Halftime Report: Live from Future Proof Citywide – March 18, 2025

Hosted by CNBC's Scott Wapner and Dominic Chu, this episode of Halftime Report brings you live from the Future Proof Citywide conference in Miami Beach, Florida. With over 2,500 financial professionals in attendance, the discussion delves into the current market conditions, key investment opportunities, and strategic insights from industry leaders.

1. Conference Overview: Networking and Innovation

Dominic Chu opens the episode by welcoming listeners to the Future Proof Citywide conference, highlighting its significance as a gathering point for financial advisors, wealth managers, institutional investors, and venture capitalists. Joe Terranova emphasizes the conference's focus on community and networking:

"What will make people in the financial industry want to get on an airplane? It's not going to be CE credits because those can be earned online... So what's going to be the thing? It's community and it's networking and it's sharing the best ideas that are working in one financial advisor's practice with all of their peers."
— Joe Terranova [03:19]

He also notes Miami Beach's emergence as "Wall Street South," attracting major players like the CEO of the Carlyle Group, Harvey Schwartz.

2. Market Update: Tech-Led Sell-Off and Index Performance

Dominic provides a snapshot of the current market downturn:

• Dow Industrials: Down ~1%
• S&P 500: Down ~1.25%
• NASDAQ Composite: Down over 11.75%, marking a significant tech-led sell-off.

The decline is attributed to the prolonged trend since the record highs, centered around the Magnificent Seven (Mag7) and the technology sector.

3. Expert Insights: Navigating a Bear Market

a. Market Recalibration and Bear Market Indicators

Bill Baruch discusses the ongoing market recalibration, which he identifies as the "year of the bond":

"I don't believe that investors or viewers should expect that abates anytime soon and you get that V shaped recovery that historically we've had over the last several years."
— Bill Baruch [05:19]

He warns of an active unwind of the Mag7 stocks and suggests that a bear market is already underway, citing the largest drop in US equity allocation ever and the University of Michigan's bearish consumer sentiment gauge.

Joe Terranova echoes this sentiment, categorizing wealth managers into those still riding the US Growth theme and the majority pivoting towards European exposure, utilities, and healthcare sectors.

b. Alternative Perspectives: Dollar Weakness and Global Outperformance

Scott Wapner presents a more nuanced view, focusing on the declining dollar and outperformance in European and Asian markets:

"If the dollar is going to continue lower and I am a bear on the dollar, I think you're going to see outperformance within those."
— Scott Wapner [06:54]

He suggests looking beyond US markets, highlighting the euro's month-over-month increase of 8%.

4. Nvidia and the AI Revolution: A Growth Powerhouse

The conversation shifts to Nvidia's annual GTC event, with insights from Josh Brown and Joe Terranova underscoring the company's pivotal role in the AI sector.

a. Demand and Valuation

Josh Brown anticipates a watershed moment from Nvidia's CEO Jensen Huang, projecting a 15-to-1 demand-to-supply ratio for AI chips:

"We're in year three of an eight to ten year build out for the AI revolution."
— Josh Brown [11:06]

Joe Terranova highlights Nvidia's undervaluation amidst the AI boom:

"This is the cheapest you have been able to buy Nvidia stock since October of 2022 before the launch of Chat GPT... It's never been a better bargain than it is today."
— Joe Terranova [12:45]

b. CapEx and Market Position

Bill Baruch and Josh Brown discuss the importance of capital expenditures (CapEx) in sustaining Nvidia's growth, with Brown asserting:

"We see about 70% of that capex actually accelerating because it's an arms race."
— Josh Brown [15:10]

5. Alphabet's Strategic Acquisition in Cybersecurity

The report covers Alphabet's $32 billion acquisition attempt of cybersecurity startup Whizz, analyzed by Josh Brown and Joe Terranova.

Josh Brown anticipates increased M&A activity in the cybersecurity sector, signaling strengthened positions for big tech:

"We're talking about one of the golden assets in cybersecurity. This doesn't just end here... they're going to look to get aggressive on M&A."
— Josh Brown [18:27]

Joe Terranova notes Alphabet's current valuation and growth expectations, suggesting potential stock recovery:

"A stock with a 20 PE forward... looks like they're in the White House's good graces... the stock should recover."
— Joe Terranova [20:40]

6. Calls of the Day: Stock Evaluations

The panel evaluates notable stocks, including Berkshire Hathaway and Block.

a. Berkshire Hathaway

Despite TD Cowan analysts cutting Berkshire's target price by 7%, Joe Terranova defends the stock's performance, highlighting its resilience:

"Berkshire is up 15% year to date... it's a battle cruiser in stormy seas."
— Joe Terranova [27:42]

Bill Baruch adds that Berkshire's strong cash position and lack of stock buybacks underscore its robustness.

b. Block

KBW analysts upgraded Block to "outperform," although internal opinions vary. Bill Baruch expresses skepticism about Block's momentum:

"I think unfortunately, Block is going to be sideways to lower at best."
— Bill Baruch [29:24]

7. March Madness Favorites: Uber Shines Amidst Volatility

Highlighting KeyBank's March Madness bracket, the panel focuses on Uber as a standout performer:

Scott Wapner praises Uber's diversification and growth trajectory:

"It's going to become a free cash flow juggernaut. The trajectory there is unbelievable."
— Scott Wapner [30:31]

Joe Terranova underscores Uber's earnings growth and valuation, positioning it as a resilient growth company:

"36% earnings growth expected for this year... it's a 15 times trailing PE."
— Joe Terranova [31:27]

8. Consumer Sentiment and Market Indicators

Brian Belsky from BMO Capital Markets addresses consumer sentiment and market normalization:

"I just don't think it is [a bubble] until everybody is losing... It's not normal to have seven stocks lead the way."
— Brian Belsky [40:33]

He advocates for a diversified investment approach, suggesting that owning a little bit of everything will benefit investors as the market normalizes.

Scott Wapner concurs on the validity of sentiment indicators but advises focusing on technology investments:

"I like the idea of owning value, but I don't think this is the time... I think this is time to buy tech."
— Scott Wapner [44:42]

9. Fixed Income Strategy: Bonds as Safe Havens

In a segment with Bob Pizzani from ETF Edge, Jeffrey Katz discusses the role of bonds in current portfolios amidst heightened market volatility:

"Bonds actually are a safe haven. Investors are coming to bonds looking for income and looking for some buffer from the volatility."
— Jeffrey Katz [34:02]

He highlights the increased flows into fixed income ETFs, suggesting a strategic increase in bond allocations to mitigate risk.

10. Conclusion: Embracing a Diverse Investment Landscape

The episode wraps up with final trades and a reaffirmation of the importance of diversification in today's volatile market. The panelists emphasize staying informed, leveraging technology, and maintaining a balanced portfolio to navigate ongoing market challenges.

Notable Quotes:

• "It's community and it's networking and it's sharing the best ideas that are working in one financial advisor's practice with all of their peers."
  — Joe Terranova [03:19]

• "We're in year three of an eight to ten year build out for the AI revolution."
  — Josh Brown [11:06]

• "This might be like the poster child for how much money a corporation can save in staffing costs using AI."
  — Joe Terranova [16:21]

• "I don't think it is [a bubble] until everybody is losing... It's not normal to have seven stocks lead the way."
  — Brian Belsky [40:33]

Conclusion:

This episode of Halftime Report provides a comprehensive analysis of the current market landscape, emphasizing the importance of diversification, strategic investments in technology and cybersecurity, and the role of fixed income in mitigating volatility. With insights from seasoned experts like Josh Brown, Joe Terranova, Bill Baruch, and Brian Belsky, listeners gain valuable perspectives to navigate the complexities of today's financial markets.