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Halftime Report
Cyber Stocks Hit New Record High: How to Trade it 7/14/26
00:47:15
Scott Wapner and the Investment Committee debate how to trade the cyber stocks as they hit record highs. Plus, David Faber joins us with an exclusive interview with Goldman Sachs CEO David Solomon. He talks, Warsh, the Fed, his IPO Outlook, the markets and more. And later, Josh Brown spotlights Travelers and Delta Air Lines in his "Best Stocks in the Market." Investment Committee Disclosures
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David Faber
At Edward Jones, we believe rich is more than caring about the latest and greatest. It's also taking care of what gives your life meaning. That's why your dedicated financial advisor meets you where you are with personalized financial strategies that help protect what matters so you can preserve your progress while creating a path forward. The key to being rich is knowing what counts. Let's find your rich together. Edward Jones Member, SIPC Are you as
- [00:31]
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- [01:01]
David Solomon
You're listening to Halftime Report in progress.
- [01:05]
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.
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Joe Terranova
It's standing in the eyes of Congress
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David Solomon
and the American people.
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Scott Wapner
Chairman, will you commit to getting the
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David Solomon
Fed back to truly sticking to its lane?
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Brian Belsky
And if so, how do you plan
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David Faber
to do it so I can make that very commitment. Our credibility in monetary policy, our credibility as supervisors, our credibility in payments, these
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Scott Wapner
are all tied together.
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David Faber
And the way we erode that credibility are two things. We wander outside of our lane, into your lane or into the lane of another executive branch.
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Scott Wapner
We don't deliver on our promises.
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Brian Belsky
The first thing we can do is
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Scott Wapner
to deliver on our promises.
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Brian Belsky
And the second thing is, as you said, more eloquent.
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Scott Wapner
All right, welcome to the Halftime Report. I'm Scott Wapner. We will monitor the remainder of Fed chair wars, his hearing on the Hill. We do, though, want to get right to a CNBC exclusive. Interview David Faber with Goldman Sachs Chairman and CEO David Solomon right here at the New York Stock Exchange. David, take it away with David.
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David Faber
Thank you so much, Scott. Yeah, we can wave to you from up here, actually. It's a nice view, David, thank you for joining us.
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David Solomon
Absolutely. Thanks. Thanks for having me. I've never been up here. This is kind of.
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David Faber
No, it's rare. We don't let anybody up on this little plot.
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David Solomon
I feel lucky to be up here with you today.
- [02:32]
David Faber
They let you hear at the New York Stock Exchange. You know, we've been listening Our viewers have been listening to worse the last couple of years. Obviously going to get to your earnings and spend a lot of time on that. But just quickly, you know him well. I don't know any expectations. He shared a lot of what he's already shared. To the extent he shared, not much at all. But what are your expectations for sort of the Wash era Fed?
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David Solomon
Well, I'm excited to see Kevin in the seat. You know, I think he's got an enormous amount of experience that can help him shape his leadership as chairman of the Fed. You know, of course the governors, along with the other regional bank presidents, you know, will work collaboratively to drive monetary policy. You know, he's got a view as to how he's going to communicate around that. You can see him executing on that. But I also think that Kevin understands that, you know, the role of Fed chair is not just monetary policy. It's a big important institution that has responsibilities around regulation and, you know, other issues. And I think he's focused on putting his imprint on the institution.
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David Faber
Like he's going to remake the institution
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David Solomon
to a, I think remakes a big word.
- [03:38]
David Faber
Yes.
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David Solomon
You know, I think Fed independence has served us well and I think the institution has continued to operate, you know, independently with a very, you know, high standard toward discharging its responsibilities broadly. But I, you know, I think there's always room, you know, to shape at the margin, you know, great institutions like this. And I think Kevin has a view that he can have a broad impact and I look forward to watching him, you know, execute against that. Yeah.
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David Faber
All right, let's get to, let's get to Goldman Sachs. Your stock is the best performer of all the big banks that reported this morning. It was a, a quarter of quarters. I guess, having followed your company for as long as I have. I'm just looking at net revenues were up 39% year over year, 18% sequentially. Earnings up 78% year over year, 18% Sequentially, and on and on from there in terms of ROE and return on tangible equity and everything else. David, I guess the question really is is this a one time peak as a result of this unique moment we find ourselves in, or can this really be something you expect to be a new baseline?
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David Solomon
Well, I, you know, I appreciate the focus and we had a lot of focus on the earnings call today about the forward from your. First of all, I'm so proud of our team, our people, you know, the work they've done with our clients. I think, I think the firm is in a position where this moment, this environment is just super aligned with what we do really well. We're in a technology super cycle that's accelerating. There's enormous demand for capital formation. We sit at the center of that with our franchises. There's a lot of strategic M and A as clients are really thinking about scale and how they can execute at scale. And you know, those are all things that create an environment that's really aligned with our business and the way our business is positioned. What I think we're all, as a leadership team, really proud of, David, is that we've really spent a lot of time over the last seven or eight years investing in the growth of our franchise, the growth of our client footprint, our wallet share shares through our one Goldman Sachs ethos of serving our clients in a really, really distinct way. And that's put the firm in a strong position. We've grown the revenues of the firm very materially, there's no question. And we highlighted this on the earnings call today. This environment, you know, is a very, very strong environment for our business. But the firm's bigger, it's more diverse. And I think when we look out over the next three, five, seven years and we look at the environment we're operating in the. I'm not smart enough to tell you what's going to happen in the markets in the next three to.
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David Faber
No, but you've seen plenty of cycles, David.
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David Solomon
There will be cycles, but we're going to grow the firm.
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David Faber
Right. But you know, this seems to be a somewhat unique moment and I mentioned that because $1 trillion in capex from six companies. We just saw Alphabet issue $85 billion in equity, one of the most profitable companies the world has ever seen, choosing to go to the equity markets. I mean, there are those who say, wait a second, this is getting a little weird. And I would even reference your own comments where you talked on the call. There continues to be far more demand across the client segment than we're willing to engage with. There's more demand for financing than there is supply.
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David Solomon
That was Dennis, my cfo.
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David Faber
Excuse me, I got the wrong attribute.
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David Solomon
But it's, but it's, you know, it's true. We're in an environment where the need for capital formation is great. And you know, we have a significant franchise position where we have an ability to, or leaning into our clients and their demand, but there's more demand than we can meet. And you know, that is, that's a pretty robust environment that gives pricing power, leverage in the business for sure. You know, I think what I try to frame in. This is, I think, the cycle of this capital formation for the infrastructure build. I think we're in the early innings now. That doesn't mean it's going to be a straight line. That doesn't mean that every valuation of our stock or every business or the trajectory of demand is going to move, you know, perfectly along. But when you step back and you say five years from now, is there going to be a lot of growth, a lot of productivity gains in the economy because of the deployment of this? Absolutely. And the firm is very well positioned to capitalize on it. Will there be some bumps along the way? I think so.
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David Faber
Well, there have to be. Don't have to.
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David Solomon
But there have to be.
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David Faber
But, but the bigger bump would be suddenly, if everybody comes to a realization, says, wait a second, we're not going to get an adequate return on this capital.
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David Solomon
I don't think it's that simple. I think there's capital that we're going to get an adequate return on and there's capital that we're not. And that's been the case in any technology expansion. There are great companies that are created, there are some companies that are stood up, that don't meet the test of time and they fade away. And I'm sure we'll see both of those things in the case of, of this environment. But the underlying technology, the ability for that technology to be deployed broadly in enterprises and create productivity gains in the economy, I think that's real. I think it's got a lot of legs and I think that's very good for Goldman Sachs.
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David Faber
So to those who would characterize this period as a bubble, you would say
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David Solomon
I, I, I would say that you can always have recalibrations and resettings when you have extremely fast, you know, movements in markets. But the deployment of capital to invest in this technology and have this technology become more embedded in enterprises and in our economy, I don't think that's a bubble. I think that's a trend that's going to have long secular legs. Whether we get the pricing right of all the capital, you know, every minute of the day. You know, I don't know. I'm sure we'll get some stuff wrong.
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David Faber
Right.
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David Solomon
You made the point about Google. Google did this very, very large.
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David Faber
Yeah, it surprised an awful lot of people who've been doing this for a very long time.
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David Solomon
But just step back. One of the things that's interesting is people are talking about how robust the equity markets are. The IPO market was very active in the second quarter. But still, when you look at IPOs year to date, they're running around or under the 10 year average.
- [09:13]
David Faber
I saw you talked about that.
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David Solomon
Yeah, market cap matters. You know, you've got companies now. When people look at the size of these things, you got to remember they're underpinned by companies that because of their earnings power are justifying, you know, 3, 4 or $5 trillion valuation. So it's not surprising therefore that the capital needs, you know, are large, are enormous.
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David Faber
But by the way, A1 Space X IPO, which obviously will lead manager on, can go a long way in terms of generating fees. One anthropic ipo, one open, I open AI IPO is a far larger than all of the smaller ones.
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David Solomon
You know, the SpaceX IPO obviously was a big IPO. But when you look at our $20 billion of revenue in the quarter, the SpaceX IPO was imitating material to the $20 billion of revenue. It's just part of a puzzle of lots of client activity. You have a confluence of strategic M and a really turning on. You know, we've got an environment from a regulatory perspective where CEOs feel they have a right to really explore strategically what they could do. That's not the way they felt four years ago.
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David Faber
Right.
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David Solomon
That's positive. You have all this capital formation around the cycle. You have growth for people who own assets, for people that are stewarding assets in the asset management business. You have growth in assets because of market cap expansion. And so they're, they're, you know, balancing their portfolios are redeploying. Those are all really positive things. And then look at the wealth creation, you know, going on. But all that's got to go into wealth management franchises.
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David Faber
Without a doubt. I get it. And it's, I mean, yeah, the, the, somebody said the blast radius of just $1 trillion just of CapEx spending is, is kind of what you're describing right there. Yes, it's enormous. But I guess, are we building up a risk in the system that ultimately if for some reason this thing takes a significant hiccup, that we're going to see very significant dislocations?
- [11:00]
David Solomon
We will see dislocations. You know, when you say very significant, you know, I, you know, I, I look at the test of time. We have an incredible ability and incredible nimbleness, you know, as an economy to take the speed bumps and reorient adjust and I'm sure there are going to be speed bumps whether they're significant or not. You know, of course, in the future, if you look at an unlimited future, there'll be significant speed bumps, but I think we've got a great ability to navigate and, and move forward. And I do think the US Economy is just very well positioned in all this, given our capital markets and our leadership position, capital formation around the world, our technology innovation and the largest, most important companies and the concentration of them that are here. You know, that kind of ecosystem combined with kind of entrepreneurship. And also there's a culture here and I think this is very different than other places in the world. Americans want to take risk and participate, and that's a real positive. If you go to Europe, you don't see that. You know, Europeans don't, don't buy single stocks, take risk, Americans do. And that's, that's part of that positive ecosystem. So there'll be bumps, but we've got a really versatile economy and, and I think it's an exciting time when I look out, is there enough capital?
- [12:13]
David Faber
I mean, I know it's kind of seems like a crazy question to ask, but I mean, your CFO said, you know, we have more demand than, I mean, I do wonder.
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David Solomon
There's $9 trillion in US money market funds. I'm aware where there's, there's a lot of capital out there. Whether or not every financial institution deploys every quarter to exactly meet demand. No, of course not. You know, in every quarter they're going to be constraints because people want to manage the risk appropriately. I think one of the things we're spending a lot of time thinking about at the firm is how do we manage risk in a complex environment like this. But there's a lot of capital out there and I, I'm not concerned about the ability for the capital to be available for things that make sense. Will everything make sense? No, but there's plenty of capital out there to support this, this kind of investment in technology, in the economy.
- [12:58]
David Faber
Let me come to a couple of other things in the quarter as well. Your headcount, I mean, was basically flat down 2%. But even any down from somebody who said don't worry, there's not going to be a jobs apocalypse as a result of AI People focus on, I mean, is that a look any displacement or
- [13:16]
David Solomon
not the result gain? It's not the result of a displacement or productivity gains. One of the things you have to, you have to look at is it's a second quarter snapshot. And remember, we hire 2300 kids out of school who start in the third quarter. So if you actually were looking at the headcount today versus when we reported June 30th, the headcount is back up year over year? Yeah, it's up slightly. I think one of the things that we're doing is we're finding that these tools and the way people are working is making very productive people more productive. And so in the context of that is our people kind of become more productive. You know, they think about things through a slightly different lens. They use these tools. They think about things through a slightly different lens. But we tried to be very clear on the call that at the moment there's no structural change in the way we're thinking.
- [14:03]
David Faber
I mean, it's a similar cadence that you've seen.
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David Solomon
Similar cadence. It's a similar case. It's a similar case, yeah. Now do I think there's opportunity as we remake processes and automate some things, some of the things we're focused on and what we call one. Goldman Sachs 3.0. Yes. I think there are going to be some opportunities, but with a lot of that, we have businesses that scale with people like private wealth where we'd like to invest more. And we're trying to be forward investing in those businesses. And I think net, net, it always balances out, but step back over long periods of time. If you think about metrics of people and kind of the capital we steward, the revenue we have, the firm has always gotten more productive over time.
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David Faber
Yeah. I wanted to come to some recent press involving your. Your still current general counsel, Kathryn Rummler. There was a journal story yesterday saying that she's digging in at Goldman, complicating the search for the next general counsel. Is that true?
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David Solomon
Fake news? Really?
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David Faber
Come on, you got more than just
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David Solomon
fake news digging in. Kathy has been terrific in this transition. Kathy stepped away because of the noise. We run a complicated organization. We have of lots, lots. We've got lots going on as a big, complicated organization. And Kathy has agreed to act as an advisor and help us navigate through until a new general counsel is seated. We're running a search. We're deep into that search. We will seat a chief legal officer at some point in the near term. And once that person is seated, Kathy will move on and do other things. But we're very grateful that she continues to help the firm.
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David Faber
She's involved in search, so yes, she is.
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David Solomon
She knows. She knows the job well. She knows the people well. And, you know, why wouldn't we take advantage of that as we try to do what's best for Goldman Sachs, that's our obligation to do what's best for Goldman Sachs and Kathy is, you know, helping, you know, helping us do that. And we're really pleased that she's acting that way.
- [15:49]
David Faber
Finally, real quickly, Anthropic and Open Air going to go public this year, you think?
- [15:54]
David Solomon
You know, I think those are big companies that one day we'll have to go public. They're very large company. Other than that, I don't really have a lot to say.
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David Faber
Not going to tell me Goldman Sachs not going to be the lead manager
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David Solomon
for both of Goldman Sachs is certainly close to both companies and would love to play a role, you know, when they go public.
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David Faber
Yeah. And finally you and I haven't sat down and done an interview in a while, so I'm appreciative of that. But you have been in the job for a while now. It's been eight years. There seems to be a chosen successor in John Waldron. How are you thinking about your tenure at Goldman, especially given things have never been better? I would make an argument. You certainly seem to be, you know,
- [16:26]
David Solomon
I'm really excited about the firm and what the firm can accomplish, you know, over the course, you know, of the next three to five years. At the moment, you know, our leadership team is in place, it's moving forward. At some point in time there'll be a transition, but it's not now.
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David Faber
It's not now. Okay, so we might do another interview.
- [16:43]
David Solomon
I think we very well will do another interview.
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David Faber
Well, we're going to end this one for now. David, thank you.
- [16:46]
David Solomon
Absolutely. It's good to be with you, David. Thanks very much. I appreciate it. Thanks.
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David Faber
David Solomon, Chairman CEO, Goldman Sachs Scott, back to you down there.
- [16:53]
Scott Wapner
All right. I appreciate it very much. Yep. I'll wave to you, David.
- [16:56]
David Faber
Thank you.
- [16:56]
Scott Wapner
And of course to David Solomon as well. We'll have much more on the banks, their earnings in just a bit. That big move in Goldman today. Certainly we will discuss that. I want to bring in our investment committee. Joe Terranova, Brian Belsky, Rob Seachen, Josh Brown, give you an update on the markets. We're about a quarter past noon, as you know here. And we are holding on to gains in the S and P. The NASDAQ and the Russell Dow's under pressure. And you know very well what that story is about, all of it due to that historic drop in IBM today. It is the worst day ever for shares of IBM on that warning about their earnings. And that's where I really do want to begin because you, you just don't see this very often, certainly with any stock and definitely not IBM. Belsky get the first crack at this. I mean what do you make of this drop? What do you do with the stock? What do you do?
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Brian Belsky
We own a little bit in our value portfolio Scott, for this very same reason that we thought there was going to be a little bit volatile number one as they kind of transition more into the software side of things. I kind of like that they came out and pre announced and they said hey, changing buying habits in this. They had transactional volume down in their software business. Remember this is a pre announcement so the numbers actually could be a little bit better. But I think they're cautioning the market, you know, under promise over deliver. But I think this sends a sign for the other software names out there. But we do like overall that they came out and talked about it.
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Scott Wapner
I mean you just don't often hear the kinds of negative comments that you got today from any CEO. Certainly no less Arvind Christian over it. At IBM, clients shifted spending towards hardware purchases such as memory quotes. These conditions require our teams to execute perfectly. And this quarter we faltered. We did not adapt and move quickly enough and numerous large deals failed to close on the timeline we expected driving the majority of our shortfall.
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Rob Sechan
You own the stock too and we're
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Joe Terranova
going to continue to be patient because we bought it at about 12 times. We're still up 60% in the name even after the fall today.
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Scott Wapner
Okay, and that's a good point. In fact since you say that, back the chart out guys if you would because this is far more than a one day event. Let's not even do year to date. Give me a couple years on this stock. Give me a three year and you're going to see a stock that has performed really really well. It did the integration of Red Hat.
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Contessa Brewer
Right.
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Scott Wapner
There were a lot of naysayers on this name and Mr. Kristen was able to shut a lot, a lot of those voices down over the past few years. And now people like you may be asking new questions.
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Joe Terranova
I think the story is yet to be written. What happened was a pivot in spend as we all talked about in this quarter with pricing probably increasing in some of the infrastructure spending which drew away from the, from the software spend. I mean I think it threw cold water on the thesis that you know, integrating AI will, will strengthen the software business. But that is for now that is not necessarily mean it's prologue and that's why we continue to be, continue to be patient with the name. I think you could see the narrative reemerge that they are going to be a beneficiary of the, of the spending in the integration with software. And ultimately I'm going to give them the benefit of the doubt.
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Scott Wapner
All right, so we'll watch that. Obviously now there's another bit of fallout here. You know, you could say, well, obviously some of the other software names would be falling in sympathy with the decline you're seeing here. Cyber not among the names that I am talking about. Why? Because the CEO also in the letter to shareholders said, in addition, clients were distracted with rapidly evolving industry wide scale cybersecurity concerns in the quarter. Okay, well, that means that they were spending in cybersecurity, which is why CrowdStrike, Josh, is up 10%, why Palo Alto is up 6 and why Fortnet's up 3.
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Josh Brown
So CrowdStrike is fresh off of a 4 for 1 split. This is becoming one of the biggest winners for me personally and for the Overall S&P 500 of all time. I mean it's really. This would be now if it hadn't split, it would be over 800 bucks. What you guys understand, this was trading at 350 at a time when people were saying, oh no, AI is basically the death knell of every software company. That narrative turned out to be so incredibly wrong in the case of the cybersecurity stocks. And it's notable that the IGV is actually green on a day when IBM blows up and specifically references a lack of interest in software relative to other categories. How is that even possible? If this had happened two months ago, they would have hit all these cyber stocks along with IBM. They would have knocked down every software stock. But now the market is differentiating, it's getting smarter and the cyber names have grown in size within the igv. And so that's how you have a green day for the software sector. With frankly one of the most pessimistic pitch black announcements about software demand that we've heard yet. I expect that to continue and I expect the market to stop speaking of software monolithically and to start thinking about the various categories within the software space as their own individual stories that are differently either benefited or put at a disadvantage due to AI.
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Scott Wapner
The Fortnite record high octave 52 week high. You have Crowdstrike too, but these are the names that the market's focused on today. Because of those comments in the letter,
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Rob Sechan
I see today's price action is somewhat consistent with the trends we've seen so far year to date. We know that IT spending is going in the direction of cybersecurity. That's been the dominant force over the last several months. I'll defer to Rob and Brian as it relates to IBM. You guys know the the company better than I do. I would think they're diversified enough. Best in breed enough. At the Scott's point, if you pull the lens back on a multi year basis this stock has rewarded you. But I do think there is going to be continued concerns as it relates to to it software services names. They are in a very challenged environment and I'm not necessarily sure how you reverse the trend where spending is going away from them instead of incentivizing the spending to come to them.
- [23:40]
Scott Wapner
I thought also I think worth noting now even though, you know I don't necessarily want to talk about the greatness of the Goldman quarter and the movement in the stock which you just don't see to that magnitude very often. The commentary that we just heard David Solomon tell David Faber about being in the early innings still of what he called not a bubble, a trend and I think that needs to be discussed as well. Is there some consternation in the marketplace about where we are in this cycle, who the winners and losers may very well be?
- [24:14]
Joe Terranova
It's debated every day and that's when why you you saw in June the hyperscalers get absolutely killed. The Mag 7 they came, they came raging back. There's this handoff to the software names last week. Today there's this announcement which challenges that thesis. So I think to Joe's point, and it's probably the most important or maybe it was Josh's point, there's going to be winners and losers. Those winners and losers are not just going to be idiosyncratic positions, individual stocks. Sometimes it's going to be entire ecosystems and other ecosystems are going to get punished. But that is what creates the opportunity. That is why we bought IBM at 12 times. That is why we bought in Video when it dropped to 29 times. Right. When you have these moves it takes great and that's why Josh continues to buy crowdstrike. That stock has been been hit many times where it gives you an opportunity to step in. So if you can understand these trends and that there will be winners in each vertical, ServiceNow is going to be a winner. I don't care how bad it is.
- [25:20]
Scott Wapner
I get it. But this is if nothing else a bit of a gut punch to the logic of you know, companies like an IBM are not going to be caught up in the same way that some of the pure and traditional SaaS companies have been. They're not part of the so called SaaS apocalypse. Whereas you would learn pretty harshly and starkly today that they have challenges related to the amount of capital that's being deployed and where it is away from them.
- [25:49]
Joe Terranova
So part of the announcement today was they didn't get a number of large contracts closed because some of their clients were directing those dollars out elsewhere and also managing their quarters. Just as I have to do, just as anybody that runs a business has to do. You have to make sure you know where to spend the incremental dollar. That does not mean that that dollar is not going to get spent. It doesn't.
- [26:18]
Rob Sechan
Look, cybersecurity is the key. If you have a touch of security as it relates to software, I'll mention a name. Datadog and software name working remarkably well. Why they have a focus on cloud infrastructure. I just think the capital continues to move in that direction and with momentum being a dominant force in the marketplace, you're not going to capture inflows of capital into IT software services without there being some really powerful fundamental catalyst.
- [26:47]
Brian Belsky
I think it's, I think it's one more thing and it's the all copy you on the gut punch thing. It's a gut punch to the theme of an industry or sector. So that's gone now. So now it's going to be individual stocks. Individual stocks. And that's why the cyber names are working. That's why certain software names are going to work and that's why certain software names are not working.
- [27:07]
Scott Wapner
No. And it has been, it has largely moved already from sector slam to idiosyncratic stories, some better than others. Take a look for example at a snowflake. Okay. It's weathered a lot of the downturn in that space in ways that other names have not. Cyber has already disconnected itself from the overall sour and dour of the software piece.
- [27:31]
Brian Belsky
This is a leading indicator not just for software. This is about heading into then semis and then memory. The same thing's going to happen to semis and the same thing's going to happen to memory.
- [27:40]
Scott Wapner
Right. Because there's like the initial, that drop you're looking from the last fall through the winter and into the spring was all software is finished. Right. And then you start, start to realize that well, maybe not all software is going to have that big of an issue. And then companies like Snowflake this distance themselves.
- [27:59]
Josh Brown
This is about, this is also about, it's also about pricing power. Why didn't these deals close for IBM? Well, one logical explanation might be that companies are pushing back after 15 years of having to say yes to every price increase, every time a two or a three or a five year contract came up. This automatic escalation because companies were locked in. And Salesforce is a great example of this. And Adobe, you build a huge part of your business on a very critical piece of software. And, and no matter what they say on the renewal, the answer is basically yes. And this is how many seats I need. And thank you very much for, for, for this golf outing. Those renewals are not automatic anymore and I want people to recognize. Give me the IBM chart real quick. This stock did not plunge today from an all time high. It plunged first last week on news that Starbucks is actively looking to cut IBM and Microsoft out of some of the things that they're being paid for. Probably because they're able to do things either with frontier models or whatever that would take the place of some of the things that they're spending tens, hundreds of millions of dollars on. And I'm not saying Starbucks is going to completely rebuild its whole tech stack away from large cap technology and software providers. But just the idea that it might even be a conversation is what spooks investors in these stocks. And I honestly don't think it stops with IBM.
- [29:41]
Scott Wapner
All right, so let's do this. If there was a common theme from the bank earnings today, it's that the economy and the consumer remain resilient. Diamond, Moynihan, Scharf and in many respects Solomon, who just finished speaking to David Faber, all reiterating that Goldman's hitting a new record high. We got some trades there to discuss because all the banks are on the move. Citi was a reversal just before we came on the air. Today as well was green. Now it's red. Josh Brown's best stocks in the market coming up too. We're back after this break.
- [30:14]
David Solomon
Which are America's top states for business. Get all the data and complete state by state analysis. See how your state measures up America's top states for business.
- [30:25]
Josh Brown
See the full list now at topstates.cnbc.com.
- [30:44]
Contessa Brewer
We're back on halftime. I'm Contessa Brewer with your CNBC news update. Federal immigration agents are pausing most vehicle stops nationwide after deadly shootings in Maine and Texas. In Maine, Independent Senator Angus King says a 26 year old man shot by ICE agents in Biddeford was not the person the agents were looking for. DHS says the man who was in the country illegally tried to flee when agents tried to stop him and an officer fired out of concern for public safety. So these traffic pauses are temporary with the exception of serious criminal targets as ICE reviews the tactics and the conduct and needs to look at additional training. Mexico is now escalating its response to migrant deaths in U.S. custody. President Claudia Sheinbaum says her government has begun filing criminal complaints with US Prosecutors over the deaths of Mexican nationals in immigration detention or enforcement operations. Mexico says 17 of its citizens have died in custody or during raids. Ean Carroll has received more than five and a half million dollars from President Trump after a jury found him liable for sexually abusing and defaming her. That money had been held by the court while Trump appealed the 2023 verdict. The Supreme Court rejected the president's request to delay the payment. That's the news now, Scott. I'll send it back to you.
- [32:04]
Scott Wapner
Okay, Contessa, thanks so much. We do have more news. It is breaking out of order. Washington. Our Megan Casella is at the White House with the latest there. What are we learning here? Meghan?
- [32:12]
Megan Casella
Scott, President Trump this morning is backing off his idea to charge that 20% toll in the Strait of Hormuz. Remember, he announced this yesterday, saying the US should be reimbursed for providing security to cargo ships moving through the strait. But this morning announcing on Truth Social that based on highly productive conversations with Middle east leadership, he says he's decided to replace the 20% reimbursement fee with trade and investment investment deals that the various Gulf states will be making into the United States. He says these will be massive investments. And we just heard from the president speaking from the Oval Office alongside the prime minister of Iraq, who's here for a visit and elaborating on these comments just a little bit. He says several Middle east leaders called him yesterday and said that they would like to do things a different way. They proposed, he says, investing in the United States instead of paying this reimbursement fee. And the president says, I liked that actually, because I don't think anybody should be able to charge a fee. Now, Scott, these comments and this big reversal comes after a lot of criticism yesterday that this idea would have run afoul of international law, that it was a big shift in policy stance for the United States, where officials had for weeks or months now been advocating for a free and open strait, saying that nobody should be able to charge a fee. And of course, it comes after Iran seized on the idea, said, yes, President Trump was right. Now the president reversing course here.
- [33:23]
Scott Wapner
Scott, do we know if these are considered to be new investments, Megan, because if it serves me Correctly, the Gulf states, many of them have already pledged significant amount of investment into the United States. Are we talking about monies being re appropriated into different, in different ways or are these fresh new investments these countries are pledging to make? Do we know?
- [33:47]
Megan Casella
You're absolutely right to ask that. The president is framing these as new investments. He says we're already the hottest country in the world for investment and that this will bring us, bring those numbers even more. But as you know, Scott, it is incredibly hard to track these sorts of investments because once they can be announced, it can take years for them to play out and it's almost impossible to figure out what's new, what was already planned, what's actually been invested and what's still just being talked about. So this is a very Trumpian move to propose something like this toll that was very unlikely to ever get off the ground. Then to ship coins horse and say actually we're getting a big win here, we're getting these investment deals instead. When we'll be trying to track this to find out if it is new money, but it could be several months before we know exactly what things start to look like.
- [34:30]
Scott Wapner
Also, frankly, the, the admission in and of itself that it seems as though the, the fees, the Hormuz fees aren't going away anytime soon.
- [34:41]
Megan Casella
Yes. And that was part of the criticism here. When the US had been pushing Iran to back off the idea of fees, how could they then reverse course and say, well, the fee should be paid to the United States instead, especially when it was supposed to be for secure passage for these ships, when we know that cargo ships, commercial ships, have been fired on over the past couple of weeks by Iran. So the security angle aspect of it wasn't even there yet. So the president acknowledging in some ways that there were a number of reasons this wasn't going to get off the ground now saying let's abandon the idea.
- [35:10]
Scott Wapner
Okay, Meghan, thank you very much. At the White House, as always for us, that's Megan Casello. Let's talk about the banks. Take a look at Goldman here. It's a new record high. Wasn't that long ago either that the stock had finally gotten over $1,000 a share for the first time ever. Well, you're at 1121 and change, which is a better than 7% gain today. That's not even the best levels of the session to this point. You want to talk about this? I don't know that much of the quarter is a surprise. Maybe the stock moves a surprise prize. But when you look at what the markets have done, what the capital markets have done, what the M and A environment looks like.
- [35:43]
Rob Sechan
Yes. So let me speak towards Goldman Sachs briefly. Continue to own it. I've owned it since April of 2024. I think there is much more upside in this company. And to your point, it is the confluence of a tremendous amount of favorable tailwinds. Those tailwinds just don't exist for gold. Goldman Sachs, it was very clear the common denominator in the earnings of bank of America, JP Morgan, Goldman Sachs was the strength of equity trading. I want to give you some statistics.
- [36:12]
Scott Wapner
All record highs, by the way.
- [36:13]
Rob Sechan
All record highs. So in the month of June, we did 23 billion shares of equity flow. That's with volatility down 30%. So let's not say that equity flows increase because of volatility. No, the beginning of the word. I said to you, I want to be invested where there's engagement as it relates to trading. And that is the theme for 2026. We have this new class of investor that has an appeal towards the equity markets. It's domestic, it's international, it's a younger generation, it's an older generation. And that is not going away. That's a healthy market. It doesn't mean that I think the market markets going up or going down. It just means there's going to be continued strong demand like we've never seen before.
- [37:00]
Scott Wapner
Mr. Financials.
- [37:01]
Brian Belsky
Yes.
- [37:01]
Scott Wapner
What do you think? I mean you got a lot of, you got a lot of ownership here. You got bank of America. I think you have JP Morgan as well. You have Goldman Sachs, you have Wells Fargo. So this is you Citi as well.
- [37:14]
Brian Belsky
Well, first off, scale, is it overwhelming to think about it today? It's a little.
- [37:19]
Scott Wapner
Did it just knock you over thinking about the exposure you have?
- [37:22]
Brian Belsky
It really did. But being humorless and humble as I am, we have been owning these stocks for a long time.
- [37:29]
Scott Wapner
Better than being humiliated.
- [37:30]
Brian Belsky
Exactly. For a long time, Scott, because of the scale the big banks do, the executing, what they've done on their plan and then the relationship side of things. The relationship side on the small banks. But think about how important relationships are with respect to the investment banking side. That's why the investment banking side was strong in these names in the quarter. That's why the M and A was big. And Goldman. One thing you didn't hear about with any of these is wealth management. That's why I think wealth management the second half of the year with increased volatility and trading flows, it could be very strong. We Think too, we think too, that Citigroup, unbelievable, man. They executed on their plan, record revenues.
- [38:07]
Scott Wapner
So this was interesting and I referenced this. I'm sorry to interrupt you, but I just wanted for the context purpose, I referenced a turn in this stock when I was walking to the set. Okay. So it happened, you know, just before noon. Now, they didn't raise their return on tangible common equity. Is that what the market's upset about?
- [38:28]
Brian Belsky
I think so, but I think the market may be looking at, at the value play that Citigroup was. Scott, relative to, let's say Wells Fargo trading at 3 multiple points higher than Wells, the stock obviously been outperforming. Well, Scharf did a great job this morning talking about the future of what the plan is in executing on, on Wells Fargo. So the turnaround is complete in Citigroup. Jane came in 2021, put the plan together in 2023, has rocketed. It's now caught up with the rest. So I think from a value perspective, Wells Fargo provides more, but from a pure leadership perspective, it's still J.P. it's Goldman Sachs, is Bank of America, and it's Morgan Stanley.
- [39:05]
Joe Terranova
Okay. I think it's going to be Morgan Stanley in the second half of the year because of that wealth management business, which is further ahead than some of the other banks. Right. And they have all those other characteristics of the other banks.
- [39:17]
Scott Wapner
Okay, Josh Brown, best stocks in the market coming up after this break.
- [39:25]
David Solomon
Which are America's top states for business. Get all the data and complete state by state analysis.
- [39:32]
Rob Sechan
See how your state measures up.
- [39:34]
David Solomon
America's top states for business.
- [39:36]
Josh Brown
See the full list now at topstates.cnbc.com.
- [39:54]
Scott Wapner
Welcome back. Josh Brown's got stocks in the market. The lesson here, Josh, you say, is sticking with a couple of names that were on the list and now they're paying off.
- [40:05]
Josh Brown
Yeah. So one of the things that I see in terms of investor mentality, particularly people who are relatively new to the markets, they have this idea in their heads that it's a game about like batting averages and how many stocks and how, how many winners, almost as if it's like how many hits or how many home runs. The reality is this is not a game where variety is necessarily your friend. You want to have diversified portfolios, of course, but we don't need to be trading a new ticker every 24 hours just because the market closed and then reopened. So one of the things we try to do with the best stocks in the market list at CNBC Pro is keep people updated on some of the ideas that are still live. And that's what we did yesterday. So let's, let's take a look at travelers. They're going to report at the end of the week. We first talked about this name at, on June 11th. It was right at that 308 to 310 resistance zone. It has since broke out. It's up about 12%. Since this is very much still a live situation, you got sort of a small, shallow, low volume pullback, but still great momentum underneath the surface. The 50 day moving average here is the key, Scott. It's at 309. It has risen sharply to meet price. It is the most important reference point for traders. I think longer term investors can eyeball 300. If we're above 300, I think you want to be long the name because the structure of this uptrend remains intact. RSI high 60s. Very healthy, very desirable serving. The other name is Delta. We talked about this first in December in the column and we brought it to TV. It's about 23% since then. Again, short, shallow pullback here. Perfectly normal for an uptrend. Perfectly healthy. And what I would tell you is this is probably another viable pullback. Every single one of them on the way up has been rising 50 day at 80. That has supported every meaningful day dip. This year. RSI has reset into the 50s after, after being overbought as the stock was pushing 90. Again, perfectly normal. I think the 200 day at 69 is, is really a little bit too far away. So what we would tell people is 80 bucks on volume if you're a longer term investor. And I think that would be a good line in the sand here. So I like the risk reward. 5 down to make 15 up. I think this is $100 stock ultimately and the buyers are coming in exactly when they're supposed to.
- [42:36]
Scott Wapner
Okay. All right, good stuff. We'll take a break. We come back. Apple is the best performing mega cap stock tech stock year to date. Been on a great run and hitting new highs for the last several days. Now one firm says sell it. We'll debate that next. All right, welcome back. Apple's been on the run, as you know. It's been hitting new closing highs. Got 320 yesterday, I think was the number it hit, which was a new intraday high. It wasn't able to hold that. But I said the stock's the best performer of the group year to date in which it is. It's up 15.3%, Joe. Today it's downgraded to an underweight at keybanc 250 is the target. Why they see slowing iPhone builds with price increases, weak US upgrades and changing device subsidy models to 2027 expectations that likely need to move lower for the Mac, the iPad and wearables. And three, as unit growth likely slows, so will the growth in Apple's user base likely pressuring services. Those are big words.
- [43:58]
Rob Sechan
So for each of those three reasons to be correct, I think you would have to see a significant deterioration in global economic conditions because the way the economy is set up right now, I don't see the demand, demand for Apple's products waning in any regard. So I disagree with that. I think they've left off the ability for this company to deliver a tangible AI product in the hands of consumer which I think ultimately this company will do. I said to you yesterday I want to build upon this a little bit. I said I would, I wouldn't be buying more here. I've been aggressively buying it all the way up From a momentum standpoint. You had a stock that very quickly from June 8th down to the end of June fell $45 and then recovered over the next two weeks and went up $50. It is somewhat exhausted. The next leg should be a sideways consolidation phase before it breaks out once again towards three left.
- [44:55]
Scott Wapner
One important thing out.
- [44:59]
Rob Sechan
What would that be?
- [45:01]
Scott Wapner
Valuation 35 times.
- [45:04]
Joe Terranova
Okay.
- [45:04]
Scott Wapner
Is what KeyBank says for Josh. If any of those things happen, which they wrote about 35 times, it's too expensive for that to occur. That's been the challenge with this name. For those who look at it and look at the growth levels and say 35 times for this. Okay, what do you think?
- [45:26]
Josh Brown
It's not going to matter. They're going to, they're going to launch, they're going to launch eight new phones in the next five years. They've got in my opinion the most powerful lock on the global consumer of any publicly traded company anywhere. And this is going to be the platform that serves as the consumer use gateway for all of AI. The profitability from that activity, the services revenue, the increase is in consumer lock in and their ability to actually make more money with higher phone prices, which is what the Morgan Stanley analyst just said. So unfortunately the world that we live in, companies raise prices. We assume it's to offset inflation. Maybe that inflation subsides somewhat in some of the components or some of the materials. And you know what the companies do, they don't drop the price back down to where it was earnings which ends up becoming the company's take and pure earnings growth, pure revenue growth. Even. So, that's exactly how it'll play out here. I don't think that the analysts really thought through what's going to happen to numbers as a result these price increases. The analyst is more worried about how elastic or inelastic the demand might be. Apple has shown repeatedly the elasticity complexity of the iPhone universe is actually, is actually something that we've never seen in consumer electronics really until Apple. And I think that'll continue to be the case.
- [46:57]
Scott Wapner
Real quick, real quickly.
- [46:58]
Brian Belsky
You know who else doesn't agree with this? The Russell 1000 Value Index is not. It added 400 basis points of Apple in the latest rebalancing while the stock.
- [47:07]
Scott Wapner
I told you, it's been on the run.
- [47:08]
Brian Belsky
Exactly.
- [47:09]
Scott Wapner
All right, finals are next. We'll talk to IBM shareholder Stephanie Link today on closing bell, three o' clock Eastern. Adam Parker, Liz Thomas, Anka Crawford, Kristen Olson of Goldman Sachs going to join us as well. Josh, what's your final trade?
- [47:28]
Josh Brown
JP Morgan still the best.
- [47:31]
Joe Terranova
Cicci Morgan Stanley. Given what you saw today, I think the momentum continues.
- [47:36]
Scott Wapner
All right, 3% gainer there. The humble, not humiliated. Brian Belsky.
- [47:43]
Brian Belsky
Thank you. Invesco. Another financial shocker. $13 billion owner of the Qs.
- [47:48]
Contessa Brewer
Okay.
- [47:48]
Scott Wapner
Joe T. Nvidia, owner of the Joe T. Yes.
- [47:51]
Rob Sechan
Nvidia. We bought some last week. I bought some last week. I think you buy more right here.
- [47:55]
Scott Wapner
Okay, I'll see you at 3 o' clock on closing bell. The exchange begins right 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.
- [48:11]
Podcast Disclaimer Voice
All opinions expressed by the Halftime Report participants are solely their opinions and do not reflect the opinions of CNBC or its parent company or affiliates and may have been previously disseminated by them on television, radio, Internet or another medium. You should not treat any opinion expressed on this podcast as a specific inducement to make a particular investment or follow a particular strategy, but only as an expression of opinion. Such opinions are based upon information the Halftime Report participants consider reliable. But neither CNBC nor its affiliates and or subsidiaries warrant its completeness or accuracy and it should not be relied upon as such. To view the full Halftime Report disclaimer, please visit cnbc.com halftimereportdisclaimer which are America's
- [48:47]
David Solomon
top states for business. Get all the data and complete state by state analysis. See how your state measures up America's top states for business.
- [48:56]
Josh Brown
See the full list now@topstates.cnbc.com.