Halftime Report: Can the Market’s Momentum Continue? (02/13/25)
Host: Scott Wapner
Guests: Josh Brown, Liz Young, Bill Baruch, Kevin Simpson
Release Date: February 13, 2025
Introduction
In this episode of CNBC's Halftime Report, host Scott Wapner engages with top investors Josh Brown, Liz Young, Bill Baruch, and Kevin Simpson to dissect the current market momentum and its sustainability. The discussion spans various sectors, with a particular focus on Meta's unprecedented stock streak, the resilience of the cybersecurity sector, international market performances, and strategic investment moves amid ongoing economic indicators.
Market Overview
Scott Wapner opens the discussion by highlighting the market's ability to weather recent economic challenges, including tariffs and inflation. The panel acknowledges that despite "hot inflation reports" and "reciprocal tariffs," the market shows remarkable resilience.
Liz Young emphasizes the underlying strength of economic fundamentals:
"We still have supportive economic fundamentals. You've got growth that's strong, a consumer that continues to spend. We've got an earnings season that's come in above expectations." [02:25]
She notes the transition of investor focus from jobs to inflation, underscoring that current inflation data is still influenced by the previous administration.
Meta's Unprecedented Momentum
A significant portion of the discussion centers around Meta's extraordinary stock performance. Josh Brown astonishes the panel by comparing Meta's 19-day consecutive uptrend to historical streaks of other major companies.
Josh Brown explains:
"Meta has just gone from 612 to 723, which is an 18% run. That's 280 billion in new market cap. It's way overboard here." [02:48]
He attributes this momentum to active manager crowding and the company's strong earnings performance relative to its peers. While recognizing the potential for a pullback due to an overextended RSI of 81, Brown advises patience for a better entry point.
Bill Baruch supports the bullish outlook on Meta, highlighting its strategic moves and efficiency improvements under Mark Zuckerberg:
"They're in a unique position here to really have that data set. From an advertising standpoint, companies need to be advertising on there and they're going to be continuing to drive that revenue." [04:39]
Kevin Simpson adds that Meta's integration into both dividend and growth strategies makes it a versatile investment:
"This is one of the few names, Scott, that we have, both in our dividend strategy and in our growth strategy." [05:28]
Despite the current overextension, the consensus among the panel is the anticipation of further growth, albeit with cautious optimism regarding potential pullbacks.
Cybersecurity Sector Resilience
The conversation shifts to the robust performance of the cybersecurity sector, with particular attention to CrowdStrike and other key players.
Kevin Simpson highlights the impact of AI on cybersecurity demand:
"Because of what's happening with AI and the open source model, you're going to need more and more cybersecurity." [11:41]
Josh Brown reinforces the secular growth trend in cybersecurity:
"I've been saying for four years on CrowdStrike, this is a secular trend. Nothing's going to stop the amount of spending here." [12:00]
Liz Young concurs, pointing out the sector's outperformance within the tech space:
"Cyber has outperformed the tech sector by 950 basis points. It's been a great place to be." [14:46]
The panel agrees that cybersecurity remains a critical and growing investment area, driven by increasing digital activity and inherent security risks.
International Market Performance
A noteworthy segment discusses the outperformance of European large-cap stocks compared to the S&P 500.
Josh Brown draws attention to the European market's acceleration:
"FEZ is up 14% year to date, 12% over the last 12 months. So the rally is accelerating." [40:01]
He cites significant contributions from companies like ASML, SAP, Siemens, and LVMH, attributing growth to sectors such as AI, automation, and financials.
Bill Baruch adds that Europe's underpositioning presents lucrative opportunities:
"There's some tailwinds here, a lot of negativity coming into the year. So it's definitely, as Josh pointed out, probably very under-positioned." [42:15]
Liz Young offers a contrarian view, stating that despite potential outperformance, Europe might not be the primary focus for new investments:
"Unpopular opinion is that international outperforms the US this year. I think it's quite possible Europe might be a part of that. However, that's probably not the first place that I'm looking for buying." [43:21]
The discussion underscores the importance of diversifying portfolios to include strong international performers, particularly in the European market.
Strategic Stock Discussions
Live Nation
Josh Brown praises Live Nation's robust business model and leadership under Mike Rapinoe:
"This is such a difficult business to run and look at what Rapinoe has built. So I think they deserve the higher price target." [26:17]
Scott notes that Goldman Sachs raised Live Nation's price target from 148 to 166, anticipating solid earnings in the upcoming report.
Lilly (Eli Lilly)
Kevin Simpson expresses confidence in Lilly's growth prospects, citing unexpected revenue spikes and potential new applications for their products:
"Revenues were up 45%... there's a long runway and we agree with the call." [27:36]
AT&T (Ticker: T)
AT&T reaches a new 52-week high, with Bill Baruch and Josh Brown endorsing continued investment based on the company's strategic focus on broadband and wireless:
"This is a name that's right." [28:14]
Josh adds resilience to AT&T by pointing out its shift towards business customers and reducing debt:
"Focusing on business customers, focusing on broadband, focusing on wireless and reducing debt." [28:40]
Adobe
Despite its strong market presence, Adobe's stock performance lags compared to peers. Kevin Simpson remains cautious but hopeful:
"We're going to continue to hang in here with this name if they can turn it around because of the user base." [29:04]
Astro Labs
Bill Baruch highlights Astro Labs' strong earnings and growth linked to Nvidia and Amazon partnerships:
"The relationship it has with Nvidia, Amazon... we're expecting a fifth consecutive quarter of record free cash flow." [30:07]
Investment Strategies and Insights
Tail Risk Hedging
Scott references Tony Pascarello's advice on market hedging:
"If I were an optimist I'd repeat a line from the past. Over the long haul, tensions in the US equity market usually resolve in favor of the bulls." [21:00]
Josh Brown counters by advocating for practical hedging strategies:
"The best hedge is don't invest more than you can afford to lose due to a temporary drawdown in the stock market." [22:16]
Retail Investor Behavior
The panel discusses the dichotomy between cautious long-term investors and aggressive short-term traders:
"Old buy and hold investors are very skeptical. They're headline sensitive, they're cautious. And then you have YOLO stuff happening in other parts of the Markets." [39:03]
Upcoming Earnings and Market Movements
Live Nation Earnings
Goldman Sachs anticipates Live Nation to report "in line to better than expected results," prompting a price target hike.
Salesforce Inclusion in Dow Jones
Kevin Simpson announces Salesforce's entry into the Dow Jones Industrial Average and its initiation of dividends:
"It's a stock that we own again in the dividend portfolio as an investment for the long term." [44:31]
Additional Notable Stocks
- DoorDash (B of A Price Target: 552): Despite an earnings miss, strong user growth and strategic investments into grocery tech and international expansion maintain investor optimism.
- HubSpot: Achieves a new record high post-earnings beat, with price targets raised by Goldman Sachs and Morgan Stanley.
- Chevron: Announces a 20% workforce reduction as part of cost-cutting, presenting a potential long-term investment opportunity despite short-term challenges.
International Partnerships and Technology
Steve Kobach, CNBC’s technology reporter, elaborates on Apple's partnership with Alibaba to launch Apple Intelligence in China, addressing previous challenges in penetrating the Chinese market.
"Alibaba is in fact going to be the Chinese partner for Apple Intelligence in China... we're expecting to see this happen in April." [16:25]
This strategic move is anticipated to alleviate some of Apple's longstanding issues in China, potentially boosting its market performance.
Conclusion
The Halftime Report episode "Can the Market’s Momentum Continue?" offers a comprehensive analysis of current market dynamics, emphasizing the sustained momentum in specific sectors like technology and cybersecurity. While celebrating Meta's unprecedented stock run and the resilience of cybersecurity investments, the panel also highlights opportunities in international markets and strategic plays in undervalued stocks. Investors are encouraged to remain vigilant, balancing aggressive momentum trades with prudent hedging strategies to navigate the evolving economic landscape.
Notable Quotes:
- Scott Wapner [02:47]: "What’s on your mind about this market?"
- Josh Brown [02:45]: "The Meta thing is wild going there yet?"
- Liz Young [02:45]: "The market continues to be resilient through it."
- Kevin Simpson [05:28]: "This is one of the few names that we have, both in our dividend strategy and in our growth strategy."
- Bill Baruch [04:39]: "They're in a unique position here to really have that data set."
This summary captures the essential discussions and insights from CNBC's Halftime Report episode dated February 13, 2025, providing a detailed overview for those who missed the live broadcast.