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Dow Heads for Worst April since 1932 4/22/25
00:43:53
Scott Wapner and the Investment Committee debate the rebound for stocks as the Dow heads for its worst April since 1932. Plus, the desk debate Tesla’s earnings report tonight. And later, Leslie Picker brings us an exclusive interview with Disney Chairman James Gorman.
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- [00:02]
Scott Wapner
As America's leading business lender, bank of America is on your corner and in your corner. With $215 billion in business loans and over 3,700 business specialists across the nation, we help businesses thrive so communities prosper. What would you like the power to do? Learn more@bankofamerica.com LOCALBUSINESS bank of America Official bank of FIFA Club World Cup 2025 Copyright 2025 bank of America Corporation. All rights reserved.
- [00:31]
Josh Brown
Hey Fidelity, what's it cost to invest with the Fidelity app?
- [00:36]
Scott Wapner
Start with as little as $1 with no account fees or trade commissions on U.S. stocks and ETFs. Hmm.
- [00:43]
Josh Brown
That's music to my ears.
- [00:45]
Scott Wapner
I can only talk investing involved risk, including your surplus. Zero account fees apply to retail brokerage accounts. Only $0 commission applies to online US equity trades and ETFs and Retail Fidelity accounts sell order assessment fee not included, some account types and securities excluded. Details@fidelity.com Commission Fidelity Brokerage Services, LLC Member NYSE SIBC 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. Carl, thanks so much. Welcome to the Halftime Report. I'm Scott Wapner. Front and center this hour, the rebound for stocks. The Dow, though, still pacing for its worst April since 32. We'll discuss and debate the road ahead for this market with the investment committee. Joining me for the hour today, Josh Brown, Stephanie Link, Rob Seach and Jim Labenthal show you the markets here. We do have a very nice bounce and you do have the dollar up, you have yields down. So the backdrop feels better today. Not a lot of news other than that. And I guess that's the kind of market that we're in right now, where those items bonds and the dollar having as much to do with the market direction as anything. Rob, I guess I'll go to you first. What stems the selling in this market? What gets us out of this current environment? JP Morgan's trading desk today says we feel a completed trade deal is the only catalyst that can break the market out to the upside. And we still need resilient macro data and solid earnings. And we really aren't able to check any of those boxes at the moment.
- [02:25]
Stephanie Link
Not at the moment, but I do think that clarity is ultimately going to come. It's just a question of when. And right now we reside in that space in between where we're all kind of waiting for Godot to figure out what's going to happen. On the one end you also have kind of a cap, not only a technical cap, it at 5,500, but a valuation cap. Right. There's, there is not a lot of room from a valuation standpoint. Earnings and GDP growth growth are still expected to be higher than maybe many of us think they will be. And so any positive news is going to be met with some resistance on the lower side of things. We do know that we're going to get through this.
- [03:10]
Scott Wapner
I'm going to take it from you just for a second because there's a story that's moving from Bloomberg and if you see the movement in the market, this could be exactly why you're seeing the direction that we're seeing. At the very moment that the Treasury Secretary, Scott Bessant, this is according to Bloomberg, I'm reading directly from their report, has told a closed door investor summit that the tariff standoff with China is unsustainable and that he expects the situation to de escalate, that negotiations haven't yet started but that a deal is possible. That is according to people who attended that session at an event hosted by JP Morgan in DC. It wasn't open to the public, it wasn't open to the media. Those are the reports that are coming out. If that coincides with what you're seeing on the screen, then it would make some sense. We'll do our best obviously to get more out of that, to clarify it even further. But nonetheless, perhaps a little bit of optimism about de escalating the situation with China would have a benefit on the market. I mean, that's one of the things you need.
- [04:14]
Stephanie Link
Yeah, and by the way, we're hanging on every headline for that. And what that does is when you have sentiment, you have positioning so washed out, you're going to get moves like we're getting today. Right. And when we get a little overbought on the bounce and you kind of get some negativity, you're going to get the other. So I think we're caught in this highly volatile range for a bit until something comes along, brings us clarity and breaks us out of this. And I think it'll happen. I really do think it'll happen.
- [04:45]
Scott Wapner
I go back, Steph, to this JP Morgan trading desk, right? We need a completed trade deal, we need a resilient macro and we need solid earnings. The problem is the macro looks ugly. Everybody knows that. Latest evidence, Chicago Fed survey of economic conditions was terrible. Both services and manufacturing worked into that report. So you can't say, well One's good. They're both kind of ugly. Almost everybody at this point thinks that earnings estimates are too high. JP Morgan today says more downside strategists. Most striking, they say, is the decline in the percentage of companies beating estimates. Just 68% of those that have reported so far have exceeded. That's the lowest rate in some time. And calls for a more significant slowdown are seemingly everywhere. The latest from David Solomon, chairman and CEO of Goldman Sachs. Listen.
- [05:37]
Jim Labenthal
There'S no question the trade policy that's been articulated, the direction of travel has changed the perspective on forward growth.
- [05:46]
Rob Seach
So consensus on Forward growth was 2%.
- [05:48]
Jim Labenthal
It's obviously much lower now.
- [05:51]
Scott Wapner
All right, so that's Solomon. But you get the picture, right? Everything that, that you need completed deals, X, you don't have that resilient macro. X, you don't have that. And earnings just aren't that great. And they're not expected to be very much at all.
- [06:05]
Josh Brown
And that's why the S and p is down 10% on the year. And that's why the Nasdaq hit down 18% yesterday. Right. Expectations are very, very low. Sentiment is very negative. Yeah, I'll give you some of the data that is really weak or weakening. But as, as long as the labor market stays strong, that's the thing that I'm watching. If that starts to fall in a big way, then Katy, bar the door because that is the most important piece. Because that's the most important piece for the consumer and not only but, but for the consumer. They need jobs, they need, they have wage growth. Inflation is certainly coming down. So there are some positives out there in terms of earnings. Only 25% of the companies in the S&P 500 have reported so far. It's way too early to call the game at this point in time. And I actually would say 68% beat rate is not so bad given what we're going through.
- [06:55]
Scott Wapner
Not really.
- [06:56]
Josh Brown
And I will say, I will also say some things that we've learned today and we're going to get to earnings later. But currency, the weak dollar is actually helping to offset some of the pressures and the commentary that we're hearing about tariffs and the tariff hit to earnings. So there are going to be, there are going to be a lot of puts and takes this earnings season. I think expectations are very, very low. So it's a low bar, but I think they will be better. I think margins are going to hang in. I mean, she is look at, look at 3 in GE today in their margin. So you have to just take each day by day. It is very volatile, it's very challenging. We've all been doing this for 30 plus years. This is probably the hardest year ever. But the sentiment is extremely negative and it won't take much for this market to bounce like we're seeing this afternoon.
- [07:46]
Scott Wapner
Jan Hodzius, by the way, follows up Solomon. And just before we came on the air today, Josh cuts his GDP forecast for this year to 0.5 for the obvious reasons, tariffs, tighter financial conditions, policy uncertainty. But what do you make of what you've heard already on the desk? And then what the street is making the focus of its commentary today?
- [08:12]
Rob Seach
Stephanie and I agree that sentiment is extremely washed out. And it's so washed out that these 800 point intraday Dow rallies are exactly what you should expect in that environment. The problem is the presence of washed out sentiment alone doesn't really give you a longer term respite from the things that everyone is worried about. So we have these bear market rallies. They're fast, they're sharp, they're furious. You see people covering short positions. You see people, you know, chasing after stocks because they think maybe they missed the bottom. They don't, historically at least. And maybe this time will be different. They don't often lead to a sustainable bottom. While we're still talking about washed out sentiment. Like it has to get to the point where we didn't even bother talking about sentiment because it just becomes a given that everybody's bearish. I would love to tell you that I think we're there, but I just don't. As to what Rob was saying, I want to take his metaphor of Waiting for Godot one step further. A lot of people are unaware of the provenance of that idea. Waiting for Godot is a play by Samuel Beckett and it has no point. It's what they coined at the time the term theater of the absurd. There is no resolution. It's two characters basically talking themselves in circles for three acts and it never goes anywhere. Spoiler alert. Godot never shows up at the end of the play. And I think that that's what's starting to set in here, which is that we might get resolution with one country, but continue to battle with rhetoric another country. And this just might be like the permanent condition of the rest of the year. That's a worst case scenario. I'm not rooting for it, I certainly am not expecting it. But that's what's starting to set in here. It's like, oh, wait a minute, the negotiations are the point, not the resolution. So Godot might not come as far as Jan Hatzius. I could have told you he was about to cut his estimate because he put out a piece of research on April 6th where he quantifies the effect of uncertainty on hiring, on business investment, on consumer spending. It's a really good report. You should try to get your hands on it. There are real numbers here. He's Talking about a 25 to 30, $30,000 per month drag on hiring every month for the rest of this year. He's talking about consumer spending, the wealth effect, going from positive to negative, shifting that from a quarter point boost to GDP last year to a quarter point drag. These are really big numbers in dollar terms. He's Talking about a 45% probability of a decline in capex this year. There are real impacts that transcend whether or not sentiment is washed out when you consider the gravity of what those numbers mean. And that's why I think this is not an environment where you want to go chasing bear market rallies.
- [11:15]
Scott Wapner
Yeah, that's really what I think many people think this is. Right. It's the bear, bear market rally. You look at the S and P like two thirds of the S and P constituents are down well, more than 20%. So you know, it walks like a duck, it talks like a duck, it's a duck. Right.
- [11:35]
Jim Labenthal
Totally agree.
- [11:35]
Scott Wapner
I mean, what do I do? You know, we've long said when the market steps. Point is partly this. I think markets already down a bunch. Is it? I mean, unless I guess you think we are going into a recession, which I know you don't.
- [11:49]
Jim Labenthal
Well, no, no, no, no. The odds of a recession have definitely increased. I don't want to come across as some permeable. Who's got, who's been taking, you know, nitrous oxide here? Scott, you can't, you know, Scott Besson said it correctly. The trade situation with China is unsustainable, unequivocally. So trade flows have basically gone to zero with tariffs where they are. Any, any company, and there's a lot of them that rely on China for raw materials is going to run out.
- [12:15]
Scott Wapner
My point is it's because the market's down a bunch. Yeah, it's hard for some to get all beared up now because, because of a kind of headline that I read you and the market was already up a lot, obviously, but it took another leg up. It doesn't take much. So people are afraid to get too negative now unless you have more conviction that you think a recession is more Likely, because then you can easily make the argument that even at these levels, even with this pullback, that the market's still too high, that it's still overpriced. If you think we're going to have a recession.
- [12:46]
Jim Labenthal
I might even make the argument, not strongly, but I might make it that you could get a short, shallow recession and with the trade issues at least partially resolved, go higher from here to year end. But I think there's a blend between what I'm saying and what Josh just said. Let me start by saying this is, in my opinion, all about the trade war. That's, that's entirely it. And we see it in today's move higher on the Scott Bessant comments to Josh as well made points that, that the negotiations may well be what the whole point of this is. I think I agree, but I would also point out that the markets and the economy can adjust to that. Companies can adjust to a lower, albeit still high, but a lower level of uncertainty. I think they did that in the first Trump administration. When you look at how bad 2018 was, 2019 surged higher. But the sine qua non here is you have got. Okay, well, well, that's fine, Josh. I'm going to continue on with what I'm saying here. Is that going to. It could, I mean, the Fed thinks it's restrictive. I don't think we're going to disagree on that. And the Fed funds futures market, whether it's right or wrong, does expect more cuts.
- [13:53]
Scott Wapner
Let me ask you this question, since you're talking about that. What happens just for argument's sake and for the sake of this conversation, what happens if the Fed cuts rates tomorrow?
- [14:00]
Jim Labenthal
I hate that idea.
- [14:01]
Scott Wapner
No, I'm just saying I hate that. What happens if that the market goes down.
- [14:04]
Jim Labenthal
I'll tell you what happens. The market initially goes down minutes. For about 10 minutes it goes up. And then after that it says what the heck does the Fed know that we don't know? The last thing you want right now is an emergency rate cut.
- [14:16]
Scott Wapner
No, I'm not, I don't mean like tomorrow in an emergency. I mean figuratively, if. Let's just say there was a meeting tomorrow and the Fed cut now. They cut now, is my point. Not like I hear, you know what I'm saying?
- [14:28]
Jim Labenthal
So I think, I think I said this last week. Is that what we really want, or at least I want is no surprises from the Fed right now. The Fed is expected to cut in the meeting after this. Okay. If they were to cut in, if it were A regular scheduled meeting tomorrow and they cut. What the market would say is it goes back to Powell's comments last week where he said we're going to look. If both goals are intention, we're going to look at how far we are from each of them and the path to restore them. And if they were to cut at the next meeting, that would be the Fed's way of saying we're worried about growth.
- [14:59]
Scott Wapner
You're making it too complicated. If the Fed cuts, if the Fed cuts, is that just unequivocally positive for the market? That's all I want to know that.
- [15:08]
Stephanie Link
It would be negative because they shouldn't. They should not cut. When you look at the hard data, it's totally disconnected from the soft data and it's going to stay disconnected from the stock data because the pull forward in demand, everybody trying to beat the tariffs on spend. So you're to have this hard data lag that is not going to press permit the Fed to cut, period. So if they cut, it'd be idiotic and I think that would be viewed as negative.
- [15:35]
Josh Brown
They don't need to be restrictive, though. They can be neutral. They don't need. They are. They think they are restrictive and they are actually. And by the way, we are making progress on inflation. It's not to their target, but I'm not saying they're going to go 100 basis points. 25 basis points would be an indication.
- [15:51]
Stephanie Link
That they're watching the jobs number.
- [15:53]
Josh Brown
They're not.
- [15:54]
Stephanie Link
They're watching jobs.
- [15:55]
Josh Brown
That's the only thing that may 2nd not looking at inflation, the progress on inflation. They're not looking at productivity and that's actually been better than what drives really.
- [16:03]
Stephanie Link
To lower, which drives jobs. Well, I'm hard data.
- [16:06]
Josh Brown
Look, I am the one that has been a bull.
- [16:08]
Jim Labenthal
Okay, well, I'm not following your data.
- [16:10]
Rob Seach
They move.
- [16:11]
Josh Brown
My point is inflation has come down substantially. Growth has come down substantially. We grew 3.4% in GDP last year. We're going to grow one and the mood's bad. So we were to cut 25 basis points. That's not a hundred. It's not emergency. It's them saying, you know what, we kind of see what's going on. I don't think that they will.
- [16:35]
Scott Wapner
Do you agree with the President that they should do a preemptive cut? Because that's what you're arguing for.
- [16:41]
Josh Brown
I don't know if it's a preemptive.
- [16:42]
Scott Wapner
That's what you just made the argument for.
- [16:44]
Josh Brown
Because I'm saying you just made that.
- [16:45]
Scott Wapner
Case you just didn't use the word.
- [16:47]
Josh Brown
Inflation has come down and growth has come down. The only thing that hasn't come down is the labor market.
- [16:51]
Scott Wapner
Yeah, but you're arguing for, you're arguing for a cut. I'm arguing in case the labor market does worse.
- [16:57]
Jim Labenthal
It's not going to matter.
- [16:58]
Josh Brown
Not in case you. Not labor. It's on inflation. They have a dual mandate. Labor has been strong. I've been saying that for months and years now. It's the inflation thing that went from 9% to something like 2 1/2 percent.
- [17:10]
Scott Wapner
You're making the argument though that the Fed, you think the Fed should cut?
- [17:14]
Josh Brown
I think they should.
- [17:15]
Scott Wapner
Okay, yes, I do.
- [17:16]
Jim Labenthal
Not going to matter if ships aren't flowing between America and China.
- [17:18]
Scott Wapner
Josh.
- [17:21]
Rob Seach
Unemployment is a lagging indicator. Respectfully, I agree with Stephanie here. That is not the metric that should, that should determine the entirety of what the Fed is dealing with right now. The Fed is stayed at this moment not by the labor market, but by the concern of reigniting animal spirits at a time with high prices. High prices that are being caused artificially by. By trade wars. If I understand correctly the Fed's dilemma. I think that's where they are absent this tariff stuff. If we were just looking at the data itself. Rob is right. The data is strong, but it's probably not a 4 1/2% fed funds rate economy. So absent like concerns about price spikes, this is not a 4 1/2% fed funds rate environment. It just isn't. And what the Fed should be looking at is spreads blowing out not, not last month's nonfarm payrolls. And by the way, go back and look at 2007. The labor market was. The unemployment rate was under 5% the entire year. And meanwhile the recession magically snuck up on everyone when, when they went back and actually dated the start of the recession. It was December of oh, seven. I think it was pretty clear to all of us in August, in September, in October there was absolutely no reason why the Fed's worried about inflation right now. Things are falling apart. So I don't think we need emergency rate cuts. Rob is right. The labor market data is strong. But Stephanie's right. There's a lot more happening beyond the labor market. And these uncertainty itself is what's going to undo that labor market strength the longer it persists. We should be getting easier now. Europe cut seven times. I'm not saying Europe is the paragon of central banking. Okay, they flawed too. But I don't know why we're sitting on our hands here when all of the sentiment and all of the trends are going in the wrong direction.
- [19:21]
Stephanie Link
I agree with that. But the question was what would happen happen immediately?
- [19:24]
Scott Wapner
No, I just want to know if there will.
- [19:27]
Stephanie Link
And I don't think there's going to be some ripper rally.
- [19:30]
Scott Wapner
I think it's implied that if the Fed cuts, it's automatically positive for stocks. I just want to know what you guys think. That's all you suggest. Maybe for a second, but not in the bigger picture.
- [19:42]
Stephanie Link
In the bigger picture, what really matters is the clarity on the tariffs and what ultimately happens. When do we look through to the other side of this? So we could have a, we could have a scenario, a very easy scenario to, to see where, where we get the soft, the hard data starting to roll over. You get the cuts at the right time, you have clarity on tariffs and all of a sudden that was a speed bump and we're looking through it. So we had this deceleration and we're looking through it as transitional. That's a very possible outcome, which is why all of us stay invested the whole time, positive or negative.
- [20:18]
Scott Wapner
You look at stocks that would be moving, for example, on a besant headline like the one we got. Let's see an intraday of Tesla, which I think is at the highs of the day because it's got all sorts of issues. The tariffs are certainly one of them. And the company reports earnings today after the bell stocks up 6%. I think it's just a good place to look to see an immediate reaction for an individual name that I can't remember, to be honest. Guys, another company or stock with this much noise around it, you'd like this one. Tariffs, brand damage, doge sales declines, price declines, gross margins. All of the things that have been talked about are going to come to a head tonight. Nobody owns this stock. I'm kind of surprised that maybe you wouldn't take a look at this in any sense.
- [21:09]
Stephanie Link
Let me just say this. Is it because of my political leanings or. Why do you say why?
- [21:15]
Scott Wapner
I just, I don't know, I just have a feeling that you maybe kick the tires, pardon the pun on something like this. And it's down. So substitute down 50% down 40% year to date.
- [21:27]
Stephanie Link
I don't even know what P it's trading at right now, but it's still expensive. And it we color within the lines and everything else we own is properly valued in the Mag 7, which is a lot of it. But we're underweight the Mag 7 relative to the to its constituent relative to the S and P. We're underweight. The Mag 7, Josh. And we're underweight because of Tesla.
- [21:53]
Scott Wapner
Josh, you remember, you know a stock, a company that has this much hair on it going into an earnings report like, like this one with a market cap the size of this one, at least what it was, still is large, but not as large as it was.
- [22:10]
Rob Seach
So historically I have missed out on a huge run in Tesla because I never believed in it. I'm not in the, I'm not in the cult. And I was wrong. What I would tell you now, this is a company where we're being told, the shareholder base is being told, ignore the fundamentals of the business and focus on robots. Like they're like flat out, don't worry about how many car deliveries last month. That's not relevant to the story. 90% of Tesla's revenue comes from auto. And we're being told the Cyber Taxi is going to be such a monumental growth driver and completely transform the transportation grid of the United States, States and elsewhere, that that is the reason to bet on the stock in the intermediate term and then in the long term, everyone's going to have a Tesla robot in their place of work or in their home or both. And that's the reason to buy the stock. And those things might actually be true. I mean, the CEO is one of the most innovative human beings who's ever lived, but that's not the type of investment that I take typically make. So like, if I'm being told, oh yeah, yeah, yeah, 90% of the business is cars, but don't worry about that, that's not what's exciting. Be excited for autonomous taxi. Be excited for robots, all right, I guess, but probably not with a Stock that, that's 50% off its high and falling. So it's, it's not for me. But there might be an opportunity here if people get too negative or if the auto sales picture from Europe and Asia is not as dire as, as the street thinks it is, the stock could probably bounce 20, 30 points. I wouldn't tell you it can't drop Apple too.
- [23:52]
Scott Wapner
Guys, if you wouldn't mind, Intraday too. I feel like that looks to me like at highs of the day also just because of the China relevance that it has in all of this and maybe just the optimism that's trying to be reflected in names like that. Back at 200 bucks. And a really interesting report today from Eric Woodring, he's the top analyst over at Morgan Stanley who covers that stock. Has Some positive survey data out today about upgrade cycle, which surprised many people. He reiterates his overweight today because of that $220 is the price target. Then you have the Wall Street Journal today talking about Buffett and timing his Apple sales just perfectly. Arguably, they say one of the most lucrative single stock investments of all time. They made, I don't know, a paper gain of $110 billion when they began selling it. I'll just give me a quick comment on that because you own Apple and you own Berkshire, right?
- [24:50]
Jim Labenthal
Yeah. Well, and just remember, Scott, as you do, I was very small in Apple until about two weeks ago when the deluge happened and then I picked up a meaningful amount of it. And what you didn't add to that list is the sentiment around this stock, which is to say retail investors love this stock. And you know, Josh, Stephanie, Rob probably see this as well, that when you go and you trim Apple from a client's portfolio because you think it's too big, almost invariably you get a call from the client saying, why did you do that? Don't ever do that again. And this may sound like something ephemeral, but it actually matters. There is a strong amount of sentiment. It may not be as big as say, Tesla. And Josh was just discussing that a minute ago, but it is vibrant. And if you add to that some fundamental drivers like you were just talking about, Scott, I think it's easy for the stock to go 10, 15, 20% higher from here.
- [25:36]
Scott Wapner
All right, let's take a quick break. We come back. Stephanie Link mentioned three, albeit briefly, best performing stock in the Dow today. And we have ownership in multiple places here on the desk. So we'll trade that. FTC is taking aim at Uber. Obviously gotta get Josh's take there as well. And later, we have a halftime exclusive interview coming up with the Disney chairman James Gorman. Excited about that one. We're back in two.
- [26:04]
Josh Brown
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Welcome to the now it pays to Discover.
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Jim Labenthal
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Scott Wapner
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- [27:23]
Scott Wapner
All right, welcome back. I want to call your attention to CNBC's newest subscription streaming product, CNBC. Plus you can stream Halftime Report and all of your favorite CNBC shows anytime, anywhere. And also on demand, you can see the data feed on your screen here and we hope you do that and I think you'll benefit from it. Let's get to 3M now because it's a big mover today. It is the best performing stock in the Dow, Rob, you own it. Stephanie Link owns it. You love it. You love you bought this for a.
- [27:52]
Josh Brown
Turnaround on it in March when they announced that Bill Brown would start the company. Didn't start until May. Started working as it should because the company is really focused on changing everything at the company and he's doing a really good job. So they beat on revenues. It was organic. Growth was very mixed. Electronics were good. Autos not so much, but kind of expected. But it was the operating margin story that was so exciting. Up 170 basis points better than expected. Up 220 basis points year over year. I think they're in the second or third inning in terms of margin expansion. They also, by the way, increase their buyback. And they did talk about currency helping them to offset tariffs. Tariffs are going to hurt them. 20 to 40 cents. So now we know at least we can model it. But you have the weak dollar. That's also helping. So I think the story is really exciting. It remains one of my largest industrials.
- [28:41]
Scott Wapner
All right, wanted to get Josh your take on the FTC suing Uber, alleging that they charged for Uber one without consent. What's your take on this name right here?
- [28:55]
Rob Seach
It's not true. I'm a, I'm a member. I could cancel right now if I want to. So I think, I think, look, they want big headlines. They want to score wins and I understand it. And if what they were alleging was true and then the product changed. That's possible, but I don't think that the marketing practices here were deceptive. My opinion and I don't think it's hard to cancel. So I'm not 100% sure where this goes or how it ends or if it's a settlement. But I think Uber looks like they're going to stand their ground and they think they have a winning case. This is just like when you own large cap tech. This comes with the territory. There's litigation, there's lawsuits, there's regulatory actions. You just have to prepare for that in mentally and not react to every headline.
- [29:48]
Scott Wapner
Let's talk UnitedHealth. Steph, you first.
- [29:51]
Josh Brown
Sure.
- [29:51]
Scott Wapner
Because the stocks has gotten hammered in a really short period of time. It surprised a lot of people. Downgraded today at HSBC. That's a new 52 week low for UNH. It trimmed it a while ago but still what do you do now?
- [30:06]
Josh Brown
Well, so I bought it in February when the DOJ coating issues were out there and the stock had fallen so substantially it was, it rallied 16% off those lows. That's why I trimmed a little bit. I didn't trim at all. I should have probably in retrospect but actually, actually this was the first miss that this company has had in a decade. That's to speak to its consistency, strong execution, strong management team. They're going to find a way to fix this. It's going to take time. A lot of it has to do with Medicare Advantage and utilization rates going up. That's because they price this stuff so high and so people wanted to get their money's worth. That's good for the consumer for sure, not good for the company that has to pay for that. So this is still the number one managed care company in the industry with a very strong balance sheet with 10 billion in buybacks to come. I think the medical loss ratio, the margin story is at its worst at this point in time and that's what they guided to. So I think from here I think you could see an improvement in medical, medical loss ratio margins and the story. It's going to take time though.
- [31:04]
Scott Wapner
Why no love for McDonald's on this desk. Rob? Jim, he was reiterated a top idea today at Wells. We can take a look at the the stock. That's why I wanted to look at it today. 350 is the price target. They say trends are digested, shares are defensive affects now is a plus and sentiment starting to improve. It's up 7% year to date. And what's been a really tough take, why no takers?
- [31:28]
Jim Labenthal
I'm not going to, I'm not going.
- [31:29]
Rob Seach
To hate on my best stocks list.
- [31:31]
Jim Labenthal
It's. And so I'll make this quick so Josh can come in. Look, it's more of a defensive, defensive name as far as I'm concerned at this point in the market. And this goes back to what Steph was saying at the very beginning. At these levels, I want to be more aggressive with the things I own, but I don't have any hate for this stock. It's just defensive.
- [31:47]
Scott Wapner
You want to be more aggressive in what's been a very defensive market.
- [31:51]
Jim Labenthal
Yeah, again. And I'm going to, I'm going to quote Steph. She had the numbers. I think we're down 15% from the high just two months ago. Down 12% year to date. Yes. This is the time I want to be more aggressive. I don't think, and I understand people disagree with me that I don't think this is time to hunker down.
- [32:08]
Scott Wapner
Josh.
- [32:11]
Rob Seach
On February 25th, my birthday, I told you McDonald's got added to my best stocks in the market list. It's acted extraordinarily well since then. Another very similar name that's already broken out is Coca Cola. This is a new all time record high bronze price. The Wall Street Journal is talking about maybe Berkshire taking the whole thing private and buying the rest of it that they don't own. McDonald's is a similar category. I think when people talk about the end of American exceptionalism, they should pull up some stock charts because McDonald's is like one of America's greatest exports to the rest of the world in terms of financial success, at least over the last 50 years. And this stock is about to break out. So it's been a strong stock all year. It is on my best stocks list. I'm not in it. I should have taken the trade. I didn't. Hopefully some other people that were watching the show that that day did.
- [33:08]
Scott Wapner
All right, we hope. Let's get the news now with Silvana Hanowell. Hi, Silvana.
- [33:12]
Josh Brown
Hey, Scott. Good afternoon. Defense Secretary Pete Hegseth says he didn't do anything wrong in the second signal chat involving military plans. In an interview on Fox News, Hegseth doubled down on his argument, saying that the information was informal and not classified. Earlier this week, sources told NBC News Hegseth had sent information ahead of the strikes in Yemen to a chat group that included his wife and brother. The EPA has started to lay off its environmental justice staffers. It affects about 280 workers, and the agency said their work no longer aligns with the EPA's mission. According to the memo obtained by NBC News, the reduction in force will take effect on July 31. The agency previously announced major rollbacks of environmental regulation, probationary worker cuts and put other workers on administrative leave. And the Washington Post is joining forces with Open AI, the Post said today as part of the deal, it will be able to make summaries, quotes and links to its stories with ChatGPT. It is the latest major news organization to sign a deal with the AI giant following News Corp. And Hyundai nascar.
- [34:25]
Scott Wapner
Send it back to Alvana. Thank you very much for that, Silvana. And now up next, that halftime exclusive we told you about our Leslie Picker standing by with the Disney chairman, the former Morgan Stanley chairman and CEO James Gorman. We get his take on everything going on right now. Next. 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.
- [34:58]
Jim Labenthal
With your card, you automatically earn cash back.
- [35:01]
Scott Wapner
Welcome to the Now It Pays to Discover.
- [35:04]
Jim Labenthal
Learn more at discover.com creditcard Based on the February 2024 Nelson Report introducing CNBC.
- [35:11]
Scott Wapner
Plus the new streaming platform from the number one source in business news.
- [35:15]
Rob Seach
Watch live or on demand access any market, anytime, anywhere.
- [35:20]
Scott Wapner
Start streaming.
- [35:21]
Rob Seach
Go to cnbc.com stream now.
- [35:26]
Scott Wapner
All right, we are back. We'll send it to our Leslie Picker now at the General Atlantic Investor Summit with a CNBC exclusive interview. Leslie, take it away.
- [35:36]
Leslie Picker
Scott, thank you so much. I'm here with James Gorman, who is a recently added advisor to General Atlantic, the growth equity firm and of course chair of Disney as well. Thank you so much for taking the time today. Really appreciate it.
- [35:49]
James Gorman
So great to be here. Leslie, great to be back with you. Been a long time.
- [35:52]
Josh Brown
Likewise.
- [35:53]
Leslie Picker
It sure has. And we have so much to catch up on because a lot has changed since we have heard your perspective. First of all, the market is jumping today because of some headlines from Bloomberg about Secretary Bessen discussing the situation with China being unsustainable as it pertains to this trade war. Do you agree with that and do you think that the way things are going are unsustainable as it pertains to the economy?
- [36:17]
James Gorman
Well, I think the, you know, the, the tariff trade wars, if you will, have clearly been a shock I mean, it's reflected in the US Dollar, it's reflected in rates in the bond market, and that's reflected in the equities market. So I think the job of the Treasury Secretary, if you will, additional title, would be Chief Marketing Officer for usa. And I didn't see his comments this morning. I don't know if they're in a public forum or not, but I think bringing some sense to investors of what is the end game plan here, where are we actually heading with this and what do we expect the outcome to be? Because clearly tariffs have an inflationary aspect to it and that's going to affect how the Fed behaves going forward.
- [37:00]
Leslie Picker
In the meantime, in your role as chair of Disney large multinational company as well as General Atlantic, you see all the portfolio companies and kind of how they're weathering all of this uncertainty. Do you foresee a recession here, some.
- [37:16]
Jim Labenthal
Sort of growth slowdown?
- [37:17]
Leslie Picker
What do you think the overall impact of this tariff uncertainty will be kind of on these multinational companies and entities?
- [37:24]
James Gorman
It's really hard to predict. I heard this morning that two of my former peers, bank CEOs, one projected rates will be treasuries will be around 6% a year from now. The other three and a half percent. It's too unpredictable, I think. And that's what you look at the vix. That's why the VIX is where it is. We're in a world of a lot of unknown and so predicting whether we end up in a recession or not. It's too, it's too early to say that, but certain things are true. One is tariffs are generally inflationary. Two is the Fed is reluctant to cut rates in times of inflation when they have a dual mandate of employment and inflation to control. And three is it's very difficult to know the impact on global trade and what that does to the global economy economy during this very dramatic shift in tariffs. It's certainly more likely recessionary bent than not, but it's too early to say.
- [38:19]
Leslie Picker
More recessionary than in that range that you gave of the interest rates was notable as well. Speaking of rates, one area that's kind of caused some volatility lately is this concern that the Fed's independence could be in question, that its credit credibility could be in question. Is that something that you're concerned about?
- [38:37]
James Gorman
This isn't the first time an administration, this country has disagreed with the Fed. The Fed's job, it's still mandated, as I said before, is unemployment and inflation. It's, it's not to manage the economy they remain independent. And the role of the Fed chair is an independent role. And I expect that will continue, though they'll always be. Not in every administration, not in every time, but certainly in times of high economic volatility and uncertainty, there will be different points of view. But the Fed has proven itself to be very patient, absent clear evidence of.
- [39:10]
Leslie Picker
What to do as chair of Disney. Succession has been in the spotlight here, and you were brought on because of your experience with succession at Morgan Stanley, which is largely seen as a pretty painless, bloodless succession, which is. Can be pretty rare on Wall street and Morgan Stanley in particular. How is that succession surge going? And do you think that you'll be able to meet or even exceed the timeline in the sense of pulling it forward, the timeline for finding a new CEO?
- [39:39]
James Gorman
Well, given you raised Morgan Stanley first, I'll just say how thrilled I am at the job Ted Pick is doing, working with his great presidents, Dan Simpkowitz and Andy Saperstein. They had an extraordinary first quarter, and the company's in great shape, which is one of the reasons I can go off and do the other things I want to do for Disney. I can't really talk about the succession. We've said publicly we'll have an answer by early 2026. That will happen. The exact date is obviously for the board to figure out, working with. With Bob Iger, but we have a clear process. I think we're in good shape in that process. Process. And, you know, we've. We've laid out a plan, and we'll stick to the plan. It's not very complicated.
- [40:23]
Leslie Picker
I was just actually, ironically, at Disney parks yesterday. It was extremely crowded, lots of people. Do you see any effects from kind of the geopolitical situation playing out on consumer spending and people's appetites for travel, particularly as it pertains to maybe. Maybe some international tourists? Something I anecdotally didn't hear much of was, was foreign languages at the parks.
- [40:49]
James Gorman
Well, first, I have to. I was there two weeks ago. You're in Orlando.
- [40:53]
Rob Seach
Yes.
- [40:53]
James Gorman
What was your favorite ride?
- [40:55]
Leslie Picker
My favorite was Guardians of the Galaxy. It was a new one and really enjoyed that.
- [40:59]
James Gorman
Your favorite park?
- [41:01]
Leslie Picker
Epcot.
- [41:02]
Scott Wapner
Okay.
- [41:03]
Leslie Picker
Epcot was my favorite.
- [41:04]
James Gorman
I. I love them all, but I loved Animal Kingdom and. And I loved. I love the Avatar. Right. But, you know, I think, listen, Disney is. Parks are, I think, about 40% of the company now in revenues. They're very global. There are several parks outside the US and in Greater China and in Japan, in Paris. So it's a very global company. And maybe it's too early to say, maybe the flow of people visiting parks changes as to which parks they go to. Obviously can't talk about the present environment because Disney is going to announce its earnings in a couple of weeks. But you know, I've, I've been a fan and involved with consuming Disney products for almost all of my life, going back to when I was a kid in Melbourne, Australia. And that will endure whatever this economic.
- [41:55]
Leslie Picker
Cycle is, the diversification of its footprint. Absolutely. James Gorman, thank you so much for taking the time today to be really catch up with you and get your perspective. Scott, I'll send it back to you.
- [42:05]
Scott Wapner
All right, Leslie, thanks so much for that. Leslie Picker. Coming up, we get the committee's take on the defense space today. Those stocks are certainly worth trading. They are down in a very big tape. Back after this. Let's talk defense stocks because Northrop today did not have a good earnings report or forecast. And a lot of stocks in that universe today are down that decline right there for north of 13 and a little more than 13.13%. The worst day since October 08. You added this stock to your best stocks in the market list, Josh, around April 11, 11 or so days ago. What do you do with something like it now, if it's on the list and then does what it did?
- [42:53]
Rob Seach
Well, we'll have to see how it closes Friday. But if I had to guess, it is not going to be able to reclaim the 200 day and it's going to be a stock that will no longer be a best stock in the market. They had a really big miss. But it's attributable to the stealth bomber, one specific product. But just to go through the actual Numbers, revenue was 9.47 billion and the street wanted 9.95. Earnings were 332. The street was looking for 626. That's a massive, massive earnings miss. So it's, it's very highly doubtful that this stock will be able to stay on. But effectively this is happening in the context of other names in the group holding up a little bit better. But then rtx, which most people remember as Raytheon also said there would be a bigger than expected tariff hit. So it's a tough name. I'm not personally in the stock and I don't think by the close of this week it'll still be on my list.
- [43:50]
Scott Wapner
Yeah, sympathy declines for sure. Lockheed, you know, if we showed you that it would, it would, it would not be a pretty picture either.
- [43:56]
Jim Labenthal
Yeah.
- [43:57]
Scott Wapner
Lockheed's up.
- [43:58]
Jim Labenthal
Yeah.
- [43:58]
Scott Wapner
Oh, my bad. Why is Lockheed up then?
- [44:00]
Jim Labenthal
Lockheed's up because F30 fives are in the picture for India to acquire them as vice President Vance is over there right now. That's why it's up. That's, that's the story on Lockheed Martin.
- [44:10]
Scott Wapner
I got you. I'm glad you corrected me on that. Thank you, Jim. Sustained. Santoli's next. He's back. We get his midday word next. All right, we are back. Our senior markets commentator Mike Santoli here at the desk with us for his midday word. You went away, you came back. Markets are pretty much still in this thing. Yeah.
- [44:33]
Jim Labenthal
No, still grappling with the same snarl of issues and also in the similar mode. And it's kind of telling the way the market did react to all the headlines you talked about. One, you know, the immediate conclusion is either what Treasury Secretary Benson said or is said to have said is either a statement of the obvious or a reiteration of what the administration's tariff dove would have otherwise said. So it was empty. But then why is the market up 2.7%? Because everyone knows there's upside risk if you get the de escalation. And the market really was leaning hard to the downside and got oversold again. And so when you're in this mode, I think the market can trade very fast and loose in this range. I mean, 4850 up to 5500. It's almost just kind of a random number generator. And you have to be careful not to just press your bets on one side or the other. And look, there's a reality to the fact that if things do ease up a little bit on the tariff front and the hard day to hold up, then you're not in a terrible place. And we still, meanwhile, after this rally, have another, you know, 40s and P points to go to get to Thursday's high. Right. Just for perspective in terms of where this is taking us.
- [45:40]
Scott Wapner
Yeah. All right. We'll see what happens over this final stretch, too. And you'll be with me on closing bell, so I'll look forward to that. Mike Santoli, final trades after this break. Final trades. Josh, what do you got?
- [45:53]
Rob Seach
Staying long 3M AbbVie Salesforce.
- [45:58]
Josh Brown
Intuitive Surgical.
- [45:59]
Scott Wapner
All right. See you on closing bell. The exchange is now. You've been listening to CNBC's Halftime Report, the podcast. You can always catch us live weekdays at 12 Eastern only on CNBC.
- [46:15]
Josh Brown
All opinions expressed by the Halftime Report participants are solely their opinions and do not reflect the opinions of CNBC, NBCUniversal, their parent company or affiliates, and may have been previously disseminated by them on.
- [46:25]
Scott Wapner
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- [46:28]
Josh Brown
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.
- [46:36]
Scott Wapner
Expression of an opinion.
- [46:37]
Josh Brown
Such opinions are based upon information the half time report participants consider reliable, but neither CNBC nor its affiliates andor 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.comhalftimereportdisclaimer.
- [46:54]
Scott Wapner
Introducing CNBC plus the new streaming platform from the number one source in business news. Watch live or on demand.
- [47:02]
Rob Seach
Access any market, anytime, anywhere.
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Scott Wapner
Start Streaming.
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Rob Seach
Go to cnbc.com stream now.