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Halftime Report
Cracks Forming in the Private Credit Market? 10/17/25
00:43:54
Scott Wapner and the Investment Committee debate the cracks forming in the private credit markets and how you should trade them. Plus, the Committee are making some major portfolio moves, they share the details of each one. Investment Committee Disclosures
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- [00:00]
Bryn Talkington
What does it mean to live a rich life? It means brave first leaps, tearful goodbyes and everything in between. With over 100 years experience navigating the ups and downs of the market and of life, your Edward Jones financial advisor will be there to help you move ahead with confidence. Because with all you've done to find.
- [00:23]
Bertha Coombs
Your rich, we'll do all we can.
- [00:26]
Bryn Talkington
To help you keep enjoying it. EDWARD Jones Member, SIPC Clorox Toilet Wand it's all in one. Clorox Toilet Wand it's all in one. Hey, what does all in one mean?
- [00:41]
Scott Wapner
The Caddy, the wand, the preloaded pad.
- [00:45]
Bertha Coombs
There's a cleaner in there inside the pad.
- [00:48]
Bryn Talkington
So Clorox Toilet Wand is all I need to clean a toilet.
- [00:52]
Scott Wapner
You don't need a bottle of solution to get into this toilet revolution. CL feels good.
- [01:00]
Bryn Talkington
Use as directed.
- [01:02]
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, thanks. Welcome to the Halftime Report. I'm Scott Wapner. Front and center this hour, these volatile markets, what those new credit concerns might mean for this record setting rally. We discuss and debate with the investment committee. Joining me for the hour today, Brent, talking to Steve Weiss and Jason and Snipe. We will take you to the markets here. Again, a bit of a volatile morning. Dow still positive, as is the S and P. And the NASDAQ is basically flat is what we'll call it. But we, we do have these credit issues which are hanging over the markets. I think everybody at this point recognizes that. The key questions at this point being are they idiosyncratic and overblown or is this something more widespread, the cockroach issue, as Jamie Dimon suggested this week in saying there usually isn't only one. We're trying to figure out. Investors are, I think the markets are, what other issues are there? We've been talking about this on this show for the better part of the last three weeks, since September 24th. That was when the FT ran a story. We'll show you a little tear from that just to bring you up to date on how much this issue and how long it has been kind of bubbled to the surface. September 24th, we saw this since then. Take a look at the performance of ALTS managers, which have really been in the center of this until this week when you started talking about regional banks. And we'll get to that in a minute. Alts manager since then, aries is down 22%, KKR is down 20, Blue Owl down 15 and Blackstone down 14. These so called BDCs, the business development companies are down. They're publicly traded vehicles focused on direct lending and private Credit. The Aries one is down 6%. Main Street Capital down 11. One of the Blue Owl ones is down 8. Sixth Street Specialty Lending down 8. Blackstone Secured Lending is down 5. Now with all that, I turn to Bryn Talkington who is here on our set today. And we're happy to have you from Texas in person at post nine. You've made the argument on this show when we've discussed it lately that the issue is overblown. You have decided to buy Ares Capital, ARCC and Blue Owl Tech otf. If you're playing at home. The Blue Owl Tech Invest is a vehicle that invests in AI related plays. The tech one is tell me why you decided to do this now when there's still a lot of smoke around and in some cases it's hard to see through it to know if there are any flames anywhere.
- [04:02]
Bryn Talkington
Yeah, well, so first on Blue Owl, we're investors in the private, the private company. We know the Blue Owl team very well. I think that for investors, as everyone's been talking about Tricolor and First Brands, you know, first of all with Tricolor and the comment about cockroaches, I mean, you know, just calling balls and strikes, you know, JP Morgan I think took a $500 million hit from the revolving warehouse facility of Tricolor and other big banks had a lot of exposure to First Brands. And so I think in the credit markets, you know, credit's always risky and underwriting standards I think is what the question is on Tricolor and First Brands specifically. Now as it relates to These publicly traded BDCs, first of all, they don't trade with a ton of volume. But as investors, these companies have quarterly earnings and these, I think ares comes out October 30th and then I think November 4th. For Blue Owl, you can go on, look at their website, look at their investor relations, pull up their last earnings and look at the summary of investments and see with Blue Owl, you know, all 198 discrete tech investments. They really do more software, by the way, they do across the tech stack, but they're more focused on software lending and you can see exactly who they have loans with, what the yield is. And so I think in terms of transparency, this private credit narrative I think is a very broad brush of a heterogeneous asset class. And so with both of These I can get about a 10% yield. They're both trading between like 10 to 8% below book value. I think a year, a year from now, I can look back and have a 20% total return in an asset class that I know. I have complete transparency in both these BDCs.
- [05:41]
Scott Wapner
So, Weiss, I mean, I want to know, you know, how concerned you are about this. This seems to be a far greater issue on underwriting standards being more of an issue than just with First Brands and Tricolor that there was such high demand for leveraged loans, which were. The demand was that issuance was at a record in the third quarter that to meet the rush for the demand, underwriting standards were lowered to get the loans, so to speak, out the door.
- [06:17]
Steve Weiss
Right.
- [06:18]
Scott Wapner
And now we're seeing a little bit when the tide goes out, who's got a bathing suit on and who doesn't.
- [06:24]
Steve Weiss
Right.
- [06:25]
Scott Wapner
In some cases, the tide hasn't fully gone out yet, so we're not really sure who has what. The market is kind of guessing a little bit. Maybe it's broad brush, as Bryn said, but it seems to me to be too minimizing it to suggest that it's only related to the two bankruptcies that we've talked about already.
- [06:44]
Steve Weiss
Right. So. And the knock on effect, just add one more name to the ones you put up on screen. Jefferies. Jefferies, because of their first branch exposure, you know, that went when they had a good quarter stocks trading around 70 and now we see that it's 51. They'll be fine. They know how to underwrite risk very, very well. But look, I'm not worried about another issue like 2008 with the banks. But when you're talking about private credit, it's not regulated. So the standards, the capital, the loan loss reserves, all that, you just don't really have those standards there because again, it's not regulated. So you, you have to know, as Brin does, who you're partnering with. Right. Because some firms are driven by the fees that they're generating because they're asset managers, that's their business generate fees. And so they will take some of those loans, package them up, and then they'll sell them to mutual funds, pension funds, retail investors, etc. So the point is that we don't know where the tide is right now. We know that we're seeing some signs that are heightened because we also have the consumer that's under pressure. So if you're lending to consumer businesses, odds are like subprime lending, auto lending that you reference you may have some problems. So I'm cautious on it. I don't see a huge issue here, but I agree with Jamie. It is never, never just one incident or two. That's why I think it could underpin the whole market. Surely it can.
- [08:14]
Scott Wapner
Just because they're publicly traded and as you suggested earlier, you're getting a look as an investor where the loans are going and to whom. That doesn't mean that the loans themselves still aren't risky by nature. Loans that are made in the private credit and private loan market are probably more risky than they are if they're made by the big banks, because the firms who need the loans are forced to pay a higher interest rate to get the loan. And their balance sheets probably aren't as pristine as companies who are borrowing from the big banks, which is why they've had to go in the private market in the first place. Is that fair to say?
- [08:59]
Bryn Talkington
I think that's a narrative. I would say a narrative.
- [09:03]
Scott Wapner
Isn't that fact?
- [09:04]
Bryn Talkington
No, I think you have to go back further that the banks were doing this lending for decades. Yet the banks, what they did is we all lived through the great financial crisis. If you want to talk about leverage, the bank take our bank deposits that we get and they have to what, 10% that they have to keep and then they go make loans across the country, lever those up and that's what got us in this crisis. And so the banks have not been able to make these types of loans. On top of that, the regional banks have been in their own kind of recession because they had all of this real estate that they are now asset managers and can't get off their balance sheets to make new loans, returns. And so I think the private credit market really over the past 15 years have just evolved and it's been a first call versus the banks used to be the first call. You do have to go back with. What Steve said is you have to know the underwriting standards. And so with Blue Owl, they have very stringent, you know, what's the EBITDA of Klarna? What is the ebitda? What is the growth? So they are not willy nilly making these loans. And so I think that me as an investor, no, I'm not making the loans myself, but I have a very high level of confidence, confidence in the firms. Like people have confidence in JP Morgan's underwriting ability. You have to have confidence in these private companies ability to underwrite.
- [10:14]
Scott Wapner
But people would have had that same confidence and not in any way to suggest that this Is another crisis waiting to happen or a systemic in any way? People would have said the same thing around 0809. Well, people have confidence in these firms and their ability to manage leverage. And to know that the loans that they made and to know that they were sliced and diced and diced again and this, that and the other until everything blew up and you're like, well, how did they know?
- [10:45]
Bryn Talkington
No, no, no. These firms are like one and a half to two times leverage. The banks were like 50 to 60 times levered on their balance sheet. It is not, it is not an analogy to compare the Bank's leverage of C60 to 70.
- [10:59]
Scott Wapner
I just said I wasn't making a comparison. But the notion that, well, they would know. I'm not so sure. Leslie Picker is following this story for us. Les, you've heard our conversation. What would you like to add?
- [11:13]
Bertha Coombs
Well, just to, you know, put some context around it, Goldman Sachs is trading desk telling clients in a note this morning that it's on a regional bank's NDFI credit watch. Now, NDFI stands for non Depository Financial institutions. And this is a term you're going to be hearing a lot as it's a common thread among the Tricolor first brands and now this latest situation with Zions and Western Alliance. Now, NDFI loans currently comprise about $1.2 trillion out of the 13 trillion in total loans among all FDIC institutions nationwide. According to data collated by Janney and the FDIC about a year ago. Regulators actually required banks to separate these loans in their reporting from other credit categories, which drew more attention to the rapid WR growth and the interact interconnectivity in this space. The rise is due to non regulated private lenders. What you guys were just talking about private credit BDCs and the like garnering credit lines from regulated FDIC banks. So even though the Tricolor and First Brands bankruptcies were separate from the Zion's borrower, the timing of it all is drawing bigger questions around the interconnectivity of the banking system, the regional banking system and, and the private markets. And then there's also this question of fraud with Zion suing that its borrower for that and then lenders alleging something similar at Tricolor and now Jefferies CEO Rich Handler telling investors yesterday that they too were defrauded by First Brand. Scott. So there's just a lot here, but it's really garnering this Microsoft microscope on the interconnectivity between the private markets and the regulated banking institution.
- [12:55]
Scott Wapner
You know, it's interesting that that's where you ended because, you know, John Waldron, Goldman's president and coo, was at a conference gathering in which he said the following, quote, I don't really understand why we're talking about private credit as one thing and lending in the banking system as another thing. There's one system.
- [13:15]
Bertha Coombs
Yep.
- [13:15]
Scott Wapner
If there's pain to come, quote, everybody in that system will feel that. And I think that's being represented in the markets. Why a lot of stocks are down. It's a react first, figure it out later and hope that where there's smoke, there isn't fire.
- [13:34]
Bertha Coombs
No, I think that's spot on. And it's this, this notion. You know, we've seen so many headlines throughout the year of private credit eating banks lunch or banks taking back share from private credit. Well, they're all kind of in this mix of together and in fact, a lot of these NDFI loans were made as a way to essentially take risk off of the bank balance sheets and send them through in a more kind of diversified form, the private market sector. But the capital is still ultimately coming from the banks in many of these situations. I was surprised to see how much of it is also in the regional banking sector, in addition to kind of the bigger. The bigger six that we often talk about. But yeah, there's a lot of crosscurrents and the disclosures are better over the last year than they were historically. But obviously, you know, there's been rapid growth here and there are a couple of instances all playing out kind of in concurrence with one another.
- [14:28]
Scott Wapner
Are we at the point? Are you at the point because you're, you know, you're deep in the space every day that you're looking to see who has a lot of CLO exposure because of they would have bought a lot of leveraged loans. Are we at the point in the process of doing that?
- [14:43]
Bertha Coombs
Yeah, I mean, I was looking to see as it pertains to NDFI specifically, kind of who has the most exposure. Most of the regionals have anywhere from, you know, 2% of their total loan book to 40% of their total loan book as being exposed to NDFI. Zions was somewhere in the middle of that. So it's an area that a lot of them have been seeking to kind of win deposits from this cohort. And in doing so, they're extending more lending relationships with them. That's not to say all NDFI borrowers are bad, of course. It's just we look at these situations and we clamor onto those and then wonder what other risk is in the system. Because this is somewhat of an opaque but yet quickly growing area. It's caught the attention of regulators. It's now caught the attention of the markets. And I think the exercise now is to just kind of see where else the potential pockets of stress are. Or maybe these are just kind of idiosyncratic situations that sound like there's a lot of alleged fraud. And that's kind of contained as just that. That's kind of where we're at the inflection point we're at in the story right now.
- [15:45]
Steve Liesman
Yeah.
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Scott Wapner
Because you're hearing from many of the players in here. I'm being simplistic in the way I say this, but there's nothing to see here. Yes, these are idiosyncratic issues.
- [15:57]
Bertha Coombs
Yes.
- [15:58]
Scott Wapner
There's not a bigger problem in private credit. Glenn August told me that at Case out in Beverly Hills earlier this week. Charles Schwab, CEO, was on Squawk this morning, Quote, I don't think we're seeing anything yet that's systemic. Yep. So we'll just see less. Thank you so much for helping us set that up. I want to hear from you, Jason, because I haven't yet. I mean, you do have some exposure here through Apollo. You own Blackstone. What do you think?
- [16:21]
Jason Snipes
Yeah, I think for me. So there's a couple of things, you know, as I kind of look at this shift to private credit and this has been going on for years in terms of the demand, what we've seen. Part of it is regulatory shifts that we've seen since the GFC and obviously where interest rates have been. And then I look to credit spreads, which obviously have been very tight. And there are folks that are obviously looking for yields. So if there has been some loosening up of covenants and some loosening up on just general lending standards.
- [16:47]
Scott Wapner
Yes.
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Jason Snipes
I mean, sometimes there's some flies there. And then you have Jamie Dimon's comments on Loop. Right. And I think if you kind of widen the lens and think about where the market multiple is, you know, we're trading at close to 23 times and the NASDAQ is trading at close to 28 times. You know, we are susceptible to headline risk. So I do think, you know, to make a greater point that this is a idiosyncratic story, I don't think there's broad based contagion here. I think where banks are largely. I think it's hard to extrapolate this issue here to some of the Larger institutions, you know. So for me, I think this is an issue, not necessarily that we should ignore, but I do think we should make note of it. But I do think six months from now we won't be talking much about it.
- [17:33]
Steve Weiss
You know, can I, can I just come at it from different ways?
- [17:35]
Scott Wapner
Just be quick because I want to bring in, you know, hold your thought.
- [17:39]
Steve Kovach
Okay.
- [17:39]
Scott Wapner
All right. Hold your thought. I promise I'll get you guys back. But the regional banks are in the epicenter of some of the concerns for the last couple of days. Now. They're bouncing today, but there were several yesterday that, that had sizable losses. I wanted to hear from Joe Terranova today because of anybody on this show, he has the most exposure in the regional space. So thank you for coming on. How are you thinking about this today? You've got Citizens Financial, Cincinnati Financial, Fifth Third, Huntington Bank, First Citizens Regions, M&T, PNC and US Bancorp.
- [18:12]
Joe Terranova
Okay, so we, we maintain positions in seven mid cap banks and two super regionals, as you said. I pull back the lens and I look at it from 30,000ft. I look at the exposure right now we have about 5.6% towards those mid cap regionals, another 1.5% towards the super regional. It is very clear that what has been building since April of 2024, which was very strong momentum, which was supported by price appreciation, is nearing the end of that story. It's very clear to me we have not added any positions. The positions that we I just referenced for you, Scott. They were all established in April of 24 and in July of 24. So this story, this theme surrounding the regional banks kind of having their moment after sitting on the sidelines, which we did. We didn't own any regional banks in 2023. Established in 2024. It's coming to the end of the road.
- [19:12]
Steve Liesman
Now.
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Joe Terranova
Is there something larger going on today? I think you look at some of the banks that reported today and we own some of them 5th, 3rd regions financial. What you heard today was somewhat comforting. What you saw statistically was somewhat comforting. Why? Because the provisions for credit losses came in lower than what the street had anticipated and even kind of taking a turn because we have these concerns surrounding tricolor. Look at auto. Look what Ally Financial reported today. Again, their provision, provision at 415 million was less than what the street anticipated at 450 million. So it's clear to me it's, it's kind of the end of the regional banks moment that they've had since April of 24. Not excited about where they're going over the next six months. I agree with what everyone's saying. I don't think it's systemic and I think most importantly, it damaged momentum. I think that's the story. It damaged momentum, it damaged sentiment and reflected in the way the market's trading today.
- [20:17]
Jason Snipes
So.
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Scott Wapner
I mean, you can't really do anything anyway. That's part of the problem. Even if you wanted to do something, you can't do it because of the rules of your etf. You're just going to have to sit there and watch this movie unfold and see what the ending is going to be.
- [20:36]
Joe Terranova
Yes, and fortunately the calendar works in my favor because two weeks from now we will rebalance and reconstitute the following Monday. You and I will discuss that on air. I can't see that we'll be adding any regional bank exposure I could see and you know, we've ranked them. I could tell you when I look at the screen in the score where they are right now, Citizens Financial, Cincinnati Financial, they have high scores. But then you look at the bottom M and T bank that's deteriorating. The super regionals, we added those in January of 25. They haven't worked. Both of those are small losing trades, US Bancorp, PNC Financial. So I could see what's building as we work towards the end of the month. We'll see what the strategy does. But as I said, I think the bullet point, the highlight is this trade that's been in place since April of 24 is coming to an end.
- [21:32]
Scott Wapner
Joe, thanks for coming on. I really wanted to get your perspective given your holdings here. That's Joe Terranova. We'll see you next week.
- [21:38]
Joe Terranova
Have a great.
- [21:39]
Scott Wapner
Appreciate that. One, one of the key questions with all of this too is what's the Fed thinking and how might it influence what they'll do at upcoming meetings? There's like 100% chance of a cut in October. There's a 100% chance, I think for December. And now there's a 60 plus percent chance for the first meeting of 26 to be a cut as well. Maybe the market's looking at all of this and thinking that, well, the Fed's hand is going to be forced to. Steve Liesman, our senior economics reporter, is here with more. Is is that the correct way of, of thinking about this, Steve, that the Fed's taking note of all of this and if anything it's just going to force them to be a little more aggressive on the cutting cycle than they otherwise potentially would be?
- [22:25]
Steve Liesman
It could be if these fears play out in the worst ways. But let me do a little backup here, Scott. I think a couple of things you want to understand is the first is that by definition the next credit event happens in a place you weren't looking at it kind of also by definition, supervision has a certain inertia to it. We learned that in the savings in the SVB blowup, which is that they weren't looking in the right place. So you can't be 100% sure. That said, the New York Fed actually just is today the 17th, just today they put out a paper looking at these financial, these non bank financial institutions and they say that it's possible in an extreme economic event for it to affect the economy and the banking system. But a lot of what I'm reading, Scott, is that it's not big enough really to have a dramatic effect. Going back to the first thing I said, if we begin to find out that what's been moved into the shadow banking system, like we found out in the great financial crisis, has connections back to the banking system, that would change the game.
- [23:30]
Scott Wapner
There's a suggestion that the Fed has contributed in some degree to these issues in the credit market by shrinking the balance sheet like they have, maybe too aggressively so. And the announcement by Powell the other day during that speech, I think it was in Philadelphia saying that the Fed was going to stop that in the coming months. Would that decision be directly related to this?
- [24:02]
Steve Liesman
It could be. We have seen some tightening in the overnight market, Scott, and particularly around the end of the quarter there was a flare up there that eased off a little bit. And of course it definitely seems connected. The chair said as much that they were stopping quantitative tightening or would in the coming months because there has been some tightening. They're reaching this level of what they call just above the level of ample reserves. So that's where they're headed to. They're not quite sure where that is. They may have gotten to a point where they have caused some tightness. But remember, their job is to provide reserves and to manage the reserves of the regulated banking system. Again, by definition, the shadow banking system is outside that regulation. I thought where you were going, Scott, is the Fed caused this or the Dodd Frank bill caused this by overly regulating the banking system such that a lot of stuff came out and went into the shadow banking system.
- [25:01]
Scott Wapner
You could make that argument, that's discussing that. You could make that argument for sure that the banks were handcuffed, if you will, from doing the lending. So all of this, not all of it, But a portion of it was forced into the shadows and now we are seeing perhaps the first cracks in that move.
- [25:22]
Steve Liesman
Yes. Let me just give you another point here, which is that from, from Pantheon Economics, which points out that only 9% of the liabilities of non financial corporations is from this kind of lending or outside of the regulated banking system. 3% is in the regulated banks. The vast majority of is in corporate bonds. That's where the big money is in terms of the borrowing of non financial corporations. So we are talking about a big segment, it's 1.3 trillion, I guess from private credit. But before we get there, remember one of the features of this is that there's equity in the first instance to the extent these are not highly leveraged and we don't know how much, but we expect, as Leslie was saying, that they are not highly leveraged and there's equity in front of it. People are out there, are free to go out there and lend as much money as they want, lose as much money in that process. But what they're not free to do and where the supervisors should be involved and hopefully are, is making sure there are not connections back to the regulated banking system that would cause a systemic issue.
- [26:28]
Scott Wapner
Yeah, thanks for helping us understand this, Steve. I appreciate that. Steve Liesman, our senior economics correspondent, you wanted to say what?
- [26:34]
Steve Weiss
Yeah, all I was going to say was that if you take a look at where rates were for private lending, you go back a couple of years, there are 22%, 20% now they've come down to about 10%. Prime is at seven and a quarter. Prime plus is what you lend out banks is closer to eight. So when you take that and you look at it, what it means is that there's been way too much capacity to lend. And when that happens, there's less capacity because your rates are half what they were to protect your portfolio. So just have to keep that mind in mind how much they've. They've gone into riskier and riskier assets last week.
- [27:11]
Bryn Talkington
The point is like the Goldman analysts that you said that said it's one big system, right? It's not two systems. If you look at the high yield.
- [27:17]
Scott Wapner
Market, this was the Goldman CEO, not just some guy, just some random person. Okay.
- [27:24]
Bryn Talkington
So even more important that if you look at the high yield market, the high yield market is on the other side of private credit. It's showing no signs of strong stress. And so that to me is what's so curious is that the high yield market spreads are so tight but yet in private credit where there's this opacity in quotes is where all the trauma is when the reality is Tricolor and first brands were mostly bank issued debt holding it. So I just think there's a lot of confusion here and people are just pummeling the illiquid BDC that have low volume and are easy to sell, easy to push down.
- [27:55]
Scott Wapner
All right, so I think we surrounded that story. Thank you for doing that. All right, so let's squeeze in a break. We have a big move to tell you about from Bryn. We will do that after this break. Tim Cook went to China. We'll discuss that as well. These days you've got two choices. Buying a new car or making the one you've got run like new. We know which one we choose. That's why at Firestone Complete Autocare we have thousands of ASE certified technicians nationwide trained to spot an issue with your car before it becomes a problem. No matter the make or model. Get more out of your car. Firestone Complete Auto Care. Call or go online@firestoneauto.com to book today. The heaviest metal credit card of all time, rumored to be one of only 18 in existence. Plated with the very same tungsten that forged the international space station and wielded at business dinners like a samurai sword. It's a classic corporate power move. But the real power move, having end to end visibility on your most critical shipments. FedEx. The new power move.
- [29:20]
Joe Terranova
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- [30:02]
Scott Wapner
Oh, we got a block of moves to tell you about. This one surprises me from you, Weiss.
- [30:07]
Steve Liesman
Yep.
- [30:08]
Scott Wapner
Because you own this stock for as long as I can remember.
- [30:11]
Steve Liesman
Yep.
- [30:12]
Scott Wapner
Bank of America. You sold it.
- [30:14]
Steve Weiss
I did sell it.
- [30:15]
Scott Wapner
To what we were just talking about.
- [30:16]
Steve Weiss
No, no, actually not at all. Because I'm not worried about set before the big banks and the least.
- [30:22]
Scott Wapner
Why would you sell this one?
- [30:23]
Steve Weiss
Well, here's why. Because number one, I'm looking to reduce my exposure overall to the market. I'm still pretty fully invested. I also have Goldman Sachs and that is a core position. It's a very large position. So when I get in B of A that I'm not so sure I want want right now is more of the general consumer population versus what I'm isolating on is the underwriting cycle, IPOs, investment banking, etc. And I get that with, with Goldman. So this had really just very little, despite what I just said, to do with the company, almost nothing is really just an exposure in the portfolio issue. So I just said, do I need to double down on financials? Because I've run a very, you know, non diversified portfolio.
- [31:07]
Scott Wapner
Okay, so we got that one. Now this other one, Brin, made people a lot of money in this stock since you first started talking about it. The chart, you can refresh our memories on Ionq, which you sold.
- [31:22]
Bryn Talkington
Yep.
- [31:23]
Scott Wapner
No longer in it?
- [31:24]
Bryn Talkington
No.
- [31:25]
Scott Wapner
It's up 50% year to date. The chart's interesting obviously to look at over the course of the, of the last 10 months. Right. Why did you get out of it now?
- [31:36]
Bryn Talkington
So I actually bought it last quarter after listening to their earnings call, which I listened to a couple of times. You need a dictionary because you're talking about qubits and things like that. These are research companies. Whether it's Ionq or D Wave, these are research companies. Ionq, I think, is the best. They continue to buy. I would call research teams that are doing really cool stuff. But I'm telling you, these are very long, long time before this company makes money. I think that these stocks have caught hold by a lot of viewers on X. They become momentum plays. And so when I buy one of these companies, I'm buying it to make money. And I bought it in the 30s, I sold it at 70, and I'm going to take my toys and go home. And if it comes back down, I will buy it back. I do think the quantum computing is a really interesting technology, but I'm telling you, it's five, six, seven years out and these stocks make no sense on any valuation metric that you could even remotely find.
- [32:31]
Scott Wapner
Amy Raskin bought this stock a long time ago. She really made people a bunch of money because the stock in the trajectory of her ownership is unbelievable. All right, so we're past that.
- [32:47]
Joe Terranova
You.
- [32:48]
Steve Kovach
Yeah.
- [32:48]
Scott Wapner
You trimmed Apple?
- [32:50]
Jason Snipes
I did.
- [32:50]
Scott Wapner
Tim Cook went all the way to China and he comes back and you trim the stock. What's up?
- [32:55]
Jason Snipes
I did, Scott. So listen, Apple's been the eye of the storm with the kind of tariffs discussion all year, you know, but the stock has jumped since August, up about 20%. I think they're in some ways, and we talk about this a lot, a victim of their own success. You know, replacement cycles are approaching five years. You know, they had a really strong quarter this. This past quarter. But for me, you know, I think the real run is going to be next year on that. Then demand has been good for the iPhone 17. ASPs are going up. IPhone Air and the Pro have obviously gone up $100. So I think that'll be accretive for the stock. But as I look forward, I think the real opportunity is when they really start to focus on siri, which I think they will start to solve soon, and apple intelligence going forward. And I think that iPhone 18 next season will be the one.
- [33:40]
Scott Wapner
Steve Kovacs with us now because as we said, Tim cook was in China. IPhone goes on sale there. And by all indications, the early numbers are good because they sold out.
- [33:51]
Steve Kovach
Yeah, that's right. That's the latest headline we got out of China during this trip that Tim cook was taking. Scott. So that's the iPhone air. It was actually delayed several weeks because, long story short, there was some kind of regulatory issue around the new kind of sim card technology they're using. It's on sale today and already selling out, according to reports over there in China. And by the way, the iPhone 17, the cheapest one, the base model, has also been selling like crazy over in China in part because of those subsidies. So what did we see from Tim Cook this week? Well, he goes on these tours quite often, a couple of times a year, usually around these iPhone launches. He's promoting the iPhone 17 lineup, of course, but also playing a little bit politician. He met with some commerce officials over there and promised some more investment in China, but no specifics there. We didn't see anything like we saw Trump a couple months ago give to president Trump. No. No golden trophies, no promises of hundreds and hundreds of billions of dollars of investment, things like that. It's very vague because at the same time, you have Cook working the other side of the equation to bring less assurances on China and reliance on China for the supply chain. We talk so much about India building more iPhones bound for us, and then all these new gadgets that are coming out, excluding the iPhone, are being made in Vietnam. So that's. That's what we're looking for here. And in 13 days from now, Scott, we're going to get earnings. We're going to get our first official look at how this iPhone 17 lineup is performing. To Jason's point. There's a lot of excitement next year, not just because of the series stuff, but also keep in mind Apple has shown this in this cycle. People can get excited about new hardware. That folding phone could be a big hit in the making, too. Scott.
- [35:29]
Scott Wapner
I can't wait for the earnings and all the talk around that. Me too, Steve. Thanks. Steve Kovach. The headlines now with Bertha Coombs. Hi, Bertha.
- [35:37]
Bryn Talkington
Hey, Scott.
- [35:38]
Bertha Coombs
President Trump's former national security adviser, John Bolton, has pleaded not guilty to charges of mishandling classified information. Bolton surrendered to authorities earlier today and has now been released. If convicted, he faces up to 10 years in prison for each of the 18 charges a grand jury indicted him on yesterday. But federal guidelines would likely recommend a less severe punishment. Former special counsel Jack Smith has been referred to an office at the Justice Department that handles professional misconduct, according to the New York Post. In a letter to Attorney General Pam Bondi today, a group of Republican lawmakers also suggested Smith be disbarred in Tennessee and New York. Smith and the DOJ have yet to respond for comment. And the heads of the Catholic Church and the Church of England will pray together later this month. For the first time since the Reformation, Buckingham palace and Vatican officials announced King Charles and Pope Leo will take part in the prayer service, which will take place in the Sistine chapel next week, October 23rd. Even more ironic, Scott, you're talking about an American pope praying with the king. So many layers that no one could.
- [36:56]
Steve Kovach
Ever have foreseen hundreds of years ago for sure.
- [36:58]
Scott Wapner
Bertha. Thank you, Bertha Coombs. Coming up next, bitcoin's been breaking down. We'll talk about that. The exposure that is on this desk. I have another move from Jason still to get to as well. And we'll do that next.
- [37:14]
Bertha Coombs
What made you confident that you could do something that hadn't been done before? I have no fear of failure.
- [37:20]
Bryn Talkington
Trailblazing women, changing the game. One of my favorite pieces of advice, think about what your boss's boss needs.
- [37:28]
Bertha Coombs
Leadership can look in many, many different forms. It really does come down to just trusting yourself. Life is short and you just gotta think big to accomplish big things.
- [37:36]
Bryn Talkington
Julia Boorstin hosts CNBC Changemakers and Power Players. New episodes every Tuesday.
- [37:42]
Bertha Coombs
Wherever you get your podcast.
- [37:58]
Scott Wapner
There are so many different parts of this market that have been moving, including bitcoin, which is above 105,000 you want to. And by the way, the related assets to the move are all down week to date. Riot, coinbase, Robin Hood, MicroStrategy, you've got Robinhood, obviously. Obviously. What do you, what do you make of what's happening here? Is this just a de risking move?
- [38:23]
Bryn Talkington
We were talking about shadow markets earlier and if you want to talk about shadow markets, there's an incredible amount of leverage in cryptocurrency. And when Trump announced the tariffs again on China, I think it was October 10th and 11th that you actually had the largest one day auto liquidation in crypto is $19 billion. That's really, if you put a chart, I think the beginning of where you started to see unease. These auto liquidation just automatically occur at the different, at the different will call them custodians. And so I do think this, this margin level, people have to watch that you can, you can find sides to see that. But to me that started it. So now you now have to find a technical bottom. And I think just as momentum is starting to be questioned, Bitcoin's clearly going to be on the, on the, on the correlated side of lack of momentum.
- [39:08]
Scott Wapner
You just stay with what you have. No moves. Whether it's the IBIT grayscale. Well, with the bit mine.
- [39:16]
Bryn Talkington
Yeah, well, bmnr, you know, I love selling calls against that. There's so much, there's so much volatility. And so I think if you don't have calls, you can still get 10% call premium for selling like 10% out of the money calls on bit mine. So that's, that's the way I'm going to play that and just get that income while the asset class continues to be volatile.
- [39:33]
Scott Wapner
Why so you're sticking around or what I'm doing.
- [39:36]
Steve Weiss
Sticking around. Look, it's not a big position at all, but it's smaller now than it was a couple of weeks ago. But what you say underscores it. And look, I still don't know what the use cases but I own it because I still think there's momentum is going to come into it over time. President Trump, it's part of its large bars net worth. So I'm hanging out.
- [39:56]
Scott Wapner
All right, quick break. Santoli will get his insight into where these markets or what they're telling us. We'll do it next. Senior markets commentator Mike Santoli here at Post nine for his midday word. I mean, we're still trending for positive on the week, but speaking of weak conviction feels weak.
- [40:32]
Joe Terranova
Yes, it does feel like a 1% up week and I think it's mostly because the unusual long stretch of calm ended a week ago today and what we've done this week and I feel like the market just kind of wants to escape, you know, with less damage done We've traded, I keep saying it, within Friday's range, within last Friday's range. Along the way I think you did have this crescendo, crescendo of buying in a lot of the spec fraud stuff that has now come off. You see some of the bigger losers today. It's all the drone tech stuff and the independent power and then I think just haircuts across the board.
- [41:04]
Steve Liesman
Right.
- [41:04]
Joe Terranova
Volatility up. Bitcoin, you're talking about down and you know, credit spreads being really tight and the VIX being really low is correlated with high equity valuations. And so, you know, if you're going to take a haircut on all the other ones, it makes sense for to just moderate. I don't know if anyone wants to get too negative ahead of the earnings stream next week.
- [41:23]
Scott Wapner
Well, that's the thing. Yeah, I think that's the key. Without that, you know, otherwise there might be a more negative bias. Yeah, but to your point, you're really going to do that before you start hearing from the big tech companies?
- [41:34]
Joe Terranova
I would doubt it. I mean, look, I think equity exposures are high enough people don't feel the need to rush in and buy a ton. But if you're not going to see on a day like today for selling in the regional banks for a second day or anything like that, that suggests something's going to blow loose in the system. Yeah, I feel like it's. Let's see what companies tell us. Everybody, literally everybody who expected of a year end rally said oh, we could get some bumps in October. These are bumps in October because we.
- [41:58]
Scott Wapner
Didn'T get them in September lines.
- [42:00]
Steve Liesman
Yeah, exactly.
- [42:01]
Scott Wapner
We didn't get them in September which.
- [42:02]
Joe Terranova
Is like a month's worth of, you know, a few percent upside.
- [42:05]
Scott Wapner
All right, I'll see you in a little bit. On closing belts. Mike Santoli, we have another move to get to from Jason and Snipe. We'll do that next. All right, let's do this move I told you about from Jason Snipe. You bought more IBB, which has been on a roll 52 inch week high yesterday for both the XBI and the IBB. So tell me about this.
- [42:41]
Jason Snipes
Yes, it's up 15% year to date, obviously 35% since the April lows. But this is a subsector that's been under the mat for quite some time. So it's nice to see some price action there. So a couple of things for me, I think one big pharma, they really need to rebuild their pipeline. So if you Think about a story like Abbie, who lost the patent for Humira, which, which was 25% of their revenue a couple of years ago. Now you see Skyrizi and Renvo rolling. So I think there's going to be some M and A operating in the biotech space and I think that's going to benefit the IBB and especially some of those smaller names.
- [43:15]
Scott Wapner
Well, you, you own AbbVie also, just to be clear, right? You still own that name.
- [43:18]
Jason Snipes
I do, I do. Which has been a great performer as well this year. So I just think there's going to be some M and A action. I think part of it is the macro deal flow will kind of come back online in that space. And I just feel like the IBB will be representative of what's going to happen.
- [43:31]
Scott Wapner
I don't want to miss hitting American Express with you because you own that stock too. They had earnings which were good. What do you think?
- [43:37]
Jason Snipes
Yeah, I mean, listen, very strong quarter. The new, the new Platinum card is. Was very accretive to earnings this quarter. EPS was strong. Revenue growth is strong. The consumer continues to spend on lodging and flying around. So they cater to the higher end and I think that speaks through in their earnings release.
- [43:55]
Scott Wapner
All right, we will do finals after this quick break. I welcome back. We should talk about gold because we haven't yet today and it has been, as you know, a big story. It's at 4200 an ounce so it's down a bit. Freeport reports next week. I bring it up to. Because Brin owns it and it was upgraded today to a buy. The target 43 to 50. From 43. Excuse me. It's 30% above its 200 day moving average is gold. It's the widest spread since 2006.
- [44:34]
Bryn Talkington
What do you think with Freeport? We've got to see when that mine in Indonesia is going to get back on and we want clarity. I think until we have clarity, I don't think Freeport can break above 45.
- [44:45]
Steve Kovach
All right.
- [44:45]
Scott Wapner
Tesla reports next week. What do you think?
- [44:48]
Steve Kovach
We already know the numbers been that.
- [44:50]
Scott Wapner
Positive on this stock lately. That's for sure.
- [44:52]
Bryn Talkington
No, because I think I'm pragmatic, right? I said I wouldn't buy it.
- [44:55]
Scott Wapner
Yeah, for 60. That's what I mean. Like, that's what I mean.
- [44:58]
Bryn Talkington
I'm here to make money, right? Not fall in love with the stock.
- [45:00]
Scott Wapner
I'm not being critical of it. I'm just. It's a matter of fact, you have not been all that jazzed up about it lately.
- [45:06]
Bryn Talkington
I think that the new car is nothing. I think China continues to be competitive. I think from a price point perspective of the stock, I think it's going to take more than just new car sales to get this stock above 460.
- [45:17]
Scott Wapner
All right, what's your final trade while we have you?
- [45:19]
Bryn Talkington
Okay. For my crypto friends. BMNR. Buy BMNR here. You can sell the November 55 calls. You get 10% or 5 bucks. And if it gets called away in November 21st, you've made 20% in a month.
- [45:31]
Scott Wapner
Okay, thanks and good having you here in person at post nine. Jason Snipe, what do you have for us today?
- [45:36]
Jason Snipes
I like Autozone here. Same store sales were up 70 bibs. They opened up 304 new stores this year and I think they'll continue to open up more in 20.
- [45:43]
Scott Wapner
Nice.
- [45:44]
Steve Weiss
FTA aviation. Clearly it's in the right sector but I'll tell you it's a bit risky because the charts not looking great.
- [45:52]
Scott Wapner
All right, I'll see on closing bell. But Tom Lee, Doug Clinton, Adam Parker, Brian Levitt, I look forward to that. We'll see what this market finishes this week. Closing bell, the exchanges now. You've been listening to CNBC's Halftime Report, the podcast. You can always catch us live weekdays at 12 Eastern only on CNBC.
- [46:15]
Bertha Coombs
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.
- [46:26]
Bryn Talkington
Television, radio, Internet or another medium. You should not treat any opinion expressed on this podcast as a specific inducement.
- [46:32]
Bertha Coombs
To make a particular investment or follow.
- [46:34]
Bryn Talkington
A particular strategy, but only as an.
- [46:37]
Bertha Coombs
Expression of an opinion.
- [46:38]
Bryn Talkington
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.
- [46:50]
Bertha Coombs
Please visit cnbc.com halftime reportdisclaimer what made you confident that you could do something that hadn't been done before? I have no fear of failure.
- [47:01]
Bryn Talkington
Trailblazing women, changing the game One of my favorite pieces of advice. Think about what your boss's boss needs.
- [47:08]
Bertha Coombs
Leadership can look in many, many different forms. It really does come down to just trusting yourself. Life is short and you just gotta think big to accomplish big things.
- [47:17]
Bryn Talkington
Julia Boorstin hosts CNBC Changemakers and Power Players New episodes every Tuesday.
- [47:22]
Bertha Coombs
Wherever you get your podcasts.