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Halftime Report
Buy Tech’s Bounce? 2/18/25
00:44:14
Scott Wapner and the Investment Committee debate tech’s re-emergence as the NASDAQ 100 looks to build on its best week of 2025. Plus, the desk debate the latest Calls of the Day on Merck and Gilead. And later, the Committee give you The Setup on some key names reporting this week. Investment Committee Disclosures
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- [00:01]
Edward Jones Representative
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Scott Wapner
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Scott Wapner
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- [01:03]
Scott Wapner
I'm Scott Wapner and you're listening to CNBC's Halftime Report, the podcast the most profitable hour of the trading day. We record this live weekdays at 12 Eastern. Listen in. All right, Mike, thanks so much. Welcome to the Halftime Report. I'm Scott Wapner. Front and center this hour, tax reemergence. The NASDAQ 100 looking to build today on its best week of 2025. We will trade that space with the investment committee. And we are right at a new closing high for the S and P. We'll track it with Josh Brown, Joe Terranova, Sarat Tsaitsi and Brian Belsky as we take you to the markets. Give you a look here on this Tuesday morning. But Joe, that's the story very much is this resilient stock market and the fact that we're right there at a new closing high, give or take a.
- [01:50]
Joe Terranova
Point or so throughout the morning, the resiliency is remarkable. We've had three bouts of elevated volatility. The Vix spikes above 23 Mondays so far in the six weeks of 2025. And very quickly you see the VIX on the retreat. You now have the Vix towards 15. I think the low for the year is around 14.6. You look at the treasury market. The range in the treasury market is tight, about 40 basis points. The earnings, the growth has been there. We're now entering a buyback period. And I think the comfort that you have in staying engaged towards risk is that there is an expanding thesis surrounding where you can invest. You're looking year to date at sectors like financials, which are working, materials which are working, industrials which are working. And then certainly if you want to go outside the US you're finding opportunities is there as well. So there's a compelling case, Scott, that could really be made for each and every asset class. And that's a much different environment than we've seen in prior years.
- [02:49]
Scott Wapner
Brian, we've gotten here, you know, to this new closing high territory. Yeah, tech's woken up lately, right? I said the NASDAQ 100 off its best week of 25. We're off a record high. Last week Apple was up 7 and a half percent. Nvidia is up 7, Met is up 3. The others were flat. But there's a lot that's been working within that space. And I'm going to tell you a bunch of names after you address that issue that I'm putting forth. This fact that tech's woken up and thus the S and P is adding to these gains.
- [03:20]
Brian Belsky
Well, the proof's in the pudding, right? I think these large cap tech stocks, their death has been largely blown out of proportion. And I think, Scott, where there was such a huge focus on the big cap tech companies, earnings growth beginning to roll over in terms of a forecast perspective and then other areas in tech accelerating. So actually what's happening is that the growth rates and the expected growth in those areas for the next two years has actually begun to rebound a little bit better than most people thought. Cash flow's been sector. Joe talked about buybacks. We're starting to see more dividends, but we're really seeing the broader participation actually come together. So I think the demise has been widely blown out of proportion and that's why we've remained quite overweight the sector.
- [04:04]
Scott Wapner
What do you think about the resiliency of the market, Sarah?
- [04:07]
Sarah
Look, I think we need tech for the market to do well overall. And I think the companies that are executing and you look at the matter that was up 20 days, you know, except for today they are executing and they're spending money to grow. And the companies today, that's a little bit different from a couple of years ago is they're being rewarded to spend because they've had some good ROI on the expenditure. So I think you like that. And that's also rolling over to software. So you not only get the large cap techs, but you get the software, you get financials, you are getting this diversified uplift in the market and I think that's good.
- [04:39]
Scott Wapner
Josh, you know, there's a lot working today within the tech universe. If you and Maybe some of it has to do with Xai and the launch of Grok 3 from Elon Musk, which he's, he claims it performs better than anything else. I don't know what else you would expect him to say, but Nvidia's up, Oracle's up, Dell Verta, Vistra, Palantir, a new intraday high. Alibaba today is working well. You know, President Xi and meeting with business leaders in China. The climate feels a little bit different certainly from the idea of whether it's investable over there or not. I've got cyber that's been doing well. Palo Alto is up a bunch today. You take your shot really on whatever you want to talk about in that realm.
- [05:20]
Josh Brown
Well, here's your, here's your backdrop Overall. You've got U.S. earnings growing. We're coming off an outstanding quarter, one of the best quarters we've had in the last five years. Quite frankly, a lot of it was unexpected and we'll take that. It's the highest year over year earnings growth rate since the fourth quarter of 2021, which is already, believe it or not, like three and a half years ago. It's the sixth consecutive quarter of year over year earnings growth for the S and P. And then when you look at where those earnings are coming from, it's such a widespread story that people just feel good generally. Let's talk about tech though, which you, what you bring up. Through last week the narrative was we've seen the best we're going to see on technology. And through last week it had underperformed the S&P 500. The most of all of the individual sectors going back to 2022. Today we have a little bit of a resurgence. You've got 55% of the S&P 500 stocks above their 50 day, but 59% of tech. So they're, they're coming back both on an absolute basis but relative to the rest of the market. And what I really think is most exciting here is, and I know we talk about tech as a catch all, it's the communications sector and it's not just Metta. Look at the top names in this group that are just on my own best stocks in the market list right now you've got the Liberty Formula One group which is FW O N K. We never talk about this name on the show. It's a tracking stock. It's one of these weird John Malone Creations, but it's, it's, it's crushing. Alphabet looks good. Live Nation, we talked about last Week record highs. Netflix record highs. Roblox is rallying. Spotify rallying. Now you've got AT&TNT mobile and you've got some of the video game names. Take Two Interactive. They're not tech, they're tech adjacent. Their communications, they look outstanding. The sector seeing the highest percentage of constituents hitting new 52 week highs is the communications sector. 32% of the names in this group are hitting highs. That is just an incredible situation for investors who are wondering did I miss out on semis? Did I miss out on AI? Did I like what do I do? Did I miss the software trade? Well, here's a few hundred stocks you almost never think about. Many of which are breaking out, a third of which are at 52 week highs. That's the nature of the tape that we're in. And by the way, it's international as well.
- [07:54]
Scott Wapner
Yeah, which we'll get to. Yes, right. I mean Meta is going for 21 in a row. It's got some work to do today. But Josh raises a good point about all of these other stocks that aren't getting as much love on TV but certainly are from investors who continue to buy up these names like the Liberties and Live nations and Roblox and Spotify and T& take 2 and T mobile.
- [08:18]
Sarah
Yeah, look, there's plenty of other opportunity and I can throw companies like Disney in there as well and you've got an opportunity where earnings growth is now wide across different companies. And given where the other thing to watch for is the ten year. Right. Because of the ten year starts coming down, people start moving more towards growth as well. So you will see more money moved across. And it's not to say you can't just be in the big seven, you can be across some of these sectors.
- [08:43]
Scott Wapner
What do you think Belsky? These moves in the Oracles of the world today or Vistas or you know, Palantir, we said record intraday high. We talk about a number of these names a lot because they continue to hit new highs. How can you not?
- [08:56]
Brian Belsky
They do, they're performing fundamentally. But you go back and look at the Mag 7. Right. The Mag 7 is comprised of three specific sectors. Technology, communication services and discretionary. Our strategy all along this year is barbell that barbell those positions by neutralizing the meg 7, maybe picking 1 or 2 to overweight and then massively overweighting the other side of it. Meaning the Oracles, the Palantirs in tech, the Spotify's, The Disney's, the AT&TS and communication services, Neutral Amazon and Tesla but owning more Lulu and Marriott and Home Depot. That's the way to do it. And oh by the way, those are the names that are actually growing on a relative basis in terms of earnings but also revenue growth and that's an important distinction.
- [09:38]
Scott Wapner
What do you got?
- [09:39]
Joe Terranova
Well, I think first of all Spotify is a name that we've owned. It's had very strong momentum in communication services. It's got double digit revenue growth but going beyond there. Yeah, you're mentioning a lot of names that are really strong but you're also also having a lot of what we called years ago, the longer duration software names that are participating. Once again, it's not just App Loven, it's other names like Guidewire. We haven't spoken about Guidewire in quite some time. There's areas of the market that now are seeing inflows that previously we're not seeing the inflows. Look at SAP, it's a beneficiary of that broadening out geographically. Baba David Tepper. You know I bought that last week up to 127. So it's going to some of the unfamiliar places of the last several years. And again that emphasizes that that is a strong opportunity for investors who over the last several years had that narrow concentrated focus on just the Max 7. Doesn't mean you can't own the Max 7. It just means there's other opportunities.
- [10:33]
Scott Wapner
I'm glad you mentioned Map Lovin because we do have some unfinished business from last week when you were away, all related to ad tech. Blow ups, blowouts, you want to call it that? Blow up Trade Desk. I want you to talk about that. And the Applovin blowout which surged on earnings which could be part of the reason that Trade Desk had the kind of earnings reaction that it did as well.
- [10:58]
Joe Terranova
What's your take here?
- [10:59]
Scott Wapner
Trade Desk first, please.
- [11:00]
Joe Terranova
Okay, let's go on Trade Desk. And I'm not going to sit here and say okay, we've got a profit in Trade Desk and I'm not playing that game. What I'm going to tell you is this plain and simple. The strategy can't exit trade desk until April 30th. Those are the rules. Can't rewrite them. SEC's not going to allow me to do it for the narrative of the show.
- [11:17]
Scott Wapner
And you don't own it personally.
- [11:19]
Joe Terranova
Trade Desk. I do not own personally. No. I will say this. If you own Trade Desk and you are still sitting with Trade Desk then you are not risk managing your position because there is literally no reason to be in trade desk right now after what we witnessed last week.
- [11:33]
Scott Wapner
Well, Josh sold it last week. Good.
- [11:35]
Joe Terranova
He knows what he's doing.
- [11:36]
Scott Wapner
He knows Belsky though. You're calling out Belsky because he still owns it.
- [11:41]
Josh Brown
Buying. Are you buying?
- [11:44]
Brian Belsky
No, we own it. Josh. Hey. Hey. Thanks. Hello. No, we own a. This is a shoulda, coulda, woulda stock because you shoulda, coulda, woulda sold the stock after the election. We stuck with it because of the fundamental growth of this thing. Now it's too late. Now we think at the end of the day this stock is in a two quarter penalty box. Two quarter penalty box. We still like their fundamental vision. We're going to continue to own it. And I know you love this. We don't own a full position, we own a small position. We're long term investors.
- [12:12]
Scott Wapner
That's irrelevant.
- [12:13]
Brian Belsky
In a diversified portfolio where Trade desk is in the communication services sector where we talked a lot about this, where News Corp and Reddit Reddit were huge winners last year. Trade desk is one of those areas that we think now in terms of where the comeback is, is way oversold, fundamentally. Great vision, great company, great product.
- [12:32]
Scott Wapner
But you said it's too late as part of your little speech there. Too late to what? Sell it now?
- [12:40]
Brian Belsky
If you want to have exposure to this company longer term, it's too late to sell it because I believe that this company is going to work now. It's going to be in the penalty box for a couple of quarters. But in terms of the company's vision and fundamentals, I think it's going to be fine. And it needs to be part of a longer term communication services holding within the mid cap space.
- [13:00]
Scott Wapner
Space. Josh, you obviously didn't think that it was too late to sell it because you did on the blow up.
- [13:06]
Josh Brown
Well, I was in the stock. I was in the stock primarily riding the technicals higher and I let a pretty big profit turn into a loss because I held it through earnings. But like most investors, I was blindsided by how poor the quarter was and how much worse the outlook would be. So one of my, one of my rules with the best stocks portfolio is if it's not a list anymore, it's out. So I'm out of the position. It's not the end of the world. I got tons of stocks that are going up and this is a part of. You either have a risk management strategy to Joe's point or you don't. But to Belsky's point, I do agree with him that there is a longer term opportunity in the space. It is a very unique company with a very unique hold on its part of the market which is serving people watching television and movies on apps, serving them ads with almost as perfect of a, of a understanding of who that person is that we see Facebook and Alphabet be able to do on the Internet. The connected television advertising market is not going away. Maybe there's more competition, maybe that's why the outlook wasn't great. But I actually do think longer term investors will do well with Trade Desk. But to Belsky's point, they have to earn back trust because it's a pretty substantial guide down and that might take more than one quarter. So for my strategy, I don't need to wait that out. I'll come back into it higher if I have to. For a longer term investor strategy who doesn't want to guess it when it might turn it makes sense. And by the way, let me just remind people, comebacks happen more frequently than you think. And before you think they will, we talked about the comeback in Crowdstrike last week. There were people who thought that was over forever. Netflix blew up in 2002, it looked over forever. Metta was in a 70% drawdown. In 2022 it went up sixfold. So don't count it completely out. Just understand if you have a risk management strategy, you have to do what's best for your strategy. And sometimes that means taking the fast loss.
- [15:18]
Scott Wapner
Good point, good points. Applovin, you want to take that one.
- [15:23]
Joe Terranova
Applovin, plain and simply. I think I gave this as a final trade over the last several weeks and you could see that what was happening was that there was an attempt for momentum to deteriorate. And, and by the way, last week I spoke about, I think Jeff DeGraff put out an excellent note on the fact that he didn't feel momentum was overbought yet. I pushed back against that. I said, yeah, I feel like it's deteriorating. Well, it kind of deteriorated in a very short time span. And Jeff's right because on the other side of that you see that momentum is playing out strongly to the upside again. And I think what happened with Applovin is there was an attempt on the downside to see that they would be able to negate a lot of the positive momentum and it failed. And when you recognize something like that, you have to acknowledge, okay, here comes the other side of that where people that are pushing against it in the option market that are leveraging up, they're going to come back in and they're going to cover Their short positioning. I also think that you have to have the Applovin, you have to have the Palantir in your portfolio if you're going to be a successful active manager because you're up against the Mag 7 and they're performing so strongly the last 10 years. And if you have Applovin and you have Palantir and you're selling it early, you're never going to be able to compete with that passive indexing performance. You have to maintain ownership of your winners. And Applovin is a great example of it.
- [16:46]
Scott Wapner
Joe went after Belsky offhanded. Now he's coming after you. You don't own any of these names. No Cyber, no Palantir, what's up with that?
- [16:57]
Sarah
No, I got my others. I got Oracle in there, I got Salesforce, I got, you know, Workday. So. So I've got some of the other horses in there. But I agree with Joe's. You need to find other growthy momentum companies that are going to keep up, if not beat the back seven. And you got to look at other different areas and we like the software space in that and you know, there's the cyber space, but there's a lot to choose from.
- [17:18]
Scott Wapner
Speaking of, you sold Twilio.
- [17:20]
Joe Terranova
Yes, Soldier. Twilio rather bought it November 13, 98 and a quarter. Sold it out on Friday at 125. No reason to sit around and wait here for the turnaround story to unfold. You have to risk manager the position and not look at the fundamentals and guess and hope that they're going to restore themselves very quickly. Had a decent profit in it. What got me into the trade momentum. Okay, so what should take me out of the trade momentum? Momentum's gone in the name.
- [17:46]
Scott Wapner
The other thing I thought was interesting is the 13 Fs that we got last week, which I thought we. And we highlighted some of them obviously on the show as we talked about Appaloosa, Tepper's family office adding to the China plays, we learned that third point. Daniel Loeb accumulating Meta again, Philippe Lafont, CO2 selling a bunch of Nvidia. And we also learned about Berkshire, which I want to talk about because we have ownership of some stocks and we have ownership of Berkshire in and of itself. Took a new position in Constellation Brands, bought more dominoes and sold more B of A. You want to take Constellation first, which you own.
- [18:21]
Sarah
Constellation is in the doghouse. It's in the doghouse like Diageo and Budweiser and there are a lot of headwinds there. So this is something we're watching. They've got Cagney this week, which is where all the consumer stocks are going to be talking about. The question is, you know, is beer going to grow and what is the secular headwind against that? So it's a cheap stock at these levels. Is it a multiple you haven't seen in a decade? Question is, can they execute and will the demand be there?
- [18:44]
Scott Wapner
What if you think that, you know, as some are suggesting that these are all in secular decline, but the trends are certainly not your friend and not. Not likely to reverse anytime soon. In other words, consumption of, you know, alcohol spirits in general has been dramatically declining.
- [19:00]
Sarah
That's why I will say this is on our watch list. So we are going to make a decision whether we add more or get out of this.
- [19:05]
Scott Wapner
You're going to get out of it as Berkshire's getting in.
- [19:08]
Sarah
Look, Berkshire can get out of whatever they want, but, you know, they were getting out of Apple and people are getting into Apple so well, but they.
- [19:15]
Scott Wapner
Were getting out of it with tremendous gain in the name here. They're obviously initiating a new position in something that's been hit pretty hard.
- [19:24]
Sarah
I'm not saying we are, but if our work determines that this is a secular headwind, it's something that we will put our capital elsewhere. If not, we'll stay in it and add more.
- [19:32]
Scott Wapner
What do you make of the B of A? More. More selling of B and a B.
- [19:36]
Brian Belsky
Of A. I don't think it's any different than what he's done in the Apple, just in terms of rediversifying. I mean, I think the Constellation B.
- [19:43]
Scott Wapner
Of A is up as much as Apple.
- [19:45]
Brian Belsky
Well, well, in terms of his cost position. His cost position and where he was originally in B of A, same thing with Apple. I think Seurat's point on Constellation, we sold it way last year. I just think that's an expensive stock in a secular decline. But you never want to bet against Buffett in terms of his contrarian way of thinking. When you're a value manager, you're not just looking at intrinsic valuations, you're looking at being a little bit more contrarian. So he must kind of think something else is going on there. But, you know, we own the stock in our financial holdings from a financial sector perspective, and we're still going to own the stock.
- [20:18]
Scott Wapner
Josh, you want to give me something?
- [20:20]
Josh Brown
Yeah. On Berkshire in general, contrarian is the right. Contrarian is the right term for what's happening here. He sold Apple into a massive Mag7 rally having made more money in that stock than like almost the maybe the bottom 50 stocks that they, that they've owned in the last 20 years combined. It's just, it was such a remarkable gain and he took it off the table at a really high multiple. I think he started buying Apple at a 10 multiple net of cash, which is insane when you think about what it sells for. Now that's contrarian. Bank of America lightening up. He sold all his banks into one of the biggest financials rally since that we've seen since the great financial crisis. Contrarian. What he's doing with Constellation Brands is contrarianism because there is this big idea out there that GLP1s will not lead to the end of beer. But the person that might have drank five now drinks two. And the person that used to drink two now just says no thank you. And we're seeing that with all sorts of categories within food, within alcohol consumption. And then you've got this Gen Z generation that really doesn't drink. It's not that they will never drink anything, it's just the patterns of consumption for where they are at their age are nowhere near what was customary amongst the Gen X's. My generation, for example, and certainly older, the boomers and the silent generation, which basically it's night and day. So that's what makes that a contrarian situation. Nobody wants to own the space. So the truth is probably somewhere in between. And I think that's the way that you want to think about it. It's usually not the most extreme version of the bull case or the bear case.
- [22:06]
Scott Wapner
There was a contrarian view. Speaking of going against the crowd that nobody a year ago wanted to talk about Europe or investing outside the U.S. i did Trump well a year ago. I mean, the Trump election also brought brought upon this view of, you know, this perceived return to US exceptionalism. I bring it up because Josh last week pointed out the breakout in Europe and he showed you. We sort of played it as sort of Josh's one big chart that he told you about. Others are talking about it too. So bank of America today, their fund manager survey for February says you've gotten a peak in investor conviction of US exceptionalism. Pascarello Gulmade Sachs today says the US market is not the best game in town right now. We are, quote, witnessing a collective rally in global equities that is both powerful and notably broad. Jeff DeGraaff, as Joe was highlighting from Renaissance, says, yep, Europe's breaking out too. He watches the charts and he's looking at the DAX in Germany breaking out relative to the US Josh, I'll give you this first. I'll go around a little bit. This idea that now you have a trade that can work perhaps better than the U.S.
- [23:23]
Josh Brown
Ed Yardeni wrote about this. Who is coming at it from a macro slash fundamental perspective? All the technicians I follow are writing about it separately. They don't care about the macro. They're looking at the charts. It all lines up within the Footsie. 100 today, 11% of the companies are making new 52 week highs. 75% of those names are above their 50 day. It's a roaring bull market. Go over to France, the CAC 40, 95% of stocks in the CAC are above their 50 day. 73% above their 200. That's a roaring bull market. What's my DAX is going ballistic.
- [23:59]
Scott Wapner
Okay, so if I'm looking at all the things as you are, and then I'm sitting there wherever I am today and I'm wondering, all right, I want a piece of the action. How do I do that?
- [24:06]
Josh Brown
Well, so let me ask you a question. Are you one of these people that thinks, oh, the market's always wrong, I'm about to outsmart it, or are you like me and look at that and say, okay, maybe there are people who know something that I don't know. And there's a new story going around which is that actually American exceptionalism and Trumpism is super bullish for European equities because the engines of capitalism might have to roar back to life as those company countries start to realize they might be on their own. So the answer to your question, judges, is this a blip? The Fez up 14% year to date. IFA up 9. Is that a blip? Or is this a theme that might have legs for the next three years? And I think the answer is the latter. So what you want to do here, I think focus on large cap. Don't get cute. Don't start buying European small cap banks based in Italy. Buy the fez or find 10 names in the fez that are selling at a below market multiple and try to figure out if three or three or four of them could be up 20% by the end of this year. That's what you want to do here. I don't think you want to fade something like this. It's early and it's insistent.
- [25:18]
Joe Terranova
Hang Seng up 14%. Mexico up 10%. Brazil up 7%. Look towards Asia. Obviously we talked about a lot of the names in China that are doing well. Baba, I've already mentioned Brazil, new holdings, ticker symbol and you we own it in the Jyoti etf. It's a financial stock. You get exposure to digital banking in Brazil having a very strong year. Asia Coupang, South Korea, E Commerce. Brad Gerstner owns it as well. Also having a very strong year. And lastly, yum, China.
- [25:49]
Scott Wapner
All right, we're going to take a quick break. We come back, we have a pharma fight, an upgrade for one big health care name, a downgrade for another. We debate both our calls of the day. Halftime's back right after this. Foreign.
- [26:03]
Sarah
What'S at stake when administrations change from the first 100 days and beyond. EY brings insights on the issues that matter. Executive orders, regulation of AI, the fate of billions in tax credit, global trade and workforce stability.
- [26:18]
Josh Brown
No matter the policy shifts, EY helps.
- [26:20]
Sarah
Business and government leaders remain resilient and seize dynamic growth. EY navigate the geopolitical and economic landscape with confidence.
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- [27:01]
Scott Wapner
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- [27:26]
Scott Wapner
February 2024 Nelson Report. All right, welcome back. Let's do some calls. Gilead got upgraded today to a buy. 120 is the price target at Deutsche, which also downgrades Merck to hold from buy price target to 105. You have both of these stocks so you're the perfect person to talk about this. What about it?
- [28:02]
Brian Belsky
Well, thank you. We've owned Gilead.
- [28:06]
Scott Wapner
You not want to talk about it?
- [28:07]
Brian Belsky
Of course I do. We've owned Gilead for 10 years. It's both tactical and value. It's value because of the great cash flow and the balance sheet and the dividend growth. But now from the tactical perspective perspective, it's got a great pipeline. That's where healthcare investors want to be. And that's why we've doubled our position over the last year in our tactical side while maintaining and valuing dividend growth. On the Merck side, we own it much lower. Own it for a long time. We only own it in our dividend growth portfolio for very specific reasons.
- [28:35]
Scott Wapner
It's a new 52 week low today.
- [28:37]
Brian Belsky
I know. But from a taxable perspective, we run tax taxably efficient portfolios where we've owned that stock for at least eight years. We own it at much lower levels. We think that again from longer term perspective and fundamentals, we want to own it because of the dividend Surat.
- [28:54]
Scott Wapner
You have Merck too.
- [28:55]
Sarah
Yeah, and I share the same thing. We've wondered for so many years that our basis is low. But that's not the only reason I own it. It's down 18% for the year. It's a value contrarian play like Bristol is and Glaxo is. So if you're going to play the deep value contrarian play in pharma, I think this is one of the best.
- [29:11]
Scott Wapner
Let me just say something real quick. I mean, both you guys, just because you've made a lot of money in the name which you're insinuating by suggesting, well, we owned it at much lower from much lower prices, doesn't mean that you're going to make the same rate of return from here forward.
- [29:29]
Sarah
I don't disagree with you, but what I'm saying is I still think I.
- [29:32]
Scott Wapner
Know you've owned it from much lower levels.
- [29:35]
Brian Belsky
Let me address that insinuated. Not insinuated. We're a published analyst, so we actually publish our.
- [29:41]
Scott Wapner
Yes. Okay. So you made a lot of money because you owned it a lot longer. I get it. I hear you.
- [29:46]
Brian Belsky
But if you think about it.
- [29:47]
Scott Wapner
So what's the helpful piece of advice out of that?
- [29:50]
Brian Belsky
Here's the helpful piece of advice. We own it because of it's a dividend growth name. We own it because it's more of a value name. We own it because the stock has not cut a dividend in 25 years. We own it because the free cash flow yields above the dividend yield. We own it because their earnings are still positive. Yes. From a tactical perspective, we don't buy and trade stocks every other day. We buy and trade stocks and own stocks. As an investor with respect to the specific strategies that we run now, that's.
- [30:15]
Scott Wapner
The kind of answer That I think is what people were looking for.
- [30:20]
Brian Belsky
Well, thank you, Scott for allowing me to do that.
- [30:23]
Scott Wapner
Thank you, Brian.
- [30:24]
Joe Terranova
If I could spoil on Merck, it's a name that I have owned in prior years. Don't own it anymore. I think what is good about the Deutsche bank downgrade is. Here you go. The analyst community is finally saying, okay, we're going to begin to acknowledge the price deterioration. The 12 month price target on this stock is 35% higher. No one is a sell. 67% of the analysts. Don't you own this name too, Merck?
- [30:49]
Scott Wapner
No.
- [30:50]
Brian Belsky
Yeah, but you know what though? On the analyst price targets, analysts are really good at a lot of things. Some of them are good at price targets, some are good at modeling, some are good at fundamentals. I would never and I've never in my collective career bought or sold a stock based on an analyst price agreement.
- [31:04]
Joe Terranova
Reflection of sentiment. Correct.
- [31:06]
Sarah
Great.
- [31:07]
Joe Terranova
Reflection of sentiment.
- [31:08]
Brian Belsky
You can.
- [31:10]
Scott Wapner
All right.
- [31:10]
Joe Terranova
Does Merck look like a momentum name to you? No.
- [31:13]
Scott Wapner
Okay, I thought you does. No, Josh has highlighted Gilead is last, last week.
- [31:20]
Joe Terranova
Great stock looking for a breakout.
- [31:22]
Josh Brown
So give me a 10 year chart, let me cook for like 2 seconds and we can get out to a break. Go ahead, look at, look at the 10 year chart on Gilead. So I wouldn't sit through 10 years of this because it's a, it's like a smile and you're writing that's not 10 years. There we go. Thank you so much, guys. I mean, so the smile is going to have a happy ending when it gets back to the upper right corner of the smiler's mouth. But like let it break out. So less I don't know anything about. Honestly, nothing. It broke out last week. So I'm like, hey, if you haven't looked at Gill yet in a long time and I haven't traded it in like 15 years, now might be a good time to find out why it's doing what it's doing. So it's not one approach is better than another. This is a different approach where you say, I don't want to sit through a consolidation period that lasts 10 years while a pharmaceutical company tries to do like research. I'll just buy when that's over. And I think that's why it's on the best stocks in the market list and why now it's momentum while Merck is just in a different phase of its, of its. But it doesn't mean one is better than the other. Long term, short term is a huge difference.
- [32:34]
Scott Wapner
All right, good stuff. Let's get the headlines now with Silvana now. Hi, Silvana.
- [32:37]
Silvana
Hey, Scott. Good afternoon. A federal judge is expected to rule today on a request to temporarily block Elon Musk and Doge staffers from accessing information systems at several federal agencies. Thirteen state attorneys general argued the power should be exercised by an official who has been nominated by the president and confirmed by the Senate. However, the judge did question during the hearing whether the plaintiffs met the legal standard needed to grant a temporary stay. A federal appeals court has blocked former President Biden's student debt relief plan that was designed to lower monthly payments for borrowers and speed up loan forgiveness for others. The court ruled the Biden administration didn't have the authority to go ahead with the plan. The Trump administration was expected to roll back the plan if the court did not block it. And Nike is teaming up with Kim Kardashian's shapewear company Skims to launch a new brand called Nike Skims, which will include apparel, footwear and accessories that will launch this spring and globally next year. And the partnership is part of Nike's bid to win over more women and better compete against rival Scott Silvana, thank you very much.
- [33:50]
Scott Wapner
That's Silvana. Now straight ahead, startup investing for the masses. The big push underway now to give investors more access to the private markets. Kate Rooney is following that money for Think you'll be interested in this story? Very much so. Halftime is back right after this. Are you still quoting 30 year old movies? Have you said cool beans in the past 90 days? Do you think Discover isn't widely accepted? If this sounds like you, you're stuck in the past. Discover is accepted at 99% of places that take credit cards nationwide. And every time you make a purchase with your card, you automatically earn cash back. Welcome to the now it pays to Discover.
- [34:32]
Josh Brown
Learn more at Discover.
- [34:34]
Scott Wapner
Based on the February 2024 Nelson Report.
- [34:38]
Edward Jones Representative
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.
- [35:23]
Scott Wapner
Hi, welcome back. A big push among investors to gain better access to private markets, gaining some traction as the new SEC takes shape. Our Kate Rooney joins us now with how startup investing for the masses. So to Speak might be on the horizon. Tell us more.
- [35:38]
Silvana
Yes guys. So there is this renewed momentum around changing the SEC so called accredited investor laws. They were first put in place to protect people from asset classes that historically come with higher risk. So think venture capital, private equity, hedge funds. Right now you need at least $200,000 in terms of income and then net worth of about $1 million. Historically mom and pop investors would get a shot of those growth companies when they went public. But venture backed names are not in any rush to go public at this point. IPO, there's a lot less pressure from their employees who can now sell pretty easily in secondary markets. And on average it's now about 10 years, 9.7 years before a company does go public according to PitchBook. And there's about half of the public companies available listed right now versus 30 years ago. Meanwhile you can see that chart there. Valuations and the total number of private companies have soared. Venture as an asset class is outperformed. If you look compare that at least with the S and P in terms of annualized returns, it's about 14%. Robinhood CEO Vlad Tenev is among those looking to open up access here by maybe changing those laws. He pointed out some of the irony of allowing access to speculative meme cryptocurrencies but not in some of the blue blue chip startups we talk about. You mentioned OpenAI anthropic. He's pushing for a knowledge based test versus that wealth criteria. And part of these laws, Reg D in particular were loosened in the first Trump administration. So there's some renewed hope right now that the SEC chair nominee Paul Atkins will be supportive. Proponents say the changes could support capital formation. It would make these markets more liquid. But critics still going to be worrying about investor protection. Scott?
- [37:13]
Scott Wapner
Yeah, Kate, thank you, appreciate that. That's Kate Rooney. Josh. You know I see a story like this and I'm like well, makes reasonable sense in how the evolution of alternative investing has come to the masses, so to speak. We know most people never had access before to private equity or private credit private companies, so why not now?
- [37:37]
Josh Brown
So I, yeah, these are two things happening on a parallel track but with different motivating factors. On the alternative side, the traditional buyer of private equity and private credit is full up. The institutions have bought as much as they can and because of where interest rates are, there just aren't exits. And so you need exit liquidity. So bringing in retail investors, bringing in the dentist with the accountant Morgan Stanley and getting them really excited about hey, you two were democratizing Guess what? We're going to make this available to you. That's the story there. I'm a little bit cynical on this one. I actually think it's a good idea. But people are going to lose a lot of money and it's a good idea because you look at historical small cap returns and why they've been trailing for so long. It's because the best companies don't come public until they're already large caps. So they almost skip that part of the lifestyle where they're paying their dues. In the Russell 2000, Airbnb, Uber, they come public worth 30, 40 billion dollars. They're never small caps.
- [38:42]
Scott Wapner
Some don't even come public.
- [38:43]
Josh Brown
I mean that's one of the arguments in public markets. Misses them entirely. Yeah, that back in. I like giving people access but in the venture backed startup world a lot of these things go to zero and I don't think most investors understand that either.
- [38:57]
Scott Wapner
But we've also been talking Joe, lately. I'm sorry to interrupting Josh there, but more companies staying private for longer.
- [39:05]
Joe Terranova
Yes.
- [39:06]
Scott Wapner
So you have just fewer IPOs. So a lot of these companies that people hear about all the time on networks like this and in other publications or whatever, they have no access to and they may never come public or they certainly may have to wait years before that happens.
- [39:19]
Joe Terranova
And the availability of publicly traded companies is down like 40% in the last 20 years. I also think there are a lot of public companies who are now looking towards the patient time that they are afforded by actually going private. So I agree with Josh about the concern that he has, but I do think we need to find some form of a solution as we move forward in the wealth management industry to say okay, we've got these private markets, they are fertile ground for strong returns over the course of a 5 and 10 year period. How are we going to properly package it for the investor who previously had no access?
- [39:56]
Scott Wapner
Yep. All right, the setup is coming up next. All right, time for the setup. Arista Networks. That's after the bell today.
- [40:35]
Joe Terranova
Joe T. David Tepper I believe moved out of position here. Revenue has to come in at around 23%. It already had the deep seek sell off. The Capex is related to Microsoft and Meta. That's what's in important here because it's the adoption of Ethernet capability. That's where Arista Networks is going to benefit in terms of having that networking. One thing to watch out for here is the guidance. What are they going to do on the guidance? If they just maintain the guidance? I don't think that's going to be good for the stock.
- [41:04]
Scott Wapner
Okay, Garmin, tomorrow morning. What do you think about that one, Garmin?
- [41:08]
Joe Terranova
You're going to need to have revenue growth and earnings growth come in mid teen level here. This is a stock that has been approved appreciating very significantly, obviously a very strong momentum name. With that you have to see the ability of this company to deliver a.
- [41:22]
Scott Wapner
Strong earnings Walmart Thursday before the bell. Brian Belsky, you own it. Love Walmart Stocks been doing great lately, right?
- [41:29]
Brian Belsky
Yeah. I mean Walmart and Costco are the only names you should own in Staples. We talked about Constellation earlier. This is an expensive stock that's going the wrong way in terms of that. But let's hear more about margins in their awesome business on the grocery side. And the E Commerce Shack is Thursday morning.
- [41:45]
Josh Brown
Josh, looking for revenue up 15% year over year, 25 cents in earnings which would be up 1150%. It's a 95 forward P E but 142% earnings per share growth in calendar 25 is the expectation. So it all sort of makes sense. I want to stay long this name. I've been long since the beginning. It's worked out really well for me and I think new management is doing exactly what we want to see if this is going to be a company of significantly more scale.
- [42:19]
Scott Wapner
How about Block, which is also Thursday morning?
- [42:22]
Josh Brown
I'm not in the name currently I am. This stock has.
- [42:27]
Scott Wapner
Yes, my bad. I'm sorry, I'm going to give it to Joe. I read the sheet wrong. My bad.
- [42:33]
Joe Terranova
It showed the early signs of beginning to develop some strong positive momentum. It's kind of teetered out somewhat on the earnings front. You're going to have to see this company accelerate the revenue growth. Single digit revenue growth for XYZ is just not going to get it done. Free cash flow generation also has to increase as well. Somewhere in the mid 4 to 500 million. Again insufficient.
- [42:57]
Scott Wapner
All right, we'll bounce for a couple. Santoli on the other side with this midday work. Senior markets commentator Mike Santoli is here at the desk today. Not a lot of direction. We are above a closing high though on the S and P. Thank you. To some, you know, very big stocks.
- [43:30]
Mike Santoli
Yeah. Working on kind of the least emphatic breakout potentially to a new high that you can remember. It's kind of tantalizing. I mean tactically you're supposed to trust the move out of a two to three month range if we get a decisive one. But you're also not supposed to anticipate it. Right. You're supposed to react to it. So that would be the trading side of it. I'm on board with the idea that the market has largely been pretty resilient and able to kind of ingest all the, you know, the noise and kind of hang in there. But I also would say, what else would you expect when more than 3/4 of companies are beating by 7 percentage points for the fourth quarter? So you've had, I think, a little bit of a. Of a fundamental head start into this year. Now the question is, you know, how do we assimilate it from here? Very interesting sentiment breakdown. It doesn't seem unified across the board. You had the B of a fund manager surveys, very low cash levels. On the other hand, the retail investor survey has lots of bearishness. So Normie Long only retail is a little cautious. And then you have Robinhood traders who are kind of not so pedal to the metal. So it's kind of a funny offsetting sentiment.
- [44:41]
Scott Wapner
I felt like, you know, a lot of people came into this year thinking that, you know, returns were going to be almost a layup, that the environment was going to be so great.
- [44:51]
Mike Santoli
Yeah.
- [44:52]
Scott Wapner
That what could happen other than the market going up, deregulation, all these deals, animal spirits, blah, blah, blah. Tariffs are one issue there. I thought the story today that Eamonn had on the M and A guidelines of the Biden era staying in place for the time being is an interesting perspective on this animal spirits idea. Maybe not coming to fruition.
- [45:12]
Mike Santoli
Yeah.
- [45:13]
Scott Wapner
As easily as some thought.
- [45:14]
Mike Santoli
It's a challenge to that kind of, you know, that sort of playbook that we went into the year with. On the other hand, market's been good about not reacting to things that aren't yet substantive and written down. So we'll see. I think it's going to get hard. It's going to be hard to get people off the fundamental idea, the premise that it's somehow a growth positive agenda, whether in fact the details seem like that in the near term or not. So I think, I think the investors give the benefit of the doubt until we are told, well, it is a.
- [45:46]
Scott Wapner
You can make, I think.
- [45:47]
Mike Santoli
Yeah.
- [45:47]
Scott Wapner
The statement that it is a growth positive agenda.
- [45:50]
Mike Santoli
Well, you're cutting government spending, you might be adding tariffs. You're going to actually be a little bit of a roadblock for. For M and A. What. What's growth friendly is taxes deregulating the financial regulation industry. Honestly, that's the way one thing anybody's convinced is going to happen.
- [46:06]
Scott Wapner
Yeah. All right, good so I'll see you on closing bell. That's Mike Santoli. We'll do Finals next. 3:00 Eastern. Closing bell. Mary Lago, private wealth manager, is going to join us. Liz Young Thomas and the winner of the Daytona 500, William Byron. He's one of two years in a row. I think he's going to be with us today right here at post 9. Can't wait for that. Josh Brown, what's your final trade?
- [46:32]
Josh Brown
Watching Toasts report this week with no.
- [46:35]
Brian Belsky
Position and access media.
- [46:40]
Sarah
Salesforce AI.
- [46:42]
Joe Terranova
Intuitive. Surgical. I think that right now that's best health care.
- [46:45]
Scott Wapner
All right, we'll see if we can close above that. Get that closing high on the S&P 500. I'll see in a few hours. The exchanges 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.
- [47:04]
Edward Jones Representative
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 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 Eduardo.