcare.
- [46:55]
Scott Wapner
Alright, excellent stuff. I'll see you on the closing bell. Couple hours. The exchange starts 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.
- [47:13]
Joe Terranova
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 affiliate, 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 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.