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Halftime Report
Gearing up for Tech Earnings 7/22/25
00:43:12
Frank Holland and the Investment Committee debate whether the rally is running on fumes as the market gears up for tech earnings. Plus, Stephanie Link details her latest portfolio move in the banking sector. And later, Josh Brown gives an update on his “Best Stocks in the Market.”
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- [00:01]
Fidelity Representative
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- [01:01]
Scott Wapner
I'm Scott Wapner and you're listening to CNBC's Halftime Report.
- [01:05]
Frank Holland
The podcast the most profitable hour of the trading day.
- [01:09]
Scott Wapner
We record this live weekdays at 12 Eastern.
- [01:12]
Frank Holland
Listen in.
- [01:15]
Scott Wapner
Welcome to the Halftime Report. I'm Frank Holland in for Skywaffer. Front and center at this hour is the rally running on fumes as we gear up for big tech earnings and we're also looking at potential new signs of fraud beginning to emerge. Our investment committee is here to debate everything and much more. Joining for the hour we got Josh Brown, Joe Terranova, Stephanie Link, and Citi Wealth's Chief Investment Officer Kate Moore. But first, a very quick check of the markets. You can see kind of a mixed picture right now. The Dow just fractionally higher, the S and P fractionally lower. It's really the NASDAQ under some pressure, down about a half a percent after a multi day winning streak. Chip stocks really weighing on the index. Joe Terranova, you're right here at post 9. I'm going to start off with you. Are we starting to see signs that the rally may be running out of steam and if so, what are the signs like?
- [01:59]
Joe Terranova
Think you're watching the semiconductor industry for sure. It was one of the catalysts that led the recovery from the April low. So they've been very strong. They are literally the mobility of the economy. We're going to hear some earnings in the in the coming weeks. Texas Instruments is going to report tomorrow. Texas instruments near a 52 week high so they're critically important. If you're looking for, if you are bearish, if you're looking for a catalyst for markets to correct I think a failure for semiconductors to respond favorably to really strong earnings that could be the catalyst where you get a mild correction. But I've said over and over again if we're talking about the macro I think it's a pause ultimately that refreshes. I fully expect that when we're talking about the semiconductor industry, the capex and spending is going to be there, it's going to be strong and those companies have to feel a lot better than they did on April 2nd.
- [02:52]
Scott Wapner
Stephanie, seen any signs of froth? Is the market getting a bit too top? We've heard a lot of people come on our air and say they're seeing those signs of fraud. They're getting to beginning to get concerned. Even the kind of the reemergence of meme stocks may be a sign that maybe the market's getting ahead of itself.
- [03:06]
Stephanie Link
August and September could be volatile seasonally. That's these are the worst months ahead of us. So I wouldn't be surprised to see a little bit of a push pull in the marketplace. But I think I lean my hat on the economy and the economy is humming at two and a half percent last week. We've got really good data in terms of retail sales, consumer sentiment. Initial claims are now coming down again that was something that I was getting kind of nervous about. Inflation is still a little bit sticky but it's, it's come down way from three years ago from 9.1% to 2.7%. So all of this adds up to I think earnings are going to be better than expected. Expectations are for 5%. I think you're going to see 10% because I think in a 2 and a half percent GDP world you could see mid single digit revenue growth but with margin expansion which I do expect to see especially led by tech, I think you could get to 10 to 11% earnings growth and earnings are going to get revised higher and that is actually what is going to drive the markets higher. But volatility the next couple of months of course it certainly could be normal and expected but you want to use that to be buying and you want to buy cyclicals versus defensives.
- [04:12]
Scott Wapner
All right. Josh Brown coming from the office put this in perspective for us again. Markets pulling back but the sb, the NASDAQ still both very close to their all time highs by about 1% away even with the slight pullback today. And we got also Got to keep in mind, today's pullback is from an xp, which really focuses on the auto business. It's not necessarily part of the trade. So I want to get your take. Are we making too much of this? Is this just, you know, the market's trading at highs and a natural pullback, or is it the sign of something else?
- [04:38]
Frank Holland
I think you want to pull back. If you're a bull, you're not looking for vertical lines straight up. I think if we're really in a healthy uptrend and we're in a new cyclical bull market that began on the heels of the trade war blow up in April, what you're not looking for is another 20% of upside in the next six weeks. I mean, you could want to see that if you're, I guess, a swing trader because you think you're going to scalp, you know, some more profits and some momentum stocks. But if you're a serious investor and you're not a trader and you're focused more on the long term health of the bull market, a pause would be absolutely fine. I'm sure everyone on the desk would agree with that. One of the things that you want to not do, and I wish somebody had told me this when I first started investing, is not extrapolate sideshows into as though they are in the center ring of the circus. So there's a freak show happening outside the tent, the main tent, right. Kohl's is up 37% today. The stock opened up 82% today. On Friday it was a $9 stock. Today it's 14 and opened at 19. Just outrageous, right? I mean, great for people that own it. Congratulations. No disrespect, 45% of that stock was held short. Okay, 87 million shares traded hands by 10:00am not normal. Can only happen in the retail fever swamps of, of Reddit. And we've seen this before. There's another name just like this Open Door, which was a former spac, now a meme stock, heavy retail favorite. All the platforms say this, this thing is going crazy. It's up 200% open in the last week. Also completely abnormal. Absolute freak show. And again, congrats to the long stock. What you don't want to do is look at that activity and then tell this story where it's indicative of a toppy market because it'll, if you do that, you'll miss the bigger story, which is earnings growth and earnings growth specifically in the technology space. Kohl's is $1 billion market cap. It could it could disappear tomorrow and it wouldn't matter. That's not the thing that you want to focus on. You want to focus on the leading stocks in the market, what I call the best stocks in the market, and then understand why they're going up. And to Stephanie's point, the backdrop is a growing economy. Sure, decelerating somewhat. We sort of all knew that that would happen. But in the end you have economic growth and you've got earnings growth in the biggest, most important companies. And that is the real show. And that should keep you on the right side even if we get a 5% pullback, which once again we welcome it with open arms.
- [07:27]
Scott Wapner
All right, Kate, want to come over to you. Is Josh right? Are these some of these moves we're talking about, these meme stocks like an open door and a call. So these just sideshows. And the real story has the secular bull market that still has the potential to continue. And of course we have Alphabet earnings coming up tomorrow.
- [07:41]
Kate Moore
Yeah. Much more focused on what's going to happen with the mega cap and big tech earnings. And I want to kind of highlight something that's been coming up in this conversation so far is that some of these names are extremely well owned right now and watching the price reaction after they report is going to be critical as the gauge of sentiment because we saw this with bank stocks reporting. Right. Some of the most recent widely held and well loved of those names didn't respond as well in a price situation as you might expect from their results. So I think that'll be a sign for fatigue or no fatigue in the market in the near term. And as Stephanie pointed out, you know, August and September sometimes into early October is a more heightened volatility period. More generally, it's not going to be a straight line up as Josh was saying. So you know, from this environment I'm watching positioning very closely and the market reaction to earnings less so the mean stocks.
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Stephanie Link
I think earnings season is silly season though, because good fundamentals, even if they are, are over owned and the stocks fall, that's your opportunity to buy. And that's what I would do. And I always have a little bit of extra cash around earnings for that very reason. If the fundamentals are there and the estimates ultimately are going higher and you mentioned the banks earnings are going higher.
- [08:47]
Kate Moore
Yeah, right.
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Stephanie Link
And the stocks fell. That's your opportunity.
- [08:50]
Kate Moore
I think it should be an opportunity.
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Scott Wapner
You know, before we get to earnings this focus a little bit more on what you're calling the silly season right now, especially with some of these Things that Josh is calling a sideshow. Joe, I'm going to bounce this off you. Piper Sandler out with the note. Sand and park. Time for a little risk on rebalancing. Higher beta names at risk Important to note yesterday the SP hb, the higher beta, higher beta ETF hit an all time high. Names like Nvidia, a lot of other chip names they go on to say recommend taking profit on stocks that have benefited the most from the relief rally since early April. Talking about again those higher beta lower quality names that have seen huge multiple expansion. We what do you make of that take? I mean can you ride some of this, maybe not a swing trader, but just for a short term pop or is it just time just to kind of get out of these names?
- [09:32]
Joe Terranova
I think it's plausible. I mean the market has had such a dramatic recovery. Take AMD for instance, talking about stock that's up 100% from the low. So it's, it's in April rather. So it's plausible that, that these stocks have a degree of exhaustion. What Kate is talking about, what I referenced in my opening remarks, that's an example of what we call good news, bad price action. What does good news bad price action mean to you as an investor? It probably means that you just need to understand that your expectation is over the coming course of time that the equity that you own moves sideways to potentially lower. It's not a call to action. More than anything else it's really a call to you have to exhibit some patience and just ride out what potentially might be a time correction. So I don't think you could rule out anything after the dramatic recovery that we've had since the lows in early April. When you're talking about some areas of the market that are up 75, 80, 100%, they could clearly pull back very obviously. What do you want to do? You want to focus, as Stephanie said, on where you see the good fundamentals in the market. I am not to suggesting that you want to go out and buy companies that have the extreme valuation and are long duration assets and are hoping to grow at some point into an extreme valuation. I don't think that's the area of the market that you're going to find the comfort in right now. And I think there's enough opportunities and we see that represented in the financial sector with a lot of mid and large cap where you could find companies that have a decent valuation and they're actually for the first time giving you the growth.
- [11:11]
Scott Wapner
Are you also excited about the idea of deregulation acquisitions happening today. We're talking about Goldman and Northern Trust. Last week it was Huntington.
- [11:17]
Joe Terranova
Let's talk about the financial sector for one second. So in the Jyoti ETF, we have a 30% weighting to financials. And it's really rooted in the belief that fundamentally you've had the combination of a revival in earnings growth, M and a trading activity. There's, there's strong engagement in trading activity. And then you have the regulatory relief. You add upon that the premise that now you have this technical momentum. So our top performing names, interactive Brokers, best financial stock we own in the etf. Charles Schwab, another name, new holdings, digital banking company down in South America. JP Morgan obviously performing remarkably well. Northern Trust, bank of New York. So the financial sector is giving you the growth opportunity. And to Kate's point, when you're thinking about positioning. Yeah, positioning could be a little bit extreme. There could be a need to work off some of that positioning. But now Stephanie's going to like this. When you look at valuation, look at the 11s and P sectors, where do financials score? Even with the rally that they've had, they are the third lowest valuation out of 11s and p. P sectors at a current P of somewhat around 18.5. That's still cheap enough to get me excited and keep me anchored in the sector.
- [12:38]
Scott Wapner
Yeah. By the way, just to your point, bank of America out with their client flows, big financial inflows amid bank earnings. A lot of other investors going into the banks. Speaking of Stephanie Link, you have a move in the financial space.
- [12:48]
Stephanie Link
Yeah. What we were just talking about Wells Fargo. They had a reported good number. They beat earnings. They had good fee growth provisions were under control. Credit costs were low, efficiencies were in line and strong and good. They're buying back. They have a buyback program of $40 billion. That's 15% of the market cap. And the stock fell 5% on the day. So I actually added to it. It's now my largest financial services holding. It trades at 14 times earnings, 1.6 times. Book is not exactly cheap for them. However, with the asset cap lift, I think your rotc goes from 15% to 17%. And that's a very good thing for multiple expansion over time. So I used earnings season silly season to buy best in breed.
- [13:31]
Scott Wapner
All right, you also own pnc. Made some news today, announcing a strategic partnership with Coinbase. Just while we're on it.
- [13:37]
Stephanie Link
I don't own pnc.
- [13:39]
Scott Wapner
I'm sorry.
- [13:40]
Stephanie Link
I own Truist.
- [13:41]
Scott Wapner
Actually, you own pnc. I apologize. Look down on my nose. Look at the wrong name. Joe T. Coming to you. PNC teaming up with Coinbase to give clients some crypto access.
- [13:50]
Joe Terranova
Pnc, usb, we call these, we call these names super regionals. And candidly, I have a degree of disappointment. I've expressed this over the last several weeks in the way that regionals are trading. It's really idiosyncratic. You have certain instances, like a Huntington bank where. Or Regions Financial where its citizens is another example, where it's trading well. And then you have other instances where regionals are not working particularly well. I'm not particularly excited about what I've seen over the last year from PNC. I think it's up somewhere around 11%. You could lump USB in there as well. I think the money center banks is really where you want to find the opportunity right now. Wells Fargo on a valuation perspective, obviously attractive, but it's also had relative underperformance and you will get that mean reversion at some point. So I think you could trade higher up here. You don't have to go to the regionals, the super regionals just yet. Stay with the money centers.
- [14:46]
Scott Wapner
All right, Speaking of Josh, you and J.P. morgan, just your broad take on the financials. Right now we're starting to see that deregulation story kind of play out again. Goldman looking to acquire potentially Northern Trust, Huntington bank last week. I'm sure there's some other acquisition targets out there as well.
- [15:02]
Frank Holland
So the deregulation story is like the, the climate, like it just, it exists and it's a different climate than what we experienced over the previous four years. And, you know, it probably in the background has helped people feel a little bit better about, you know, buying some of these wealth managers, asset managers, money center banks, at a elevated price to book, let's say, over what they would have paid five years ago when they were being regulated like utilities. So now, like, there's a little bit more slack in the reins. I don't know that anyone could directly point at any specific financial stock and be like, oh yeah, deregulation is good for $0.20 per share in earnings for this company next quarter. I don't think it's quite. I don't think it's quite that formulaic. I just think it's the climate like it's the atmosphere. But it's helpful. It's a tailwind because, look, you think about the growth of just as one example, private credit, like market making is another example. These are areas where the largest banks were told by the government, we don't want you there anymore, we don't want you doing this. So now the banks have been reduced to doing originations and turning over the lending business to Blue Owl or somebody else. And it's not that that's necessarily negative per se, but it's definitely held back the potential earnings power for these banks in what would otherwise be a roaring bull market. You've got stocks at all time highs. You've got more millionaire households than ever, multimillionaire households, explosive growth in 401k balances. You've got the middle class leveling up in their spending which helps. Credit card companies like these stocks have done well. But I would argue in this environment they should be doing better. As some would say the next catalyst will be the first rate cut. Okay, maybe got to wait to September. Maybe that's true. But these stocks are doing well without them. So I like what Joe said about Interactive brokers. That's on my best stocks list. I think that's going way higher. Just looking at the way Schwab and Robinhood have been treated. I think that stock should get a bigger rally. And there are tons of those stories everywhere I look in the sector. So I think it's going to continue to work. I think you want to be in financials in the end of the year.
- [17:23]
Scott Wapner
You know, to your point, the CEO of Interactive saying he sees another two or three years on the rally, I believe. Kate, I want to come over to you. By the way, Citi hitting a 52 week high, talking about these big banks moving higher.
- [17:32]
Joe Terranova
Just, just allows a comment on that.
- [17:35]
Kate Moore
I'm not, but I think I'm allowed to smile.
- [17:38]
Scott Wapner
Yeah. And by the way, talking about deregulation, we had the treasury Secretary also talking about deregulation, saying the capitalization requirements are unnecessary burdens on financial institutions. Talking about he wants to see more growth in the finance sector. So just talk to me more broadly about financials. And we see some people talking about some of the trading houses like an Interactive and a Schwab. And of course you have the big banks and the regionals. Is there a certain area that you see as the most attractive?
- [18:01]
Kate Moore
Look, I think there's a lot of very strong stories across the entire sector. We've highlighted a few of them across regional banks, across some of the money centers. I think the important point here is that it has been an unloved sector for a considerable period of time. It has not been any place anyone's been taking big concentrated risk. They may pick a name or two here and there, especially for the active managers. But in general it hasn't occupied the space of being a consensus overweight. I will suggest looking at the sell side strategist looking at recommendations. It is a consensus overweight right now for the reasons we're talking about. A stable economy, maybe not explosive, the likelihood of future rate cuts, the expectation that the curve is going to steepen and that the deregulatory story is going to be this tailwind for earnings. So I think it's reasonably well owned. This is why I pointed out before that we need to watch the price reaction. I will tell you I was at a conference about 10 days ago and it was a small group discussing their highest conviction calls. About half of us pitched regional banks. So I think that's a little bit of a warning sign in the near term even if there are structural reasons to consider this sector as more of an anchor to portfolios today than it's been in the last five years.
- [19:07]
Joe Terranova
I think with the, the regulatory relief does is it unlocks capital for M and A and for capital allocation strategies. And I don't think you dismiss this report this morning that Goldman Sachs is looking to make a big acquisition. Goldman Sachs isn't I don't think looking to make that big acquisition in the prior four years. I think this is something that is is going to be rather popular in the financial services industry where we're going to begin to see tie ups that previously were never thought of.
- [19:35]
Stephanie Link
You're going to see M and A but you're also going to see more loan growth. This is what Jamie Dimon has been complaining about since 2008 the restrictions on capital. When you loosen that up you can lend out to small and medium sized businesses and that's really important for the economy as a whole. So not only are going to see buybacks going higher which we are and we're seeing a lot of very different shareholder value creatures creation but I think loan growth is really at the heart of this whole thing and that's important.
- [20:05]
Scott Wapner
Well the buybacks, yeah that's going to happen. But higher loan growth in a slowing economy you see the two things happening at the same time.
- [20:10]
Stephanie Link
I don't really see the economy. It's slowing but it's still strong. It's above trend. Two and a half percent is above trend. Trend is one and a half percent for this economy. So deregulation, lower taxes, Capex cycles going higher. That's not going to lead to a 1% economy. 1 1/2% economy economy I think it's going to stay strong and I think they are going to lend. And that is something that has been missing from the banks over the last several years.
- [20:35]
Scott Wapner
All right, let's switch gears going over to tech. Let's put up an Alphabet chart. If you look at Alphabet today, if it's higher today, it's on pace for a 10 session win streak. It'll be its biggest win streak ever in the history of the stock. So just kind of holding on to gains right now. Surprisingly, nobody owns it but Josh, I'm going to come over to you. Is this rally really hinging on these big tech earnings? We got Alphabet tomorrow. I'm just going to look at the numbers. I very quick. The cloud business is expected to grow by 26, 27% year over year. The ad business by 7%. Is that realistic? And even if it hits it, does it have to blow it out the water or just meet it to keep this rally going?
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Frank Holland
I think it's realistic from the standpoint that at Alphabet they have a lot of different levers to pull in different areas of the business. And if they feel that this quarter it's really critical to report a certain metric, they'll find a way to do it. And I think what's so I exited Alphabet earlier this year, took a profit after having held it for a long time. And my, my big idea in doing that was that, you know, I've got tons of exposure to megacap tech as it is and I felt that other companies were better positioned. And you know, one of the things that they're going to have to accomplish on this call, which I think is more important than any specific specific number outside of the earnings per share number in the guidance is they're going to have to get everybody on the same page in sell side land about their strategy and their ability, believe it or not, to compete. And as we've talked about on the show, Frank, this is something that Alphabet shareholders have never had to worry about. They had plenty of things to worry about, but competition wasn't one of them. It's a company that had 90% of their market forever since before they came public. So that's kind of what I think. People, whether they're long the stock or looking to put on a new position or nervous, that's what they're, that's what they want to hear. They want to hear about the, the query results when Gemini takes over from where a search result used to be and how are we going to replace the revenue from the blue links now that the Consumer has grown accustomed to a new way of search. They don't want Google to tell them which website to go to to find the answer. They just want the answer. I think Alphabet has the potential to figure this out and not cannibalize their traditional search revenue. And that's what you're betting on. If you're buying the Stock Here at 190, we don't know for sure. So people going to want to hear that they're holding their own as the consumer's behavior fundamentally changes for the first time in the history of the Internet.
- [23:08]
Scott Wapner
K coming over to you. Does this rally hinge on Big Tech earnings? Does it hinge on Alphabet tomorrow? We saw last week Netflix did better than expected, gave better outlook and it moved lower. Do you think we're on, on pace for a similar setup? I'm not asking you to ask about the actual company, but a set up where goods just not good enough and then does that change the rally's trajectory?
- [23:28]
Kate Moore
I think Big Tech has to put up good numbers that's necessary but not sufficient for an extension of the rally. So this is what I would suggest. Big Tech is kind of table stakes at this point, beating expectations and offering solid guidance, basically saying, you know, regardless of what happens in terms of the economy, we have stable earnings, we're going to continue on our trajectory. That's the message we need to hear. I got to tell you, the thing that I'm really watching as we go through the balance of earnings season so this week and next really is what happens to discretionary stocks. This is an unloved part of the market. And if we get better news, whether or not they're handling the margin pressures from tariffs or that they're getting actually solid like we saw in retail sales activity from the average consumer, I think that will go a long way to kind of supporting the market.
- [24:13]
Scott Wapner
All right, we're going to switch gears just a bit right now. We want to go down to D.C. our amen jabbers is at the White House with some breaking news. Amen.
- [24:20]
Eamon Jabbers
Hey there, Frank. That's right. President Trump just finishing up a Q and A session, an extended Q and A session with reporters in the Oval Office as he sat alongside President Marcos Jr. Of the Philippines for their meeting today. The president said that he floated this idea, which is interesting, Frank, of getting rid of capital gains taxes for American homeowners when they sell their houses. Now that's something he's talked about before. It's not clear exactly what the legislation, legislative vehicle for that would be given that they've passed their big legislative agenda for the summer and Congress is about to go on recess now until September. So an idea that the president is clearly kicking around, though, is a very populist idea in terms of tax cuts on getting rid of those capital gains tax. The president also said, speaking of the Philippines, that he does expect a trade deal with the Philippines coming soon. He says he's not there yet, so they are apparently hammering out some details there. Today he went on an extended critique of Federal Reserve Chair Jay Powell, as he's done in the past, saying that he views Powell as being too late, as being political, as somebody who spent too much money on renovating the Fed's buildings and not focusing enough on lowering interest rates. But he also said in that same critique that he doesn't see himself moving to try to fire Jay Powell because he's going to be out in the eight months anyway. So that might be a little bit reassuring to markets. And then finally, he did float the idea that he may be meeting with Chinese President Xi Jinping in the not too distant future. No specifics on that, but obviously the global economy will be watching closely to see when those two leaders do meet face to face. Frank, back over to you.
- [25:58]
Scott Wapner
Yeah. Not only just possibly meeting, but the president says he got invited to China. So we'll have to see if the president actually goes to China. By the way, back to that first story, Amy, and I think everybody. Realtor in America, you just woke them up.
- [26:08]
Eamon Jabbers
Yeah, that's right.
- [26:09]
Scott Wapner
Some champagne is coming out of the fridge right now.
- [26:12]
Eamon Jabbers
I just did a little D.C. i. Frank, I did a little Googling. I just did a little Googling here to try to figure out. I can't find the amount of money that that would represent just off the top of my head here. But that is a large amount of money. And you're right, the real estate sector would really benefit from that one. But we have to figure out exactly how many tens or hundreds of billions we're talking about there.
- [26:31]
Scott Wapner
And guess what? I think there's an easy email from the national association of Realtors coming in right now. Wait and see. Eamon Jabbers live at the White House. Great to see you. Joe, Joe, Joe, listen, that's one.
- [26:41]
Joe Terranova
That's one way to unlock inventory, that's for sure. A lot of people I think would be saying, okay, I'm going to put my house up for sale. Listen, there's a lot of nuanced things that the administration could do. One of the things that, that bothers me is since 1978, the capital loss deduction in this country has been $3,000. Think about that. Since 1978 that's all you could deduct is $3,000. I think it's time to take a look at that as well.
- [27:08]
Scott Wapner
I think there's a lot of smiles going on, right?
- [27:09]
Frank Holland
Don't spend it all in one place.
- [27:13]
Scott Wapner
More committee stocks on the move. We have to watch some some real estate stocks, probably including one of Steps names that's on pace for its best day in nearly two years. Then later, Josh Brown, he comes back with an update to his best stocks in the market. Halftime's back in just two minutes.
- [27:28]
Stephanie Link
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Kate Moore
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Stephanie Link
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Kate Moore
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Stephanie Link
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Kate Moore
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Stephanie Link
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Kate Moore
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Stephanie Link
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Kate Moore
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Kate Moore
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Stephanie Link
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- [28:28]
Fidelity Representative
Did you know over 75% of small businesses don't have enough cash on hand to cover unexpected business disasters? You need Relay, an all in one banking and money management platform that will change the way you think about money. With Relay, you can open up to 20 accounts to separate your cash for things like income, payroll or operating expenses. All you need is a few minutes to sign up@relayfi.com podcast that's R E L A Y-F I.com podcast Relay is a financial technology company and is not a bank. Bank services provided by Threadbank member FDIC for 140 years, MultiCare has been in Washington prioritizing long term solutions, partnering with local communities and expanding access to care. Together we're building A healthier future. Learn more@mycare.org.
- [29:14]
Scott Wapner
And welcome back to Halftime. Now to some more stocks that are on the move. Let's start off with Dr. Horton top estimates on earnings and revenue. Steph, you on this one.
- [29:22]
Stephanie Link
Yeah. There was very, very low X expectations. The stock hasn't done anything in over a year. But they did have a good quarter. They beat earnings, they beat on deliveries. Most importantly, they beat on gross margins which I was kind of nervous about just given the pricing pressures. And orders were actually better than expected. At flat, people are spending down 4. So I'm not excited about flat order growth, but I am excited about the execution at this company and trading at 11 times forward estimates. I like it a lot. For the long term we do need interest rates to come down and when they come down and when the Fed does start to cut, these stocks are going to take off. And I think in anticipation of that, you're going to start to see buyers now because we think that they're going to cut probably sometime in the fall.
- [30:05]
Scott Wapner
All right, talk us through this one. I mean the shares are up almost 15% just off in earnings. I mean this is a huge upside move. Was there something in this report that.
- [30:13]
Stephanie Link
No, no. Well, no. I mean they look, they derived risked the numbers last quarter and they slightly beat expectations. I think that this whole sector has been under pressure because of the interest rate environment. Like I've said, I think housing is a decade long theme but you do need interest rates to come down. You need a 30 year fixed below 6, not near 7. But when you do get that, there's pent up demand because we are 5 million homes short in this country and the builders have underproduced for 15 consecutive years. They'd rather buy back stock, which they're all doing, than build at these levels. So I think the supply demand metrics are very favorable for the long term. And these guys are just exceptional in terms of operating.
- [30:58]
Scott Wapner
Yeah, they've also been doing a lot of buying down of rates. Something that's kind of weighed on margins for a lot of these homebuilders as well. Dr. Horton shares up about 14 and a half percent. Right now. We want to move on to defense space. Some big upside moves there. Lockheed Martin or downside and upside? Excuse me, Lockheed Martin cut guidance where Northrop Grumman, they topped earnings estimates. Joe, look at this chart. Look at this chart right here. Give us your take. You own?
- [31:20]
Joe Terranova
I do, I own Lockheed Martin, I own Northrop and also on General Dynamics, which will report tomorrow all in the Jyoti etf. When you're looking at the aerospace and defense stocks, it really has not been the defense stocks where you've seen the strong positive momentum. It's been names like Helmet and other aerospace names that have been the strength in the industrial sector. This report today, it's owning all of these. It's literally like having a pillow fight because on one side you have Lockheed Martin, which is down 8% because of the procurement cuts and a $1.6 billion charge that they needed to take the other side of it. And this is where stocks can be so idiosyncratic. And you have to understand that idiosyncratic risk. Northrop Grumman up 8%. Why? The President Trump's 2026 budget benefits Northrop Grumman and their missile program, the Sentinel missile program, also the B21 benefits as well. So in each instance, you're seeing that one stock has been benefiting, the other stock obviously is being punished because of a lot of the cuts. And ultimately, for me, as a holder of both, it leads to a wash.
- [32:33]
Scott Wapner
There you go, Josh. And come over to you. A bit of a softball. I think it's one of your best stocks in the market. You're looking at shares of toast.
- [32:41]
Frank Holland
Yeah, look, this, this is a breakout that I think deserves another mention just because it's a $27 billion market cap. It's not yet in the s and P500, although I think by year end they will have put together enough consecutive quarters of GAAP profitability that they will have to be considered just on the basis of that market cap. I think the lowest market cap in the S and P is 22 billion. We just saw shares of Block get added to the index today at 44 billion. And, and that's because Hess was finally fully acquired by Chevron. So there will be other names coming out of the S and P. And I think TOAST could be in the running by year end. Not anything imminent, but that all, in my view, that'll just be the icing on the cake because asset managers have discovered this name. You're seeing it under a substantial accumulation over the last three months of about 40%. And I think the story here is still super compelling, despite the fact that the stock has gone up a lot from when we originally started talking about it on the show, which was in the 20s. They're growing revenue at a 55.0percent CAGR over the last five years. Profit margins have now gone up five consecutive years. Operating margins five, five past quarters have. Have gone from negative 4% at the end of 2023, when the stock was a teenager, to now 3.7%. And they're rising each and every time this company reports. So you have this combination of profitability finally arriving. You have revenue growth exploding and you've got huge deals being signed with enterprise level. This is not just walking into a diner and saying, hey, you want to take our handheld device to ring up your customers? They're doing deals with Marriott, doing deals with Applebee's operators that have hundreds, if not thousands of locations. And that's the part that really makes me think the TAM here could be much more substantial than what analysts right now believe. So it's broken out technically this week. I just want people to know that I'm not, I'm not taking a profit. I'm staying long.
- [34:54]
Scott Wapner
You know, I think the stock was actually about a half a percent lower when you started talking. Now it's up a bit about 3/4 of 1%. Very interesting. All right, we're going to leave it there. Time now.
- [35:03]
Frank Holland
It's don't, don't chase. Be calm, be calm.
- [35:08]
Scott Wapner
We're going to start with the headlines now. Our Bertha Coombs back at CNBC hq. Hey, Bertha.
- [35:12]
Stephanie Link
Hey, Frank. The House of Representatives is starting its August recess early because of a Capitol.
- [35:18]
Scott Wapner
Hill fight over the release of the government files on Jeffrey Epstein. House Speaker Mike Johnson telling reporters today the effort is for, quote, political gains.
- [35:29]
Stephanie Link
Earlier today, the House Oversight Committee unanimously adopted a motion to subpoena Epstein's associate, Ghislaine Maxwell.
- [35:38]
Scott Wapner
Meanwhile, the federal judge on Maxwell's case is issuing an order on how he will handle the DOJ's request to unseal.
- [35:47]
Stephanie Link
The grand jury transcripts in the case.
- [35:49]
Scott Wapner
The judge said he intended to quote exactly expeditiously resolved the motion that was filed on Friday, but directed the government to submit three versions of the transcripts.
- [35:59]
Stephanie Link
And other grand jury materials.
- [36:02]
Scott Wapner
And NPR's top editor, Edith Chapin, is leaving the public media outlet. In a memo to staff today, Chapin said that she'll stay until an interim editor is chosen. It comes just days after the Senate passed President Trump's rescission bill, which stripped the outlet, along with PBS, of more.
- [36:23]
Stephanie Link
Than $1 billion over the next two years.
- [36:27]
Scott Wapner
Frank, Bertha, thank you very much. Our Bertha Coombs live at CNBC hq. Thank you again.
- [36:32]
Frank Holland
All right.
- [36:32]
Scott Wapner
Coming up here on halftime, we're back to Josh Brown's best stocks in the market. Josh is ready with an update on two names on that list that are in danger of falling off we're going to hear his strategy coming up next. Stay with us.
- [36:43]
Fidelity Representative
Did you know over 75% of small businesses don't have enough cash on hand to cover unexpected business disasters? You need Relay, an all in one banking and money management platform that will change the way you think about money. With Relay, you can open up to 20 accounts to separate your cash for things like income, payroll or operating expenses. All you need is a few minutes to sign up@relayfi.com podcast that's R E L A Y-F I.com podcast Relay is a financial technology company and is not a bank. Bank services provided by Threadbank member FDIC on WhatsApp, your personal messages stay private between you and whoever you send them to. So things like the passport numbers for your honeymoon stay between you and your.
- [37:22]
Kate Moore
Fiance and that video call for your.
- [37:25]
Fidelity Representative
Gran'S 80th stays in the family. Even your streaming password stays between you.
- [37:29]
Scott Wapner
And your college roommates, who still ask.
- [37:31]
Fidelity Representative
For it every week in your group chat. Because on WhatsApp, your personal messages are yours. No one else can see or hear.
- [37:38]
Kate Moore
Them, not even us.
- [37:40]
Fidelity Representative
WhatsApp message privately.
- [37:45]
Scott Wapner
And welcome back to Halftime. We're back with Josh Brown's best stocks in the market. Josh, you want to focus on two names that are actually in danger of falling off your list.
- [37:54]
Frank Holland
Yeah. As Joe Taranova would tell you, the number one factor performance this year is momentum. Better than value, better than dividend, better than growth at a reasonable price. Just far and away, this has been a momentum market really since the jump. And as a result, a lot of the names on my best stocks list have been huge winners, but not all of them. And not every trade goes right. And I wanted to use this as a teachable moment because I have a couple of names that are in danger right now. One is called Expand Energy and the other one is called Deere. And the important thing here is one of the number one mistakes I see investors or traders make. And this is throughout my whole career, buying a stock for one reason it goes against you, and then coming up with new reasons to not take the loss. It's just like the kiss, the absolute kiss of death. So you'll see people say, I bought it on the tacticals, the technicals break down and then they're like reading through an 8K and it's, what are you doing? So, so here's what's going on here. EXPAND Energy is U.S. energy producer. It's not been a good sector, but this was one of the better names. It may be stabilizing Here. But the stock is now below its 200 day moving average. Natural gas prices are minus 15% over the last month. Crude is negative 5%. These stocks just can't hold up in that kind of an environment. And so you see that across the sector for investors. I might be tempted to leave it on the leash because it looks like, like it's finding support here around this hundred dollar level. And it's found support here twice earlier in the year for traders. When we put up these columns at CNBC Pro, we're already telling you here's where you're wrong. Here's where you know, here's where you might want to exit if you're a shorter term trader. And those people should already not be in the name. So I'm just highlighting this as an example of when a best stock becomes just a mediocre stock. And it happens all the time. We never assume they're all going to work. I'll do Deere quicker. Sorry. Deere still deserves the benefit of the doubt. It hasn't gotten anywhere near its rising 200 day moving average. And this is a really big stock and it tends to move a little bit on, on the slower side. So I would take this pullback with a grain of salt. I would not overreact to it. The company will report on August 13th before the market opens and I would stick around for that report report the last time they reported earnings, Frank, the name hit $528 a share. Huge day. And I know tariffs are a concern here and that's probably explains the short term weakness. Deere is very good at managing supply chains and I do not think that's going to take this thing down when they report. So that one, it's in danger but I would still stick with it as an investor.
- [40:39]
Scott Wapner
All right, Josh Brown with a take on his best stocks in the market. It's SPAN Energy, formerly Chesapeake Energy and also Deere. Josh, thank you. We appreciate the curtsy. All right, coming up next, Mike Santoli joins us with his midday word. We are back right after this. And we're back on halftime. Senior markets commentator Mike Santoli joins us with his midday word. Mike, what is the word? Market's kind of at highs but we're seeing a pullback today and some of the best performing stocks this year, I'm looking at a palantir down about 2%. They're pulling back today.
- [41:07]
Joe Terranova
You call it churn, I think would be if you had to go to a single word. It's almost as if the market is Sort of working backwards from let's keep the s and P500 flattish. We're on a very long streak with not even a 1% move in the S and P. But internally it's rotating around the overheated stuff in the market. You mentioned Palantir. The best performing five stocks year to date in the S and P this morning were all down at least 2% on no news.
- [41:31]
Scott Wapner
So it shows you that there's a.
- [41:32]
Joe Terranova
Sort of a mechanical mean reversion going on. Stuff has to cool off, it's consolidating for a few weeks. At the same time, some of the laggard stuff is getting a break. I'm noting interest rate sensitive stocks, working homebuilders, guys we talk about, but also utilities and so, you know, 10 year yields easing back. So I think it's a lot of this sort of churning and push pull within the market.
- [41:53]
Scott Wapner
It's sort of the market's way of.
- [41:54]
Joe Terranova
Attempting to stay supported and not get thrown off by the erratic flows into the super aggressive short squeezes and speculative stampedes that are going on in the options market.
- [42:06]
Scott Wapner
Yeah. By the way, for the audience, Mike lost his voice telling us don't worry about those sideshows, focus on the actual.
- [42:11]
Joe Terranova
Always, always.
- [42:13]
Scott Wapner
I want to come over to you just your view on what he's calling some churn. And by the way, just important to note, from the start of the third quarter, the S and P equal weights actually outperforming the S&P 500. Is that in your mind a sign of some of the churn that he's talking about?
- [42:24]
Kate Moore
I like this phrase mechanical mean reversion because that's what it's about. Right. The stuff that's lagged year to date is not the fundamentally strongest part of the market. And I get a little tired sometimes. We started at the end of last year, beginning of this year, everyone wanted to see rotation. But the truth of the matter is when you look at the performance in terms of the top quintile of stocks year to date, it's very much like the composition is very much like what we saw in 24 and in fact in 23. And that is because these companies are more fundamentally sound. They have more sustainable earnings, they continue to surprise the analysts on the upside. And even though they're well owned, there's always room for reallocation. So when we get these days where we have this sort of mean reversion or this mechanical rotation. I like that. And stealing that Mike that, you know, I'm inclined to feed that and stay very focused, frankly, on the fundamentals and not just on the technical.
- [43:16]
Scott Wapner
All right, we have to leave it there. Mike, thank you for your midday work. Coming up next, we got some committee moves. Steph is ready with two more trades. Much more halftime coming up after this break. And we are back. Let's get some more committee moves. Steph, you're making two new two moves. You're actually buying Freeport McMoRan ahead of earnings.
- [43:32]
Stephanie Link
Yeah, so I bought Freeport back and I sold Diamondback Energy. I just like copper market better. The inventories are at record lows for copper. And every $0.10 per pound chicken change in copper is $200 million to Freeport's EBITDA. So I think that there's a lot of upside. Copper prices are up about 25% year to date on better demand and electrification, that whole theme that we've been talking about. So trading at about 6.3 times EBITDA versus 8.9 times historically. But if it's down on earnings, for whatever reason, I'll be buying more.
- [44:03]
Scott Wapner
I mean, copper prices are up 13% just this month.
- [44:06]
Stephanie Link
No, I know.
- [44:07]
Scott Wapner
Again, on the tariff, tariff announcements. So do you see potential for a big pop? Because they might raise guidance, as you just mentioned, they have like a big multiplier effect every time copper prices go up.
- [44:15]
Stephanie Link
And I think long term copper sets up very well, much more so than energy. We have a lot of supply in the energy market.
- [44:21]
Joe Terranova
And Freeport Macron, you're also benefiting from the price of gold moving higher as well.
- [44:25]
Scott Wapner
Right. Any thoughts? Josh?
- [44:29]
Frank Holland
You know, this is not really my favorite area of the market, nor is it anyone else's, but this chart looks great. I think Steph's going to make some money here. And I think you can't ignore the correlation between this and global stock markets around the world rising. I think it's a signal of increasing demand relative to what we had expected even six months ago. The world is booming. You will see increased copper demand.
- [44:54]
Scott Wapner
All right, Freeport McMoRan share is up over 2% right now. Stay with us. Final trades that come up on halftime. You don't want to miss it. And we are back on halftime with final trades downtown. Josh Brown, you're up first.
- [45:08]
Frank Holland
I have to report a breakout in progress in a name I am long Rocket Companies Value. Act Capital has just raised its stake to 8.9% of all shares outstanding over the last two weeks. They have bought 2.9 million and change shares at prices from 13 and a half up to of 14 resistance in this name has been right about 15 and a half, 1575 all year. It is now trading through that level. I am holding my position. I don't know anything more than what's being reported, but this stock is under accumulation.
- [45:43]
Kate Moore
Kate, I'll go fast here. I'm long volatility into the end of third quarter. I think we're likely to see some spiciness in the market. We talked about positioning, seasonality, but I also just want to highlight the tariff threats are not over and I think that's likely to cause some indigestion.
- [45:59]
Scott Wapner
Steph Toll brothers, Joe Fast and all.
- [46:01]
Joe Terranova
And I like Kate's trade.
- [46:02]
Scott Wapner
All right, that's going to do it for halftime. You've been listening to CNBC's Halftime Report, the podcast. You can always catch us live weekdays.
- [46:12]
Joe Terranova
At 12 Eastern only on CNBC.
- [46:18]
Stephanie Link
All opinions expressed by the Halftime Report.
- [46:20]
Fidelity Representative
Participants are solely their opinions and do not reflect the opinions of CNBC, NBCUniversal.
- [46:24]
Frank Holland
Their parent company or affiliate, and may.
- [46:26]
Fidelity Representative
Have been previously disseminated by them on television, radio, Internet or another medium.
- [46:31]
Stephanie Link
You should not treat any opinion expressed on this podcast as a specific inducement to make a particular investment or follow.
- [46:37]
Fidelity Representative
A particular strategy, but only as an expression of an opinion.
- [46:40]
Stephanie Link
Such opinions are based upon information the Halftime Report participants consider reliable, but neither CNBC nor its affiliates and or subsidiaries.
- [46:47]
Kate Moore
Warrant its completeness or accuracy, and it.
- [46:49]
Frank Holland
Should not be relied upon as such.
- [46:51]
Stephanie Link
To view the full Halftime Report disclaimer.
- [46:53]
Kate Moore
Please visit cnbc.com halftime reportdisclaimer.com did you.
- [46:58]
Fidelity Representative
Know over 75% of small businesses don't have enough cash on hand to cover unexpected business disasters. You need Relay, an all in one banking and money management platform that will change the way you think about money. With Relay, you can open up to 20 accounts to separate your cash for things like income, payroll or operating expenses. All you need is a few minutes to sign up@relayfi.com podcast that's R E L-A-Y-F I.com podcast Relay is a financial technology company and is not a bank. Bank services provided by Threadbank member FDIC.