C (2:22)

Right.

E (2:23)

And I think it's a reasonable question. Historically, when we come off of a strong April like we just had, it's not uncommon for May and June to also be soft months. And so it is possible that there is some validity to that question. However, if you look at how strong tech has been over the last month and you look at the price of Bitcoin because the NASDAQ and Bitcoin are inextricably linked. It getting off of those $60,000 per coin lows and now chasing 80,000 shows you just how strong the demand is, at least among retail investors. Because to me that's the retail investor fear and greed index as opposed to the vix. That is the place that you want to be paying attention to as far as the tech trade is concerned. So all week we've been asking the question is this the make or break moment for the Hyperscalers for tech? $700 billion worth of capex on the table. And based on the earnings that we just saw this week, that I'm sure we're going to discuss this entire hour, I would say yes, I think that tech did actually deliver on the whole. And so the make or broke, make or break, excuse me, was actually a make.

C (3:26)

Is it as simple as just keep believing in the earnings growth story, forget about the rise in oil prices, forget about more tariffs and all that and just focus on really what makes stocks go either up or down on a more prolonged basis than a headline driven thing and that is earnings growth.

F (3:48)

Well, I think earnings growth is absolutely the most important. And what a relief rally we had in April. I mean we went from hope to true validation. And the relief wasn't just in earnings. It was all also in the fact that we didn't have a worst case scenario in the Middle East. Oil prices didn't go to $200 a barrel. The earnings didn't crack, which is great. But I think most importantly to Malcolm's point, the trade held up. So Scott, I think you're right. As long as earnings can continue, at least for the next few weeks, that's going to be the cornerstone of the market to prove the rally. I think the thing that we're going to turn our attention to sooner rather than later is really inflation and interest rates. Those are the two things kind of looming over the problem of the markets moving higher. But for now I think it's absolutely about earnings.

C (4:29)

Earnings have been so robust, I mean, I think even well ahead of the highest of expectations. Which is why if I ask you buy in May or sell in May, you're probably going to tell me the former over the latter because how could you tell me something otherwise?

G (4:47)

Well, I lost track of what was the latter and what was the former. So let me be clear.

C (4:51)

You should be buy in May or sell in May, it's pretty simple.

G (4:53)

Yeah. No buy. Okay. Market's going higher and it is because of Earnings growth. Okay. 19% is the projected year over year earnings growth in the s and P500. I should point out that when we started the year it was around 15%. These estimates have done nothing but go higher. And what's been driving those estimates is technology earnings estimates. So the projections coming into this week is that where the earnings growth was going to come from was technology. And this week was actually kind of make or break in that regard. We got very good earnings from most of them. You know, we'll just put that aside. Actually, the earnings were fine. It was the capex, we got it. But basically technology is what's driving this market and it's going to continue to. Now there will be other sectors as well. Energy and materials will show some signs of growth as the year goes on. Industrials financial should do fine. So there is a little bit of a foundation there. But make no mistake, this market is driving higher on technology.

C (5:48)

So I mentioned the Goldman note from Ben Snyder. Earnings growth is going to drive continued equity market appreciation going forward. There is a little more to the story though where they say tactically, however sharply narrowing breadth has historically indicated equity market drawdown risk. S and p has rallied 14% from the low in late March. The median S and p constituent is 13% below its respective high. So does that indicate, does that indicate a potential problem? That headlines are great below the surface, not everything's playing ball?

E (6:30)

I think under normal circumstances the answer to that would obviously be yes. In this case it's a different scenario because Jim just pointed out the fact that earnings growth has actually accelerated since we started this year. Even though you have meta spending 100% of its free cash flow probably turning negative, you have Amazon spending 100% of its free cash flow, you have Alphabet spending a ton of its free cash. Meanwhile, the chips are the ones actually responsible for the growth. And we haven't even heard that story yet from those chip names. And so I expect that coming through the rest of this year, we're going to still get that positive earnings momentum that makes you want to own the tech space specifically, but also the S and P on the whole. And so I think that yes, you could normally look at this and say breadth is narrowing. The trend tells us that it's time to get out of the way. But I think that tech is actually pushing us higher and higher. The market is showing signs that it clearly wants to go higher and higher. And once again, all Roads point to AI.

C (7:29)

I mean I'm looking at an earnings growth number that makes you do like a triple take because I thought expectations were, were for something like 14% earnings growth or something in that ballpark for Q1, you know we're at, we're better than 28%. We're at 28.8% earnings growth.

E (7:47)

And for tech it's in the 40s.

C (7:50)

That's, those are crazy numbers.

F (7:52)

And that's on the heels of 2025 where we had double digit earnings growth which was unprecedented to expect two years in a row. So for it to double is insane. Now we have had a market that's extended, it's a little bit stretched. So it could be normal to see a little bit of a pause maybe. But I don't think you want to be selling in May and running away.

C (8:11)

That's a key point you raised which, which tease the debate. Momentum behind stocks versus overbought areas of the market. Right. So two different things. Like there is a lot it feels like of momentum behind stocks at the same time you have, according to Michael, partner of B of a lot of areas that are stretch, oil, semis, Taiwan related stocks, tech, AI all he says are vulnerably overbought relative to their 50 and 200 day moving averages.

G (8:39)

I think it's a stock pickers market in all of those sectors. You know, sure, you can find some chips that are maybe overpriced. I would look at Nvidia, the bellwether of the whole sector.

C (8:47)

I mean there's so many of these things have been just straight up into the right.

G (8:50)

They have been straight up and I'm

C (8:52)

not talking about a handful either.

G (8:53)

I got you. And you know, as you're saying that I'm thinking about Micron. But here's the thing. Micron's valuation is not some valuation that makes you say oh my God, there's got to be a trapdoor opening up under the share price sometime soon. And I think that's really what I'm driving at here is pick those stocks where the earnings growth rate versus their multiple looks attractive. It can be Micron, it can be in video, it can be Qualcomm, there's a lot of them. So regardless of how far they have run up, their earnings growth is supporting it. And you know, I would look even within the larger tech space and say if you're getting those growth rates that you just talked about 28%, that justifies a much higher multiple than if you're getting 10 to 15%. One other side note on this, and I think this is kind of where you were going maybe Malcolm, is that the earnings growth is projected to broaden. So everything's, you know, the growth rate.

C (9:39)

It is, but it's going to continue.

G (9:41)

It's going to continue.

C (9:42)

Is always going to have the best of the earnings growth.

G (9:45)

Fine, fine. The point that I'm driving at with this is to the question of whether the rally can broaden without the market coming down. You. Yes, it can. As long as the other 493 or other sectors of the stock are seeing their earnings projections go up, which they are.

C (9:59)

Well, you said a handful of chips have gone up a lot. I'm just going to read you some numbers. Yeah, more than a handful that blow your mind. And perhaps many of our viewers who own these names and know that they've done well but maybe don't understand fully how well. Okay, this was just in April. Intel's now Intel's a special situation. Special situation. Obviously it's up 114. It was in April. Astera 78%, AMD 74, Marvell 67, Micron 53, Qualcomm, your Qualcomm 39, ARM 39, Broadcom 35, Applied Materials and Nvidia only 15 and 14 respectively.

G (10:41)

You know best.

C (10:43)

That's not some these.

G (10:45)

Okay, point taken. Bad word choice on my part. But let's move to the point that matters, which is these hundreds of billions of dollars being spent on capex for artificial intelligence. Malcolm, this is where you were going just a second ago, right? It trickles down. Where? To these chip companies. Look, the reason that companies are buying chips from not just in video and AMD, but from Amazon and from Alphabet is because they can't get enough of them. The demand is there. And the demand by the way, starts at the point of selling compute. All of this incremental commute is compute is profitable. So these hyperscalers can't get their hands on enough chips.

E (11:20)

And that's why these and everything else they touch, right? It's the energy consumption, it's the infrastructure, it's the construction companies, like construction workers. And construction companies in the state of Texas alone have never been more busy. Like they're constantly talking about how sold out they are because of trying to build these data centers, centers you can't get enough turbines, for example. Like all of the things that this capex touches. It's Alphabet, Amazon, Microsoft and I'm missing one other. But out of those four companies, $700 billion going into the dirt to Build the next set of data centers in just one year that trickles through the entire economy to continue your narrative there. So I think that's really what we're seeing when we talk about expansion to

G (12:03)

continue into the next year. This is not something we're peaking this year. It is projected to get higher next year based on the earnings conference calls this week. I mean this is not old news. This is fresh.

E (12:14)

It's projected to keep going. But we will hit a wall sometime.

G (12:17)

We will.

E (12:17)

I don't want to make it sound as if it's all rainbows all the time. We will hit a wall at some point simply because we run out of energy at some point.

G (12:25)

We're power do not sell in May as the table.

C (12:27)

I love the Wolf comment today. Wolf research on the chips space overbought, extended, overhyped, you name it. But trying to fade this type of powerful momentum has been extremely painful.

G (12:39)

And therein lies the best point. Don't try to fade this. I mean we can talk about valuations, earnings growth rates, we can talk about where this peaks and everything but just look at the market for these stocks. They are going higher. Now look, I'm an analytical fellow. Everybody knows that. I like to use numbers. But sometimes I'm just telling you the sentiment of this market. And to your first question, Scott, of should we be buying in May, the answer is yes.

C (13:02)

Yeah, but when you say they are going higher. So those gains that I read you in the semi space, that's a big statement to just say just out of hand, they're just going higher.

G (13:11)

Okay, so I also.

E (13:13)

A lot.

C (13:14)

Right. I mean look, I also certainly are if nothing else at risk of something pulling back in May. I mean I think people are bullish on the chips. But let's get real. I mean these stocks 60 and 70% in a single month just. And I get momentum in all of that. But at some point momentum runs out of gas or at least you need to take a prolonged sit down before you get up and run again.

G (13:43)

You can pick so many stocks right now where I see attractive entry prices.

C (13:46)

Okay, you tell me which one video. You tell me right now.

G (13:49)

Nvidia. I mean just go with the biggest, the best chip company in the world, the thing that drives the markets overall all why make it harder than this? It just set a record this week at 213 somewhere around there. Now it's at 199. I mean come on. It's that it's right in front of your face.

E (14:04)

I would argue though to that Point what we heard from Alphabet as a. Alphabet as it relates to TPU's and from Amazon as it relates to training kind of flies in the face of Nvidia being the stock to buy at this moment. I understand the argument that once they cross the 200 marks, they're supposed to go parabolic again from there. I'm not a technician. I'm not going to sit here and play one on tv. But I don't think that you can say as confidently now as maybe you could have before this earnings period that Nvidia is going to have the same level of demand that they.

G (14:36)

Because of competition.

E (14:38)

Because of competition.

G (14:39)

I mean, I hear you. Your point is well made. I simply say that the demand is just outstripping the competition. It's outstripping the supply. We're getting that from everyone. So this is a pie big enough for video to continue to excel while Alphabet, fabulous company. I mean, we all love it, right? While Alphabet continues to show Demand for its TPUs and Amazon for its Trainium and AMD and. And Broadcom. Haven't even mentioned Broadcom once so far. The demand is simply stellar.

C (15:06)

Let's talk about Apple, right? How could we not? The stock got it within a whisker of a new record high today. Let's look at the chart. Got within 1% of a new high. So this thing keeps pushing higher. They had a good quarter. I mean, iPhone sales may have been slightly below expectations, but they've been robust consistently. And that's why the stock, which even ramped into the print, continues to move higher. China is A rebounder, up 28%. Record high. A new one for the services business, which is massive in its own right. Gross margins near 50%, 49.3. You get the big buyback, 100 billion. You get a dividend hike. You got a new CEO coming in who talks about, quote, an incredible roadmap ahead. Kev, you have the name.

F (15:53)

You couldn't have nailed it better, Scott. And the biggest thing that you said there was that the iPhone sales being a little bit light, usually that controls the entire narrative. And the fact that, that we took a back seat to everything else is just incredibly exciting. We have a full position in Apple. We had an opportunity. There was a rumor a few weeks ago, for those of you who remember that the flip phone may be delayed. The flip phone is not part of our thesis. It's not part of the narrative on why we own it. We were able to build out the position. I couldn't be more excited than the number. What's the difference.

E (16:22)

It's a folding phone.

F (16:24)

I'm old.

C (16:25)

The last quarter had really robust iPhone. The iPhone 17 has been a home run. I don't think there's any other way.

G (16:32)

So has MacBook, but the Mac.

C (16:34)

I think it's actually the upgrade cycle surprised some people. I mean, we've been waiting and waiting and waiting, and it's been more incremental than just you come out with a phone and then bang. But the 17's been pretty good.

G (16:47)

Yeah.

C (16:47)

Now you look forward to, you know, this foldable phone. But more especially, I mean, it really is a, I think, a belief that they're gonna, they're gonna get this AI story corrected.

G (16:58)

I think that that may be the centerpiece of what John Ternus, the new CEO, was saying when he says the roadmap ahead is the most exciting that he's seen in his 25 years at the firm. I think the centerpiece of that does have to be. I wonder if there's other things as well, Scott. I mean, one can't help but wonder, is there an acquisition? Maybe? Does that mindset change? But I don't want to get too ahead of our skis.

C (17:19)

I can't imagine that.

G (17:20)

I hear you. I hear you.

C (17:21)

I hear the, the course that they've been on. I know.

G (17:26)

Let me have a dream fever for a moment. You can talk me down, especially because,

C (17:29)

you know, Turnus is a. Is a product guy. I'm not going to say they're not. You know, there's zero chance they're going to go out and buy a product. What product are they going to go out?

G (17:36)

Listen, I'm. As I said, let me have a dream fever for a moment. You're appropriate to talk me down.

C (17:41)

Wouldn't that really be a dream fever? I mean, use a shareholder. Want them to go do a deal for something rather than just, you know, get it right with AI, which they seem to be on the. The track to do it.

G (17:50)

The issue is, what do you do with all this cash and all this cash generation? I mean, sure, you're buying back shares, you're going to increase the dividend, but the cash piles up.

C (17:57)

Pump it into your AI story, okay? You pump it in. You're still not spending nearly what the others are.

G (18:03)

And you don't need to.

E (18:05)

You don't need to.

G (18:06)

You're generating the returns in the cash flows without it.

E (18:09)

On that note, I would say that we, all of us, with the exception maybe of Dan Ives, who sit at this desk for the last three years and criticize Apple, the good folks at Apple Computer for not getting into this AI arms race and spending a gazillion dollars to either develop their own LLM or develop the AI native product that's going to change our lives or whatever we were all calling for. For the last three years they stayed out of this fight. They just mentioned that they spent about $6 billion in capex in this previous quarter. Meanwhile, I just mentioned four companies spending $700 billion. Apple managed to eke out enough cash flow to announce another $100 billion share buyback while also increasing their dividend. And we haven't even mentioned that their services revenue actually came in at a record high, about 16% growth they just came in with and that is the profit generator going forward for Apple. So I think that we have been having this conversation for some time about like where is Apple, where are they going to participate? When's the upgraded series? They bought themselves a ton of time and the reason for that is that iPhone sales have actually been steady through this whole period. Surprisingly to just about everybody who was

C (19:21)

watching you mentioned ives. He keeps 350 as his target. Woodring. Eric Woodring of Morgan Stanley who's joining me at 3 o' clock today by the way, hikes it to 330 so he makes a move there. Now the elephant in the room, if you want to call it that, is the valuation which seems to be the one thing that those who are negative on the name always want to cite. Barclays sticks with their underweight today we believe the valuation stretched. Given that we're still unsure of the AI strategy and how monetization will work, is that fair? Is that a fair criticism?

F (19:56)

I think it's absolutely fair. If you look at it from a calculation you can say that Apple's multiple is too high. But I look at it and I say this isn't just a stock, this is the zeitgeist of the modern consumer. And I just believe that Apple deserves a premium and it always has. And the fact that they have gotten through this AI reducing their capex instead of exponentially expanding it to your point, I think that's the story that we're going to.

C (20:19)

Didn't this thing always excess trade at a low teens multiple? That was like a very, very, very low.

F (20:26)

I feel like for the past five years as we've been sitting here it's been in the high 20s, but yeah, it's.

C (20:30)

Yeah, but now it's 33. 33.

F (20:33)

I wouldn't confuse stretch with broken. I think it deserves a higher multiple. I really do. I just think this stock is a little bit different.

E (20:39)

Here's the amazing thing. There's an opportunity for a 50 year old tech company to grow into its valuation because the moment we do get that upgraded Siri experience that they were teasing on the call, the moment we do get the new hardware phase under Ternus, suddenly Apple goes parabolic once again and grows into this valuation and makes it make sense. So there is a ton of opportunity still in this name. It's amazing to say that out loud considering everything I just said about them missing the moment with AI quote unquote, that was the expectation or the impression all this time. But I think it's amazing that they've been able to hang in there, kind of just stick to their knitting if you will and come out on the other side with everyone singing their praises.

C (21:20)

The 10 year average thanks been on our team is 22 and a half. The 10 year average forward PE for Apple is 22 and a half. So it's 33 and a half now.

G (21:31)

So it's expensive. I mean I will agree with whoever's saying that it's expensive. I will not however take action on that. And I think all of us would agree that valuation is not a tool that you use to sell a stock. What you do though is you combine it with the technical analysis. And Eric Malcolm, I think you understate, you have some technical chops as well and you probably agree with me. You let it run. And an expensive stock like this, when it stops running higher, you trim it. But this is not the time to trim it. This is the time to let it run and just close your eyes to the valuation.

C (22:02)

So close your eyes to the valuation. Okay, famous last words. You timestamp that folks. Okay, we'll come back.

G (22:08)

There's got to be 1A show, right?

C (22:11)

Timestamp it. What did we learn this week from the big tech results we already did, like who we thought was the clear winner, the clear loser, etc. Etc. I think what we learned maybe more certainly than anything else is that these are all going to trade differently. There's going to be dispersion between the group. What is great for or an Alphabet is not necessarily great for a meta. What somebody is upping their capex target to may not be well received by the other company that is upping its capex targets to. It's all whether you believe in the end game, the end of the rainbow. We talked about rainbows. The end of the rainbow, right? I think there are questions about meta. I think we Leave this week with still some questions about Microsoft. I think we feel pretty good about Alphabet and I think we feel pretty good about Amazon. Forget Apple, we just had that conversation. Is that fair? Is that a fair way to sum it up?

E (23:14)

It is and I think that's exactly what we want. We want the dispersion amongst the leading companies because we're having a conversation about whether there's irrational exuberance creeping in basically as we start off in May. And I think the dispersion between those companies as it relates to to their specific earnings prints tells you that we are coming at this with a little bit of skepticism and making our decision based on earnings and the fundamentals and everything else that matters. So I think Alphabet turned in a great report as it relates to Google Cloud. It was surprising to me even looking at how much they've been able to improve their margins while also spending aggressively into building out the cloud segment. I think Amazon is an obvious win winner. To your point, Scott, I think that the other two had some question marks. Metta is the one that has the biggest question mark simply because they don't have the direct linkage between a public cloud to turn around and sell credits against with every incremental dollar that they spend on capex. So it makes sense that they came out of this looking the weakest. However, I think we've already seen this story play out itself a number of times where there were doubters of Mark Zuckerberg and what he was willing to spend as it relates to a percentage of their revenues. And I think that they can actually prove that there is some there there with their ability to target those ads a lot better.

C (24:31)

They have some proving to do obviously. At least the street believes that they do. So let's, let's squeeze in a break. Kevin's got a move that we need to tell you about. He's going to take you to trade school as well. I want to squeeze that in at some point this hour, but we'll be back right after this.

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H (25:54)

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H (25:59)

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E (26:01)

Now with AT&T business Wireless, routes are updating on the fly and deliveries are on time. And the influencer did get us 53 new followers though.

C (26:10)

AT&T business Wireless connecting changes everything. All right, welcome back. Robinhood is pacing for its worst week since early February. It's been a tough one, that's for sure. You bought more on this dip? Tell me why.

F (26:24)

We were surrounding the earnings. Not expecting a whole lot out of it. We bought a few shares last week, Scott, in the low 80s and then covered it right before earnings. It brought in $2.75 on a tight call. The very next day, the stock traded down. So we were able to close that out at $0.30, netted a 250 hedge on it, and then went long again at $72. We made a lot of money with this stock. The last time it ran, it went from 30 well into the hundreds and then from 130 it rolled back down into the 60s. So I think here at the 70s as an investment, not as a trade, you've got a really solid company, a tremendous infrastructure. I love their customer base and we're happy to take a shot with it.

C (27:01)

Again, I mentioned that the crazy move in the month of April that Intel has had like 114% or whatever, right? You're smiling because you're like, unbelievable. You wanted to take our viewers to trade school on that. In what? In what sense?

F (27:15)

I mean, it is unbelievable. So let's just frame it there. You know, sometimes when you have a stock that's moving, it pays to sit and watch it. And I think the greatest trade that we did this week, Scott, was to not trade it at all. This was a name we picked up in December at $40 a share. And to go back in time, it had just doubled from 20 to 40. So it was a little bit with reservation that we went into it and we took a fairly sizable position. Last Friday. This thing was trading in the 80s and we went into through the weekend. And we're like, should we trade it?

G (27:43)

Should we trim it?

F (27:44)

Should we cover it? And we thought, well, it's got this kind of momentum. Let's just wait and see for another week. Here we sit. It's $100 a share almost. I mean, I can't believe it. So we'll sit into the weekend with the same conversation. I think when we're talking next week, we'll be talking about a trim or a covered call. But this is a trade. If you're thinking about trade school, sometimes you let a run run. And my gosh, I've never seen one like this.

C (28:05)

Yeah, no, it speaks a lot, not only about the chip space, but about momentum in general and understanding when you see something that you really don't want to try and get in front of in the way of and just let things sort of play out until you see maybe some level of inflection point that then forces your hand to make another move.

F (28:27)

Yeah, and I thought we saw that last Friday at 82. I mean, who would have thunk it for another week? But you were bringing it up with, with Apple. You know, you just don't want to get in front of a moving train sometimes. And this thing has worked out incredibly well. And maybe there's an air pocket here, but it's a recovery story, a turnaround story that's becoming a legitimate investment. So even if we sell, it'll be a trim, not a liquidation.

C (28:48)

Okay, I appreciate that. So let's talk about Exxon and Chevron for a moment because they're both obviously coming off of earnings. Take a look at both of these names, if you could. We do have ownership, but I feel like there's a good story in the FT today. So Exxon is down a little bit, and obviously energy stocks and oil have been great performers because of the rise in oil prices. The story I'm referencing is about how the oil majors aren't necessarily in tune with the drill baby drill mantra from the President, and they're more focused on growing their profits. So, you know, the president can strong talk these companies all he wants. As the Chevron CFO said within this story, quote, our strategy is to grow free cash flow, not grow production. You wouldn't expect us to be changing our plans significantly on the back of eight weeks of disruption. In other words, we're thinking longer term. We've almost completely reorganized our thoughts how we run these companies today.

G (29:53)

Absolutely right. Absolutely.

C (29:55)

What they do with their capital allocation and the way that they strive to utilize the best parts of their business is no longer necessarily drill baby, drill.

G (30:07)

But it's been a change, Scott, that's been 10 years in the making. You know, you go back to the beginning of the 2010s when oil was again at $100 a barrel. People were drilling like crazy all through the shale plays. And what happened was capital was undisciplined in how it was allocated and a lot of losses were accrued. Now big companies like Exxon, Chevron made it through, but a lot of smaller companies had problems. And we all may remember 2016, there was like a mini credit crisis because of cratering high yield bonds for energy companies. Now fast forward from that. And once Saudi Arabia flooded the market in with oil in the mid-2010s, these companies said, we're not doing it anymore. We're not going to put ourselves on the brink. We're going to manage cash flows, we're going to manage profits.

C (30:51)

We're going to be more shareholder friendly.

G (30:52)

We're going to be more shareholder friendly, which makes me feel great. It makes me feel, and just to

C (30:58)

get, you have, you have Exxon and you have Chevron. Chevron.

G (31:01)

I'll make this succinct. I think you should be buying Exxon here. I'll let you talk about Chevron. But you know, 15 times earnings, almost to 3% dividend yield, it's about 15% off of the high it set. And look at where oil prices are, look at where natural gas prices are not here in the US but in Asia and Europe. They're going to be minting money for a while.

C (31:19)

I think these companies saw the writing on the wall that to some degree Big Oil fell out of favor with a large swath of the investing community. And in part they're like, we have to be more, we have to be more shareholder friendly. We have to do things that will encourage people to either stay with us or come into us. And we'll reward them if they do. It's not so much looking for gushers all over the place. It's doing that and it's, I think worked.

F (31:50)

It's worked beautifully and it's music to my ears as a shareholder. And these are not your father's or grandfather's energy companies. We entered into this position 15 years ago and added to it in November. We also added Marathon Petroleum. Never imagining that oil would go to $100 a barrel. Obviously we're great beneficiaries in the short term of that. But to your point, these are phenomenal return of cash to shareholders, dividends, special dividends shareholder buybacks. It's not drill for the sake of drill. It's fiscal responsibility, not capex.

C (32:19)

All right. Angelica Peebles has the CNBC news update for us today. Hi there.

D (32:23)

Hey, Scott. Well, the US Military is closing, closing an operations center in Gaza that was meant to monitor the Israel Hamas cease fire. That's another blow to President Trump's plans to develop land in Gaza. And that's according to Reuters, which reports that the closure comes after diplomats and officials involved with the project face difficulties in efforts to oversee the cease fire and distribute aid now to the fda. The FDA has named a new acting head of its vaccines and Biologics unit, which regulates vaccines, gene therapies and the blood supply. Catherine Sarma will take over for Binai Prasad, who stirred controversy during his time at the agency over a series of decisions on rare disease, drugs and vaccines. Now to some consumer news. Thermos is recalling 8.2 million containers due to defective stoppers that can forcefully eject and cause lacerations. That's according to the Consumer Product Safety Commission. The affected units include 6 million stainless king food jars and 2 million sportsman food and beverage bottles. Affected consumers are advised to contact Thermos for a free replacement. Be careful out there, Scott.

C (33:26)

Back over to you, Angelica. Thanks very much, Angelica Peoples. Coming up next, a special midday word today. Michael Santoli is live in Omaha ahead of the Berkshire annual shareholders meeting, the first one without Warren Buffett as CEO. We'll be back right after this.

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C (34:43)

Berkshire Hathaway's annual shareholder meeting kicks off in less than 24 hours from now. We'll bring you the entire meeting exclusively on CNBC.com starting tomorrow morning, 9:15am Eastern. Senior markets commentator and overtime co anchor Mike Santoli is there as he always is in Omaha, joins us now for his midday word. I mean, Babe Ruth is in the building, but when he doesn't step up to the plate, it's going to be a little jarring, I'd gather.

I (35:09)

Mike it is true. Let me extend the analogy. I mean, I think a Berkshire shareholder would hope that it's mantle taking over for DiMaggio perhaps, which was seamless and a very kind of orderly transition. Look, it feels the same now. It's essentially the same event, the same vendors, the same shareholders largely. But tomorrow I think there is some suspense as to how different it might feel and of course, how this company may be run with slightly different areas of emphasis or priorities than it has been before. Now the presentation is going to be different. There's going to be a pretty extensive business review which I think is is somewhat interesting. I also think it probably reflects I mean, this goes back to when Greg Abel was first kind of named as the likely successor years ago, before one year ago when he was formally named the CEO as of the start of this year, which was it was most likely going to mean that this company was going to be somewhat less about running a portfolio of outside investments of public equities and cash and the like. And as it is right now, it really is that the operating businesses are perhaps one of the bigger near term opportunities to get margins up, maybe to take a second look and get we have a new manager in there that was named just for the consumer subsidiaries. So I do think that might be one area of focus, even as the company has massive amounts of dry powder, which you can depend on deploy in all manner of ways.

C (36:35)

I was just wondering, you know, how you think in the big picture about Mr. Abel's desire to put his own stamp on, on a, on a firm that has been so deliberate in how it's operated for the last so many decades. It's, it's in some, I guess, sense that you could understand he would want to do that. But it's hard when it's Berkshire we're talking about.

I (37:02)

No, there's no doubt about it. And that's why I think that there's going to be a message of continuity of culture, right, where you allow these businesses to do their thing and you look for ways to essentially buy quality businesses at reasonable prices. But again, it's going to be a little bit less about leaning on Buffett's history of finding, you know, this absolutely massive long term upside in, in some undervalued situations and more about how do we operate the business a little bit better. Of course, Greg Abel, having come from industry running utility and energy businesses and things like that. So, you know, I think there's a luxury of time here to a degree because the business is in a decent shape now. Look, the stock has had a year of underperformance from an absolutely tremendous premium a year ago, in fact, a historic premium to the market. So it had a lot to give back. But as the it is now, it's pretty reasonably valued. There's more than 700 billion in book equity. That's a pretty hard book value right there, too. So it's not as if, you know, there's something that needs to be done quickly. But I am interested to see like what what Abel might say about what he what most gets him excited about the company as it's structured right now and what might change.

C (38:11)

All right. Enjoy yourself down there. That's Mike. We'll see you later, Michael, down at the Berkshire meeting, of course, in Omaha. Up next, we're on the move again. We take you live to Churchill Downs ahead of the 152nd running of the Kentucky Derby. NBC Sports Mike Tirico is standing by to talk about all the big money on the line the first Saturday in May. We're back after this 52nd running of the Kentucky Derby tomorrow on NBC. Twenty horses are in the field this year. NBC's Mike Tirico will be hosting his 10th Derby for NBC Sports. As you see, he joins us now from Churchill Downs and what's become a tradition here for us and we are happy. Michael, welcome back.

H (38:55)

Right back at you, Scott. Good to talk to you, man.

C (38:57)

I didn't realize that the favorite hasn't won since justify in 2018. Now Renegade, from what I read, goes off at 5 to 1 but has a tough post position for this race.

H (39:11)

Yeah, a couple of numbers since we're talking to people who love numbers out of the one hole. That first position, it's been since 1986 that a horse won. Now there's a little bit of a change. There's a new gate over the last three or four years that slightly moves the horse off the rail. But Renegade has a chance to change that history for a variety of reasons. One trainer, Todd Pletcher, he's conditioned or tried trained more horses who've Started the Derby than any other trainer. Second, Irad Ortiz Jr. Kind of interesting. Five of the last seven or eight years he has been the Eclipse Award winner, top jockey in America, but he hasn't won this race. So there's the horse, the trainer, the jockey, the combo, all of that. But as you said, oh, for the last seven for the favorites in the Derby, a trend to watch.

C (39:55)

You have some awesome storylines too. Cherie Devoe is trying to be the first female trainer to win the Derby with Golden Tempo. Mike Smith at 59, trying to become the oldest jockey to win the race. The Motts, the father and son who are going against each other in the race. Oh, yeah, and the legendary trainer Bob Baffert is back.

H (40:16)

Baffert back. Three year suspension a couple years back. Now he has two horses. Potente is getting some interest from some folks. He doesn't have one of the six or seven that are in the group that people think are the favorites. I want to go back to Mike Smith, age 59, trying to break Willie Shoemaker's record for the oldest jockey to win the Kentucky Derby. The trainer of that horse so happy is a gentleman named Mark Glatt. It's his first time at the Derby. Longtime trainer out in the Pacific Northwest and the West Coast. Sadly, less than three months ago, his wife passed away. Glatt's horse won the Santa Anita Derby. Very emotional. Has come here with a lot of support and emotional support and a good horse. And Mike Smith, many Triple Crown wins, experience in this race, has a good feel for the horse. If there's a sentimental combo horse with a pedigree here that you've seen over the last couple of years that has a chance to win this race. So happy, maybe the one folks land on, that's the number two choice at the moment.

C (41:14)

How's the weather going to look for this race tomorrow?

H (41:17)

Well, this is not my Friday investor vest that I'm wearing. It's colder than I had planned. Usually it's in the 70s, 80s. We're, you know, dealing with sweat out here and all that. But it's cool. It's in the 60s, no rain, track should be fast. The Kentucky Oaks, the best three year old race for the Phillies is tonight in primetime on NBC. It's a little bit different under the lights, Churchill Downs, but the weather for the Oaks tonight, weather for the Derby tomorrow, perfect. Think we have a great two days ahead.

C (41:43)

Might have to throw though something on Great White. 50 to 1. I gotta talk to Eddie Oldcheck though first, see if Edzo likes it and

H (41:50)

a huge horse, the biggest horse. So big they were worried that the horse wouldn't fit in the gate. He does. And if he gets going, look out.

C (41:58)

Have a great call. I know you will, as always, Mike, thanks.

H (42:01)

Good to see you, Judge. Be good.

C (42:02)

All right, Take care. That's Mike Tirico. Coming up next, our calls of the day. One firm turning more bullish on one of Jim Leventhal's latest buys. We discuss next calls. The the day ebay Target goes to 120. Reiterated outperform at Citizens JMP. Jim Leventhal owns that name, I believe

G (42:22)

I'm going to reiterate that reiteration of an outperform stock. Reported earnings yesterday, I think it was yesterday. Beat across the board. Stock was down a little bit, but that's because it's up over 50% in a year. There's a lot of drivers here. Collectibles, precious metals. They're even getting, getting into cars. They're buying a consumer to consumer business, Depop from Etsy and their business continues to grow. Great balance sheet buying back shares. There's a lot to like here.

C (42:47)

Okay, let's talk about Caterpillar posted its best day yesterday since October. They raised their guide. You have 1, 2, 3, 4, like 6 or 7 target hikes. The highest looks like 1165 at Baird. Kev, you own this name.

F (43:02)

I'm having a good week, Scott. Their earnings were out of control.

C (43:05)

That's back to you, Scott. I mean, you got something on that.

F (43:08)

Completely unbelievable. They did 5.54 earnings per share, $60 billion in backlog orders. The revenue was up over 20%. This isn't just a story of the previous quarter. This is a story moving forward. Love the name.

C (43:21)

Sofi market outperformed 30 bucks is the target at Citizens as well. That's a huge upside from here, Malcolm.

E (43:28)

Yeah, I dig it. I think there's a tremendous amount of opportunity in this name. I know there's still some overhang from that Muddy Waters report saying there's a little bit of creative accounting happening here, but the stock right now is trading as if it's never going to grow again. Meanwhile, they just added another million members in the past quarter and for context, they only have about 15 million. So that's a substantial amount of growth for a company that is now turning itself into a financial powerhouse. So I think there's still time to get in. But this is a stock with a decent amount of upside.

C (43:58)

From here, we'll go down to Washington. Eamon Jabers has some news for us. What are we learning here?

J (44:02)

EAMON yeah. SCOTT the president was just talking to reporters on his way out of town here in Washington, and he addressed a couple of issues. One is he struck something of a pessimistic tone on the negotiations over the war in Iran. The president says that the Iranians are asking for things that he can't agree to. He says he's not sure they'll ever get there in terms of these negotiations and citing a lot of the discord and confusion in the Iranian leadership for part of the reason for that. He says that they've made some strides, but I'm not sure they'll ever get there. He also said again, as he said several times in the past, that he believes that gas prices are going to go down dramatically when the war does wrap up. On the Spirit Airlines deal, he says that the US Is driving a tough deal on that. He committed to the China trip, which is scheduled for next week. He says that's going to be a great visit. There's been a lot of question that trip has been postponed once. SCOTT and there's been some question about whether that could go on while the Iranian conflict is still up in the air. The president seems to be signaling today that he does intend to go to China next week and also said that his chief of staff, Susie Wiles, had a very good meeting with Anthropic. So not clear necessarily where all that will land, but there is dialogue happening between that company and the White House. SCOTT thank you.

C (45:22)

Number of topics, Eamon I appreciate that very much. Thank you. Eamon Jabers from Washington. Finals are next. 3 o'. Clock. Closing bell told you we had Eric Woodring on Apple, Tom Lee, Jonathan Karinsky, Warren Pie. So I look forward to seeing y' all in a couple hours. Final trade Farmer Jim, take a look

G (45:38)

at Apollo rallying here.

F (45:40)

Archer Daniels Midland, they report numbers on Tuesday. I'm expecting a great print.

C (45:44)

Dlr.

E (45:45)

Yeah, Digital Realty. The AI trade is going to keep pushing this one higher.

C (45:48)

All right, see you at 3. You've been listening to CNBC's Halftime Report, the podcast. You can always catch us live weekdays at 12 Eastern only on CNBC.

B (46:02)

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 halftime reportdisclaimer the day

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