← Halftime Report
Halftime Report
Can the Bounce Continue? 3/26/25
00:44:05
Scott Wapner and the Investment Committee debate whether the bounce in stocks is sustainable. Plus, multiple moves being made by the Committee, they reveal them all. And later, the desk discuses the latest Calls of the Day. Investment Committee Disclosures
Loading summary
Transcript165 lines
- [00:01]
Fidelity Advertiser
Don't just ride the index, seek to outperform it with Felc, the Fidelity Enhanced Large CAP Core ETF. Unlike passive ETFs, FELC is run by a team of experts to adapt to market conditions and pursue upside potential wherever it's hiding. And while you get the potential outperformance of an actively managed fund, you can still buy and sell it on your terms just like any other ETF. Discover FELC, the Fidelity Enhanced Large Cap Core ETF part of Fidelity's suite of active ETFs. Learn more at fidelity.com felc before investing in any exchange traded fund, you should consider its investment objectives, risks, charges and expenses. Contact Fidelity for a prospectus and offering circular or if available, a summary prospectus containing this information. Read it carefully. While active ETFs offer the potential to outperform an index, these products may more significantly trail an index as compared with passive ETFs. Fidelity Brokerage Services LLC Member NYSE SIPC Is it time to reimagine your future? The right business skills may make a difference in your career. At Capella University, we offer a relevant education that's designed to focus on what you need to know in the business world. We'll teach professional skills to help you pursue your goals like business management, strategic planning and effective communication, and you can apply these skills right away. A different future is closer than you think with Capella University. Learn more@capella.edu.
- [01:33]
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, thanks so much. Welcome to the Halftime Report. I'm Scott Wapner, front and center this hour debating the bounce in stocks and whether it is in fact sustainable. We'll ask the investment committee who's making some more moves today. Joining me for the hour, Joe Terranova, Jenny Harrington, Kerry Firestone, Brian Belsky. We want to check the markets here. We've had a little bit of a roll here in the S&P 500 within the last five to ten minutes on headlines related to tariffs in which Bloomberg is the first with this headline that the President is preparing auto tariff announcement as soon as Wednesday that just moved and the market moved on that you can see the intraday of the S and P. We could pull up Ford and gm. You can see what is probably an intraday move lower in those names as well. Sure enough, there is that. We'll watch all of that. We'll have A report from the White House coming up momentarily from our Eamon Jabbers. We're getting that set. You already had some weakness within the market today. Really related to the nasdaq, Nvidia, weaker chips, weaker on some China concerns. Tesla down another 5% today. That was dragging the NAS lower. As I posed the question at the top, can this bounce continue? It's been a good bounce. S and p is up 5% or so from the low. That's before the news that is developing here. It did close above its 200 day moving average. Nasdaq up 5% from the low. The Q is up 5%. The Dow up 5%. Best week since January. So you get the idea of what kind of bounce back we've had. Brian Belsky, you know, some of the tariff related news of late has been more conciliatory than not yesterday. We didn't get any. Whether this is a bit of a, you know, an attempt to change the subject from some of the other news that's happening around the White House, we don't know. Nonetheless, the market doesn't like anything that looks like tariffs are coming sooner rather than later.
- [03:42]
Joe Terranova
I think the market's been dealing with recently what it knows and what it doesn't know. What it doesn't know is still this uncertainty surrounding what going to ultimately happen with the tariffs. So you start to hear more noise about the tariffs. Market goes down. What did the market did know? The market did know that it corrected 10% with your classic correction. The tariff noise went away and markets began to rip. The other thing that the market is starting to sniff out is that if you take a look at the Magnificent Seven, they're down more than 12% year to date. But the other 493 stocks are up. So that's starting to show the signs of stock picking broadening out. Market's recovering. And so I think when the market knows something, it likes it. It goes up. When the market doesn't know anything and the uncertainty increases, we have volatility.
- [04:27]
Scott Wapner
Yeah. There's even a lack of certainty in the statement that you make. Because the market doesn't know anything.
- [04:34]
Joe Terranova
Correct.
- [04:35]
Scott Wapner
It's what the market thinks.
- [04:36]
Joe Terranova
Right. That's the problem with a lot of people that do what I do, changing their numbers. They're changing their numbers based on what they don't know. And I think that's a really, really big issue. And I think that's why you have to be consistent. You have to show your process and your discipline. And there's always things to buy there's, there will always be stocks, Scott, that outperform the broader market trends, period.
- [04:57]
Scott Wapner
I mean, Joe Barclays today, speaking of changing their numbers, people who do what people like, like Brian does. Barclays goes to 5,900 from the target of 6,600. So that's a pretty big takedown of what they have. It sort of underscores how everybody is kind of resetting their expectations. I point to a couple of journal headlines. The first corporate America's euphoria over Trump's, quote, golden age is giving way to distress. You had the op ed the other day from Alan Blinder, who's a frequent guest on this network entitled, quote, trump plays recession roulette. Roulette with the US Economy. Trump plays recession roulette with the US Economy. And then you do have the takedown of some targets. You have had US equities downgraded in the last handful of weeks as well.
- [05:49]
Kerry Firestone
So it's interesting because I don't even think anyone knows where the S and P equal weight index trades. We all know where the s and P500 trades. But the S and P equal weight index, to Brian's point, is probably where you should be focused this year. You know, two weeks ago I bought Amazon. Amazon is in the quality momentum Strategy, the Jyoti ETF. If I bought at 194, if I could sell it today at whatever it is, 202, I would, but I'm not going to do that. I think the real story underneath the market here is that 2025 is about ownership of bonds. 2025, to Brian's point, is about looking away from the magnificent Seven, ownership of bonds.
- [06:29]
Scott Wapner
You're, you're bailing, you're just all, I mean, we're, what are we two months, three months into the, three months into the year, a little more than two months into the administration and we're, this is going to be the year of bonds. We came into the year all bulled up on stocks.
- [06:43]
Kerry Firestone
Absolutely. I think there's been a dramatic reversal in the way the administration is administering fiscal policy and the effect on pricing. I've told you for the last several weeks, I think interest rates are going to be pushed lower. But the story to me in equities is really about this unwind that continues. And you see it on days like today. What's the reaction to the reintroduction of, what's a negative headline for equities? Immediately you see the MAG7, the semiconductor names, the AI adjacent names begin to move lower. And I think you have to highlight that type of activity and understand, you turn your attention elsewhere. You look at materials, you look at energy, you absolutely look at financials, which we're going to dig deeper in later in the show. And I really believe that is where the viewers, that's where the investors have to find the alpha generation opportunity.
- [07:40]
Scott Wapner
So, Kara, I asked at the top of the show, our lead is, you know, is the bounce sustainable? Can it continue? J.P. morgan's trading desk addresses that, where they say for the second day running, they're pointing to yesterday. Long only and fundamental hedge funds appear to be selectively adding decent size. Behavior is changing around the edges, but given the recent scar tissue, and some of it's deep, there isn't enough confidence for a pile in before April 2. So April 2, of course, is the tariff day that's looming. Wolf research says it's going to be more severe than expected. Now, you add the headline that we just got right before we came on the air today. How would you answer the question? Is the bounce that we got 5%, which is, you know, not small by any measure, sustainable?
- [08:26]
Jenny Harrington
In a word, I would say not necessarily. This is a market that reminds me of a roller coaster, roller coaster in the kiddie park of an amusement park, meaning it's moving pretty fast, but not with a whole lot of up and not with a whole lot of down. It's within a range. We have had very few years in the last 20 where the market is up or down 3%. It's always been more. We've had so many good years and the bad years have been bad. This market can be flat for the year, up 2%, down 2%, and it can keep doing that all through the year. Just based on the news and what we're hearing from the Fed and what we hear about tariffs and whether there might be a recession, there's a lot of news. But the economy is relatively strong. Earnings are reasonably good for many companies. And you can just do this back and forth every single day or maybe go to sleep and wake up in nine months and it'll be exactly where we are today.
- [09:24]
Scott Wapner
Jenny Piper sticks with 6600. I mentioned, you know, the Barclays cut from 66 to 59. Piper sticking with 66, as they say they are quote, this is them, not me, marching through the madness. We believe the weight of technical evidence now suggests an intermediate term low may be in place and stocks have room to run.
- [09:43]
Brian Belsky
So 6600 seems ambitious to me and what I've really been struggling with, when I think about what Joe said about maybe you look at bonds. When I think about what Kerry said about corporate earnings are still good, the economy is still strong. What I struggle with right now is let's say the market's down 10% more from here. Let's say it's down 20%. It then does that manifest into in a rotation, which is what we've had so far where you've got things like energy up 10% on the year, financials up 6. Do, do some things go up? Well, you see tech and consumer discretionary plunge. So does, does a broad market correction from here manifest a rotation where you can actually just switch areas and benefit? I mean, look at international, international stocks up 10% too. Or does a broader market correction say, okay, everything's going down and maybe energy is down 5% from here if the broader market's down 10%. So I think 6600 sounds ambitious. And I'll tell you the thing I'm struggling with also is I don't see anything good out there in the near term. I don't see anything terrible either, but I don't see anything good. We've seen corporate earnings actually the S and P earnings estimates are down about 2% compared to where they started the year. The multiple of the S and P is still at 20 times. The long term average is still only about 17 times. So everything's rich, nothing's great, and uncertainty prevails.
- [11:02]
Scott Wapner
All right, let me get to Eamon Javors now who is at the White House who can give us some more details on that headline that undoubtedly moved the market.
- [11:10]
Eamon Jabbers
Eamon Scott, that's right. Bloomberg now reporting that there is a preparation underway for auto tariffs here at the White House as soon as Wednesday. That coming from Bloomberg News. They're saying the president is readying an announcement on auto levies as soon as Wednesday. They're sourcing people familiar with the matter. They're saying that would escalate the President's fight with global trading partners. That confirms what the president has said earlier this week was he was expecting auto tariffs to come perhaps before that April 2nd tariff deadline. Now we know that could come as soon as Wednesday. We'll see whether we get an announcement from the White House. I've texted a couple of officials in the building. No confirmation of that just yet. I expect that might be coming fairly shortly. But a new report now from Bloomberg. Scott, back over to you.
- [11:55]
Scott Wapner
The other issue. You know, as I mentioned, you know you have the, the national security question about the Atlantic story sort of swirling around the White House again today and dominating the conversation in which we have said over the last couple of days, frankly that it's been all quiet on the western front of the White House as it relates to tariffs. Yesterday was a very quiet day. There wasn't a single headline really related to it. And now as we have a deeper move really by the Atlantic to publish more of what they had learned. You get this headline now?
- [12:31]
Eamon Jabbers
Yeah. Look, the White House is in charge of the timing of these announcements on tariffs and if they want to change the news cycle, they can certainly do that. Scott, we did get a little bit more clarity earlier this morning on what the president said on Newsmax last night, which was that he would be a little bit more lenient than reciprocal next week in terms of the reciprocal tariffs. What does that mean? I asked White House officials. They're telling me that what the president was signaling in that interview last night is that they're not necessarily going to go as far as they said they would in terms of the non tariff barriers to trade. So they had said earlier in February they would take into account vat, tax, currency manipulation, wage suppression, all those kinds of things as they calculated the tariffs and that would give you a very high tariff back against the other countries. Now they're saying they might not go that far. They might dial that back, not take all of that necessarily into account and come up with a lower tariff number next week on April 2nd. So we'll see where that lands. So clearly they're signaling at least a dialing back of the ambitions. A lot of those ambitions had been criticized by economists for going beyond just a reciprocal tariff into punishing countries for other trade machinations that they might engage in. So now they're signaling that they might dial that back a little bit as well. So we are getting, you know, some movement on the tariff front today and through the morning.
- [13:48]
Scott Wapner
Scott, appreciate the insight from you. Eamon, thanks so much. Bring us more headlines. Of course, as you get them, the market, Brian will continue to go through all of that, but we have had a number, as I said in the weeks prior of targets come down. You still have Oppenheimer, which is at 7,100 and you have some 6,000 eight hundreds. But to Jenny's point, 6,600 at this point, 900 points on the S and P. I mean that sounds like a lift. It sounds like a lift. Now the other issue I raised the other day is it sounds like a lift today in the messiness of tariffs and trade wars and all the other stuff. Does it sound Like a lift. If you get to the good stuff later on. Tax cuts, deregulation deals, all the things that we came into this year bulled up about.
- [14:45]
Joe Terranova
I think so. And we remain at 6700. Nobody believes us. And the more people that cut their targets, the better. The more Jenny talks about how she doesn't like anything, the more bullish I get. If you take a look at post great financial crisis earnings, we're still above those earnings numbers, down 2%. It's nothing. If you take a look at the 500 stocks in the S&P 500, we've seen zero negative revisions for FY2. If you look at energy up 10%, energy consumer staples, utilities have been more of a momentum trade, just as. Just as Europe has been. I don't buy stocks based on price. I buy stocks based on fundamentals. How can energy continue to maintain its positive performance if WTI is going to be down 95% of the time, 95% of the time, when WTI is neutral or down, the energy sector underperforms the market. That's where we're going the end of the year. So guess what? Our theme remains resolute. I'll quote the great philosopher Ricky Bobby said, if ain't first, you're last. Meaning we were the first people to put out our target number. We're not changing it. Everybody else is going to change their number back up again when the good news comes in. We have been underweight. The MAG7, overweight the constituents of the three sectors that make up the other stocks in the three sectors that make up the MAG7. That's why our stuff's outperforming this year. And that's why I think our portfolios will continue to outperform.
- [16:03]
Kerry Firestone
The good stuff is coming. I'm with you. How do you get to 6600 without the Mag 7? Because to go to 6600, I'm telling you that the Mag 7 are screaming by right here.
- [16:15]
Scott Wapner
Well, NASDAQ's down 300 points.
- [16:16]
Joe Terranova
Almost parts of the Magic 7 are screaming buys. But how did the market.
- [16:20]
Kerry Firestone
You need all you need.
- [16:21]
Joe Terranova
I disagree. I disagree. And here's why I disagree. Because if you take a look at the performance of the MAG7, Joe, as you know this, in the fourth quarter, they actually underperformed. What outperformed in the fourth quarter? Small cap financials, things that have not been working. So I think that we're going to see massive rotation still into the areas that have been oversold that aren't necessarily in the Mag 7.
- [16:43]
Scott Wapner
Even if we're asking ourselves whether this is a slowdown in the economy or something worse like a recession, the reason why that all worked.
- [16:50]
Joe Terranova
There are no signs of recession is.
- [16:51]
Scott Wapner
We didn't have recession questions then.
- [16:53]
Joe Terranova
There are no signs of recession.
- [16:54]
Kerry Firestone
That I agree with.
- [16:55]
Joe Terranova
There are no signs of recession.
- [16:56]
Scott Wapner
Are there signs of slowdown?
- [16:57]
Brian Belsky
There's not no signs.
- [16:59]
Joe Terranova
There are no signs of recession.
- [17:00]
Kerry Firestone
There's signs of slowdown.
- [17:02]
Joe Terranova
A slowdown is not a recession. And a 10% correction is not a bear market. We're acting like it's a bear market and it's not. We are not seeing substantive signs in the economy of a recession, period. Oh, by the way, Powell said that too. So is he wrong? Are people wrong? They're seeing the stuff that is not bad. And the answer is why is the.
- [17:19]
Scott Wapner
Russell down 7% on the year?
- [17:21]
Joe Terranova
Russell, there's 400 companies in the Russell 2000 that don't even make any money. Guess what? The other ones that do make money are actually really, really good companies. So it's not about buying the index, it's about buying the company.
- [17:32]
Scott Wapner
And by the way, when you say Jenny doesn't like anything, pay attention to what she does, not necessarily what she says. I don't mean that disrespectfully. I mean, look at what you just did. Don't tell me you don't like anything. Don't tell me that, you know, you feel so bad about where this market is or where the economy is going and then buy more. Disney and TripAdvisor.
- [17:55]
Brian Belsky
Right, but so here's the thing. I didn't say I don't like anything. I said worry. And I said what I worry about is, you know, is it the market corrects more and it takes everything or is it rotation? And if it's rotation, there's a lot that I do like. And then you ask me, okay, what do you like? What I like are things that are really well priced which are Disney and.
- [18:14]
Scott Wapner
Highly leveraged to the consumer and the economy.
- [18:17]
Brian Belsky
Critical nuance. They're highly leveraged to the high end consumer.
- [18:22]
Scott Wapner
Disney's highly leveraged to the high end consumer.
- [18:24]
Brian Belsky
It's a very different consumer who goes to Disney than who shops at Dollar Tree. Right? It is.
- [18:29]
Scott Wapner
And if Disney is not very high end, Disney's leverage everybody wouldn't you say.
- [18:36]
Brian Belsky
That if you're looking at credit. But if you were looking at credit cards, which I know we might talk about later, like American Express is more of the Disney customer versus say a Discover card, that might be more of you know, a dollar.
- [18:46]
Jenny Harrington
I mean, I get the point you're making.
- [18:48]
Brian Belsky
Okay. And so yeah, you buy.
- [18:51]
Kerry Firestone
When you buy Disney, are you buying the growth story or the value story? Because to me, the growth story went away.
- [18:56]
Brian Belsky
I'm the wait, the growth story went away story of Disney.
- [18:59]
Kerry Firestone
Disney was supposed to be a growth stock.
- [19:00]
Brian Belsky
Let's say it's mean reversion to more of a historical multiple. Okay, Right. So you've got Disney right Now trading at 17 times epsilon. So 17 times EPS growth for the next three years expect to be 11%, 13%, 12%. That's pretty decent foot traffic. Goldman just put out a report. Foot traffic is holding up in the US Parks. Summer bookings are looking really good. So there's part of the consumer that's fine. And this goes, Belsky, actually to exactly what you were saying, which is there's other areas that can do well. And that's what I think and that's why I brought up international. International.
- [19:30]
Joe Terranova
Jenny, I threw you a bone because I know you like dividend income. I think dividend income is going to be great.
- [19:34]
Scott Wapner
This here, I think it could be TripAdvisor. What?
- [19:38]
Brian Belsky
TripAdvisor is really unique. So that's trading at 10 times earnings. They've got the Viator business which is growing like gangbusters. No one's paying attention to it. It's on track to eclipse the actual historical legacy TripAdvisor business. And the big thing here is that the Liberty Media overhang, that overhung the shares for years is gone. Like that's, you know, that's on, that's fixed or it's in the very, very short term of being fixed. So you've got a Stock with about 11, 15, 22% earnings growth in the years ahead, trading at 10 times earnings, huge free cash flow generation with a really underappreciated growing business. So you can look at those and say, hey, there's areas of value out there and I don't mean value stocks. Areas where stocks are trading at a fraction. If we look at those versus the Mag 7, you have, some of them.
- [20:22]
Scott Wapner
Are trading at a fraction because they're for a reason.
- [20:25]
Brian Belsky
Right, okay. But let's just.
- [20:27]
Scott Wapner
You better have a good summer travel season and it might be. Well, there are questions of whether there will be.
- [20:33]
Brian Belsky
But so far, and this goes to what you were saying when you're saying there's no signs of recession. And I say yet. Right. What we see still is consumer spending is holding up, the consumers holding up all sorts of. So far it's holding up and I think what's making this a really hard market to do.
- [20:47]
Scott Wapner
Is it holding? Is it holding up?
- [20:48]
Brian Belsky
It is like PC in January was still five and a half percent year over year. I'm excited to see what the new numbers come out. I think. When is that? Tomorrow? The next day PCA comes out again. So I'm excited to see what those are. But this is the challenge. So when you're talking about, you know, can can the things that we were bowled up coming into the year, like regulatory reform, all of those, they're going to take a long time to play out. Tax cuts. We're not even really talking about tax cuts. We're talking about extension of the current taxes. But so the positive things.
- [21:16]
Scott Wapner
Well, you're either yeah. Or you're talking about a tax hike.
- [21:19]
Brian Belsky
Maybe, but let's presume we're not getting a tax hike. Let's presume no one.
- [21:22]
Scott Wapner
Well, they either get, they either get renewed or tax either get renewed or taxes go up one way or the other.
- [21:29]
Brian Belsky
All right, fine. So all I'm saying is we're what we're in this challenging period of is like long term, long term outcomes and near term excitement and that makes it hard. So I'll just give you like another example. What I'm not buying is I'm not buying Target and I'm not buying Ford. Those both have huge dividend yields right now, are trading super cheap. And I have zero visibility because of tariffs, because of the regulatory environment on what the earnings of those really should look like.
- [21:55]
Scott Wapner
I'm just not sure what visibility you think you have on on Disney that it makes it such a sure bet in your mind even if you think it's cheap.
- [22:03]
Brian Belsky
I think when you can look at what current summer bookings are now and is trading at a multiple that's fair relative to the broader market, relative to what else is out there. I think you've got a decent margin of safety.
- [22:14]
Scott Wapner
I mean it's part of.
- [22:15]
Brian Belsky
That's what Joe said. Are you looking for growth? And I said no, I'm looking for valuation mean reversion.
- [22:18]
Scott Wapner
It's part of the comp service services sector which is the third worst this year and it is trying to avoid its sixth straight weekly loss. On that note, Dom Chu has some sector nomics for us on comm services of which met as a part of two, which is a big story which I'm sure you will include in part of your reporting. Dom.
- [22:39]
Dom Chu
Sure, absolutely, Scott. So this year the worst three sectors of the year are those Mag 7 type names. Consumer discretionary, which is down 9.5%. Technology, which is down nearly 8%, and then communication services, which is pretty much flat. So that is the focus for sector nomics. Today. We're going to dig into the content and cable company side, which make up almost half that sector. Now this part of the Comm services trade is actually doing pretty well at the top. You have Fox Corp. Up about 13% so far this year. Netflix, by the way, on the streaming side of things, up 12%. And even Paramount Global, which was an underperformer over the last 12, 24 months, is doing pretty decently as well. Now that's followed by the Charter Communications trade. Also Warner Brothers Discovery and News Corp. Now Comcast, which is of course the parent company of cnbc, Live Nation, Disney, are all negative so far this year. Disney's down almost 9%. Now back to the Netflix trade for just one second here. One of the sector's biggest wins this year. Moffatt Nathanson published the stock last week saying that Netflix had won the streaming wars. They upgraded that stock to a neutral from a buy to a to a buy from a neutral. They also put a $1,100 price target on those shares. But you mentioned the Meta and Alphabet trade as well. The Meta and Alphabet trade are ones that are going to be interesting because Meta has seen some of that kind of upside move off the recent lows that we saw in the NASDAQ 100 since 13 March. The question then becomes whether or not this buy, the dip mentality and muscle memory still carries for names like Alphabet and Meta on that comm services trade. Scott, I'll send things back over to you guys.
- [24:12]
Scott Wapner
I appreciate you, Dom. Thank you. Don Chu, Metta, by the way, the only of the mega caps that is positive year to date. We should note that one of the big drags, I mean, Nasdaq as we said, down 300 points and it's approaching a 2% decline in video is going to take a lot of blame for that today as it faces a threat from Beijing and environmental curbs. A lot of the chips are down as a result of that. You do have the Tesla shares, which are down again. I mean, how are we thinking about Metta here as it relates to, you know, what Joe said, no mega caps, no 6600.
- [24:49]
Brian Belsky
Yeah. So this is our only mega cap down 14% from the high. But like you said, it's the only one that's still up. The thing, the thing on this is it's kind of tough. The valuation still looks okay. It's trading about 24 times, which is richer than the market on average. But you've got expected earnings growth of 7%, 15%, 16%. They came into this year super strong with revenue growth up. Shoot, what was it like 13% earnings growth up 15, 50%. So they came into the year strong and I think it might just be a Math equation. The 7% expected earnings growth for this year, I'll bet you that comes in light and I think this is one that you don't have huge tariff risk risk. You've got a management team that continues to prove itself successful. I think the earnings growth is reliable here.
- [25:35]
Kerry Firestone
Question is, is the capex reliable?
- [25:37]
Scott Wapner
That's the tricky, that is, that is.
- [25:39]
Kerry Firestone
Entirely the tricky part on all of this. And you just wonder if there's going to be this efficiency once again. If in fact this is the environment the max 7 continue to trade in over the next several months. Just look as an example what we heard today from Jack Dorsey and Block930. 31 employees let go, unfortunately. Why? Because they're looking at performance and they're looking at reducing headcount because they know that's going to lift margins. And I just wonder if that's the story we're going to hear if the mag 7 stay in this kind of correct discipline.
- [26:10]
Brian Belsky
And so that that's been the challenge for the last two years kind of of us owning better is when matter was trading at 90 bucks. Mark Zuckerberg. Zuckerberg got super disciplined, right? And then we've been saying all right, with the stock at 500, 600, 700, will he still be disciplined? And to the guy's credit, he has been remarkably so so, so far so good. But you got to watch it carefully.
- [26:29]
Scott Wapner
We've had a busy 25 minutes thus far. We have more news. Leslie Picker has that for us. Hey, Les.
- [26:35]
Brian Belsky
Hey, Scott. Former U.S. treasury Secretary and Fed Chair Janet Yellen joining the Global Advisory Board of pimco. That is according to a person familiar with the matter. Now I'm told that the former governor of the of the Reserve bank of India, Raghuram Rajan will be joining alongside Yellen. The former UK Prime Minister Gordon Brown will become chair of the board, replacing.
- [26:55]
Scott Wapner
Former Fed Chair Ben Bernanke, who is retiring after serving a decade in that role.
- [27:00]
Brian Belsky
Mark Carney had already stepped down to serve as the Prime Minister of Canada.
- [27:04]
Scott Wapner
PIMCO manages $2 trillion, much of which.
- [27:06]
Brian Belsky
Is in active fixed income. The Global Advisory Board meets at least four times a year to talk about their macroeconomic outlooks and advise Pimco's investment committee as well as participate in some client events.
- [27:17]
Scott Wapner
Scott all right, let's thank you. Leslie Picker. Coming up, we do have more committee moves. Kerry is going to kick us off to start this next block. Number of moves talk about there. Jenny's got more as well. We are back on the half right after this.
- [27:35]
Fidelity Advertiser
Don't just ride the index, seek to outperform it with FELC, the Fidelity Enhanced Large Cap Core ETF. Unlike passive ETFs, FELC is run by a team of experts to adapt to market conditions and pursue upside potential wherever it's hiding. And while you get the potential outperformance of an actively managed fund, you can still buy and sell it on your terms just like any other ETF. Discover FELC, the Fidelity Enhanced Large Cap Core ETF, part of Fidelity's suite of active ETFs. Learn more at fidelity.com felcing before investing in any exchange traded fund, you should consider its investment objectives, risks, charges and expenses. Contact Fidelity for prospectus and offering circular or if available, a summary prospectus containing this information. Read it carefully. While active ETFs offer the potential to outperform an index, these products may more significantly trail an index as compared with passive ETFs. Fidelity Brokerage Services LLC Member NYSE SIPC for 140 years MultiCare has been in Washington prioritizing long term solutions, partnering with local communities and expanding access to care. Together we're building a healthier future. Learn more@ multicare.org try angel stuff for your tushy. It's made by Angels Soft and Strong. Budget friendly. The choice is simple, a roll that feels like paradise and always at a heavenly prize. Angel Soft, Angel Soft, Soft and strong.
- [29:16]
Jenny Harrington
So it's simple.
- [29:18]
Fidelity Advertiser
Pick up a pack today. Angel Soft, Soft and Strong.
- [29:21]
Joe Terranova
Simple.
- [29:38]
Scott Wapner
All right, welcome back. I said we had some moves from Kerry that was going to start our block here. So you bought more. These are healthcare related, your wheelhouse. You bought more Health equity and you bought more Amgen. Tell us.
- [29:50]
Jenny Harrington
Yeah, so health equity is in the health savings plan business. They had a cyber attack, not directly at them but at one of their partners and the stock came down as a result of that. When they announced it at earnings, we had trimmed the stock twice, 20% lower than where it was. We think it's very attractive. We think the administrative is inclined toward this business and we believe there's a long Runway for future growth. So that's Health Equity on Amgen, this is a stock that has been in the news because of maritime, which is one of the lip one and glip agonist drugs. We really feel that it's got an attractive balance sheet. It's got a good profile of its pipeline. It has several cancer drugs by marituzumab. I know you like it when I say the whole name of the drug. That's a cancer gas.
- [30:41]
Scott Wapner
You have it. You have a very rare skill of being able to pronounce all of the names. I said it was your wheelhouse.
- [30:48]
Jenny Harrington
Thank you. So it's, it's a cheap stock, 14 times earnings, 3% yield. So. And Joe owns it also. So give Joe a plug for the.
- [30:56]
Scott Wapner
Do you think that, I mean, do you have any confidence that the early year gains in health care, which was a standout. Right, and it still is relative to many of the other sectors, can be sustainable in its own right?
- [31:08]
Jenny Harrington
Yeah, I think, I think that they can. This is a group that has underperformed for two years now. These all sell at very attractive multiples. If you're talking about valuation, they have valuation. They are coming out of what is the worst period of losing exclusivity on many of their drugs. And so you're starting to see pipeline of phase three trials conclude. New drugs emerge in the market. And so this should carry them for the next several years.
- [31:37]
Kerry Firestone
They're also working off difficult comps as it relates to Covid and they're beginning to grow their revenue once again. In the case of Amgen, you're talking about 8% revenue growth over the last three years. Look what they did over the last year, 24% revenue growth. So the revenue growth is coming back once again and that's where you pay the premium.
- [31:56]
Scott Wapner
What do you think?
- [31:57]
Joe Terranova
I remember going to Fidelity talking to you about Amgen and Biogen and Genentech. You want back in the late 90s, like, no, I love the biotech. I love the biotechs. That's where we're overweight in health care. We're actually underweight health care because of the COVID overhang and the big pharma. But we love Gilead, Amgen and.
- [32:14]
Scott Wapner
What do you mean the COVID overhang?
- [32:15]
Joe Terranova
The COVID overhang. Covid overhang of the big pharma stocks. Look at Pfizer, Pfizer, Merck.
- [32:20]
Scott Wapner
You don't. You hate the whole healthcare space because of two.
- [32:23]
Joe Terranova
No, no, no, no, Scott.
- [32:24]
Kerry Firestone
You know, work off the cost.
- [32:25]
Joe Terranova
You know, the largest company in the S&P 500 health care sector, Lilly, Lilly was the number one performing stock last year.
- [32:31]
Scott Wapner
Why?
- [32:31]
Joe Terranova
Because of one particular drug period. So that's. You talk about the magnificent seven be concentrated, Lilly was concentrated. People are concentrating their health care positions. We like biotech because of the cancer. We like devices like Medtronic and we like the payers in the systems like United Health Care.
- [32:45]
Brian Belsky
Yeah, I think the right way to look at it.
- [32:47]
Jenny Harrington
Yeah. Well I think that Brian is talking about where is growth going to come and that's more from the biotech. I think that some of the big drug companies, not all of them still have attractive valuation. They de risked, they have dividends and they're selling extremely defensively. And so that's attractive in this kind of market.
- [33:05]
Scott Wapner
You think? I mean you better be watching rates then if you like the biotechs. Higher rates not good for biotech stocks.
- [33:12]
Joe Terranova
Well, rates are probably going to go lower number one. Number two, if you take a look at the dividend growth and balance sheet strength and free cash flow yields of Gilead, it's a monster. And then there and then they're their, their drug future, their pipeline is amazing. And so I think people, what happened in the two years that they underperformed is everybody went into Lilly, rushed into Lilly and they sold their Gileads and their amgens and their ABVs. The names that we own because of the pipeline, because of the growth and.
- [33:40]
Scott Wapner
Because of the valuation and because of the fact that interest rates went up, the cost of capital increased dramatically for companies that have to spend the cost.
- [33:47]
Joe Terranova
Of capital goes up.
- [33:48]
Scott Wapner
Those wheelbarrows full of money.
- [33:50]
Jenny Harrington
They don't because they've got tons of.
- [33:52]
Joe Terranova
Cash on the balance sheet and that's what they're using. They're not going out in the open market getting loans.
- [33:56]
Scott Wapner
Well, you're talking about the biggest of the big biotech, Correct?
- [33:59]
Joe Terranova
Correct.
- [34:00]
Kerry Firestone
Would you buy.
- [34:00]
Scott Wapner
That's the distinction.
- [34:01]
Joe Terranova
Would I buy what?
- [34:02]
Kerry Firestone
Biogen?
- [34:03]
Joe Terranova
No.
- [34:05]
Jenny Harrington
Well, it's still decelerating.
- [34:07]
Scott Wapner
Bertha Coombs has the headlines for us. Hey Bertha Scott. Tesla is bringing its electric vehicles to oil rich Saudi Arabia as global sales continue to fall. Tesla made the announcement today saying it will open pop up stores in three cities there on April 11. According to consultant PwC, EV sales make up just over 1% of auto sales in the Kingdom. Steep cuts could be coming to the Treasury Department according to a court ruling or filing. Rather, the agency is planning to furlough a quote substantial level of its workforce as it complies with Elon Musk's efforts to shrink the federal government via Doge treasury currently employs more than 100,000 people. And bonuses for Wall street bankers jumping more than 30% to an average just shy of 240% last year. A report by the New York State comptroller out today shows the bonus pool for employees in New York City's securities industry surged to a record $47.5 billion, the highest on record as the world's top financial center. One in every 11 jobs in New York City is directly or indirectly associated associated with financial services. When they do well, the city often does well. Back over to you, Scott. All right, Bertha, thank you very much. Berta coombs, we'll take a quick break, come back. We'll get to that Jenny move that we didn't have time to document, but we certainly will. We'll try and fit in some calls. And then a little bit later we have one firm talking about where to shelter during the tariff storm and they're talking dividends. We'll get some top picks from Jenny as well. Coming up.
- [36:06]
Fidelity Advertiser
Try angel stuff for your tushy. It's made by angels Soft and strong. Budget friendly. The choice is simple. A roll that feels like paradise and always at a heavenly prize. Angel soft.
- [36:23]
Jenny Harrington
Angel soft.
- [36:24]
Fidelity Advertiser
Soft and strong.
- [36:25]
Jenny Harrington
So it's simple.
- [36:26]
Fidelity Advertiser
Pick up a pack today. Angel soft, Soft and strong.
- [36:29]
Joe Terranova
Simple.
- [36:32]
Fidelity Advertiser
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.
- [37:17]
Scott Wapner
Let'S talk about this move that we have from Jenny. You bought more Cisco, the food company Sy y tell us why.
- [37:23]
Brian Belsky
This is the last of the three that we picked off when the market pulled back over the last couple weeks. So syyy that's the food service company where you see their giant trucks always delivering food to restaurants. And what we've seen in the past, well really this year is that the consumer staples with the threat of GOP1s and RFK as as head of of HHS is we've seen a huge pullback in consumer staples. People are worried that people are going to eat less, less calories. So the stock's now trading at 14 and a half times earnings. They've got earnings growth in the 6 to 9% range. Historically it's traded in a range of 19 to 21 times. It's a great company. They had revenue growth last quarter of four and a half percent. And we think it's overdone. That's it. Not that simple. Yep, Cheap with earnings growth ahead.
- [38:07]
Scott Wapner
All right, let's do some calls. CarMax, top on our list today. Upgraded to overweight at Stevens. Price target 90 was 86. They say management's well tenured and disciplined. You've owned the stock for a while, right?
- [38:19]
Jenny Harrington
Yeah, it hasn't been a great stock. So we think that business is starting to improve. We've had nine quarters now where volumes, volumes, used cars, which is what they sell, have been up. Positive, positive growth. You're also starting to see prices of used cars come down during COVID Of course, prices went sky high and it was ridiculous. No one bought used cars. No one really wanted to buy cars. They weren't driving that much. Then they started to. And the new car market moved much faster. So we see this as an opportunity in the stock because it's done. It's starting to act better and volumes are picking up and that should be good for the next several quarters.
- [38:59]
Scott Wapner
All right, trade desk upgraded today. CFR A. Joe, they're bullish on the valuation. Stocks pulled back a lot, right?
- [39:07]
Kerry Firestone
Oh, the stock is.
- [39:09]
Scott Wapner
So the valuation is more attractive at this point, according to them. They also say potential Alphabet ad tech sale could create upside. Okay.
- [39:17]
Kerry Firestone
So of course the valuations would be more attractive when the stock is literally in freefall. We had this conversation coming back from President's Day when I returned from Minneapolis, Josh, yourself and I talked about this. And I said, you have to have a risk management strategy. Now, it is in the Jyoti ETF, the ownership there is 43 basis points, the third smallest position we have. When a stock goes from 120 down to 80 after earnings, sits at 80 on February 19th. And you don't acknowledge that you have to do something with your position. I'm sorry, that's not implementing a risk management strategy. Here we are today at $59. Okay. You could say the valuation looks good. I disagree with that. The only thing good about this is the revenue growth. And I can't wait. Maybe at some point it comes off the books on the.
- [40:01]
Scott Wapner
I was going to say the Maybe at some point. I would say the only good thing about this is that we're almost at the end of the month and the quarter. You staying with this thing?
- [40:09]
Joe Terranova
Yeah, it's in our.
- [40:10]
Scott Wapner
Dogged it out so bad.
- [40:11]
Joe Terranova
I know he dogged it, man. I said last time I was on that this company is officially in a two quarter penalty box for us because in their quarterly earnings the CEO and their CFO are not great about vision going forward. And that really worries me. But we love the longer term thematics of that, of that type of business with the Google business and the online advertising. We think that's where this is going, this future. We think they're one of the best at doing it. So we're going to wait and see.
- [40:38]
Scott Wapner
Okay, two questions. Quarters. You let us know. Total Energy is upgraded to buy at Citi today. Jen.
- [40:43]
Brian Belsky
Right. So Total and Shell, both really great global energy leaders and they benefit from Europe, from Europe's demand for energy. They're really focused on lng. But here's again, not that exciting. But what's important about them. Shell trades at 9 times earnings with a 12% free cash flow yield and almost 5% at 4% dividend. Total trades at 8 times earnings, 10% free cash flow yield and a nearly 6% percent dividend yield. So they have huge free cash flow. They can buy back shares. There's not a huge earnings growth story here. Just free cash flow and endless demand quickly.
- [41:14]
Scott Wapner
I'm sorry, I just want to get Shell in there too because that was by it.
- [41:18]
Brian Belsky
B of A. Yeah, sorry. It's kind of the same story. Just Europe, Europe, demand for energy.
- [41:22]
Scott Wapner
Okay, we'll take a break and then stocks offering shelter from the tariff storm. One firm with a list of dividend names you can hide out in. We'll talk about up next. All right, welcome back. Stocks lower today. As you know, April 2nd. Looming large headlines from the White House coming today regarding tariffs. Wolf Research has a list today of a dozen dividend stocks they say could offer shelter during a tariff storm. They have names like Walmart, Procter & Gamble, ADP, Cintas, Fastenal, Ecolab, Sherwin Williams, Granger, Chevron, Lowe's, Coca Cola and Caterpillar on the list. Jenny, I'll just go to you first. What do you think of the list? You don't own any of those names, but you do have your own picks because this is your wheelhouse.
- [42:25]
Brian Belsky
It is. So those names are really Dividend Aristocrats. And Dividend Aristocrats are stocks that have paid and raised a dividend for 25 years straight. And the Dividend Aristocrat ETF, the ticker is an OBL. It's actually up year to date. It's up about 1.7% if you look at the Dow Jones Select Dividend index that's up 2.3% year to date. And why? Because I think it's just, just a quality play. The other interesting thing about the dividend Aristocrats is they don't actually have a terribly high yield. The average yield of the NABL ETF is only 2%. Right. So you're really looking for those for dividend growth, for quality. But I think quality is the key there. If you've paid and raised a dividend for 25 years straight, you've got such great control over your business. A lot of them trade with a slight premium valuation. So I'll tell you which of those.
- [43:10]
Scott Wapner
Well, Cisco falls into the category that you like. The one we just.
- [43:14]
Brian Belsky
Yep. And there's about 68 actual dividend aristocrats right now. Cisco is one of them. It's paid a dividend for 56 years and has a 3% yield. Other ones we like are your medtronic, Brian. Right, thank you. Which has a 3.2% yield. Now those two are actually in our discipline growth strategy because that's what they are. They are disciplined growth companies and they pay you dividends too. In our equity income strategy, the two dividend Aristocrats that are there are Realty Income Letter and Stanley, Black and Decker and those have yields of 5.8 and 4%. They've paid dividends for 32 years and 58 years respectively. But they're all just solid, high quality, well managed, you know, take, take shelter in the storm is exactly the right.
- [43:52]
Scott Wapner
Way to say you wanted to hit Wal Mart.
- [43:53]
Kerry Firestone
I did list Wal Mart right. At the 200 day moving average, a very interesting spot, down 6% year to day. I think this is the spot where you could buy it. But there's a larger conversation there. The fact that all of these companies, companies, Cintas, which is on the list, talked about it, Costco is talking about it, certainly Walmart. You're seeing an inventory build, a natural inventory build because of the tariffs. And that calls into question what happens in the direction of the economy if the economy deteriorates significantly further. You're talking about companies that sitting on inventory. Now that's a margin drag.
- [44:26]
Scott Wapner
You owned several stocks including Walmart, Proctor.
- [44:29]
Joe Terranova
Chevron, Lowe's going in opposite direction because I'm Polish. So we own lows in the value and our dividend growth because of the dividend. We own Chevron because we believe the move last year was out of Exxon into Chevron, plus those companies with respect to the dividend growth on the Walmart thing, we talked about Target earlier. Target has massive operational issues. Massive, a much higher yield. We own it in our value. But Walmart is the way to play consumer staples with Costco because they're the two best companies in the world with respect to that. And I think the food companies in particular are going to be in trouble for a while. So that's why Wal Mart, I think, is a place to play there.
- [45:08]
Scott Wapner
We'll come back with Santoli and his MIDDAY word next. Senior markets commentator Mike Santole joins us now. There he is. For his midday word. I mean, we up 5% off the bottom. We weren't just going continue to go straight up every day.
- [45:29]
Kerry Firestone
No, unlikely. And of course, you know, pure V bottoms are the exception, not the rule today. You know, you have to keep in mind it's a pretty top heavy decline. You know, the NASDAQ 100 type names obviously leading it. And it really is this ongoing rethink of the infrastructure build. Semis continue to act pretty poorly. That's been kind of that that bleed hasn't stopped in that area. With the Overall S&P 500, though, I think it's relevant that we backed off right to last week's high. It was one of those threshold levels that a lot of the, the kind of people looking for the mechanical buy and sell points were interested in seeing the market clear. And we're staying above that a little bit for now. It feels still like, as we discussed yesterday afternoon, Scott, that, you know, we've kind of made use of the oversold conditions, the sentiment drop, the positioning reset and the fact that the economy is probably less bad than we were pricing in at the lows. And now at some point you have to have the baton pulled by actually affirmative, better news or maybe some moderation on tariffs. So I think that's the zone we're in right now. But you know, we really are just kind of churning just in this, you know, plus 4% off the lows level. Nothing too alarming, but also not too convincing in terms of upside for us.
- [46:40]
Scott Wapner
We'll see what PC delivers and if that brings what you're talking about or not. I'll see you at three. Closing bell. That's Mike Santoli. Finals are next. Lows of the day for the Nasdaq. You can see the decline here. Yields ticking up a bit. NASDAQ stocks continue to go down. Nvidia is down 6%, Tesla's down 6%. A lot of the chips are off. We'll watch all that and I'll pick it up for you 3:00 on closing bell. We'll have Adam Parker join us, Morgan Stanley, Sherry Paul as well as you Finals. Good having you. What you got?
- [47:15]
Joe Terranova
Hey, thanks a lot for having us. Chewy Chw Y here Wabtech number one.
- [47:21]
Jenny Harrington
Maker of railcars and rapid transit.
- [47:23]
Scott Wapner
All right, thanks Jenny.
- [47:24]
Brian Belsky
Crown Castle over with a huge management management transition sold awesome things. Zero tariff risk, zero economic risk the.
- [47:31]
Kerry Firestone
Joe T sill like financials JP Morgan good stuff.
- [47:34]
Scott Wapner
The exchange begins 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.
- [47:48]
Fidelity Advertiser
All opinions expressed by the Halftime Report participants are solely their opinions and do not reflect the opinions of CNBC, NBCUniversal, their parent company or affiliates, and may have been previously disseminated by them on television, radio, Internet or another medium. You should not treat any opinion expressed on this podcast as a specific inducement to make a particular investment or follow a particular strategy, but only as an expression of an opinion. Such opinions are based upon information the Halftime Report participants consider reliable, but neither CNBC nor its affiliates and or subsidiaries warrant its completeness or accuracy, and it should not be relied upon as such. To view the full Halftime Report disclaimer, please visit cnbc.com halftime reportdisclaimer@ Capella University, learning the right skills could make a difference. That's why our business programs teach you relevant skills you can take from the course room to the workplace. A different future is closer than you think with Capella University. Learn more at Capella. Eduardo.