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Halftime Report
Former Defense Secretary William Cohen on Iran, CEO of Top U.S. Energy Producer on Prices, Time to Sell the Mag 7? 3/23/26
00:43:56
Stocks jump and oil plunges on comments from the President about a potential ceasefire in the Middle East. Former Defense Secretary William Cohen lays out what options are available both militarily and diplomatically. Then CNBC speaking with the CEO of a top energy producer at CERA week in Houston. What he as to say about the outlook for prices. And should investors rotate out of the Mag 7? One strategist makes the case. Investment Committee Disclosures
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- [00:00]
Schwab Announcer
Trading at Schwab is powered by Ameritrade, giving you even more specialized support than ever before, like access to the trade desk. Our team of passionate traders ready to tackle anything from the most complex trading questions to a simple strategy. Gut check. Need assistance? No problem. Get 24. 7 professional answers and live help and access support by phone, email and in platform chat. That's how Schwab is here for you to help you trade brilliantly. Learn more@schwab.com trading not every sale happens
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AT&T Business Wireless Customer
at the register before AT&T business Wire, checking out customers on our mobile POS systems took too long. Basically a staring contest where everyone loses. It's crazy what people say during an awkward silence. Now transactions are done before the silence takes hold. That means I can focus on the task at hand and make an extra sail or two. Sometimes I do miss the bonding time. Sometimes.
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Scott Wapner
AT&T business Wireless connecting changes everything. 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. Welcome to the Halftime Report. I'm Scott Wapner. Front and center this hour, surging stocks after President Trump says talks with Iran have happened. Even though Iran obviously denying that we're trading it nonetheless with the investment committee because stocks are on the move. And joining me for the hour, Joe Terranova, Stephanie Link, Jim Leventhal and Bryn Talkington. We will check the markets. We're not at the highs of the session, but nonetheless we obviously have pretty big gains across the board. This was always the risk, wasn't it, that just like Liberation Day, you get all bearish and you have a president whose most critical scorecard is right up there on the board here at the New York Stock Exchange that shows the major averages in the stock market and a headline like the one we got this morning and the comments that we got from him directly this morning have caused quite a rally.
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Joe Terranova
Well, last year, Scott, the Trump put, if you would, was in the bond market. The Trump put probably was in the oil market in 2026. And I think that's ultimately what we're witnessing right now. We still do not have enough information in an environment where you properly describe it as being binary to make a determination if ultimately this is the moment where we just significantly move higher from. I do think today is a very important day from two aspects. Number one, first of all, the systematic trend following funds utilize three closes below the 200 day moving average. Today would be the third day closing below that critical 200 day moving average at 66 and a quarter. Do with that information what you, what you wish. It doesn't mean you're going to see significant selling on the close. It just means the overall bias will flip the same way it did last spring, which was the wrong move and the same way that it did in April of 2022, which was the right move because following that you had 149 days below it and 20% down. The other element to all this that I think is important, I take the other side of it. In the last several days, you've seen a significant rise in yields and you have seen equities that are correlated to that rise in yields. I think this is a tremendous opportunity. If you're looking for value from rising yields, I think yields are going to push lower. I think the notion of a rate hike is absolutely misguided.
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Scott Wapner
I mean, it may be misguided. The market, I actually think you're going
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Joe Terranova
to get a rate cut.
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Scott Wapner
The market says that, you know, there's a higher percentage of getting a rate hike in June before you. That's the dislocation.
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Joe Terranova
I take the other side of it. I take the other side of this thing you can do in the market for equities related to it.
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Scott Wapner
Okay, so I just want to give you a headline here because there's been so many things that, that are happening and it's a stock market that has come off of its highs. And we should just give you the latest headlines here. That was a post on X. First, Iran's parliament speaker says no talks have been held with the United States. The speaker says, quote, fake news used to manipulate oil markets goes on to say that the Iranian people demand complete and remorseful punishment of the aggressors. So that is allegedly coming from Iran's parliamentary speaker, from a post on social media that has undoubtedly had a little bit of an impact, Steph, on this market. Talks that our president said took place, strong talks, he said, almost all points of agreement. Witkoff and Kushner are the ones who had them. They took place yesterday. They want very much to make a deal of the Iranians. We'd like to make a deal too. Going to get together again today. So you take it for whatever it's worth. I'll just go back to where many people are sort of putting their signposts today. That is a rehash of Liberation Day and the aftermath of, you know, of a president who just doesn't want to see the stock market go down a
- [05:10]
Stephanie Link
Ton which is not a bad thing. Right. I don't believe anything Iran has to say, so I discount that. I actually think that the Trump administration has been very consistent with saying to us this will be short lived. Is it four or five weeks? Five, six weeks, but not months, not years. And so if that's the case, in addition to heading into the midterm elections, I think it is going to be less than expected in terms of the time frame. He can't afford to have oil prices and just the cost of living this high and this bad for so many people, especially in a K shaped economy. The high end can handle this. The mid and lower ends, they just can't. But there's still a lot of unknowns in general Scott so it feels good today. It's, it will come down to the timing but then I always come back and I bore you to tears with the economic data because it's important, because I think we are actually in a better position from an economic standpoint this go round than where we were Liberation Day, where we were two years ago, Silicon Valley bank collapse where we were Covid and all three of those instances we saw massive recoveries. And you had to actually be buying on the in the uncertainty in general. Right. If you wait for the uncertainty to get certain, you're going to miss so much and you have to think longer term. So traders, totally a different animal. But from an investment point of view, you have to look for big blue chip quality companies that get thrown out with everything else. And you know, that's what I've been doing. I have been buying a lot and I don't even have a lot of cash. We are way oversold. I would not be surprised to see a couple of days of nice euphoria here. But we're probably going to ebb and flow until we get that timeline. But by then stocks are going to be higher, in my opinion.
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Scott Wapner
Is this, is this post Liberation Day buy stocks part? Duh.
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Jim Leventhal
I think it is. I mean we're never going to know, as Stephanie just said, until it's well after the fact. But I think the president did just tip his hand. Remember on Saturday he said for the Strait of Hormuz is not open in 48 hours. I'm going to bomb power plants. Now let's be clear. I think there's another three to four hours before that timeline is up and darkness is falling over Iran, which is presumably when bombs would start falling. However, we have to give a lot of credence to the fact that he not only hasn't bombed so far, but he put out this tweet saying that things are good. And what it says to me is that just like on April 9th of last year when he was paying attention to the bond market, Joe, as you pointed out, now he is paying attention to the oil market, and he realizes we're reaching a point of pain past which he cannot expect to have his policies continue to enact it, and that he would probably get blown out in the midterm election. So he is veering course. Now, let's be clear. The Iranians have a say in this. They're not exactly opening the gates to the Strait of Hormuz right now. But that's not dissimilar to last year with the tariffs, when he was saying that there are all these deals and a lot of countries were saying, what are you talking about? So this will play out over time. But he has clearly tipped his hand that he's not going to allow oil to stay at $100 plus.
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Scott Wapner
I mean, you've seen enough that you bought ebay today. You can tell us why you picked that one specifically. But from what I understand, you told our production team, it's very much in the spirit of feeling like this is. Like that was.
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Jim Leventhal
It is. I mean, there's an old expression. We've used it many times on the show. History doesn't repeat itself, but it does rhyme. I think that's where we are now with regards to ebay. This strikes me as a good way to play the discretionary sector for a few reasons. One, the discretionary sector, as oil prices and gasoline prices eventually come down, should see a pickup. But this also appeals to both legs of the K side. There are luxury goods being sold on ebay, but there are also all sorts of refurbished and secondhand goods being sold on ebay. And there's one little lever of this story that is not really talked about too much. This is where collectibles are treated quite often. That's actually a major growth channel company. Trades very cheaply, low teens on a forward multiple of earnings, very little debt, good free cash flow. They really shrink their share count a lot. You know, Scott, I like that it's a growing company. This is a good place to buy it.
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Scott Wapner
All right, Brin, so it's your turn. I mean, you know, just playing off, Jim. Discretionary is up a lot. Airlines, cruises, all the things that got beaten down so badly over the last three and a half to four weeks are rallying on this news today. So you want to put it all into Your own words on how you see this. We'll take everything at this point at face value because the market's moving on what the President had to say despite, you know, we're still waiting for some more specifics, but nonetheless the market's reacting, so we'll react to that.
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Bryn Talkington
I think that we'll see what happens by Friday to kind of build on what Joe is saying on the 200 day. We can handle being under the tuner day for probably 10 days. If you look historically, we need to get above that with the NASDAQ and the S and P to really be able to regain the bull market. And so I think investors need to look at that 6624 level to see we're under it right now, but we need to get back over it. I think yields also 450, we were making lower highs and 450 is like the next leg lower on those highs. As long as we're staying below that, I think that that also dovetails with the 200 day. We're in good shape. And so I think investors look at the 10 year 450, you do not want to go above, you want to get above the 200 day and then going back to oil. I think that definitely everyone's right about oil being an important signal. But understand this is where costs globally are going to start to start permeating through if we stay in the 80s and 90s for foreseeable future because 95% of all manufactured goods, a critical component of that is hydrocarbons or petrochemicals. And so whether it's plastic, whether it's synthetic fibers, etc. And so that's where you're going to see, I think prices are going to go higher with, with planes, prices are going to go higher with really anything manufactured as long as oil even remotely is above 80. And so I don't think we're out of the woods yet. I definitely think there's similarities to Liberation Day with the exception of that was a manufactured thing by the White House. They had the ability to end it at any time. I still go back to this is existential for the Iranian regime. And so we'll see if level level heads, if they even have level heads, can prevail and the Japanese and our other partners. But I mean, I just think that we're going have to wait till the end of the week. And I don't think we're really out of the woods because this is not Liberation Day. This is, this is much more impactful, much More serious.
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Scott Wapner
But the de escalation of rhetoric, at least for the time being, seems to be good enough for, as Stephanie, I think, rightly pointed out, and a pretty oversold or getting to that point market and looking for anything positive to hang its hat on. And it got it this morning and it's reacting in kind. So, you know, a lot of things that were down are up, as we mentioned, and a lot of things that were up a lot are faded a little bit like CF Industries. Take a look. The grain trade has been a big one. Joe was on it before. Importantly, it really started to move to the degree that it did. If you pull that out now for a few weeks, you get a look at the swift rise in that stock, which like month to date, 20%, right? That tells the story. So what do you do? Do you. I said actually to our executive producer hours ago to. I said to Kevin, I said, I bet you, Joe. I bet you Joe sell cf. Well, I bet you sell cf. Sure enough, a couple of hours later, Kev's like, yeah, Joe just called. He sold half cf.
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Joe Terranova
No, and that's good because you and I have been doing this long enough. We've all been doing this long enough where you understand the discipline that each of us has. I'm not going to sit here and allow what has been a really strong winning trade to turn into a losing trade. So you sell half the position, you hold the other half of the position. And to Bren's point, you see how things unfold over the next several days, over the next week, as you get more information. We are still in a binary environment. Overall, I do believe it's important to understand as it relates to cf, the materials sector and the energy sector. Remember something, this leadership that is being exhibited from these sectors was not established on March 2. The leadership really began coming into the year in January and in February. So you had time to build positioning there. And I think on the other side of this, maybe the degree of ownership is important here. Maybe you don't have a significant overweight. But I still think even if we resolve this matter and oil falls back down, I think you want that exposure to energy and materials. The market signaled it ahead of this.
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Scott Wapner
Yeah, we think of that.
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Jim Leventhal
I absolutely, completely agree. And there's. There's two sides to this, Joe, because as you know, there was a surplus plus of production over demand before this all started, to the tune of 2 million barrels a day, roughly 2%. That was a lot. So that hangs out there. But Joe and I think this is the Fundamental backing to what you're saying when the hostilities cease. There is a lot of infrastructure that needs to be repaired in the Persian Gulf. It is not just simply opening up the taps, filling up the tankers and shipping them out. That process, by the way, takes weeks. You can't just, you know, flood hundreds of of tankers through the Strait of Hormuz.
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Scott Wapner
Sure. The market's going to move dramatically though, anyway, on the headline long before, like
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Jim Leventhal
it does everything else as it is right now.
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Scott Wapner
Yeah.
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Jim Leventhal
But the point being is there is a fundamentally structural reason to think that oil and gas companies in particular are going to do well here. A lot of, in particular, liquefied natural gas infrastructure has been damaged in the Gulf. That stuff really can't be stored that well. So it's not like you can tap into Strategic Petroleum Reserve.
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Scott Wapner
No, but what about something like Cheniere, for example, example, which, because of the disruption over in the Middle east, the thought was that these guys are going to eat up every contract imaginable for the foreseeable future. And if you look at what the stock has done, it's up 20% just over the last month. I think you own that.
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Jim Leventhal
I own it. I love it. Now, if we take a much longer chart, like take a five year chart, this stock's been just a war horse, okay? And I think, by the way, even with the rise that you see over the last five years and in the last few months, I think the stock is going higher. Here's why. They are putting more and more export trains into construction on the Gulf Coast. The US Is going to increase its already sizable export capacity of natural gas. We have so much natural gas here in the US we flare it off. If you're in the Netherlands, if you're in Japan, Korea, you desperately want that natural gas. You're looking at us flaring it off and saying, stop, hold it. Get these export trains from, from Cheniere in place.
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Scott Wapner
The pioneers really in, in the exportation of, of liquid natural gas.
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Jim Leventhal
Yes.
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Scott Wapner
Cheniere, which by the way, gets upgraded today. Overweight from equal target to 313from236. 313from236 was like so last yesterday right in this one. So Morgan Stanley still likes it like you do.
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Jim Leventhal
This is not a flash in the pan is what I'm trying to say. Some people may be looking and saying, okay, well, when the Gulf hostility stop, Cheniere will plummet. Now listen, Gulf hostility stop. It probably will come down a little bit, but for the next several years, as it just continues to expand and Honestly, who's really going to want to buy from the Persian Gulf in the same size that they did before this conflict? This conflict is going to have lasting repercussions. Countries, sovereign entities, are going to redefine their supply chains for this critical commodity, liquefied natural gas. And the Gulf coast of America is an attractive place from which to obtain it.
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Stephanie Link
What do I think it's a bad problem to be trimming into strength. I mean, I've been trimming SLB into strength because 34% of their revenues comes from the Middle East.
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Scott Wapner
You mean you'd be trimming some of these names in energy that are.
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Stephanie Link
Absolutely, absolutely. I love the story. Long term, I'm just trimming it back. But it's up 30%. It's not as cheap as it once was. And I do think you're going to have bottlenecks, big bottlenecks in the market Middle east after all of this. And that was the story for slb, that you would see the Middle east see the recovery growing from Nothing to up 6%.
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Scott Wapner
But some things, like the Chenieres of the world, like if you have taken out the infrastructure to allow the delivery of natural gas in parts of the Middle east and then you have a company like that, which here, which they suggest is so bullish for their contract. Now, that's. That's different. Jimmy's not looking to trim into the strength long term. And these others are suggestive that there's a lot more strength coming.
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Stephanie Link
I mean, I think there is going to be a lot more strength coming, but I think they could sit here for a while. And they may underperform for a while because they've done so well, but they're
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Scott Wapner
not all created equal. I guess that's partly my point.
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Joe Terranova
That's an excellent question.
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Stephanie Link
I do think you should. You do want to trim some of the energy stocks. They've had a nice run and look to be buying. Buy low, sell high. That's all it is.
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Scott Wapner
Buy high, sell higher. What, do you read his book?
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Stephanie Link
I'm not in. I know. I mean, I did read your book, but I'm not.
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Scott Wapner
I don't say anything. I don't want him to get upset. Brin, Brin, your. Your play here is what. You own Diamondback, you own Viper, and obviously you have thoughts on the entire space. You own the xrp.
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Bryn Talkington
Yeah, let's talk about the xrp. I think where you look at the rig count, I didn't look at it today, but let's say before, before Iran, there was about 550. The last I looked there was 554. So the rig count really hasn't moved higher. Which to me says especially like on the xrp, the exploration of production, they are not being incentivized to drill mill more. What they have been incentivized to do is to have capital discipline, buy their shares back. And so if we have elevated prices here for multiple quarters, a lot of that goes to the bottom line of these companies. And so we still really like the mineral right names which are very sensitive to the price of oil as well as the exploration of production as they keep that capital discipline. Because you're not seeing us going to be producing more because I think they're all suspect of how long, how long these higher prices last looking at the futures curve of oil.
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Joe Terranova
So to your point, I think when you look at the energy trade, I'm going to respectfully disagree with Stephanie on Schlumberger because.
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Scott Wapner
Is that because she said something about your book? No, it's because if you she said I love the title of that book and the thesis, you'd be agreeing.
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Joe Terranova
I would still disagree. We own Schlumberger, we own Baker Hughes in the etf. And what's interesting about both oil field services, they both peaked on the very first day of trading after the conflict began. The high for Schlumberger was 52. On March 2nd it actually declined down to 44. Oilfield services have come under pressure the entire month as the strait has been closed. So I think right now what you're seeing is a little bit of transfer in terms of positioning away from what I've talked about on the network was let's go on Suncorp, let's go own Canadian Natural Resources, let's own Petrobras as alternative sources of production. Let's now go back on the expectation de escalation that the oil field services names like Baker Hughes and Schlumberger and the OH can work once again.
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Stephanie Link
But Schlumberger has gone from 11 times earnings to 17 and a half times earnings which is not expensive relative to, to the market but it's expensive relative to Schlumberger. And when you have a third of their business now is going to be under fire I think and it's going to take a long time to see a recovery. Maybe it'll be pent up demand, maybe we will see it in a year from now. But the story was for this year Middle east to recover. And I don't see how you're going to get that done. Not for this company and especially since it's had such a nice run, I
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Joe Terranova
think the entire world has very strong motivation right now to do all they can do to spend to increase production. And I think that benefits something someone like slumberjack.
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Scott Wapner
So chip names are up a bunch today too. They've been caught up in this whole thing as well. With the oil spike. If oil goes up, energy costs go up. Takes a lot of energy to run those data centers, doesn't it? Chip equipment names Kla lam amat all higher chip those chips. Charts look awfully similar today. You're looking at about 2% gains across the board. AMD is having talks with a Korean startup for 10,000 AI processors. That stock looked pretty good earlier. Come back a little bit off the best levels, but it's still good for about 1%. How about our call today? It's a big one today too. We didn't get to it for 20 minutes because there were just frankly more important things to the overall market to discuss. Microsoft. Okay, the target cut by 30 bucks. That in and of itself. Okay, that's not that big of a deal, right? To 400 from 430. It's at Melius. It's from Ben Reitzis who says somebody has to say it. Microsoft's issues are mounting. The bulls say Microsoft is time to eventually get AI right. Even if it messes up the first few times, as has happened before. Sorry, but AI waits for no one as our clients evaluate which Mag 7 stocks to sell to make room for Anthropic, OpenAI and SpaceX into 2027. Right. Get that you can't own everything and these companies want to go public either sometime this year or perhaps into next. You got to have room for it. He says Ben does. Microsoft could be a source of cash. Bryn, you get that one first. Somebody has to say it. Microsoft issues are mounting. What do you think?
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Bryn Talkington
I think he's kind of spot on. I mean I don't think you have Mustafa running the AI group anymore. Copilot, just like teams is terrible now they're using Anthropic to have cowork, which is anthropic. So to his point, you know, Anthropic is continuing to build itself into enterprise. Even with Microsoft. The stocks traded terrible and so I think he's kind of spot on. I'm frustrated with. I'm frustrated with their execution. Okay, the stock prices is down, but I am very frustrated with the execution and the lack of. I use Copilot. We have it at work for enterprise and I don't use it because it's clunky and so I think just like teams. I never use teams, I use zoom. This is where can a big company actually execute versus a small, more nimble company like an anthropic or a specs or open AI big, I mean little smaller. So I think it's a pretty good note that investors have to like take, take note of and bake that into their forward looking projections.
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Scott Wapner
What do you think of this call today?
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Joe Terranova
I think he's correct to say someone had to actually say it. If you look at the analyst community right now you have 94% with a buy rating and the 12 month price target is 596britain. Spot on. I don't believe that copilot is incredibly efficient. Before the show I was talking to our executive producer Kevin about my usage of Claude Max. I think it's.
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Scott Wapner
I already dropped his name on the show like twice earlier.
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Joe Terranova
I just dropped again.
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Scott Wapner
That's enough. But anyway, now you're pandering to the
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Joe Terranova
EP cop co pilot is not efficient for what I am trying to accomplish within the market. When you think about it, they've launched it in February of 2023. Now they're realigning the divisions so the commercial and consumer divisions will begin to work together.
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Jim Leventhal
And then you have to go back
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Joe Terranova
and look at the growth of cloud and in the most recent quarter there was stagnation in that growth that came in at 38% but yet we're going to spend more. We're going to go spend 37 billion more. Jimmy, I own Microsoft. I'm with you. Well, so it's not I want them to succeed but you have to acknowledge they're in a little bit of environment right now where you're questioning where they are in AI relative to some of their peers and they're also being punished for the open air relationship without question.
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Jim Leventhal
Okay, so the reason my jaw dropped when you said that is because to me, where the stock was really, really picked up steam to the negative side was the last earnings report. That's where the sentiment changed. And it was because of exactly what you said, the 38% growth rate in Azure and cloud services. Now first off, I want to say 38%. We're really going to sneeze at that. I mean it's a rhetorical question. I'm not. But also remember that they were supply chain constrained and they probably could have hit the 41% whisper number and I think probably will in the quarters to come. It has become a battleground stock in my opinion, less so because of the open air relationship and copilot and more so because of that cloud services business growth, which still at 38%. I'm sort of scratching my head that we hate the stock, but it's going to be a battleground stock until we see those Azure numbers continue to pick up, which I think they will.
- [25:31]
Scott Wapner
All right, let's take a break. Should we do that? Why don't we check the markets as we go out as well? So we're off the best levels of the session, but nonetheless we're green across the board. The president says we had talks with the Iranians. They say we didn't. We're going with our president who said we did. And the stock market is obviously reacting in kind to that. Russell's leading the way. Two and a third percent. We're back after this.
- [25:59]
Schwab Announcer
Trading at Schwab is powered by Ameritrade, giving you even more specialized support than ever before, like access to the trade desktop. Our team of passionate traders ready to tackle anything from the most complex trading questions to a simple strategy. Gut check. Need assistance? No problem. Get 24. 7 professional answers and live help and access support by phone, email and in platform chat. That's how Schwab is here for you to help you trade brilliantly. Learn more@schwab.com trading men are struggling with
- [26:28]
Dr. Guy Winch
their mental health at some of the highest rates we've ever seen. But most aren't getting the support they need, and that needs to change. I'm Dr. Guy Winch, your host for season three of the Visibility Gap, presented by Cigna Healthcare. This season we're focusing on men's mental health, bringing together real stories and expert insight to explore the pressures men face every day and why opening up can feel so difficult. Join us for the new season wherever you stream your podcasts.
- [26:57]
AT&T Business Wireless Customer
Not every sale happens at the register. Before AT&T business Wireless, checking out customers on our mobile POS systems took too long. Basically a staring contest where everyone loses. It's crazy what people will say during an awkward silence. Now transactions are done before the silence takes hold. That means I can focus on the task at hand and make an extra sail or two. Sometimes I do miss the bonding time.
- [27:21]
Scott Wapner
Sometimes AT&T business Wireless connecting changes everything. We're back. Most of us are back. Are you back? Most of us are back. Just let us Were you settled now? Good. All right.
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Angelica Peebles
I'm good.
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Scott Wapner
All right. Don't worry.
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Joe Terranova
Nothing to do with it though.
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Zepbound Advertiser
Don't worry.
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Scott Wapner
Don't worry. I'll see you sweating A little bit. Don't worry about it. All good. But I was all good.
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Joe Terranova
I had to bail my friend out.
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Scott Wapner
All right, let's start with Stephanie Link. And a move.
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Stephanie Link
Yeah.
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Scott Wapner
That she has because the financials are having their worst month since December of 24. Still the worst sector year to date. Whether it's worries about the economy, the war, private credit, rate hikes, you name it. The stocks not traded. Well, no, obviously you're buying more truist.
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Stephanie Link
Yeah.
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Scott Wapner
Why?
- [28:28]
Stephanie Link
And it is down 8% on the year. It has lagged the other regionals as well. I think this company is really doing some great things from their new management team and the new strategy to grow profitability. 15% this year, 16% next year. That's the ROTC that we talk about all the time. But last week we got GCIB rules and Basel 3 endgame rules. These are regulations. Right. And so we're starting to see the deregulation kicking in. I think as a result, you're going to see the banks at large really start to increase their buybacks and dividends. Overall, the big six have $176 billion in excess capital. I think it's going to go to about 220 after all these rules. So more buybacks, more dividends, more lending, which is a good thing. And Truist will benefit as well. It's trading at point nine times book. Historically that's when you want to buy a bank under book value. It's very accretive. And by the way, this company already has a huge buyback in place at later a eleven and a half billion. That's 20% of their market cap. So just imagine these new rules will give them even more flexibility to continue to show their shareholder value and appreciation.
- [29:28]
Scott Wapner
What do you think of this move in the regionals by Steph? Which would you. You still have a fair amount of exposure.
- [29:34]
Joe Terranova
We have a fair amount of exposure and full disclosure, it's hurting us so far in the current quarter. The significant exposure we have to the financial sector is one of the reasons why I look at the strategy and I see a degree of relative underperformance. So I will say this about the regionals and I like Stephanie's move. I do think there's a degree of resiliency specifically in the regionals. It really, when you look at the financial sector, the significant troubles resides itself in a lot of these private equity names and to a certain extent some of the money center banks which are giving back significantly strong outperformance from 25 Jimmy I like.
- [30:10]
Jim Leventhal
I like the move. I think the financials have been unfairly tarnished by a number of things. Many things that we've gone through them. Private credit concerns about a recession and the capital rules that you're talking about. Staff are going to inure to the benefit of everyone, whether it's regionals or big money center banks. We know that the IPO market and capital markets have been a little bit frozen because of what's going on in Iran. Again, if we think that history is rhyming and that the hostilities are going to decline, then the spring and summer could be a very good time for the capital markets. I see a lot of good valuations across the spectrum, whether it's money centers or regionals. I like this move a lot.
- [30:47]
Scott Wapner
Let's do some calls of the day. You guys see that story today about bipartisan bill to ban sports from prediction markets? I thought it was interesting. Obviously we have a commercial relationship with Kalshi, but this is pretty significant and it's having an impact on the casino stocks. Take a look at some of these names. Wynn LVs. That's in our orbit. Obviously, Steph owns LVs. Jimmy owns Wynn. What do you think, you guys, of these? Steph, you first. This headline that you have, this bipartisan bill, just a bill. I don't know where it goes from here, but you got a pretty significant, obviously casino lobby.
- [31:26]
Stephanie Link
But it makes me feel good to own LVs because. Because they don't have any US exposure right there. About 60% of their business is. Is Macao, 40% Singapore.
- [31:35]
Bryn Talkington
They're humming.
- [31:36]
Stephanie Link
But I do think it will have an impact on the overall group. I think it will have an impact on when, but I think it will be manageable. And that's again, if it even goes through. There's a lot of questions still.
- [31:45]
Jim Leventhal
I think. I think the bigger reason for the stocks to be up today is the cessation or the reduction potentially in hostilities. But I think this bill does help. I think, I think it's a reasonable question to ask is why are the sports books of the casinos regulated differently than Kalshi or poly markets? I think it's a similar question to why the banks are saying with regards to the bill it's working its way on crypto through, through Congress. How come the crypto companies can give interest and not be as regulated as we do? What I think this ends up with is that these prediction market companies are regulated a little more than they are now. It's somewhere in the middle. So I'm not sure if this is going to move the needle that much for the casinos. But again, the casinos have so much more and the reduction in hostilities matters much more.
- [32:29]
Scott Wapner
I'm guessing that you get the DraftKings got to be up on this too, right? And the other ones. Can we look at that? How could it not be? I mean, I think there was already a developing battle between the traditional online, you know, sports gamers and the prediction market points. Right?
- [32:46]
Joe Terranova
Yeah, there was. And I think Jimmy, Jimmy's right here. I think really the, the change is going to occur not so much for the actual conceit casinos themselves, but in the prediction markets there needs to be some standards that are put in place moving forward. I like that strategy. I'm aligned here with Steph. Jimmy, you know this. We took our first position in a casino in October. We did it in Las Vegas Sands. And it really was on the shoulder strength of the balance sheet relative to a name like when.
- [33:14]
Scott Wapner
All right. Angelica Peebles has the headlines for us today.
- [33:17]
Angelica Peebles
Hi there.
- [33:18]
Bryn Talkington
Hey, Scott.
- [33:18]
Angelica Peebles (News)
Flights were briefly halted this morning at Newark's Liberty International Airport due to a burning smell in the primary air traffic control tower. According to a Port Authority statement, staff were able to temporarily relocate to a backup tower and the ground stop was lifted after about 30 minutes. And it's not immediately clear what caused that issue. House Democrats launched a new inquiry into outgoing Homeland Security Secretary Kristi Noem's top aide Corey Lewandowski. It follows an NBC News investigation alleging he sought personal payments from contractors, including private prison company Geo Group. Democrats asked the company to disclose details of meetings and conversations it had with Lewandowski. Meta CEO Mark Zuckerberg is reportedly building a personal AI agent to help him lead the company company. The Wall Street Journal reports it's helping him get information faster by retrieving answers that he would typically have to go through layers of people to get. And this comes amid a push at the company to reduce internal bureaucracy and compete with AI startups with smaller staffs. Wouldn't it be great if we could all have an AI assistant? Scott, back over you?
- [34:20]
Scott Wapner
Yeah, we, we probably will at some point. Angelica. Thank you, Angelica. Peoples. Coming up, your ETF edge, Dom Chu has that. What do you have on tap today, Dom?
- [34:28]
Angelica Peebles
All right, so Scott Long have hedge fund managers use computer models to try to identify trends. We're going to talk to an ETF manager that's replicating some of those trend following devices. Coming up on the halftime report. Keep it right here.
- [34:42]
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- [36:14]
Angelica Peebles
And welcome back to the ETF Edge portion of the Halftime Report. When volatility strikes, it can cut both ways. If you're not prepared for surprise moves like today's, so what if you could replicate a hedge fund like strategy without the hedge fund costs? Certain ETFs may offer a solution. Joining us now to make that case is Andrew Beer, founding and managing member at Dynamic Beta Investments, or DBI as it's known in the Street. So thank you very much, Andrew, for joining us here. Let's start with a very broad question that kind of gets at the heart of what we're trying to talk about here. Has the market action that you've seen over the last several weeks and quarters, even at this point, been characterized as normal in your mind? The volatility that we've seen across all asset classes?
- [36:53]
Andrew Beer
You're absolutely right. What we're seeing in the markets right now is not normal. Oil should not go up or down 10% in a day. We should not open, as we talked about, up a thousand points and be back up 600 a few hours later. What the market is signaling is that the crystal ball is broken. Right. And the world could be fine in a year or it could be very, very bad in a year. So I think what the market is telling you right now is it is time to hope for the best but prepare for the worst.
- [37:18]
Angelica Peebles
How exactly then do you prepare for the worst? We've talked about diversification broadly go into all these different asset classes, but you basically run what's called a managed futures strategy in an ETF format. What exactly then goes into managing around risk with futures and trend following the likes of which hedge funds normally do.
- [37:38]
Scott Wapner
Sure.
- [37:38]
Andrew Beer
So, so, so what we basically found is a way to take a very, very valuable hedge fund strategy and make it better by being more efficient and then making it work. In an etf all they do is seek to identify big major trends and be early, contrarian and. Right. It doesn't matter. The terminology doesn't matter. The impact and what it does on your portfolio is what matters. And so part of what we have tried to do is bring that to a broader audience and be able to show that even in these very, very chaotic times, you can find a strategy that thrives on chaos and bring that to, to a broader group of investors.
- [38:13]
Angelica Peebles
What kinds of things have you seen? Because these are kind of trend following computer based models. What types of investments have you been kind of leaning a little bit more into or away from because of those trends that are starting to materialize in the markets or maybe a divergence thereof?
- [38:27]
Andrew Beer
Absolutely. So, so the trends as they are will change over time, the macro themes will change over time. But it was being early and right in gold, you know, buying gold below 3000 and writing it up. It was this rotation out of US equities into non U S equities as concern grew about the dollar and, and the US versus International assets. Recently it's been going long crude oil. So it's always a series of big macro themes that if the world changes in a meaningful way, you'll have an opportunity to benefit from it.
- [38:58]
Angelica Peebles
All right, so this is a big conversation, one that we can do here on television, but we're going to continue this conversation over at etfedge.cnbc.com Andrew is going to be joined by Nate Geraci, the president of Novodias Wealth. Back to you, Scott. Again, a lot of big conversations here about trends and how to identify them.
- [39:13]
Scott Wapner
All right, good stuff, Dom, thank you. That's the Domino Dom Chu still ahead, going global. The strong year for international stocks. Well, is it over before it started? We will answer that question next. All right, a lot of talk about international markets and the Wall Street Journal out with a headline today. The banner year for international stocks has stalled before it even began. So year to date, let's just take the the EEM which you see on your screen is now up 4%. The S&P is down 3 ish. Right. Month to date, the EEM is down 8%. The S&P is down three and a half. Steph, do you agree with that headline? Has the banner year stalled before it even began? Does this change your view at all? This war and the Rama around the world?
- [40:20]
Stephanie Link
I worry a lot about Europe for obvious reasons because of their energy dependence rather. But I like other parts of the world that have actually held up remarkably well. I own Brazil. The EWZ it is. It's up 15% year to date. It's the seventh largest country in the world and most people think it's a commodity country only but they have been building up substantially in fintech and gets what they have that everybody else wants power. So they will benefit from the whole AI data center grid power themes that we've been talking about for years. They have 214 million people in this country, as I said, seventh largest and the largest in Latin America and I like what they're doing fiscally and monetarily. So. So I'm careful on a couple of places. Brazil is my favorite. India has really lagged. I still like India too. So I think there are places that you can invest in, Scott, but they're certainly ones that I would avoid.
- [41:12]
Scott Wapner
What do you think, Joe?
- [41:13]
Joe Terranova
I think that game changer. No, I actually think it's an opportunity in particular for South Korea. EW Y is the etf. I think that's a name you want to own given the correlation and exposure that they have to the growth of AI is Israel was a name I was looking to get back into. I did that at the early days of March when the conflict began. So lower dollar I think central bank policy that still leans towards easier monetary policy. I think exposure to developed international M. You take advantage of this correction Brian,
- [41:49]
Scott Wapner
how do you see this here?
- [41:51]
Bryn Talkington
Yeah, I think, I think you want to be specific. So E20% of EEM is roughly Alibaba, Taiwan, Semi and Samsung. So just know that I like Joe's point and I've been talking about this with South Korea. If you want to own memory SK Hynix and Samsung are 45% of the index. And so if you are long term bullish on the, on that sector, this is a very good way to own that and get and have diversification from a micron or a Sandisk here. And so I think you really have to understand the constituents overseas because you have some extreme concentration within these country ETFs.
- [42:26]
Scott Wapner
All right, we're going to have to wait a little bit I think to, you know, really find out if this is a game changing move or at least a, a months long underperformance of some of these overseas markets relative to the US but we'll just wait and see. Mike Santoli, he joins us next with his midday word. We're back right after this. Our senior markets commentator overtime co anchor Michael Santoli is here at the desk for his midday word. We knew we were getting pretty oversold in certain areas and we knew we were hanging on anything coming out of the weekend. And we got a pre market.
- [43:13]
Mike Santoli
We were, we got a lot of it pre market. And you know, it's really fascinating because almost all the indicators right before we got, you know, the post from the President, we're saying almost there, maybe not quite, not unequivocally a washout number you can't just sort of close your eyes and buy regardless of the headlines, but obviously primed enough for a bounce that we got a pretty good excuse for it. And I grant that nobody really knows what to make of the longer term outlook here whether there's credibility to the claims and counterclaims and how this does end up. But I do think you have to respect and appreciate the signal value of the President indicating something like this is underway. And the market understands that. Right. So the market understands that that's a change. We know the window is closing so this can remain somewhat contained and everybody knows that. So I think you, you sort of have to first of all, we're up more than 2% from the premarket lows in the S&P 500. It's not nothing. But you came in to your point with a lot to prove it's a 4% pop just to get back up to prove it's not a dead cat bounce. We're not at the 200 day, so it's going to be this kind of trade. But I think you did enough on the downside to say let's be sure that we're not going to get caught flat footed if in fact you have an unexpected outbreak of certainty. And that's kind of the tariff playbook.
- [44:31]
Scott Wapner
Well, yeah, well, that's exactly how we started the show. Right. The market has seen this movie before and it forgets that every now and again.
- [44:40]
Joe Terranova
Well, here's the thing, it does forget
- [44:42]
Mike Santoli
it ultimately at the extremes, but I think it's been. Was trying to keep it in mind for two to three weeks. Right. That's why it was this grudging decline. I think that a little bit of the cautionary piece of it is, is March this year, March of last year, when we thought we had to price in a tariff situation. We didn't know how much and we thought we could kind of trade around that. We maybe we got down 10% before we got Liberation Day. And then the realities of the Liberation Day proposals were kind of so off, off the chain that the market just couldn't handle it. So do we need something further to the downside and more of a liquidation like we got last year? I don't think you have to. Nothing says you have to follow that, that script. But it is interesting how, you know, February peak last year, February peak this year. A lot of the things sort of rhyme.
- [45:29]
Scott Wapner
Well, because the, the, those numbers of Liberation Day were so large, they had a dramatic prospect of upending the whole global economy. I'm not saying this doesn't. Yes, but this can reverse itself in, in ways that potentially those big, big
- [45:46]
Mike Santoli
tariff numbers, I mean, I think it could mitigate itself. I mean, I don't know how many barrels you can lose.
- [45:51]
Scott Wapner
All the rest mitigates a way better. But I think you get to a
- [45:54]
Mike Santoli
point where the market will have an ability to look beyond it. That's the key. And because don't underestimate the market's, you know, tendency sometimes to just consider something settled even if it doesn't feel settled.
- [46:06]
Scott Wapner
Yeah. All right, good stuff. I'll see you in a little bit. That's Mike Santoli. We'll do finals next. We catch up today with Jeffrey Gundlach of Double Line. We'll get his first commentary post Fed. He's had a few days to let everything marinate now, so I can't wait to have this conversation with Jeffrey. We'll do that at 3 o' clock Eastern Time on the closing bell. Brian, what's your final trade?
- [46:31]
Bryn Talkington
Zoom. I like the technicals here. It could break out and go to $86.
- [46:36]
Scott Wapner
All right, Jimmy Oracle.
- [46:38]
Jim Leventhal
I think OpenAI is good for enough of the money. They've committed that this stock is undervalued right now.
- [46:45]
Scott Wapner
You want to say to everybody what you said them in the break.
- [46:48]
Angelica Peebles
Yeah.
- [46:48]
Stephanie Link
I would not own Oracle. How's that? That was nice.
- [46:50]
Scott Wapner
Well, that wasn't exactly what you said. What's your pick? What's your pick?
- [46:54]
Stephanie Link
He still owned Adobe.
- [46:56]
Scott Wapner
What's your pick?
- [46:57]
Stephanie Link
My pick is Dick's.
- [46:58]
Scott Wapner
Okay. Dick's Sporting Goods and Joey Freeport McMurray. All right, good stuff. I'll 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.
- [47:16]
Halftime Report Disclaimer
All opinions expressed by the Halftime Report participants are solely their opinions and do not reflect the opinions of CNBC or its parent company or affiliates and may have been previously disseminated by them on television, radio, Internet or another medium. You should not treat any opinion expressed on this podcast as a specific inducement to make a particular investment or follow a particular strategy, but only as an expression of opinion. Such opinions are based upon information the Halftime Report participants consider reliable, but neither CNBC nor its affiliates and or subscribers subsidiaries warrant its completeness or accuracy, and it should not be relied upon as such. To view the full Halftime Report disclaimer, please visit cnbc.com halftimereportdisclaimer Snoring Gasping during sleep?
- [47:52]
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