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Halftime Report
Debating the Tech Trade 2/10/25
00:44:07
Scott Wapner and the Investment Committee debate the tech trade as the sector remains the only negative one so far this year. Plus, multiple Committee stocks are on the move, they detail their trading strategies on those names. And later, the desk give you the Setup on key earnings reporting this week. Investment Committee Disclosures
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- [00:01]
Lisa Schneider
What counts most to you. Maybe it's spending more time with the ones you love or maybe doing more of what you love to do. The key to being rich is knowing what counts. At Edward Jones, our dedicated financial advisors are people you can count on for financial strategies to help support what truly matters to you. Let's find your rich Edward Jones member, sipc. This episode is brought to you by aarp. Ten years from today, Lisa Schneider will train in her office job to become the leader of a pack of dogs as the owner of her own dog rescue. That is a second act made possible by the reskilling courses Lisa's taking now with AARP to help make sure her income lives as long as she does. And she can finally run with the big dogs. And the small dogs just think they're big dogs. That's why the younger you are, the more you need AARP. Learn more at aarp.org skills I'm Scott.
- [01:03]
Scott Wapner
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. Okay, Carl, thank you very much. Welcome to the Halftime Report. I'm Scott Wapner. Front and center this hour, the tech trade. That sector remains the only negative one so far this year. We will discuss and debate it with the investment committee and a big name Investor Speaking of 13 Fs making some really interesting new moves there. Joining me for the hour today, Joe Terranova, Amy Raskin, Jim Leventhal, Rob Seachen will show you the markets. Despite talk of tariffs today, obviously we are green across the board. It is the Nasdaq that is leading today. Technology is doing quite well. I do want to focus on these. Tepper 13F. David Tepper already filing his 13F earlier this morning. We talked about it earlier on Squawk on the Street. Notable are the increases in position in several of the China Internet names. Alibaba bumped up as we talked about by 18%, Baidu by 7%, JD by 43% and PDD by 1%. You know, Rob, I know you own Alibaba, so I'll start with you. I think this is just simply a case from what I understand of thinking that these stocks, many of them just got too cheap. And if we were to show, for example, I can throw up a six month of baba, it will show you sort of what I'm talking about in a chart which tells the story better than words. October, the stock was around 117. There you go. And you see that and then in early 25 it was down to $80. Tepper looks at that and is like I told you guys on CNBC already a few months ago how much I like China and I don't think that stories has changed at all now. The stocks came down a lot so I'm increasing my positions in a lot of names that I had.
- [03:04]
Joe Terranova
Totally agree with him frankly. Scott, you know this is the name Baba that we added in January I believe of 24. So we've owned it for a bit. I know David was on talking about it in September and I love the fact that as these stocks have rerated since September that he's bought more, you know, Chinese tech stuff. Not just about being cheap, they've been cheap for a long time. It was about geopolitical risk, slow relative growth rates regularly regulatory headwinds, big underweights. From a positioning standpoint that is what sets them up for periods of outperformance. There's opportunities in China. But I think like Dave, we, we want to be selective. We own Tencent, we own Ping, on both of which we talked about and bought on the show. But I think this is an example of getting quality tech exposure outside the US and when you look at a company like Baba, this is a name that resembles very much the business of Amazon. They dominate key secular growth industries. They're in of E commerce, they're in cloud computing. They trade at one third the valuation of Amazon, which we happen to own too. But this company, despite being a relatively modest, modest grower, is one that you have a huge margin of safety. And I think there's just peak pessimism around tariffs and around China. So this is one where we agree with Dave that said these things re rate very quickly as we saw in September. So we will see. And if the tariffs end up being more, you know, more bark than bite, I think these are names that you can own and you can certainly own them for a long time.
- [04:53]
Scott Wapner
A lot of these stocks tell a very similar story through the chart. Baidu is another one which you can pull back to six months as well. You can see a spike in the China names when he came on and said buy everything, ETFs, names, whatever. And then you had the come down in the share price Joe and you could see then that this became an opportunity that was too good to pass up. The K web was up a bunch today as well. Tepper can be tactical as, as best, as good as anybody in that regard. 13Fs can be dangerous because they are backward looking. Obviously this is at the end of the last quarter. But I understand this to be the real deal right now too, that he likes these plays. They just got too cheap.
- [05:38]
Jim Leventhal
I think the inflection point was the middle of September last year where we heard that finally Chinese policymakers were going to be introducing aggressive stimulus measures. And it was at that moment where you saw these names begin to rally. Look at JD's performance since then, up 57%. Baba up 31%. Baidu up 11. PD, up 19. And I also think what happened is you had a lot of outflows from India. Inda, look at the ETF, down 13% from the middle of September. MCHI, the China ETF, you've got that one up 23%. So you had that negative correlation trade that has continued geographically it's been the last several years. When India does well, you see capital moving out of investments in China. Now you saw the reverse of that, I think was a major inflection point. I know our exposure is in yum China. A week ago I said to you I was a little concerned. I didn't think. I saw the momentum being there. They reported earnings two days later and clearly that reignited some positive momentum. So I think they're in the right place. If you were to ask me, of the four names that we're talking about today, which one do I like the best for further appreciation, that would be Baba. I think it's very close to returning to its high aim.
- [06:55]
Scott Wapner
There was, you know, the narrative had become China's uninvestable for many. Yeah, and it's, you know, it's like Tepper trying to play chess when others are trying to play checkers. And your trash is my treasure. Is it investable now? I mean, because of the advances in AI, Baba has an AI model which it suggests is pretty good deep seek, making us all think about what's happening over there as it relates to AI and the competition that exists. Is this the moment again? If you miss it the first time, when Tepper told you to do it, do you follow his actions and do it yourself?
- [07:31]
Amy Raskin
I'm not going there actually, and I don't think it's not investable. My issue with a lot of Chinese companies is that they're not really run for profits. They're run sort of as extensions of the government. And that makes them a little bit more risky and a little bit more volatile when policy changes. That said, I think we are very overweight ex us, so we're very overweight Europe at this point, we have a big position In Japan. I do think the rest of the world, relative to the US Is, is very inexpensive, China included. Obviously Europe has more exposure to the Chinese economy. So if you do get a big stimulus, that's going to help those companies in Europe. So I do think, I wouldn't say that they're uninvestable. It's not where we're choosing to go right now.
- [08:16]
Scott Wapner
I would tell you, Jim, the other interesting moves in the 13F that we're watching from him today. Tepper cut Amazon by 19%. Cut Meta by 21%. We know that Meta has been on this tour in pace, all of you. We've talked about it every day. Meta is trying for its 16th straight day up. That's the longest streak of any of the MAG7 ever. $270 billion in market cap since January 16th when all that began. Rob, you own Meta. I know, Joe, you own Meta, but what about this taking positions in Mega Cap down a little bit as you increase the exposure elsewhere within this universe?
- [08:55]
Rob Seachin
I think it's all a question of degree, Scott, and I agree with it. And you saw me a couple of weeks ago, Trim, Oracle and Nvidia for that matter. These stocks have had home run returns. So there's nothing wrong with taking a little profit off the table. I still own positions in all of them. And I think, you know, if you look outside of tech, you mentioned the lackluster performance year to date of tech. There's a lot of other sectors of the market that are doing really quite well. And I think we'll continue to do well simply because as you looked at projected earnings growth through the rest of this year, the MAG7 and the other 493, their growth rates converge by Q4. Now, this is a projection and things may change, but they literally converge to pretty much the same growth rate by Q4. And when you consider the weightings of the MAG7 and the lack of weightings in the other 493 stocks, there's a case to be made for the rally continuing to broaden. By no means am I saying mag 7 are dead, otherwise I wouldn't own them. But I think it's perfectly reasonable to trim these stocks and look for better opportunities elsewhere.
- [09:55]
Scott Wapner
That's what Adam Parker is suggesting today says, sell some Mag 7. We're changing our mind and we believe lowering exposure is prudent. The high beta and increasingly high capital intensity combined with the elevated valuation of the Mag 7 is, in our judgment, an increasing cause for concern. Everybody's got Alphabet. A lot of you have Microsoft Joe, you sold it in the rebalance. Amy, what about that? Is it time to sell some of the Mag 7? Is it time to change our minds and lower exposure there?
- [10:26]
Amy Raskin
Yes, we've been underweight the Mag 7 I think that is the right call. I do think the capital intensity is going up. The free cash flow numbers are looking worse. They're looking much worse than the earnings growth and everybody's still focused on the earnings growth. So look these names are over owned. I think they're, we still, as Jim said we still own a lot of them. We're underweight pretty dramatically as a, as a group. Amazon's the only one that we're a little bit overweight right now but yeah, no, I think there are other opportunities and other places to look in the market.
- [10:58]
Scott Wapner
Rob JPM says Amazon's reiterated today their best idea. I said everybody owns it. You're hard pressed to find many negative calls around any of these names. If you take Apple out of the mix we know about the, I don't know over the last month a bunch of downgrades that those have gotten but that's about it. Most of these other stocks still remain well loved by a broad swath of analysts on the street.
- [11:24]
Joe Terranova
Yeah, I would say, you know when you look at companies like Metta I would not be surprised to see some give back in price performance. Know that this is our largest overweight of the Mag 7 by double. Okay, so here we are owning it. We have enormous price performance. We're up 500% since we added it in December 22nd on the show we're not selling any of it but I think you could see some give back. I think it's about haves and have not. Scott so when we look at where we would be buyers even though we're underweight, it's in video and Amazon because they trade at slight discounts to where they have traded historically from a price standpoint and when you look at what's happened Microsoft, Google, Amazon all traded lower on weaker cloud revenue and higher capex plans in saying that weaker cap revenue cloud revenue is about capacity inability to keep up with insatiable demand. That is why you want to focus on those I think really expensive things like Tesla we don't want to go near. Microsoft has basically been dead money for the last year. That's why we're neutral. Apple we trimmed at the end of last year on that major price performance that we saw. Google's still cheap but these companies have huge capex and operating profit is up a lot but free cash flow is only up minimally because they're becoming capital intensive. So if you focus on protecting yourself with price and owning the names that are relatively cheaper, you're going to be fine here. It's the expensive stuff you have to be careful with.
- [13:06]
Scott Wapner
Wolf though. Joe, today ask the question are tech's best days in the rear view? They say the path of least resistance for the group is to the downside in their mind. So I got Parker and Wolf saying okay, lighten up or at minimum think about these as the best is maybe behind these names for a little bit.
- [13:22]
Jim Leventhal
I don't know. I want to use the word moderation. I think it's moderation in terms of price appreciation, moderation in terms of the revenue growth. I think that's the right word. And when you use the word moderation you understand that yes, these are core holdings in a portfolio but the degree to which you own them is what you should be questioning right now. So David Tepper selling off some of these, I think that's proper risk management. And I understand that we've seen evidence here in the most recent earnings report that's the right thing to do. You really don't have strong reaction after earnings for the majority of these mag.
- [13:57]
Scott Wapner
Seven now the only one we did was meta.
- [13:59]
Jim Leventhal
Yeah. And three we're really, we're waiting for Nvidia. So I could be wrong in that because Nvidia could turn around and depreciate significantly.
- [14:07]
Scott Wapner
Well, I mean Amy, and Video Evercore today says the deep seek sell off was an opportunity into the print. They want a tactical outperform. They do report on the 26, they got to wait a little bit. By the way, from the 13F I saw that tepper increased in video position by 8%. Little small bump up and you know that stock has obviously been in question and you laugh because it's a small bump up 8% for a big fish. Yeah, for a while. For a while.
- [14:36]
Amy Raskin
Right. I think, I think video quarter is going to be fine. You know, you saw the capex numbers from all of these guys and they were up huge. And that's going to be to their benefit. But from a long term perspective, would I be adding to Nvidia right now? Probably not. You know, we've owned it forever. We had clients who would kill us if we sold it. At the end of last year. Those same clients are saying, you know what, you can sell some now. It's funny how when something goes down 25% people are less in love with it. And that becomes a little bit of a self fulfilling prophecy. But look, Nvidia is a great company. They have a great position. The question in my mind is all about valuation. Should it be a $3 trillion company at this point? And I think that's, that's a fair question.
- [15:15]
Scott Wapner
So if not tech, then what? Right. If you say you're better, you're one of the few on this show who's been underweight tech for a while. If not that, then what?
- [15:24]
Amy Raskin
European banks look great. I mean, they've done great. Europe's done better than the US year to date. There's a lot of names over there that we like. Health care has been working and much cheaper valuations. We like energy. It's also been working year to date, kind of surprisingly given the policies of the Trump administration. But we do think that there's. They're very cheap and they, for the most part, we're going back to a fossil fuel world and that's going to help these energy companies. So there's a lot of places in the market that we like.
- [15:55]
Scott Wapner
By the way, you did trim another one of your big winners. This is not the first time you've trimmed this name. It's a Quantum computing stock, Ionq. We talked about it on numerous occasions. This stock had a great run and I know our viewers, certainly some of them, because I've heard from them on Social. Whatever follows you, where they bought and they made. And they made a lot of money.
- [16:15]
Amy Raskin
Yep. And it was a great. We bought it at 12 or $13. It went up to 50. Then we had the Jensen warning about Quantum. It felt they fell back to like 30 or even the high 20s. It came right back into the low 40s. We've been trimming just because it's a very volatile name. This should be a relatively small position in portfolios. There's a lot of upside if it works, but it is a risky stock. So you know the $9 billion market cap, we've been just trimming it back long term. This is a real company. $100 million of bookings last year, real customers. So we like it.
- [16:55]
Scott Wapner
Yeah. Well, you have a number of other moves that will. We'll get to throughout the show just in just a little bit. I do want to stay on the theme though, at least for the, for the moment on semis off of Taiwan. Semi guiding their revenue towards the lower end of the range. Rob you on that name, TSM. Mm.
- [17:13]
Joe Terranova
We added it in early September, I believe, of 24. Increased our weight on what I would call deep state Monday the name was down 15%. Intraday. We're plus nine on that right now.
- [17:28]
Scott Wapner
Deep Sea.
- [17:29]
Joe Terranova
Deep Sea.
- [17:30]
Rob Seachin
Yeah.
- [17:30]
Joe Terranova
What did I say? I'm sorry.
- [17:32]
Scott Wapner
That's okay. I get it. You're. You brought your conspiracy theories in. It's okay, it's all good. But you can go.
- [17:38]
Joe Terranova
I said what you're doing.
- [17:40]
Scott Wapner
Whatever.
- [17:41]
Joe Terranova
Anyway, yeah, it's a company with incredible market share in advanced chip manufacturing. It's a, it's a key beneficiary of AI CapEx. They're the world's largest chip manufacturer. Dominant market share 90% in advanced semiconductors. Listen, they have an expertise that very few of any companies can match and they continue to benefit by what's happening in this marketplace with a valuation that still remains reasonable. And that's primarily what gets us interested.
- [18:16]
Scott Wapner
I'll remind you what network you're on some other time. Hopefully you'll figure it out yourself by the next time I come to you. We can keep our eye on the ball. Broadcom upgraded today. Overweight, you got stuck.
- [18:31]
Jim Leventhal
Reports in early March and there is clearly demand still for network processing components and Broadcom has the lead in that. I think what's happened in the semiconductor industry is you have seen capital significantly move away from it towards software. I keep talking about these negative correlation trades that hedge funds are engaged with and it seems as though we're isolating the opportunity surrounding AI semiconductors to. In video, to Broadcom and then some of the semi equipment names. Jimmy. Like KLA Corp, like Applied Materials. Other than that, Scott, there's a lot of names that are struggling. I mean amd. The decline in AMD is just absolutely remarkable. The fact that you really haven't had any form of a significant bounce that's somewhat troubling.
- [19:20]
Scott Wapner
Dan Ives today by the way, if you're talking about chips versus software says the AI software era is here. Now we know about Palantir. Massive run obviously Salesforce in there. Jimmy, your Oracle, a lot of the, like Dell is up, you know a bunch not, not software but AI related things like Oracle in the, in the software space are front and center for us to Twilio today reiterated a buy at Monis Krespi. The shares are up 36% over the last month. But I'll give you quick on Oracle before I really, really take care of you today and let you talk about a stock that I know you've been dying to talk about.
- [19:55]
Rob Seachin
Okay, well then I better keep this quick.
- [19:57]
Scott Wapner
Yeah, you better.
- [19:58]
Rob Seachin
Now look, software makes sense. We're in the third year, right? Of the AI revolution and many of us, I think all of us are looking for where do the applications come home to roost? Where does this actually benefit the world outside of tech and software is that interface by which it happens. So it makes sense to me, you started with the infrastructure, the chip makers and videos, broadcoms of the world. You're migrating to the interface which is software. And pretty soon, and I think it's already happening, frankly, you're looking at how does this enhance productivity and profits outside of tech.
- [20:26]
Scott Wapner
All right, I'll let you, I'll let you do it now quickly. You did on purpose because the story we haven't even gotten to. We're 20 minutes in and we haven't even talked tariffs yet. Why? Because the market doesn't seem to really care today. A few stocks obviously do. Steel related names like Cleveland Cliffs. Cleveland Cliffs, yeah. I mean, so I think. Did you figure that tariffs were coming on steel and aluminum? I mean, didn't you read the playbook last time?
- [20:55]
Rob Seachin
Well, I feel like it. It had to come because if you look at what happened to steel prices and this is why Cleveland Cliffs has been a dog as far as share price goes over the last year. Operationally it's been fantastic. But the share price has reflected steel prices which in the last year went from $1,100 a ton in spot hot rolled coil price to $660 a few months ago. Now they're at $850. And the reason that it's been all over the place is because of dumping, because of international flows that have really crushed the markets. And President Trump, I don't think it's surprising that he said we don't want that. We don't want foreign producers to be able to put our companies out of business.
- [21:33]
Scott Wapner
No, we know that. Here's my question to you. Here's my question to you. I'm simply thinking of it along these lines and no other way. If you thought that this was going to happen, why weren't you pounding the table on Cleveland Cliffs which whose stock, by the way, has traded like garbage.
- [21:49]
Rob Seachin
Okay, wait, you're not joking?
- [21:52]
Scott Wapner
No, no, no. I didn't hear you come on and say buy it because there's going to be tariffs.
- [21:55]
Rob Seachin
Okay.
- [21:55]
Scott Wapner
You didn't talk about the, you didn't say tariffs. Okay, did you say tariffs?
- [21:58]
Rob Seachin
No, what I said, Scott, was. And I'll do this again for the umpteenth time.
- [22:02]
Amy Raskin
Okay.
- [22:02]
Rob Seachin
And I have pounds.
- [22:03]
Scott Wapner
Do the. Do answer my question for the first time.
- [22:06]
Rob Seachin
Yeah. This is about steel prices. It has always been about steel prices. With a modest increase, which we've already got in steel prices, you can get to 25 billion in annual sales very easily at the historical ebitda multiple of 12%. That's 3 billion in EBITDA. If you take the historical average enterprise value to EBITDA of 7 gives you a $21 billion enterprise value. You compare that to where the market cap and debt levels are right now, and it's a triple. And I've said that. And I don't know.
- [22:34]
Scott Wapner
I know you said it. I know you said it. But at A$9 stock, my only point is that A$9 stock or wherever it was. Right. It was, like I said, it traded like garbage.
- [22:42]
Rob Seachin
Yeah.
- [22:43]
Scott Wapner
If you, you were very quick to get out of General Motors when you thought that tariffs were coming there. I didn't hear you suggesting that. Well, hey, guys, remember the playbook from 16 where Wilbur Ross held up the Campbell soup can on CNBC and talked about aluminum and steel prices? Well, I think Trump's going to double down on that again. So this is the moment. For that reason alone, you have heard.
- [23:09]
Rob Seachin
Me say repeatedly, and I'm not even going to get animated about this because it's factual. And you will, you, as the judge, will back me up, that this has been entered into evidence that multiple times over the last few months, I've said it's a triple from here at $10 a share. Today it's $11.50. I've said that multiple times. Now, listen, listen, if I say it's a triple, I don't need to beat my chest and do monkey moves here, okay? That's all I need to say. I can't, I, if nobody wants to believe me on the numbers, that's fine. But if somebody believes my analytical capabilities, not everybody will. And I say it's a triple, so we, I don't, I don't, I don't need to pound the.
- [23:44]
Scott Wapner
We've seen stocks go up and down on tariff headlines.
- [23:47]
Rob Seachin
Yes.
- [23:48]
Scott Wapner
Is this a believable move in the stock? Or if you've been, if you were in it at nine, do I sell it at where it is now, eleven and a half? Because I'm like, I'm not. So staying power.
- [24:01]
Rob Seachin
I mean, I, I, and I want to make sure that two months from now, we're not coming back and saying, jimmy, you didn't say this.
- [24:06]
Scott Wapner
No, we won't. We won't. I get it. Your passion's obvious. Our viewers appreciate your passion. I know they do.
- [24:12]
Rob Seachin
I am not selling a share. I already went through the math and the question is not just is my analytical capabilities correct, but is management capabilities correct? I know you've pushed back on me reasonably, very reasonably, and said, jimmy, are you being objective about management? I think I am and here's why. If you go back five years ago, this was a $2 billion annual sales iron ore company. That's all it was. They've made very good acquisitions and as I just said, they're in shooting distance of 25 billion in annual sales right now. The estimate is 21 billion. But that's before the price hikes. They have done great jobs controlling costs, having good labor unions. They got caught up in a whole lot of drama about U.S. steel that hopefully is behind them. Right now, though, my passion is intact and what I'm waiting for is as this year goes on, let's see the financial results and see if I'm right and if management's done a good job. But I think my position is clear.
- [25:01]
Jim Leventhal
Quick point on the tariffs, sir. The headlines surrounding tariffs and the introduction of tariffs is not going away. It's going to accelerate. And I'll tell you what, you don't say no and think about this for one second. Amy, you know this. You mentioned Europe. Europe is up 9%.
- [25:20]
Joe Terranova
Where are we?
- [25:21]
Jim Leventhal
Mexico. Mexico's up 6%. Canada is up 3%, China's up 7%. The economic team and President Trump's administration looks at that and they gain even more confidence to say, ok, the market's fine with it. Let's take it a step further. And I think that's exactly.
- [25:37]
Rob Seachin
Joe, I've got to add something here. I know you're quick to go, but I was in Washington, D.C. on Thursday, strategic conference. Robert Lighthizer. Larry. Kate Kudlow, Mike Gallagher, I can tell you all Republicans, I can tell you the Republican Party, their tent pole is tariffs. And it's not, it's not bluster. They strongly believe that middle class incomes have been decimated over the last 20 years.
- [25:58]
Jim Leventhal
Jimmy, I understand that, but what I'm saying is the market reaction is what they're looking at. If the market was not market was not resilient, you're right, it is.
- [26:05]
Rob Seachin
You're right.
- [26:06]
Jim Leventhal
If foreign markets were not resilient like they are, they would pull back.
- [26:10]
Rob Seachin
Correct.
- [26:10]
Jim Leventhal
Their resiliency is why they're going to push forward.
- [26:13]
Amy Raskin
You think they care about foreign markets? They care about our market.
- [26:16]
Rob Seachin
Amy's right. It's the market totally.
- [26:19]
Joe Terranova
To Amy, it's the US Market that disagree too.
- [26:24]
Rob Seachin
I mean this is about trade.
- [26:26]
Scott Wapner
Guess what? We're not going to debate tariffs anymore. We're going to take a break because we have our calls of the day. Next, we have a pair of price target hikes on two big retailers ahead of our earnings, plus a sell call in one of Amy's biotech names. We'll debate it all when we get back.
- [26:46]
Lisa Schneider
This episode is brought to you by aarp. Ten years from today, Lisa Schneider will train in her office job to become the leader of a pack of dogs as the owner of her own dog rescue. That is a second act made possible by the reskilling courses Lisa's taking now with AARP to help make sure her income lives as long as she does. And she can finally run with the big dogs and the small dogs just think they're big dogs. That's why the younger you are, the more you need AARP. Learn more at aarp.org skills.
- [27:19]
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- [27:45]
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- [28:28]
Scott Wapner
All right, calls coming up. McDonald's though, is leading the Dow today. You might be like why? I mean the earnings were kind of disappointing. Rob, this is yours. Revenues were disappointing us. Same same store sales down 1 1.4%. The stock though is having its best day. It was at least since 2020 because total comps were up 0.4% and there is a belief, according to some, at least, that things have bottomed. Is that how you see it?
- [28:56]
Joe Terranova
You know, stock has got to be candid. We trimmed this name in early 24. It's a smaller position for us. We have not been adding to it primarily due to valuation and continued cost Pressures. We've been worried about sales growth, stagnating, consumers being pinched by higher prices, you know, increased competition. And while things are turning in the right direction, I don't think it's a name we're going to add to.
- [29:24]
Scott Wapner
Okay, thank you Disney. Jimmy is lower today. Interesting article in the Journal over the weekend about even Disney execs are worried about the high cost of a Disney vacation. I don't know if that's the reason why the stock is down here or not, but what does that present? What kind of problem potentially does that present for the company and then shareholders?
- [29:44]
Rob Seachin
Yeah, I pretty strongly feel that the price, price hikes have to stop at the theme parks and everything else. If they just hold them where they are, remember they're going to increase capacity by a lot. They're leaning into the tunes of tens of billions of dollars of capex in the coming years and over the last two years building more cruise ships, building extensions to the theme parks. This is about getting more people on at the current price. It cannot be about price hikes. They're already past the point of maximum pressure for consumers and they will start to lose consumers. I do think the stock is down on this news today. However, given what the strategic plan is with regards to capacity and given the valuation and given the fact that streaming is turning out to be more profitable than was projected just a year ago, I think this is a good stock to hold.
- [30:27]
Scott Wapner
All right. Speaking of price hikes, JP Morgan has done just that to shares of Wal mart. They say 112 is the new target, not 97. They expect 3 to 4% sales growth, 5 to 7% operations operating income growth. This is yours. They report earnings next week.
- [30:41]
Jim Leventhal
Absolutely reasonable. Both Walmart and Costco are benefiting from the economy of scale. They have massive market share leads right now over its competitors. That's only going to grow and their spend is going to result in further market share gains and revenue appreciation.
- [30:57]
Scott Wapner
Depot as in Home Depot added to the analyst focus list price target to 475. Rob, JP Morgan reiterate overweight. They expect conservative 25 guidance. They believe that's good. Optimistic on better housing trends. They believe home improvement spending will revert towards wage growth.
- [31:16]
Joe Terranova
Listen, this is a long term monster company that we've owned forever. It continues to be a high quality business as evidenced by their healthy profitability and capital efficiency. But ultimately it needs to be a beneficiary of a recovering in housing market activity. Scott in home improvement spend which will require lower rates and that continues to act as A headwind. And you know, just in this market environment, macro environment, valuations continue to be a little elevated from my perspective. But we're going to be patient with it.
- [31:50]
Scott Wapner
All right. Alumina downgraded Amy to underweight price target to 100 bucks from 130. That's at Barclays today. China uncertainty. We're talking about that earlier pricing headwinds as well. What do you think?
- [32:04]
Amy Raskin
We really like this name longer term. China, 7% of their sales. Now, they were one of two companies that were blacklisted in China and retaliation to the tariffs. But China's business for them has been down double digits for each of the past three years. They've had some pricing issues just because more customers have switched to their high throughput product, which is a lower price per genome sequenced. But genome sequencing is still going up 30% a year and we think that transitions largely behind them. Billion dollars of free cash flow a year, sub $20 billion market cap for the leader high gross margin business. So we like it long term, but it's going to be noisy here.
- [32:42]
Scott Wapner
All right, let's get the headlines from Silvana now. Hi, Silvana.
- [32:45]
I
Hey, Scott. Good afternoon to you. A federal judge in Boston will hold a hearing today on Elon Musk's so called fork in the road directive which offers buyouts for federal workers. The original deadline to accept was last Thursday, but the judge put a temporary stay on the program. Several labor unions are challenging its legality. According to the Trump administration, at least 65,000 federal workers have agreed to the buyouts so far. Hamas announced today it's postponing the next Israeli hostage release scheduled for Saturday Coming claiming Israel isn't abiding by the terms of the ceasefire agreement. The Israeli government has yet to comment and President Trump says he's ordering the treasury to stop minting new pennies because they cost more to make than they're worth. The US Mint lost $85 million in the past year on pennies as it cost nearly 4 cents to make and distribute each coin. The higher costs are partly due to rising prices of zinc and copper. But it is unclear whether the president has the power to eliminate the penny as the size and metal content of coins are dictated by Congress.
- [33:52]
Amy Raskin
Scott.
- [33:53]
Scott Wapner
All right, Silvana. Thank you, Silvana. Now up next in today's etf, edge is passive investing approaching dangerous levels. Bob Pizzani breaking all of that down for us. Next.
- [34:09]
Elliot Kaelin
I'm Elliot Kaelin and I cannot wait to tell you all about the new podcast I'm hosting for Smartless Media. It's called Smartless Presents Clueless, a bite sized twice weekly game show with a different main game and cliffhanger puzzle every single episode. And all this season, the contestant will always be Sean Hayes. That's the Clueless promise. Since you never know what the game will be, you won't want to miss a single episode. Listen and follow wherever you get your podcasts.
- [34:35]
Silvana
Are you still quoting 30 year old movies? Have you said cool beans in the past 90 days? Do you think Discover isn't widely accepted? If this sounds like you, you're stuck in the past. Discover is accepted at 99% of places that take credit cards nationwide. And every time you make a purchase with your card, you automatically earn cash back. Welcome to the now it pays to Discover. Learn more@discover.com credit card based on the February 2024 Nelson Report.
- [35:18]
Scott Wapner
All right, welcome back. Let's do some committee moves. I said earlier that Amy had several and I want to document them. After the bell today comes Vertex earnings. You're trimming it ahead of that. Why?
- [35:30]
Amy Raskin
Well, not so much ahead of earnings. I think earnings will be fine. But the stocks up 20% year to date on the launch of their new pain medicine. So we're just taking a little bit off the table. We still like Vertex long term. We think their pipeline is very undervalued, but we're just trimming a little bit because now some of the pain bump is already in the stock.
- [35:50]
Rob Seachin
I'm not trimming you on it. Yeah, I own it. I'm not trimming. I'm not taking shots at Amy because this comes under the heading of risk management.
- [35:56]
Scott Wapner
We've already been major contempt of court and then I'd have to call the bailiff and your butt would be on the street if you did that. So please carry on.
- [36:05]
Rob Seachin
Well, the shots on gold, as we call it and you refer to it the pipeline, they've got a lot of them. And the pain drug which just got approved, there's now this question of what the ramp will be, how many indications it will get. I do think that one's a game changer and that's why I'm sticking with it.
- [36:19]
Scott Wapner
You trim Natera?
- [36:20]
Amy Raskin
Yes.
- [36:20]
Scott Wapner
Why did you do that?
- [36:21]
Amy Raskin
So again, a big winner, up 150% over the past year. We think it has a key franchise in cancer detection. Recurring currents and we like it. Again, long term, it just got to be a very big position just due to the movement of the stock and we're trying. We making room in health care for.
- [36:40]
Scott Wapner
A new name which we'll talk about what about trimming.
- [36:43]
Amy Raskin
Is it Cadent Kadent is an industrial company. Again, like it long term, just trimming.
- [36:48]
Scott Wapner
Just Kai D. What's the ticker Kai? Oh, there it is right there. How long have you owned that?
- [36:54]
Amy Raskin
Multiple years, probably five years.
- [36:56]
Scott Wapner
Okay so your new. This is a new box that we get to next is cdna. That's Care dx.
- [37:02]
Amy Raskin
Care dx this is a leader in blood based organ transplant rejection. So typically if somebody has an organ transplant Prior to Care DX's new technology, you had to do a biopsy and see if your body was rejecting the organ. Now CareDx has new technology, it's genome based technology where they can test the blood to see if your or if the organ is being rejected. And you find out much earlier all the biopsies are already covered under insurance. This is a cheaper, better way to do it. So it's a $1.2 billion market cap company. Again relatively small but we think it has a lot of Runway over a long period of time.
- [37:41]
Scott Wapner
All right. Getting a little bit of a move as as you mentioned that in pinch.
- [37:46]
Amy Raskin
So this, this.
- [37:46]
Scott Wapner
You bought more. You bought more of impeachment.
- [37:48]
Amy Raskin
This was a long term hold holding for us. Ultra high frequency rfid. The stock was a moonshot last year. It's come back. Customers have. Have a little bit of extra inventory due to one or two customers pushing some things out. But longer term, we like this name.
- [38:02]
Scott Wapner
Okay, you want to do this next one here? Are we doing it here? We. We're doing it here. Okay. Yeah. Is that a yes? Okay. Hey, you bought more.
- [38:13]
Amy Raskin
You.
- [38:13]
Scott Wapner
You bought more. Uber.
- [38:15]
Jim Leventhal
Got back into Uber.
- [38:16]
Scott Wapner
You got back into Uber on Friday.
- [38:18]
Jim Leventhal
Got back into Uber on Friday. Rules based mechanical. Go right back in.
- [38:23]
Scott Wapner
I have never, I have never said.
- [38:27]
Jim Leventhal
Well you have to hold on. You have to attribute the move in price to Bill Ackman being in the stock.
- [38:32]
Scott Wapner
Obviously that's why I asked you.
- [38:34]
Jim Leventhal
But you react to that when you say I'm going to put my emotion to the side. Okay, so let's go through the history and In February of 2023, I buy the stock below $37. At that point I thought this company was a fantastic fundamental company that had significant upside potential. That has not changed over the last two years. I got out of the stock October 31st of 2024 a little bit below $74. I've sat out for the last three months as the stock has waffled below 70. And, and I told myself I am not going to allow this name.
- [39:09]
Scott Wapner
You said to go into this name. That's the by, golly, I'm buying this damn thing back. Is that what you said? Told yourself?
- [39:16]
Jim Leventhal
I said there's, you do have a.
- [39:17]
Scott Wapner
Lot of conversations with yourself.
- [39:19]
Jim Leventhal
There's no way this stock is going to a hundred dollars, which I believed in February of 2023. No way it goes to $100 without me. So I had a resting order in above where I had gotten out in October at $74 to get back in. Thank you, Bill Ackman, because you're the one that triggered my elective stop to buy it back in.
- [39:39]
Scott Wapner
I mean, it's been a pretty remarkable move. Can you throw up? Let's throw a one week. We have the one week of Uber because, I mean, he announced a position, the stock went up like 8% and then here you go, another 4.3%. There you see clearly what, what we're talking about here. So that, that's interesting that Joe did that. All right, Santoli, he's next with his midday word. Welcome back. Senior markets commentator Mike Santoli is here at the desk. Most of today is a tech story. Yeah, for sure. If you look at the mega caps that are up, I don't know if you have an opinion on this Tepper upping his positions on a trade that he told us on this network in the fall that he really liked, and he apparently still does, maybe even more because the stocks came in as we showed they did.
- [40:49]
J
And just today, the US NASDAQ 100 type names did grab the baton off of that. It felt like that was part of why you had a little bit of a build of strength in the NASDAQ going into the regular session. What I also find interesting is when you do have Nvidia, Broadcom, Microsoft working on a given day, it's like, well, we can now sell off the banks and take profits there because you know, it's not going to hurt the index. And they're up 7,8% on a year to date basis. So they probably have to cool. I mean, it's not obviously that's scripted and conscious, but it almost seems that way when the market is just kind of looking for a way to churn in place. And you got most stocks up today, but the equal weights doing not much of anything. I think you've obviously had a bit of a loss of altitude in the very acutely economically sensitive areas outside of banks, but it hasn't really hurt too much.
- [41:39]
Scott Wapner
You know, tomorrow's going to be interesting day one of Powell. Right. And you know, the Republicans are feeling a little bit of a flex, obviously in their position in D.C. i just wonder how that's going to play into the questioning of Powell. He's going to be on the hot seat for sure.
- [41:56]
J
What is interesting, though, is if you think about how Republicans likely want to stage things in terms of fiscal policy, in terms of arguing that, you know, tax cuts are the thing, they want to project really strong economic growth, both to kind of make the math work on tax cuts. So do you want to be saying, hey, we have a policy mix is going to have this economy humming and then say we really need rate cuts right now? I don't think that's necessarily the way it's going to go, especially after the president more or less said he was right to pause in the last meeting.
- [42:28]
Scott Wapner
Yeah. All right, we'll see. And I'll see you a little bit later on closing bell. Mike, thanks. That's Mike Santoli. We'll do our setup next. All right, we are back. It's time for the setup. Robbie, remembered where you are. Coca Cola is tomorrow before the bell. What do you have on this one?
- [43:27]
Joe Terranova
I think we're going to see 7% organic revenue growth, Scott, which would indicate that they are seeing stabilization in the business while benefiting from a healthy pricing mix.
- [43:40]
Scott Wapner
Okay. Deere is Thursday before the bell, Jimmy. And you're not expecting a good quarter? Why not?
- [43:48]
Rob Seachin
This is one of those cases where the stock is doing much better than the company would otherwise suggest it should be. It's not the company's fault. Share prices have been in a free fall for several years and that ties directly to farmer incomes and whether they can buy traction that is projected to turn around. Now, I will admit I'm not comfortable with this. I don't like this when a stock is doing really well and the underlying fundamentals stink. But the projection here is that we're at the trough right now. Crop prices should increase and then sales with it, management has done what they need to do, which is control inventory so that prices don't go down. We'll see. I'm a little tepid on this.
- [44:24]
Scott Wapner
Well, JPM raised the price target today to 500 bucks.
- [44:26]
Rob Seachin
I saw that and I read it. You know, they're putting a 24 multiple on, I believe, next year's free cash flow. I mean, 24 multiple. And what they say is that at trough that is the right multiple to use. I get it. That makes sense. But 24 kind of makes me queasy. However, if it got to 500, I think that's probably my chance to exit. It's been good. It's been a good stock.
- [44:46]
Scott Wapner
Also this week is Applied Materials. It's Thursday after the bell Joe which.
- [44:50]
Jim Leventhal
Looks to me like it wants to turn up higher or lam research KLA corporate reported Applied Materials responded positively to that. We need to see how much the decline year on year from China revenue is going to be there's some very very negative estimates close to 30% options imply 6% move here Jimmy Amat Amen.
- [45:11]
Rob Seachin
I thought you're going to go to the next one.
- [45:13]
Scott Wapner
I was just win resorts now what.
- [45:15]
Rob Seachin
You'Re going to give me a pass?
- [45:16]
Scott Wapner
Okay amount let's talk about don't you.
- [45:18]
Rob Seachin
Own a man I love love a Matt.
- [45:20]
Scott Wapner
I'm just following the order of what's on the paper. Maybe you should look at it.
- [45:25]
Amy Raskin
Hey.
- [45:25]
Rob Seachin
Matt, look we've had good results from ASML and who was it? Joe Lam Research KLA came out recently.
- [45:31]
Jim Leventhal
Lamb and KLA just said the issue here.
- [45:33]
Rob Seachin
I'm sorry the issue here is how much is sales to China going down But I think at this point the worst is priced in on that and when.
- [45:40]
Scott Wapner
No just kidding. We gotta go to break finals are next. All right I'll see you at closing bell 3:00 Eastern Time with Gene Munster. Stephanie Link. I hope you'll join me Then we'll track this market into the close. Rob Ceechen what's your final trade for us?
- [46:00]
Joe Terranova
NRG like V Stra another independent power producer. It's an inexpensive way to get exposure to AI data center demand.
- [46:09]
Scott Wapner
All right, thank you man. Appreciate that.
- [46:10]
Rob Seachin
Farmer MP Corporation Rare earth elements mining, refining and turning into magnets. This will be a trade war beneficiary.
- [46:18]
Scott Wapner
All right. Amy Raskin.
- [46:20]
Amy Raskin
As I said care dx a new position for us. A relatively small cap health care name but we think has a lot of growth in front of it.
- [46:27]
Jim Leventhal
Jyoti, A few weeks ago I gave Applovin as a final trade a little bit of an update here. I think it's about to take out its December all time high. It's at 4:17.
- [46:37]
Scott Wapner
Thank you very much. Thanks everybody. See you on closing bell. You've been listening to CNBC's Halftime Report the podcast. You can always catch us live weekdays at 12 Eastern only on CNBC.
- [46:52]
Lisa Schneider
All opinions expressed by the Halftime Report participants are solely their opinions and do not reflect the opinions of CNBC NBCUniversal, their parent company or affiliates and may have been previously disseminated by them on television, radio, Internet or another medium. You should not treat any opinion expressed on this podcast as a specific inducement to make a particular investment or follow a particular strategy, but only as an expression of an opinion. Such opinions are based upon information the Halftime Report participants consider reliable, but neither CNBC nor its affiliates and or subsidiaries warrant its completeness or accuracy, and it should not be relied upon as such. To view the full Halftime Report disclaimer, please visit cnbc.com halftime reportdisclaimer I'm Elliot.
- [47:33]
Elliot Kaelin
Kaelin and I cannot wait to tell you all about the new podcast I'm hosting for Smartless Media. It's called Smartless Presents Clueless, a bite sized twice weekly game show with a different main game and cliffhanger puzzle every single episode. And all this season the contestant will always be Sean Hayes. That's the Clueless promise. Since you never know what the game will be, you won't want to miss a single episode. Listen and follow wherever you get your podcasts.