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Halftime Report
Buy the Chips and Dips? 6/5/26
00:50:23
Scott Wapner and the Investment Committee discuss the chip rollover as many of the biggest names in the group continue to sell off. The experts detail their latest portfolio moves. The desk debates the very latest on the upcoming SpaceX IPO. Michael Santoli joins with his Midday Word. Oliver Renick highlights Options Action. Investment Committee Disclosures
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- [00:01]
Edward Jones Financial Advisor
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- [00:31]
AT&T Business Wireless Representative
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AT&T business Wireless connecting changes everything.
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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, Carl, thank you very much. Welcome to the Halftime Report. I'm Scott Wapner. Front and center this hour, the chip rollover is many of the biggest names now in the group continue their big sell off. We do have buyers though, on that weakness. On this desk today, we'll discuss the markets at large. Joining me for the hour, Steve Weiss, Jenny Harrington, Bill Baruch, Kevin Simpson. Check the markets. We do have some weakness today across the board. Take a look at the Nasdaq almost down 2.5%, a near 650 point decline. As many of those names as I said in the chip space, Micron, amd, Intel, Broadcom. Let's show you exactly what's happening right now in real time because they're all under significant pressure. Weiss, I think the question everybody is asking is, you know, did Broadcom either spook the market in some sense or was it just enough to cause a rollover in these names that some had been warning was inevitable given the runs that they all have had?
- [02:25]
Steve Weiss
You know, it's, it's, the bottom line is I don't know, I don't think anybody knows. But I'll give you how, I'll give you my analysis and I share it with you, which is that I did think it spooked the market a little bit. Let's keep in mind they met their numbers, they just didn't increase. You know, the miss was really minor, but they really met them and they talked about demand being strong throughout the year through 27. However, everybody expects companies to come out and report better than what they were guiding or better Street. You never know what, what the whispered numbers are. So the other narrative is everybody talking about, well, we got another year to go or maybe we got another two years ago, but they're looking at the end of it. So people are thinking, you know what, I don't want to be the one who turns out the lights, so maybe I take some off the table. I don't think people necessarily selling their full positions, but they're selling enough with the backdrop today of really strong job numbers. And I think that's exacerbating downside. So here we are. So the question then, is this the beginning of the end or is this just another opportunity to buy the dip? Well, again, I don't know the answer to that, but I think it's another opportunity to buy the dip.
- [03:40]
Scott Wapner
Maybe, maybe Broadcom's biggest misfortune, Kev, was the fact that they simply came after Micron, Snowflake, Dell, hpe, in which every single one of those the move after earnings went like that, right straight up and to the right, 20%, 30%, 30 plus percent moves in a single day. So when you start doing that and then you're the last person standing that doesn't do that, this is perhaps what happens. I mean, the question is whether dip buyers are going to come in and when that happens to be the determinant factor of whether this is in fact the start of something bigger or just a few days of settling and pulling back and then reassessing.
- [04:29]
Kevin Simpson
Scott, I love your point. I hadn't thought about them being kind of last in line in that reporting segment because as we approach some of these IPOs, certainly SpaceX next week, I think a lot of people are looking to take profits in some of these things since the March lows. Amd, Micron, intel, to your point, they're all up meteorically.
- [04:46]
Scott Wapner
So crazy numbers, right? Crazy numbers. AMD from the March low up 150%, Intel 152%, Micron 188%, Marvell 228%. I forgot to mention Marvell in that mix. Throw it in the mix of those that had reported and had rocket ship like moves on the backside of those earnings reports.
- [05:07]
Kevin Simpson
That's unbelievable. Truly unbelievable.
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Jenny Harrington
And you know what? They're up even more, by the way, since the beginning of the year, which makes it more unbelievable. Okay, sorry.
- [05:15]
Kevin Simpson
But here, but here what you have is you're on the precipice of an ipo. So people are looking where Are we going to raise cash? In the old days you would have cash and you would raise it from the things that were real winners. We haven't seen a cycle of IPOs in a long time. So I'm not sure how quick the retail investor is going to come in and buy the dip. I think maybe they hold a little bit of dry powder till next week. I like your ad here. I think it's a good investment, but I don't know that we're going to see the bounce that we've seen.
- [05:39]
Scott Wapner
Here's the problem with the ad. Okay. It was an attempted ad and he got stopped out in the pre market. Which shows you that maybe today was too early to try an ad you didn't attempt. I mean, you didn't think, I'm assuming when you added it in the pre market today that the stock would be down another 6%. You put a stop in and then you get stopped out and now you're out.
- [06:04]
Steve Weiss
Yeah. And the reason why I put a stop there, I bought it yesterday and I thought there's a little risk to it. But if you take a look and I look at technicals, I don't really have them define what I do, except on the downside where there's support because of people like Bill Baruch moving markets on technicals. So if you take a look at where the support was, it was just over 400 below that. Okay. The next support line is about 350. So I bought it comfortably above that support line, which means I lost money on this trade. And it was a small trade. I was going to leg into more, but I didn't want the risk, if this is more than just a couple of day event of seeing that go down another 15%. Well, that's, that's why I stopped.
- [06:46]
Scott Wapner
That's a trade school. Part of it of, you know, using stops to limit downside, especially in things that are potentially volatile like Bill. This one has been. You own the name. I mean, it did get reiterated today by 595 is the price target 595? It's about 394595 at Rothschild and Redburn. So, you know, there are those who are assessing this and suggesting you should get in with this now. 12% near decline on the week.
- [07:16]
Bill Baruch
We own the name at about a 4% weighting. So it's up there for us. I'm looking. And I said yesterday the show at 355, 360 is going to be a huge support level. So we're not going to do anything right now. I mean, in fact, we're more focused on the, on the rotation is what we've been doing. I've been on the show over the last couple of weeks. We've trimmed tech, we've trimmed some of the top names we've had. We've been buying names like Lilly and J.P. morgan and Berkshire. And so we've been rotating a bit and being prepared for this. I mean, at the end of the day, this rotation is what is needed in order for the market to really take its next leg. Every day I get in, I take a look at what are currencies doing, what, what are rates doing. And then, you know, if rates are going up, then you're going to have that impact on equities. That's what we're beginning to see today because it's a nonfarm payroll day and this is, this was a strong report, but I'm not buying the pricing in of a rate hike right now as well.
- [08:04]
Scott Wapner
But now we're pricing in a full cut, right? I mean, a full hike, excuse me, Freudian slip. Whether you actually believe that or not is another story altogether. I thought, and I was really interested to, to hear from everybody first and then get to Jenny, because you have the least amount of tech exposure on the show today and probably in our orbit towards the lower end of tech exposure. Are you looking at the makeup of this market now and thinking that you'll finally get a whack at some things that may be opportunistic for you now?
- [08:37]
Jenny Harrington
I sure hope so. So I have a very different response today. My screen's lit up in green. I've got Kimberly Clorox, Bristol Myers Pfizer Realty, Income Sovereign. Everything's green on my screen. And as you know, we sit patiently on the sidelines and look for a pullback where we could maybe one day finally own a Google, you know, maybe one day finally own an Apple. Because the cash flows even with the capex are quite amazing. So, Scott, I am looking for that and saying like, hey, maybe if this goes too far, it will be, you know, it'll be where we get in. I was at a cool conference yesterday, it's called Macro Mines. And one of the speakers reminded us, which is almost all the alpha is generated in the terrible distressed moments. And I know that's always been true for me too. You know, in the interims between distressed moments, which you don't get very often, you just kind of sit there and like, you add a little and you trim a little and you buy a little. But the moments are made when you actually have cash and you're prepared and you have a liberation day, which is when I was able to add that microchip, you know, or you have a pandemic. So we're sitting here like, you know, holy cow, maybe this is the beginning of something where we can get in.
- [09:38]
Steve Weiss
Well, thank you very much for that.
- [09:39]
Jenny Harrington
Well, you're welcome.
- [09:41]
Scott Wapner
Yeah.
- [09:41]
Steve Weiss
You know, just one other observation. So you point out we had all these other companies report they reported great quarters, but if you needed any more proof that this is purely a momentum driven market. Right. Despite that recent memory of all those companies reporting great numbers, raising, raising their guidance going forward, raising price targets, one company underperformed and took it down. By the way, that company is, is not the first time that it underperformed relative to expectations because of their broad customer base. Not focused just on AI.
- [10:15]
Bill Baruch
Go back to October, the same sort of reaction in the market. I think it was October where it actually knee jerked higher initially rolled over the next day and it impacted the market. But there's a lot, again I keep leaning on the fact that there's a lot more going on under the surface in the macro land right now. That's true. Driving what we're seeing and I've been on the show a couple of weeks ago talking about there's going to be a little bit of a June cycle peak from some of the, of our proprietary models that we look at and then you layer that into year two of a presidential election. You know, we may not go much higher than this from a, from a broad S and P look, but under the surface we're to see these rotations health care and financials. Again, I can't say it enough.
- [10:50]
Scott Wapner
The most critical question is is this a real inflection point in what we've seen in the market? On that note, Mark Newton is the technician at Fundstrat with Tom Lee. Says it is time to shift from growth to value. Says that has reached an important resistance. So it's right to take money off the table in growth and favor value. I think growth likely gives way to value over the next four to five months, he says in a move that should coincide with technology consolidating between now and October. Michael Hartnett over at bank of America Today talks about June swoon risks. The bull bear indicator has risen the third week of a sell signal. By virtue of how he looks at things there. That suggests the answer to my critical question to you. Is this an inflection point that would suggest that it is agreed or not.
- [11:46]
Kevin Simpson
I hope that they're right because I have a tendency to buy more dividend growth companies than tech stocks. But I think the point's valid. One thing we didn't bring up in the conversation is crypto. And I know it's not a topic that we talk about every day, but I don't think we can talk about a momentum trade, a tech trade or the semis without mentioning the fact that bitcoin is down 50% from its highs. And to me that's something that's a little bit deeper than just a passing comment.
- [12:10]
Bill Baruch
What do you think?
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Scott Wapner
What's the message in that? You think you guys, you guys know this space. Yeah. Pretty well. What's up with that to me?
- [12:16]
Mike Santoli
Oh yeah.
- [12:17]
Scott Wapner
I'll get you in a second. What do you mean?
- [12:19]
Kevin Simpson
I think that there's a lot of margin calls there. I mean, if that's where the speculation is and it goes back to my previous point, the people are raising capital where they have profits. At some point they had profits in crypto, they had profits in bitcoin. But when you see that going down, I mean, it's a testament to this risk on trade, flipping the switch. And maybe that goes to the point of the analysts talking about the value trade coming, coming on.
- [12:39]
Bill Baruch
Saylor sold his bitcoin or some bit, some. Not his book, some very small but meaningful bitcoin that I think it hurt, it hurt the tape. I mean, I think it hurt some sentiment around it. We had, I bid in portfolios that we kind of. I think it was January. 75,000 was, was our, was our line in the sand for, for, for bitcoin. And when it broke it, obviously it's kind of traded around it, but it's choice of technicals do work. And there was a lot of damage. It's still working through right now.
- [13:05]
Steve Weiss
There's just no fundamental story here. And we get reminded of that every day now. It's a legitimate asset to trade. But don't come to me ever and tell me that it's got a business use case. It's got a use case. We have the banks coming out, right? A consortium of banks coming out with their own stablecoin network with blockchain, which has been around since the 70s. Bitcoin didn't create blockchain. So that's another dagger in the coffin. And they don't need bitcoin for, you know, for, for stablecoins. Right. They'll do it on their own and it'll be much more stable. So what's bitcoin used for? It's only used for social media. It's only used people coming on and touting the business because they make money off the exchanges. There's no use for it. So it's dying the debt that it should. Now, I don't think it goes to zero. I think it's always going to be a trading vehicle because they're true believe levers out there, but nobody's been able to prove the use case for it.
- [13:59]
Jenny Harrington
Yeah, I think, I think when we think about the inflection point that you're asking about and we think about Bitcoin in particular, I watch it every day and I watch Microstrategy every day because to me they've always been a leading indicator for risk appetite that's out there. And so when I saw it starting to fade maybe a week, two weeks ago, I thought that was interesting. So when we think about, when we think about, Scott, your question, and we think about these stocks that have had these unbelievable 200, 300,000% runs in the last six months, months. It's not, it's not that they're mispriced right now. It's just the path that they got there. And I think the struggle for me is trying to tie up, okay, I believe in these chip stocks, I believe in the trade, but the price is hard to digest simply because of the path, not because the actual level. So when, you know, when we think about who's entered them, I do think it's a marginal buyer that drove some of those up to the stratospheric prices that we've seen. And when I couple that up with, with bitcoin and that fade, I think, okay, risk appetite's diminishing. People are going to get capital calls. Money is going to come out of that, of that kind of risk on high, you know, high risk appetite. So, so to me, like with, with the question of inflection point, that gives me more confidence that it might be an inflection point than anything else.
- [15:07]
Bill Baruch
I love that you turn to me when he mentions chip stocks on big runs. But yeah, I mean, I think you
- [15:12]
Jenny Harrington
know technicals better than I do and
- [15:14]
Bill Baruch
I think it's, this is a very healthy consolidation in order to be able to take that next leg higher. And I think again from the macro viewpoint, we might be seeing peak rate hikes being priced in, I think some of the data earlier in the week, not farm productivity, unit labor costs. The wage growth on today's report did not accelerate. It actually, actually decelerated still high. It's still high but, but decelerated from, from the way it was from the April number and then the leisure and hospitality jobs, 70,000 added. I mean guess what's coming here. This now is the World Cup. I mean there is a lot of hiring and now. So how much is.
- [15:47]
Scott Wapner
Let me ask you. So if you think we're at peak
- [15:49]
Steve Weiss
rate fears, you must believe then that inflation is going to be under control in the second half of the year, which I definitely don't see.
- [15:58]
Bill Baruch
We had a high CPI number one threes the trends. We only have one so far but PC came in and it was contained. So let me see, I'm looking forward
- [16:06]
Steve Weiss
to that back half of the year when the forecast that oil resumes its upward climb because you can't get regardless of what happens with straight or move and we don't know that anything will happen with it. So you still, even if it opens today, oil is still going to go higher?
- [16:19]
Bill Baruch
Well, a lot of the offshore storage has been, has been pulled down and I mean it's been used. So there's going to be an interesting situation in the coming months. But for now you have to go with the data and the way the data is trending is telling us that inflation, you know, from, from what we have, have right now is not accelerating higher. I think some of this multi, this
- [16:37]
Scott Wapner
a multi year low by the way, on bitcoin, you got to go back to the fall of 24 for, you know, Bitcoin breaching the 60,000 level, which it has today, it's obviously bounced a little above that. But nonetheless, that is a pretty good reflective chart of how this trade has been choppy at best and certain certainly of late, decidedly weak.
- [17:01]
Steve Weiss
A lot of 70,000 to 125 where it peaked was in expectation of Trump becoming president, an expectation of him legitimizing bitcoin because it was large family holdings. And that was just all apparently hype.
- [17:18]
Scott Wapner
Nothing's really happening even if it's not hype. I mean there's just been a lot of competition I would, I would submit over the last many months for other speculative assets that were related to equities rather than crypto currencies. I mean if you want to put chips, some of the chip names in that area, maybe you got to an exuberant, euphoric place on the momentum, you know, in the momentum orbit where people who would ordinarily play the speculative side of the markets through crypto or bitcoin were just simply doing it through semiconductors.
- [17:59]
Steve Weiss
Agreed. It was a loser.
- [18:00]
Kevin Simpson
You're saying everything right. But when you translate it to the institutional investor, and these guys were on to the point, they just never got there. If inflation is higher, whether it spikes or it doesn't, that's a problem because the Fed isn't in the position obviously to do any rate cuts. That's off the, the table today. As I've been saying for two weeks, we're not going to be cutting rates for the next year or two, but we don't necessarily need a hike. The bond market will dictate that themselves. But what we haven't talked about is valuations. When we're in a period of higher inflation, higher interest rates, you get compressed valuations and it is affected by tech stocks more than anything else.
- [18:34]
Scott Wapner
I see, I see. Move. Hang on. I want to get to some moves related to what's, what's going on in tech. And I think it's plays into the question that we've been asking today. You know, you bought more Nvidia. Speaking of where the dip buyers, well, you know, they're lurking and you apparently are one of them as it relates
- [18:55]
Kevin Simpson
to this name, 100%. This is exciting because this is the first time that we bought Nvidia in our flagship dividend portfolio. We've owned it in the growth strategy because it's a growth stock. But over the last couple of weeks after the earnings report, they did a few things. There's four things a company can do with cash and Nvidia does all of them. They incubate other companies through capex. They manage their balance sheet by paying off debt. They buy back shares. They announced an $80 billion share buyback and they increased the dividend to 25 cents a quarter or a dollar a share, which isn't a huge dividend, but it represents about a half a basis point yield. Prior to that, they were paying a penny and the penny in my book is zero. So it's never really been a candidate for the strategy. So we look at this as an investment, not a trade. And why the dividend is so important, Scott, is that Jensen Huang, his board wouldn't go out there and put a dividend in place if they didn't think that the AI monetization for Nvidia specifically wasn't there for the long term. So I think this takes this company from a great trade that everybody watching the show owns to a position now that we can own more of a long, long term.
- [19:59]
Scott Wapner
So that's a buy the dip and then there's a Sell what's been a pretty good rip for Cisco, Jenny. Right, right. And you, you know, the positions get, when they, when they go up for a, you know, an extended period of time by extreme amounts, your, the size they grow to in one's portfolio obviously becomes too hot to handle at some point. Is that what's behind this Cisco?
- [20:22]
Jenny Harrington
So we trimmed, yesterday we trimmed Cisco in our growth strategy from six and a half percent to five. It's up 62% this year. It's trading at 27 times. It's, it's still growing at like 10, 15 times. But that's a real mismatch of its growth versus its price to earnings for a long time. And so we're sitting here, we're like, look, I believe in this company, you know, as tech grows, every bit of tech growth is ultimately going to need to use Cisco. That's terrific. But you know, I always hear in my head that, that pigs get fat, hogs get slaughtered, you know, and I don't want to be a hog. I want to take a little off, put a little in my pocket and just have a better sized position. So I think, you know, I think that's, that's what you could apply to all of your portfolios out there. Because a lot of these positions have grown from 3% at the beginning of the year to 9 and 10%.
- [21:08]
Scott Wapner
You know, financials are coming off their best day. I mentioned those because we have moves there too. And it's a trade that's been uneven at best.
- [21:17]
Steve Weiss
Best.
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Scott Wapner
But financial's coming off their best day since April of 25. So in more than a year. Still the worst sector year to date is the group. Now there's been some real optimism of late in the large banks, the investment firms like the Goldman's of the world. Right. Goldman had been above $1,000 for the very first time. We can take a look at it to see where it's at now. It still is. It's the lead on SpaceX, it's going to be part of the lead on Anthropic. And when the open air IPO happens, whenever that is, you can figure that it's going to be in the mix there as well. The capital markets are wide open for business. M and A expectations are through the roof. You could have a record year. You trimmed American Express and Visa. Different conversation than a Goldman, but nonetheless in the orbit of the financials.
- [22:07]
Steve Weiss
Why?
- [22:07]
Kevin Simpson
Yeah, we own Goldman, we own JP Morgan for all the reasons that you just mentioned. We're all in on those Visa and American Express, they've actually underperformed the XLF year to date. Yesterday we saw a little pop in it. I still own them, Scott, but I needed to free up some money to buy Nvidia. We thought why not take a little bit of an underperformer and go ahead and get that money to work. So it's a little bit of repositioning within the portfolio. Not a loss of conviction on the consumer. Not a loss of conviction on those names. Heck, we've owned them for 15 years. But I think here was a situation where we were just looking for a better use of capital.
- [22:40]
Scott Wapner
You bought more Coca Cola, which is interesting if you're looking at the consumer and maybe a more of a defensive play within the market. By the way, Morgan Stanley names it today number one. It's top staple stock. Why'd you buy more?
- [22:54]
Kevin Simpson
Wanted to see how boring a stock we could find in a day like this. But the reality is you've got a company that had earnings. The stock hasn't moved in three months. They were increasing sales top line, bottom line by about 10%. It's not getting rewarded for it. We get almost a 3% dividend owning it. And I like the analysts that are coming out here and making this a top pick. I don't know that you need to race into it and chase us here, but I think there's a lot of value. And if you're looking for companies that free cash flow and you're focusing on balance sheets and companies that probably aren't going to roll over. If you're really comfortable adding to Coca
- [23:25]
Scott Wapner
Cola here, it's a $1 Million more item. Before we take a break, you just turned your laptop to me, Weiss, and showed me a chart. Was that an intraday of the gold or what Was that?
- [23:32]
Steve Weiss
Yeah, GLD is down 3.4%, 3.3%. I mean, how often have we seen gold size in the last couple of weeks trade down on spikes in rates typically don't since markets are a little, you know, wacky. Yeah, it's now broken through support. It's now down 20%. More than 20% from the high when one traded.
- [23:56]
Bill Baruch
Gold typically trades lower when rates go higher. I mean, over the past year to two. It's been a little bit of an anomaly, I think. I think the trend is going to be more sticky for gold to trade better when rates are going higher. But right now, this is the fact that we're pricing in a rate hike by the end of the year. Now gold just note to broke the 200 day moving average for the August contract right about 45, 500 earlier in the week. Now we're looking at a weekly close on the continuous futures contract below the continuous 200 day moving average at 4420. I'm sitting here, you know, I run, I run a metals fund and so you know, I don't have full positions on, but I still may sell some in today. Just to manage risk. Ahead of the weekend though, this is the place I want to be buying to start next week.
- [24:37]
Steve Weiss
All right.
- [24:38]
Scott Wapner
All right. We'll take a quick break. Coming up, T minus one week to the SpaceX IPO, retail investors are racing to get in on the action. However, cashing out too quickly could come at a big cost. We'll explain next.
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- [26:21]
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- [26:39]
Scott Wapner
Welcome back. Space X expected to begin trading a week from today on the NASDAQ with a record allocation to retail investors. But some brokerages that offer shares are doing so with a bit of a catch. Seema Modi is here with that story. Hi.
- [26:52]
Seema Modi
Hey, Scott. Well, a word of caution to traders who may want to flip Space X's stock once it goes public, you will be penalized. Fidelity says investors who sell Space x in the first 15 days of trade could be banned from participating in future IPO deals. A second, second attempt to sell within that time span will block you from engaging in the IPO process for about a year. Third flip. Well, that could result in a permanent ban on your Social Security number. The rules around flipping do vary depending on what trading platform you're using. Both Robinhood and so far define flipping as selling in the first 30 days. The goal, guys, for these brokerages and the underwriters is to discourage short term selling and to instill as much stability as possible in this IPO process. Given that SpaceX does have such a high number of shares reserved for retail investors that 30% versus the 5 to 10% typically allocated. And brokerages do recognize that this is a big opportunity. Fidelity went as far as to lower the minimum amount of money needed in an account from a couple hundred thousand to just $2,000.
- [27:49]
Scott Wapner
Scott. All right, I seem to thank you very much. I know that this is going to get a lot of conversation on this desk. What do you think of this move by these brokerages?
- [27:58]
Steve Weiss
Well, well, we used to do it. So when we priced a deal and we gave a portion to retail at the investment bank Solomon Lehman, all the others, if a retail broker wasn't able to hold that order in, in other words, they want to sell it, then they'd lose their commissions and they'd get dinged on the next hot deal. So we did that consistently. Now there's a little difference here. This is true. Truly a hot ipo, then the, the book stabilizers. So Goldman and I'm sure Morgan and JP Morgan also can be stabilized.
- [28:32]
Scott Wapner
You mean when you say truly a hot ipo, are you, are you using that word to mean something different than like a big demand?
- [28:39]
Steve Weiss
If it, if it trades up in the aftermarket? I should have said if it trades up meaningfully in the aftermarket, they're going to want some volume, volume to come in. So I'll take the shackles off. And the reason, because they're going to want to see the true demand so they don't have to short the stock to institutions that want to buy it. So institutions want to get filled, they want to control it. They don't want to be like a lunatic trade to a certain extent. Obviously you want to be a big trade because you want to win the next mandate. So there are lots of different things. So it's not as easy as saying we're going to penalize you if you sell it. There are certain way, certain times they want to sell and Some brokers also have if it's up more than 10% or 20%, you know, as it's trading, you can sell it. We'll take those shackles off.
- [29:26]
Scott Wapner
Doesn't it mean though that there's just going to be increased pent up demand to sell the shares? Yes, once the lockup period comes for, you know, institutions, insiders, it means about a trading down. Well I know that that's why they're
- [29:45]
Jenny Harrington
holding it but in theory like if there's a lockup it's just kind of cool. It puts a speed bump in the way it cools the, it cools the process of when and this is a
- [29:52]
Steve Weiss
difference in private market or locked up for six months now the banks could take them off the lockup. If the stocks moved up significantly then they'll release.
- [30:03]
Scott Wapner
But this is totally different. To me it sounds like this is like you know, mom and pop trying to buy this thing on their, in this case Fidelity account and then having you know, to some degree. Now I don't know all the rules around typical IPOs on Fidelity's platform or not but you know, prohibiting mom and pop investors from potentially reaping the benefits of a higher move in the stock.
- [30:29]
Steve Weiss
I'm not sure if legal time as
- [30:31]
Bill Baruch
many broken brokers that we listed here. There are just as many brokers from my context from what my understanding that are they're not going to hold these rules and they're going to allow people, you know, almost immediately to sell this thing if they wanted to. So I think, I think this goes both indicate. Yeah I think there's, I think it goes both ways. So I think there's yes definitely the fidelities or the Schwab's, whoever we highlighted there, they may be locking up but there's just as many other because there's a lot of brokers involved in this this So I think there's a lot that are going to, that are going to allow people to move and in the brokers themselves are not going to get dick. Now this is, I've had conversations with people about this and that's my understanding.
- [31:08]
Kevin Simpson
Anti flipping has always been there institutionally. This is just the first time that retail is getting exposed to it. Steve did a great job defining my concern isn't how's this thing going to trade the first day you and I talked about that earlier, I don't think we have a clue but there's 4.3% of the shares that they're distributing day one. The lock ups should be way more concerning not to the respective can we get out of it? But all of this money that's going to flood into it. This has been a private company for what, 24 years. All of these people want to sell their shares. They might not be able to do it day one, nine months, 12 months,
- [31:42]
Steve Weiss
but they can hedge. Well, depending upon what the documents say, when they.
- [31:46]
Kevin Simpson
$1.75 trillion worth of stock. I don't know how you can hedge that, but.
- [31:50]
Steve Weiss
No, no, I'm talking about individual position.
- [31:52]
Kevin Simpson
I'm saying in the market.
- [31:53]
Steve Weiss
But it's not all. It's going to be hedge, but it's 75. It's going to be hedge.
- [31:57]
Jenny Harrington
But Kevin, one small correction though. When you said that this is new for retail to know that they're locked up. It's not, but, but it's new in the past 30 years. So I started at Goldman in 1997 and in that time period, this was everything I did right. We just were managing this, we were doing dealing with this huge IPO calendar. Our clients were almost all retail. It was a wild time. And so now here I am at Gilman Hill, you know, and it. Gilman Hills, 20 years now that I've been there. And you know, the last time I've had clients actually call me about an IPO before Gilman Hill. It's been over 20 years since I've had a single client call me and say, hey, can I get in on this ipo? Which I think is really telling about the sophistication level and the breadth of who wants to get in. But I wonder too, if this thing's so hot and expected to do so well, why do they care if retail is being locked up? Like it makes me worry more. Do those who are distributing it know something about the truth behind it than we do? I saw that headline of the $3.4
- [32:52]
Scott Wapner
trillion, you go full on conspiracy theory.
- [32:54]
Jenny Harrington
It's pretty wild, but it's pretty wild when you see, okay, we're projecting out 14 years from what revenue growth is going to be to make it look attractive. It really, like I've been telling my clients, maybe buy it in the.
- [33:06]
Steve Weiss
There's, there's another element to this and the other element is to the bank. So we talk about all the fees they're getting, but as part of those fees, they've agreed to support the stock. So should this stock. We had one deal, believe it or not, it was a two and a half billion dollar deal and it cost the firm 500 million to support it. And it was such A bad deal as a secondary. And I don't know why we didn't know marginal buyers. But here, if this trades down, does have to trade down a lot relative to float. But these banks could possibly get tattooed if they have to support it and buy the shares in.
- [33:41]
Scott Wapner
Well, it's going to be, it's going to be an exciting week from today. We know that.
- [33:45]
Jenny Harrington
Excited.
- [33:45]
Scott Wapner
And there's more news. I mean the other big news, and I suppose it's somewhat of a surprise based on maybe where, you know, speculation was or expectations started to go to that SpaceX, it turns out well not be added to the s and P500 on a fast track basis. It could have broad implications. Of course, Leslie Picker is here with that side of the story. So were you surprised based on, you know, you've done more reporting on this upcoming IPO than anybody else that I know.
- [34:11]
Leslie Picker
Well, thank you. No, I was surprised. And as you guys were talking about what could be supportive of this stock? Well, and fast track inclusion into The S&P 500 would certainly be in that category. And this was a surprise after the Nasdaq and Footsie opted to change their respective rules ahead of the Space X IPO and other mega listings in the pipeline to fast track those big market cap companies. But in a statement last night, S and P Global said that based on the committee's review of the markets and after consideration of responses received from a wide range of market participants, no changes will be made to the eligibility criteria for the S&P 500. Among other indexes of the theirs, S and P said that companies with large market caps will still need to wait a year after going public to be considered for inclusion. And if By June of 2027, Space X is not sustainably profitable, it still won't be granted inclusion. Now, Space X will have a relatively small weighting in the NASDAQ 100 at first, but as it increases its float once the slew of lockups expire, if it does some other offerings, it will garner more influence. Influence and more forced buyers. However, it could also create some performance divergence between the indexes that include Space X and those that don't. Space X is expected to be quite volatile, especially in its early days and months of trading, as is any ipo, but especially this one. And that could make the disparity even more pronounced.
- [35:32]
Scott Wapner
Scott takes a piece, I guess, of guaranteed demand.
- [35:39]
Leslie Picker
Yes.
- [35:40]
Scott Wapner
Out of the equation. Equation, exactly right. If nothing else, at least at the beginning.
- [35:44]
Pippa Stevens
Exactly.
- [35:45]
Leslie Picker
And just to kind of, you know, tie a bow around the conversation you guys were having earlier. You know, traditionally in IPO 101 and the most price insensitive investors are passive index funds and retail investors, especially in a deal like this where they say $135 a share. Great, that sounds that that's the price. And so all of these dynamics will have a role in this debut and then the days and weeks ahead because there are just a lot of structural forces at play here that don't have anything to do with the fundamentals necessarily, but they do have a lot to do with the way this stock will trade.
- [36:22]
Scott Wapner
Can't wait for you to help us lead right up to this next week. Leslie, thank you. It's going to be an exciting week and we'll be, we'll be riding with you on that for sure. It's Leslie Picker. Coming up, more committee moves. We're back right after this.
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Scott Wapner
Soldiers, you are about to embark upon
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the great crusade from Focus Features and the producers of Darkest Hour. There are two major storms advancing towards the Normandy coast this weekend on the anniversary of D Day. If you invade tomorrow, they're going to be washed away. Honor their courage.
- [37:25]
Steve Weiss
Get my men onto the beaches somehow.
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Anyhow, see their story.
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Steve Weiss
We will accept nothing less than full victory pressure.
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- [38:21]
Leslie Picker
We're back on halftime.
- [38:22]
Pippa Stevens
I'm Pippa Stevens with your CNBC news update. Illinois Governor J.B. pritzker said he is pausing the state's data center tax incentives starting in July. It comes amid a push to address concerns about electricity costs and water resources amid the infrastructure buildout. Pritzker, who is seen as a top contender for the 2028 Democratic presidential nomination, is calling on state lawmakers to work on reforms during a brief legislative session in the fall, authorities said. Veteran actor James Handy was found stabbed to death at his home in Los Angeles on Wednesday. A 44 year old man who is the son of Handy's girlfriend was arrested on a murder charge, according to police. Handy, who had roles in films such as Jumanji, Top Gun, Maverick and Logan, was 81 years old and a US citizen who worked in China as a state media journalist, pleaded guilty to acting as a Chinese government agent. Thomas Pokin the second was arrested in February while visiting Washington on allegations he had been working at the direction of individuals who he knew were operatives for China's main civilian intelligence agency. Scott, back to you.
- [39:30]
Scott Wapner
All right, Pippa, thank you. Pippa Stevens. All right, another move and a name that got downgraded to today. Show me fiserv, please. Underperform. Don't see it that often. You just don't. Stocks down almost four and a half percent. That's it. BNP Paribas, it wasn't neutral. They say sell it. Target cut to 46. It was at 55. Jenny Harrington sees that and says, that's right.
- [39:55]
Jenny Harrington
You know me, I like to buy low and sell high. So, so it kind of goes to my comment earlier, which is the greatest alpha is generated in periods of distress and that can be at both the macro level and at the stock level. So on fiserv, here's where you stand today. Stock's been decimated and it's because they had a problem with their Clover business and their Argentina business. The new management's been in place for about you know, almost not maybe like three quarters of a year now. They've had two quarters now where they've been able to show that revenue growth has really stabilized. So what do you have? You've got a stock that's trading at seven times earnings as a 13% free cash flow yield. It's down 20%, which I like. They just reiterated their long term guidance of 4 to 6% revenue. CAGR. They expect to earn $12 by 2029. I think there's significant upside. If it trades at 10 times that $9, you've got a $90 stock which is significant upside. I think at this price it's kind of de risked. And you know me, when people, I'd rather be buying something when it's downgraded versus when everybody's upgraded it. And there's no room, there's no room for anyone to become positive.
- [40:54]
Scott Wapner
All right, I want to show you the Nasdaq. Just, you know, we're, we're in danger of posting an 8 handle in terms of the point decline because we're almost down 800 on the NASDAQ and almost three. That's 3%. The declines, for example, AMD more than 9%. Broadcom now more than six. These are all lows of the day. Mike Micron is a near 10% decliner. Broadcom more than six. Intel almost nine. So there's your point of reference for the weakest part of the tech trade today, without question.
- [41:31]
Steve Weiss
And what you're thinking about now, at least what I'm thinking about now is not about today. I'm thinking about Monday. Do I want to come in to Monday with the same positions or without hedging them, without covering them? Because we've seen this before. You know, where you get the setup. The market trades down significantly on a Friday and then you get demolished on Monday.
- [41:56]
Scott Wapner
Well, I would say the last time that we remember, what was it a week or a couple weeks ago, we had, you know, three days of selling. Maybe it was a Friday, Monday, Tuesday. Everybody's like, oh, here we go. Here's the correction that we've been waiting for. And the buyers came right in and it lasted literally three days.
- [42:14]
Steve Weiss
Yeah, it was the old V shape
- [42:16]
Scott Wapner
recovery that every single pullback in this market over the last couple of years has exhibited.
- [42:21]
Bill Baruch
Steve, you're right. Typically this happens on Fridays. You see the selling in a take and then it goes in more Monday or Tuesday. But during the Trump administration this time around, we've actually seen the selling kind of stop on Friday more times than not because people want to take that risk off ahead of the weekend. You don't know what comments could happen. We're in the middle of a conflict right now and then we've seen some bottoming action come.
- [42:42]
Steve Weiss
Yeah, but here's the thing. You have, you also have, you've got Iran out there, right? And even though Trump says he's not going to resume hostilities or bombing unless American servicemen are at risk, you still have those.
- [42:54]
Bill Baruch
All that out, all that's out there.
- [42:56]
Jenny Harrington
But guys, let me finish.
- [42:57]
Scott Wapner
No, no, no, let Jenny make the point.
- [42:59]
Jenny Harrington
You're making it sound like it's broad based and to some degree it is. But it's also targeted. If you can put the ticker DV y, it's, it's a dividend ETF that I like to use as like the other side of this. It's up. It is not universal selling out there. I see today as more of a rotation, more of a broadening. More, more of that. Mark Newton, you know maybe you sell growth and get into value now. I'm surprised to see, you know, even for me, I'm surprised to see the positivity in the value and dividend and that kind of area. To me it says this isn't broad based, it's a targeted sale day.
- [43:28]
Steve Weiss
Yeah, I would say that's pretty broad based.
- [43:30]
Jenny Harrington
Would you?
- [43:31]
Steve Weiss
Absolutely.
- [43:32]
Jenny Harrington
Okay. You would buy by dollar value. Oh sorry, you mean the selling's broad based?
- [43:37]
Steve Weiss
I mean sectors. You know, I don't know.
- [43:39]
Scott Wapner
Kev's loving his Coca Cola today.
- [43:41]
Kevin Simpson
Investor sentiment hasn't been this frothy since the great financial crisis and you have a huge IPO the likes of which we've never seen. Next Friday I don't know that we're going to see the diploma buyers that we've been accustomed to in the tech trade.
- [43:54]
Scott Wapner
Let's bring in Mike Santoli, the senior markets commentator of course the overtime co anchor as well. Pick your event I suppose which you think could be leading to this. Is it positioning ahead of space X? Is it positioning for a value move? Is it just trying to continuously now get out of some of these highest of flying chip stocks? Is it? And what do your eyes tell you?
- [44:18]
Mike Santoli
Well as a sequencing of a lot of those things, I mean I think the context is very very important and we talked about it coming into the week probably even before that, which is this is a historically profoundly stretched leadership segment of this market mostly manifest in semis and AI hardware. Massive amount of air underneath that group. A lot of therefore pent up profit taking space to be had. And so one once that did have a downside trigger, whether it was Broadcom or just exhaustion then I do think it was okay, let's rotate away from danger. That was yesterday. Usually that works in this particular environment. I do think that a hot jobs number yields going up and threatening to break containment at least on the short end perhaps sort of scrambles the picture a little bit. And so yes there's an attempt to try and buy up some defensive and value in cyclicals things haven't participated but I think that's mostly mechanical. Yesterday you know health care was up 3% not because anything happened but just because it was under owned relative to the stuff that everybody owned. Big picture S and P has broken its 20 day average that's something 7,500. We're well below that. The next thing I would look for to say whether this is anything more than a routine wobble in an uptrend is the May low. It's like 73, 330 or something like that. So we're still above it. So that's the tactical picture. But I do think you have to start asking higher yields running the economy hot. The capex going all out, you know, does it change the general equation of tech led, you know, broadly disinflationary growth down the road?
- [45:51]
Scott Wapner
Going to be a really, really incredible next 10 days. Yeah, I guess if you want to call it that. SpaceX launch looming wash his first Fed meeting is looming at a time where we're talking about rates backing up. Yeah, economy may be hot. Remember the whole run it hot idea that the President said to wash his face essentially in the room.
- [46:15]
Mike Santoli
Yeah.
- [46:16]
Scott Wapner
When he was doing the ceremony, when we were on the air live. Right.
- [46:21]
Mike Santoli
CPI next week is going to tell you how hot the inflation piece of it has been been. So yeah, all of that in the mix and look I think the, I think the supply this space X ipo, there's no doubt that that's a handy excuse to say, you know, are we getting a little overexcited? Is it basically a seller's market? Is that what we're seeing? Is that mostly about exit liquidity as opposed to giving everybody an opportunity to own this business which is debuting at one and three quarter trillion dollars. I think those are all valid concerns.
- [46:50]
Scott Wapner
Yeah, maybe you go to stair step two too. It's like Broadcom's the first thing and then it's the SpaceX and then, and then if things come in threes, the potential Fed meeting that, that's going to be consequential in language if nothing else. Michael, thank you Sinovit. Mike Santoli. We'll have more on the sell off. Oliver Renick, he's tracking the options activity today at CBO in Chicago. We'll visit with him. Spring in Oliver Renick at CBOE in Chicago. He's taking a look at gold and the options action which is around that. What do you see from your vantage point today?
- [47:30]
Oliver Renick
Hey Scott. It's definitely a rough day. We've got vix up a little here to 19. Everything's pretty much getting hit across the board. Crypto stocks, gold and bonds too. I might point to that as the culprit for today's sell off. After impressive jobs data this morning sent yield yields higher and the Odds of a Fed hike by December to more than 40%. Options traders are fully against basically all forms of bonds right now, from Treasuries to corporates in high yield. More than twice as many puts are trading in TLT than calls with 140,000 puts bought versus just 56,000 calls. And bears are swarming the corporate ETFs, LQD and HYG. In the investment grade four fund, LQD put volumes are almost seven times bigger than calls with less than 100 puts sold on the day despite almost 50,000 contracts trading. The contrarian bet is gold. Despite getting hit 3 1/2% today. Flows look surprisingly bullish with four times more calls bought than puts in GLD on more than average daily volume.
- [48:34]
Scott Wapner
SCOTT okay, Oliver, thank you. It's what we were talking about earlier. I want to mention something. I got an email from Jeffrey Gundlach a few moments ago. You know, obviously I don't care what side of the field you're on, equities, credit, whatever. Everybody's sort of thinking about the same questions of whether, you know, to what degree might we be or have been overextended in certain areas. He sent me a chart that he's been discussing with his own, you know, internal group. It's, it's from a firm. I don't want to mention the name of the firm because I'm not sure if I can if I'm allowed to share it publicly. But it looks at past periods of perceived market bubbles going all the way back to, you know, the 1800s, whether we're talking about the build out and in the investing in railroads, the TMT era, the nifty 50 utilities, Japan and now to the current of the AI Big 10, as it's being called. And you had a degree of concentration in every one of those past periods around the 40% level. And right now you're at about remember we've been talking about how concentrated and narrow the market's been, that the AI Big Ten in the here and now was about 40% and that has traditionally, a chart doesn't necessarily tell a definitive story about where the next chapter may lie. But nonetheless, if you look at, if you're looking at past patterns, things that may rhyme, it's an interesting thing to look at. Considering some of these other periods of time in which bubble concentration was was extraordinarily high, the numbers would suggest we're in one of those similar periods.
- [50:24]
Steve Weiss
Yeah, and I talked about it Wednesday. We've all observed at one point or another that this Is unusual. And I was very clear. I was greedy. And greedy always gets you into trouble. Now these stocks, even though, you know, microns down 100 today, down 10% or so, that's what it was over the last few weeks. Last couple of weeks. So where are we? So I think that's a great chart and great point that Jeffrey makes. And there are lots of parallels to bubbles here. Even though everybody always says when you're in a bubble, everybody says it's not like the last bubble, but they're shared characteristics.
- [51:04]
Scott Wapner
By the way, it remains to be seen as to whether this is a bubble or not. Critically important. Important to mention that no it is.
- [51:10]
Steve Weiss
The demand is not slowing down. All the companies you cited, the earnings are still there. These aren't companies that are built on websites with no businesses. These are companies that really like John
- [51:21]
Scott Wapner
Walls and telling me on desk the other day that by price action alone there are things to be concerned about. In his words, the microeconomic effects of all, all of this outlay and infrastructure build and spending by the hyperscalers is real. The microeconomic impacts of all of that are real. Don't try and make the case that this is 90 whatever because there are differences between then and now, at least as it relates to that.
- [51:56]
Bill Baruch
Taiwan Semiconductor has been very good at controlling the supply. That's to going. Going out. And then this, this is not just AI. There is the power, the electrification, the infrastructure that needs to be built out. So it's really touching everything. This isn't just one, one little pocket
- [52:12]
Jenny Harrington
from the bigger picture. You know that famous investment quote, right? The foremost dangerous words in investing are this time it's different. So you have to look at that and say this time probably isn't different.
- [52:22]
Kevin Simpson
And if it's not different, things rhyme.
- [52:23]
Scott Wapner
They don't necessarily.
- [52:26]
Jenny Harrington
Well, different in that it's new technology, it's revolutionary. Usually technology doesn't actually replace jobs, but there is disruption. There's over and under supply.
- [52:34]
Steve Weiss
The main difference is there's a, there's a bubble in valuations, not a bubble in demand. The bubble in demand and strength was in the energy.
- [52:42]
Scott Wapner
Someone, someone, the market multiple. Someone said there's no bubble in valuation because their earnings have been amazing and the projections continue to go up. We'll do finals next. Apple Park Monday. That's this Monday for halftime and closing bell wwdc. Will it be the big event that people have been waiting for? We shall find out. Look forward to that very much. Closing bell of the day, Dr. Jeremy Siegel of the Wharton School and Tom Lee of Funstrat. Stephanie Link as well. It's going to be a big hour. Don't miss it. Kevin Simpson Final trade in a market
- [53:22]
Kevin Simpson
full of artificial intelligence. I still like the real thing.
- [53:25]
Scott Wapner
Coca Cola all right Abbvie back above
- [53:28]
Bill Baruch
the 200 day moving average coming off a rewrite.
- [53:30]
Jenny Harrington
Sabra six and a half percent yield.
- [53:32]
Steve Weiss
I debated cash or UnitedHealth I go
- [53:34]
Scott Wapner
you guys managed to find four up names. I'll see you three. You've been listening to CNBC's halftime report, the podcast. You can always catch us live weekdays at 12 Eastern only on CNBC.
- [53:50]
Halftime Report Disclaimer Narrator
All opinions expressed by the Halftime Report participants are solely their opinions and do not reflect the opinions of CNBC or its parent company or affiliates and may have been previously disseminated by them on television, radio, Internet or another medium. You should not treat any opinion expressed on this podcast as a specific inducement to make a particular investment or follow a particular strategy, but only as an expression of opinion. Such opinions are based upon information the Halftime Report participants consider reliable, but neither CNBC nor its affiliates and or subsidiaries warrant its completeness or accuracy, and it should not be relied upon as such. To view the full Halftime Report disclaimer, please visit cnbc.com halftimereportdisclaimer Snoring Gasping during sleep?
- [54:27]
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