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How to Trade Higher Oil amid the Iran War 3/9/26
00:43:54
Scott Wapner and the Investment Committee debate how to trade the oil markets amid the Iran War. Plus, we hit the latest Calls of the Day. And later, the desk share their latest portfolio moves. Investment Committee Disclosures
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C
Thank you, Carl and Sarah. Welcome to the Halftime Report. I am Frank Holland in for Scott Wapner, front and center at this hour, the big comeback. The NASDAQ just on the brink of going green following some steep losses at the opening. All the major averages, they're well off their lows as oil pulls back from a near four year high. Our investment committee standing by here to break down this entire turnaround and much more. Joining me for this hour, we have Joe Terranova, Steve Weiss and Jim Leventhal. But first, quick check on the markets right now. You can see we are in the red across the board. But as we mentioned, the Nasdaq just fractionally away from being flat. The Dow down just about 430 points, the S and pulling back about a half of 1%. You can see oil up over 5 and a half percent, but well below $100 a barrel right now, trading at just about $96 a barrel. And I think that's where we have to start. Joe, the impact that the rise of oil prices have had on the broader economy, I have to include in there also diesel prices here in the US we're going to talk more about that. Really, the fuel for transportation here in the US Raising the cost of shipping, but in general, consumer confidence falling on these rising oil and gas prices. What do you do today on this Monday with so many questions about Iran and the path forward?
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B
That's a great, that's a great question. Look, I think markets have a rhythm for their movement. And I think 2026, you could define the rhythm of the market as a roller coaster. It feels as though each day it's exactly that. You get on the roller coaster and you basically get off in the same spot. The oper of the roller coaster right now appears to be the price of crude oil. And wherever the crude oil market is going to go takes where the overall market is. There's resiliency in the market for sure. I continue to say if you have a hyper volatile environment where it is resembling a roller coaster, just this ride basically back to where you began in that scenario, what do you want to do? When everything looks really, really good, you probably take the other side of that. When everything looks really bad, you take the other side of that as well. But as it relates to crude oil, at the end of Febr February, the average volume for spot crude oil was 300 contracts per day. We're now running close to a million contracts per day being traded in spot crude oil. So look, that tells me I understand the fundamental concerns that speculators might have. But that's, that's beginning to feel a little bit like silver one month ago where we're beginning to see some of the excessive speculation take hold within the marketplace. Take comfort in two things. Last point, number one, we are seeing that the Mag 7 in particular, the Nvidia, the Alphabet, the Apple, they're doing what they're supposed to do. They're being perceived as quality, a port in the storm. And then I think you have to look at the fixed income market and see the incredibly calm environment so far. Year to date, for a 10 year treasury, you're talking about only 38 basis points with a range fixed income trading really well.
- [03:53]
C
You know, you mentioned the word resilient or resilience I should say some people are also saying complacency. I'm looking at the S and P about 4% away from its all time high. The NASDAQ 100 about 6% away from its all time high. Steve Weiss, are investors and Joe just mentioned the bond market. Are they complacent or are they resilient in the situation? The fact that we might even see the NASDAQ turn green during this show.
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D
Well, you know, it's an interesting question by the way. I think I'm tired of the word resilience. Everybody uses it for everything. Investors, resilient. Retail is resilient. What's a better word? There is no word for it because it really doesn't come into play. Markets go up 90% of the time anytime you sold during geopolitical risk or any time you sold period. Right. Over the last few years and stayed out, you know, the market's higher. So in terms of complacency, for complacency. That makes the. You're essentially making the judgment that there are real issues there that the investor is ignoring. And the truth of the matter is we don't know. So if you go back to how everybody was looking at this year, not just me, but you and you and everybody, volatility right now, nobody expect this kind of volatility. This is volatility on steroids. And you can, you can look at volatility, you look at it one of three ways, okay? Retail investors tend to look at it as risk, right? Others, I think, you know, hedge fund manager, professional managers look at it as opportunity, right? Displacement, either to get out of shares, volatility cuts both ways, goes up, right? There's volatility higher, volatility lower. And then you can look at as a nuisance. I think in this market, it's a nuisance for now. However, if you ask me what I'm concerned about, I mentioned this on Friday, I am concerned about stagflation. We're seeing jobs growth negative. We're seeing inflation hold before this higher than what the Fed was looking at. So when you have inflation moving higher and the economy moving lower, right, that stagflation, now the question is, how long will that last and are we actually in it? We don't know. Everything at this point depends on the duration of the war. Trump come out any day, any moment and say, hey, victory, right? And we'd all go home, market would go up and you still won't see the impact of the problems until later on. So the point of all this, my conclusion is that you hold where you are now, anytime. As I mentioned again last week, you tried to catch a falling knife, you know, you made a mistake, you got cut hands instead of buying values. So I think you can wait, right, to put money to work. Having said that, depending upon your time frame, depending upon what you're buying, right, you can hold it. Except for things that I still think were very overvalued going into this. They're still overvalued.
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C
Are you lumping software in that group?
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D
Are you?
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C
Are you software? I bought, I bought my retailers in that group because a lot of things are falling that I don't think people thought were overvalued until this happened. The rise of oil prices changes the math.
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D
That's not true in software. That's not true in software?
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A
No.
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C
I'm asking, are you counting software but discount retailers?
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D
I didn't hear anybody, but not because
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C
nobody said those were overvalued until this happened. And now all of a sudden we're seeing calls for those discounts.
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A
That's not true.
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D
Plenty of people said software's overvalued.
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C
No, no, I said discount retailers.
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D
I'm saying discount retailers market discount retailers. You just don't know. You don't know how this is going to inform. Look, most of what two thirds country lives paycheck to paycheck. So now with fuel prices going up, how they've gone, I mean, same grace, we've got warm weather across the country, right? So less heating costs this time of year. But now they've got to put gas in their tank, they've got to put energy into their home. So discount retailers, they can have a tough time.
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C
All right, you don't like resilient? What about constructive? Jim, I'm going to come over to you. Mike Wilson from Morgan Stanley out with a note saying in part, I'm just kind of summarizing part of it. We think we're close to the end of this rolling correction than the beginning. Talking about the falling knife that Weiss was just mentioning. And Morgan Stanley remains constructive over the next six to 12 months. Speaking of a timeframe, agree or disagree with that take.
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E
I can't agree or disagree on it because it requires some prediction of when the war is going to end. And that's not knowable. That's not something that you know. You can do a degree of analysis and come up with when the Straits of Hormuz are going to open to tanker traffic again. However, that is the key point. That is the pivot point upon which the markets hang. Right now, when you start to see tankers other than Iranian flagged or Iranian associated tankers transiting the Straits of Hormuz, that's when you'll see oil come down and you'll see the markets rally with it. The weakness in the market. And as much as I'm happy to see that there's been an intraday rally, I'm not sure I trust it, because the markets just don't know how long this oil spike is going to last. And it will do damage. The good news here, Frank, is before it does damage, there are cushions both in the economy and the financial markets. Whether it's growth in gdp, whether it's the fact that inflation had been coming down, profit growth, stimulus from the budget bill, a number of cushions. But we see those cushions being eaten into, for instance, with Friday's labor reports. The point of this being is that the longer this goes on, the more damage will be done. And frankly, there isn't that much time left until we get the Straits of Hormuz opened if we want to avoid damage. The president says this is a three to four week operation. Okay, if that's the case, maybe, maybe we'll skate through without last damage. But frankly, I think the markets want to see tankers transiting the Straits of Hormuz this week. I'm going to keep my disciplined diversified portfolio. I'm not panic selling here at all. But I am keenly awaiting news of tankers transiting the Straits.
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D
But it's not, it's not just when the Straits open. It's if there's more damage done to the oil production facilities in Saudi Arabia, throughout the the Middle East. That's part of the issue.
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C
You know, I want to refer to something our Brian Sullivan has said because he's coming up in just a second. He said it's not just about getting the oil out. It's if other ships feel safe enough to go back in and just keep the supply chain going. So speaking of Brian, for much more on the turnaround in oil, want to bring in our Brian Sullivan. Brian, we're looking at oil move lower. Also look at the NASDAQ right now, Brian, very close to at least flat, possibly turning green. Looking at oil WTI at least trading about 9,660 a barrel. What's the very latest?
- [10:03]
A
Well, we got some breaking news on CNBC.com, which I think goes exactly to your conversation about the Strait of Hormuz. And if I'm right, this could bring oil down even more. I'd love to get the former oil trader Joe Taranova's view on this, but the Iranian Foreign Ministry is saying, and I'm not sure where they're saying this, it's up on cbc.com right now that any tanker transiting these trade of Hormuz quote must be very careful. Now interesting language because if you read into that, and again, love Joe, the former trader's take on this, if you read that must be very careful is not we're going to blow you out of the water. It's you cannot pass the straight up for moves. It is not we're going to send missiles your way. Must be very careful to me and I'd love to hear everybody's view. To me that feels like that sounds like a slight de escalation. You can see the live map there. Straight of Hormuz right at the top of your screen. A lot of ships at anchor on the right kind of waiting to get in. A lot of ships at anchor on the left waiting to get out. Nobody's kind of in the middle, but we'll see if those words must be very careful, make it a little more amenable for some ships. Now, guys, we have had, I want to be clear, this whole. It's the Strait of Hormuz is closed. I don't like that word. Great job, guys. It's not. Nothing's closed. There's no gate on this. You can make it risky. Plenty of Iranian and Chinese flagged or cargoed vessels are getting through because they're not going to blow up basically their own ships or their own oil. But I do wonder, and let's see what happens with the price of oil. And then the point I was going to make, guys, this. And if you look out, we always show the front month contract, the April contract, that's the one that's up on the screen. But if you look out, there's other contracts. May, June, July, look at that. I say it and it happens. And you could see the price. And if you're on the radio, 96, 47 for the front month for April and you got 92 and a half, 86 and then basically just under 82. That's indicating A. The market expects. It may be wrong, but it expects things to calm down. But also I think it goes, Joe, to the extreme options positioning that we had in the market. You'd mentioned at the top of the show how, you know, it's 3 million or whatever contracts. A lot of those were net short, which means when we got the escalation last night, everybody had to cover. They got their faces ripped off. And that's why we saw the price of oil had the biggest intraday spike percentage wise in the history of oil, 35% gain. And it's also why oil's come down because you've got those people, they've covered and now the market, I think the positioning is going back to normal. But I'm watching these headlines coming straight off the Iranian foreign Ministry feels like a de escalation.
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C
Our Brian Sullivan at CNBC headquarters. To your point, Brian, we're looking at those forward contracts. Certainly it seems like the market is pricing a de escalation. We'll have to wait and see. Brian Sullivan, thank you again, Joe. He called the shot. Former oil trader. You and I were talking about the before the show, the fact that you made, you know, your bones in the oil market. What is your view of some of the things that Brian's talking about, the short covering and just also this sense of the market seems to see some type of de escalation coming up.
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B
Well, I guess I didn't make enough bones because I'm sitting here with all of you. But I tried my best to do it and understanding the market, when you look out on the curve, what you see right now is significant backwardation. And this morning I was looking at the curve and, and observing where we are in terms of the price gains months to date. So spot you're up about 50%, you move out into the June and July contracts, you're up about 30 to 35%. Where I think the expectation that ultimately this conflict resolves itself is, is when you move into the fall, those contracts most to date, they're only up mid teens at best. So it looks like the market is expecting that you can have simmering tensions even as we move through the summer. They tend to alleviate those tensions as you move into the fall. To Brian's opening remarks surrounding the comments from Iran. Look, protecting oil assets I believe is in everyone's best interest, including Iran. It would be sabotage for them to do something where the response would be to destroy or to impair their oil infrastructure. That's their economic lifeline. So whether it's the U.S. whether it's China, whether it's India, whether it's assets in the Middle east and the interests of everyone, I think the expectation is that you're going to protect these oil assets. And I do think right now, as I said at the top of the show, I do think you have to build in some excessive speculation into the market right now. As far as far as what's unfolding again, it has that feel to me as Precious Metals did one month ago.
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D
The only one that wants a straight close is Russia. Let's be clear about that. Right. Because they want Russian oil to go out more on the market. China, obviously, I would say, obviously I don't know this for sure, but China has to be in Iran's ear. They've been a big benefactor of Iran and they're not getting their oil and that's where they get most of it from. So they want to flow through the strait. So they say be careful. I think it's a real leap of faith to try and parse what Iranians mean by what they say or take it on face value. That's a big mistake. As we've seen a developing situation, especially in developing situation. So. So I think the trade down in the price is from speculation nerves that drove it over 100.
- [15:36]
C
Speaking of headlines, Brian had on one of the headlines to go carefully through the straight. Also, Reuters out with the headline saying the president is expected to review options to look at oil prices. Very concerned, according to this report. And people familiar with the impact on consumers and businesses, especially ahead of the midterm elections. So not groundbreaking news there, but again, reports and the president's going to look into it at the same time. Joe, you made some moves in the oil market. You're buying Brazilian oil company and a Canadian oil company. Walk us through those moves.
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B
Just being tactical. Year to date, I've been tactical in trying to build positions in the energy market ahead of all of this. One of the trades that I put on, and it's a trade, it's short term in its nature. So it's running, Jimmy, somewhere around 90 days. And that's the oih I've moved out of the oah I think I collected somewhere around 18%. I've taken positions utilizing those funds in Canadian Natural Resources and in Petrobras. The reason being is sourcing comfortably, securely their oil. Seems as though that will be something that's in front of us here in the coming weeks. You're seeing both of these stocks do really well since this unfolded. The oah, the service names, they seem to be struggling right now. So again, it's tactical more than anything else and that's what I'm attempting to do with energy.
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C
All right, while we're looking at the energy market, we got to talk about the broader impact. Jim, I want to come over to you. Dr. Ed Yardeni raising his recession odds from 20% up to 35% due in part to the oil oil shock. When you're looking at the markets, what do you see the broader impact being? After today, we are seeing oil prices ease back a bit, but certainly still elevate.
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E
Well, look, I'm no fan of parsing the words the way Brian was. I'm not calling him out. I think you, you know, number one, you have to be able to speak Farsi to understand what the language content really means. And you have to be inside the inner circle in Tehran, which none of us are. And where I'm going with this is again, this just depends on how long long this lasts. You're seeing in the market right now rational responses in the form of hyper discretionary stocks selling off, whether that's travel, leisure, entertainment, those sorts of things. Now, they can snap back very quickly if we in some way declare victory and move on over the course of the next week. But if we get to the end of March and we're still bombing Tehran and we're still talking about whether it's Iranian or Chinese or other countries, tankers that are transiting the Persian Gulf. The effects are going to be a little bit more long lasting. You're going to see it not just in consumer confidence, which I worry about, but you're going to see it in profit margins, which I mentioned earlier. And this can take the form of anything. It can be higher fertilizer costs because natural gas prices are higher, which in turn is going to raise food prices. I mean, the effects of a prolonged inflated energy complex. The longer this goes on is going to be pretty pronounced. Now, I want to go back to where I was a minute ago. I'm not selling here. I'm not giving up on a diversified portfolio and going to consumer staples or something like that. Because I do think, first off, I have a lot of faith, a lot of respect in the US Military and I think there's a reasonable chance that in short order we will get this situation solved. But I don't know and nor does anybody else. So I am on a razor's edge that I may have to change my stance the longer this goes on.
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B
I think the biggest comfort for the market right now is, is the. When you talk about the economy and the cushion it has is what I said at the top of the show, it's where rates are. The fact that rates have not really spiked aggressively, that's going to be incredibly problematic for the administration, for the treasury, if we see a significant spike in yields concurrent with what the volatility is presenting in oil. And I think you have to be confident that we haven't seen that yet.
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E
Well, while you're on that, Joe, very
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C
quickly, does that change the rate risk that might be for the market coming up with CPI in just two days, the fact that we could see a
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B
hotter than expected cpi, my personal opinion is what's going on right now, and even if the price of oil continues to move higher, I don't think that the response from the Federal Reserve to that should be okay, we're going to raise rates even if therein lies the problem. I do, I do not.
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E
It is the Fed.
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B
So there are people that are saying, okay, well, if we get the inflationary spike, you raise rates. I think the actual opposite. I think as oil goes higher, that's telling you you probably need some more rate cuts.
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E
Yeah, rate cuts are backing out. Rate cuts are backing out. You know, we're now down to maybe one, maybe one, possibly more than that by the end of the year first rate cut in July and at the last meeting they were actually talking about, some people were talking about raising rates. Now before you get to raising rates, you have to back out the rate cuts. But this should not be off the table for anyone. And I will tell you, we got through raising prices. Yeah, exactly. And yeah, really, it's off the table. So you want to raise rates. Guys, all three of you just hang on. Okay, Jenny, have come back in 2022 you had an oil price spike. That wasn't what cratered the economy or the markets. It was the Fed raising rates. So we should be paying attention to that. We started this year talking about two to three. Now we're down to maybe one. I mean you have to back out the rate cuts before you get to rate hikes. And they were talking about no chance.
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B
Can you call on me? Let me just respond to. In 22, the Fed raises rates and what happens? We go into an earnings recession. Do you want that again? Do you want them to raise rates?
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E
No, that's why they're aware of it.
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D
Okay, look, you never say never, but so I'm using that with some, some poetic license. There's no chance of the Fed raising rates, not while jobs are going the other way. Right. They're not going to do it, period. End of story. They're not going to cut rates necessarily. Not only that, to them not raising rates. Okay, you can look at the tariff. We're going to, we're going to anniversary the new tariffs, the 15%. So that's really a temporary thing. That's out of control, you know, out of control of the Fed in terms of it's not going to be demand driven.
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E
Right.
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D
So they're putting tariffs on it. So I'm not worried about that.
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B
Oil moving higher has a deflationary economic effect. Effect on the consumer.
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A
Agree?
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D
Yeah, absolutely.
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E
Let me be clear. This is not my base case. I'm simply saying we shouldn't dismiss it.
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C
But Jim, in all fairness, you weren't unclear. I think we were just all shocked that you thought that we may need to raise rates.
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E
Listen, they talked about the last meeting, like that's a warning shot. I would just pay attention to this is all I'm saying.
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C
Understood. I want to get on the market. Jim, while you're saying that there's potentially a need to raise rates, I want to talk about the markets in general. No doubt from JP Morgan's trade desk saying that they see the potential, at least there's risk for the S and P to pull back to a correction level about 6270 from its all time high. So about 10% from the all time high. Not from where we're at right now, but from the all time high. Do you see potential in that happening and could this CPI report, if other people see it the same way you do, is potentially a report that could lead to a rate hike. Does that have the potential to lead to that?
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E
Correct. Again, base case is not rate hikes. I'm just saying we've got to be aware of it. And as for a correction of 10%, that usually happens in a given year. You should expect it. I mean we went into this year talking about midterm election years that the average drawdown is 19%. So 10% would be nothing. And by the way, when drawdowns happen, when corrections happen, there's always a reason. It doesn't just happen just because. There's a real reason and this is a real reason. Now I do think that the economy is strong enough to get through this, but as I've been saying, the long term, the longer it goes on, the more damage can be done.
- [22:48]
B
I don't know. It feels to me like we've had that correction, but it's not in the overall market itself. It's underneath the office, it's in the financials, it's in obviously a lot of the, the private equity names. It's in software. It feels to me we've experienced that already. What can probably avoid us having a headline S&P 510% correction is the strength that's being exhibited recently in the names like Alphabet, Apple and Nvidia.
- [23:18]
C
One thing we have to address is the pullback in the VIX still elevated at about 27, almost 28, but off of its highs of at least the open where was about 32. What do you make of this pullback? Is this simply reflexive when it comes to oil prices pulling back?
- [23:30]
B
I think one of the reasons Steve doesn't want me to use the word resiliency but one of the reasons why when the market looks its worst, we recover, however, is because there is a perceived hedged against the volatility and that's the price of crude oil. And we're seeing far more activity there on the part of speculators. Whether it's retail, I don't know that it is. I think it's more institutional. But you have that hedge against the volatility and it's, it's the spot price of oil.
- [23:58]
C
Yeah. Weiss, I want to get your take on it by the way Wolf out with a note saying they see a notable spike in volatility ahead. They believe it's going to break down through 30. Obviously it already did, but they believe there's more upside when it comes to volatility.
- [24:09]
D
There's more volatility is what they're saying.
- [24:11]
C
Yes.
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D
Yeah, I don't disagree with that. But again, volatility goes both ways. People tend to think of it. There's only downside, volatile.
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C
That's why I came to you.
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D
So.
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C
So the volatility goes up. Where do you put the money?
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D
Look, as I said, we see the president come out and declare victory. And I think that would be accurate, certain extent, any moment. It depends how much pain he's willing to tolerate in the polls, which painful going into Iran and how much pressure he's getting from the party in advance of midterm elections and rising oil prices. In that case, I think you'd see a really big uptick in the market, a nice bounce. I don't know how long lived that would be, but it would definitely bring back, you know, the vix. So I don't really focus on the vix. I focus on companies. I don't focus on the technicals, you know, with. I do look at them, but I take a look at where the corrections really hit the market. Take a look at a Goldman, I mean Goldman, you know, that's come down, that was on its way to breaking a thousand and now we're down, you know, and flirting with 800 on the downside. Anything change for them? Not really. Okay, so that's where I am.
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B
You got the NASDAQ higher.
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C
You look at the NASDAQ right here, just fractionally higher right now, poking its head into green territory right now. By the way, Emily Wilkins down in Florida right now with GOP leaders in a retreat. So we have to see anything comes out of that. To your point, Weiss and Joe, also about the president maybe changing his mind, maybe getting a push from his own party with the midterms coming up. All right, coming up next on halftime,
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A
our top call of the day.
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C
One firm saying for the first time in five years, this beaten down sector, it's a buy we're going to see at the desk. Agrees more halftime coming up in two minutes.
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A
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E
Right.
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A
And the best part? They accept Discover. Except Discover in a little place like this? I don't think so. Jennifer. Oh yeah, huh? Discover's accepted where I like to shop.
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C
Come on, baby, get with the times.
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A
Right. So we shouldn't get the parachute pants. These are making a comeback, I think. Discover is accepted at 99% of places
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E
that take credit cards nationwide, based on
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A
the February 2025 Nielsen report.
- [26:50]
B
This episode is brought to you by Schwab Market Update, an original podcast from Charles Schwab. Join host Keith Landsford for this information packed daily market Preview delivered in 10 minutes or less, including projected stock updates, monetary policy decisions and key results and statistics that may impact your trading. Download the latest episode and subscribe@schwab.com Market Update podcast or find Schwab Market Update wherever you get your podcasts.
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C
And welcome back to the Hamtown Report. It is time for our call of the day. It's on software. Dave Davidson, Calm this space investable for the first time in five years. A lot of ownership here on the desk. Why don't we start with the name that's going to be reporting this week? It's Oracle. Jim and Joe, you both own this one. Joe, I'm going to start with you.
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D
Okay.
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B
Jimmy, am I allowed to go?
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E
I love you. Please. There you go.
- [27:54]
B
Earnings up 16%. Revenue up about 14%. I think they really have to define business conditions for Oracle cloud infrastructure. They have to talk a lot about the businesses that are unrelated to the partnerships with Stargate and with Open Air. They have to really detail that they are more than just that ultimate relationship. Now, am I confident? I'm confident. Comforted that they can get past all of that? Not necessarily sure. I think though, when you look at software, Oracle is one of the names as long as along with Palantir and Cadence Design, which we own in the ETF that bottomed in early February and has been able to kind of through the month of February withstand some of the significant volatility that's been present in the market and not kind of break down further. I like Cadence, I like Palantir a little bit more than I like Oracle. But I do think you have that point of reference to look at and say, okay, maybe we've got some stability and the worst has passed on. Some of these show you're on the
- [28:59]
D
clock, you're starting to cut into Jimmy's time.
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B
So I apologize.
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C
We got to keep it serious, guys. By the way, the names of the D.A. davidson analysts like Adobe, Microsoft, Palantir and Oracle, everybody owns Microsoft. Why somebody come over to you? One of their points in this is they say that investors are basically misunderstanding the impact of AI and that this put companies like these at a attractive valuation again to their point for the first time in five years. Do you agree with that thesis when it comes to Microsoft?
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D
Well, I've been adding to Microsoft is now a core position. The truth is you can't misunderstand what you don't know. So all you can do is make a bet. So DA Davidson has no idea the impact of AI on any company. But what you do is you assess where they are positioned and what you think they can do. Let's keep in mind that Microsoft was in front of it as was Google and others. But Microsoft, their investments in open air before anybody is really investing in them. So I'm making the bet that this is going to be good for Microsoft. I backtracked my position that they're going to benefit more than anybody else, but I believe they know what they're doing. Some of their core products like their Office suite definitely take some hits on it. But you know, I'm there. I think it's cheap, cheaper, it's been a long time and I think that this one's been risk managed pretty well.
- [30:15]
C
But you also liked it when it was higher in all fairness because you were adding to the.
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D
I did, but it wasn't a core position and now it's a core position. So I've been adding to it a lot.
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C
In general, if you look at the IGB software is about 25, 26% off of its 52 week high. I'm looking at Adobe about 37% away from its 52 week high. Harder hit than a lot of other names. Jim, coming over to you.
- [30:33]
E
It has been hard hit. Sorry I'm chuckling about it, but reports on Thursday, they've had very good reports for the last several quarters in a row and it has had absolutely no positive effect on the stock, hence being down 37% from the high. However, now trading at about 12 times earnings. What I'm actually looking for here is how many shares did they buy back over the last five years? They've shrunk share count by 12% I believe in the company. I ask rhetorically to everybody on the desk, to everybody watching how many PDFs have you opened today? Don't answer, but it's a lot. Okay. The PDFs are not going away, but that's only one half of the story. All the bears are saying eventually they will, that, that I will not only replace what Adobe does, but will kill all the jobs that are being paid for in Adobe's revenue stream on a per seat license basis. Ultimately, I see this as a long term winner, 12 times earnings. Let's look for how many shares they've bought back.
- [31:27]
C
Yeah, I think the question really is about the creative cloud business, not that other part of the business with PDFs. We'll have to wait and see. Jim, look at Adobe shares down just about 1%. We want to turn to DC. Now we're getting some news out of Washington. Let's get to our Ammon Jabbers with the very latest.
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Ammon, Frank, that's right. I've just been on the phone with sources familiar with the G7 meeting this morning that's been really the focus of attention in the oil markets today. And what these two sources tell me is that this meeting tomorrow with the energy ministers is going to be tomorrow in the morning. It's going to be a virtual meeting, not in person, and that is scheduled tomorrow morning US east coast time. Sources also say that talks among the G7 are quote, positive, unquote, in terms of the possibility of coordinated action in releasing reserve oil into the market. Any coordinated action on that would occur, of course, after that energy ministers meeting that's scheduled for tomorrow morning. Sources also confirming the US stance on this, which is the US believes that a joint release of 3 to 400 million barrels representing 25 to 30% of the 1.2 billion total barrels in reserve would be the appropriate amount. So the US is asking here, or suggesting here that a joint release among the G7 nations from their reserves of 3 to 400 million barrels representing 25 to 30% of total reserves would be the right move here. So a little bit of guidance heading into that meeting tomorrow. I know a lot of folks were watching that G7 meeting this morning and may be surprised that they didn't move jointly on releasing reserve oil. Well, I think the expectation is that this meeting tomorrow among the energy ministers will be the key decision point for that and we'll see what happens, Frank.
- [33:18]
C
All right, Eamon jabbers live in D.C. with the very latest. Eamon, thank you very much. Time to get to the headlines now with our Julia Boorstin. Julia, Good afternoon, Frank.
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The Pentagon identified the seventh U.S. service
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member killed in the war with Iran as 26 year old Army Sergeant Benjamin Pennington of Glendale, Kentucky. Pennington was seriously wounded during a March 1 Iranian strike at Prince Sultan Air Base in Saudi Arabia. Vice President J.D. vance says his remains are expected to be returned to the US later today.
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Uber announced it's expanding its women only option nationwide.
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The feature allows women riders and drivers
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to be matched with other women, but
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an ongoing class action lawsuit filed by male drivers in California aims to halt it. They're arguing the feature discriminates against men and limits earning opportunities. And the White House said it fired National Transportation Safety Board member Tom Todd Inman after receiving reports of inappropriate behavior and failure to attend meetings. A White House spokesperson told Reuters the allegations include inappropriate alcohol use on the job, harassment of staff and misuse of government resources.
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Inman denies the allegations, calling it a political hit.
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Job Back over to you, our Julia
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C
Borson with the very latest. Julia, thank you very much. Coming up next, we got your ETF Edge with Don Chu. Dom, what's coming up?
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A
All right, Frank, markets have been rotating away from tech and media and into so called value parts of the market for months now. So has the recent turmoil in the Middle east exacerbated that trend or maybe even reversed it? We're going to chat with one investor who runs a sector rotation fund for what he's seeing. That's coming up next in ETF Edge on the Halftime Report. Starting your business isn't just about opening the doors. It's keeping the dream you built secure with New York Life. You get the financial guidance to make it real. Start today@nyl.com oh, could this vintage store be any cuter?
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E
Right?
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A
And the best part? They accept Discover. Accept Discovery in a little place like this? I don't think so. Jennifer. Oh yeah, huh? Discover is accepted where I like to shop.
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C
Come on baby, get with the times.
- [35:28]
A
Right. So we shouldn't get the parachute pants. These are making a comeback, I think. Discover is accepted at 99 of places
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that take credit cards nationwide, based on
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the February 2025 Nielsen report.
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This episode is brought to you by Schwab Market Update, an original podcast from Charles Schwab. Join host Keith Lansford for this information packed daily market Preview delivered in 10 minutes or less, including projected stock updates, monetary policy decisions and key results and statistics that may impact your trading. Download the latest episode and subscribe@schwab.com Market Update podcast or find Schwab Market Update wherever you get your podcasts.
- [36:15]
A
And welcome back to the Halftime Report. I'm Dominic Chu with your ETF edge. Much has been made of this ongoing market sector rotation, but where does that stand amidst all the market turmoil in the Middle East? Joining me now for that conversation is Kim Arthur, the CEO and portfolio manager over at Maine Management. And one of the things, Kim, that you do is run a sector rotation fund. So talk to us about how that sector rotation is playing out vis a vis what's happening in the Middle East. Great, Dominique, thank you very much for having us. And a big shout out first of all to cbo, which I'm sorry, sitting at here, they're a great partner of ours and we have all our ETFs listed there, including the sector rotation that you mentioned. What I like to say, Dominique, is the market last October had a big mix shift. What I mean by that, it went from asset light, that would be technology, communications, consumer discretion. And it's rotated very hard into asset heavy, basic materials and industrials and energies. Things that I like to say if you remember back from your physics and chemistry day, the periodic table, if you drop one of those items on your toe, it hurts. So I think there is obviously we've had a little bit of a sidetrack here with the attacks and war in the Middle east, but I still think that thesis is in shape. And when this passes, when Iran passes, this will continue. You still have big outperformance. Those asset heavy plays are up probably 15 points above the asset light. So that's a big mix shift in that period, year to date. And Kim, really quickly before we go, what's this technology trade going to look like in the coming months? Are people still going to flock back to it because of muscle memory? Yeah, I think what will happen is tech is not dead. It's still going to to, you know, do okay. But I think that this mix shift into the asset heavy plays will continue. Those cycles are long dated because of data center build out manufacturing on shoring. All these things that you need to kind of buy land, put metal and put steel in the ground and fill them with heavy things that hurt when you drop them on your feet. All right, Kim Arthur, we're going to continue this conversation over at ETF edge.cnbc.com Kim's going to be joined by Simeon Hyman, global investment strategist over at Pro Shares Advisors, who will also address where cryptocurrencies stand amid all this volatility. Frank, I'll send things back over to you guys.
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C
All right, Dominic Chu with today's ETF edge. Dom thank you very much. All right, coming up, more calls of the day. A double upgrade for one of Weiss's stocks and a price target hike for one of Joe's. Those trades are coming up next on Halftime. And welcome back to Halftime. Let's get to more calls of the day. GE Vernova double upgraded to a buy from a sell at Rothschild headline here. Weiss, you own this one. The facts have changed. They also go on to say they expect upgrades to guidance.
- [39:18]
D
Yeah, so look, I'd like to tell you this is a core position, but it's not because the valuation I think is kind of high, at least compared to the rest of my portfolio. Nonetheless, I own it. What's not going to be impacted by the Iranian war or anything else is the build out of data centers and the need for energy, the need for power, etc. So that's going to keep on going and that's why I own over. Others that own it would say it's not overvalued, but I wouldn't say they took this opportunity of a decline in the shares to upgrade it because it's, it's held up pretty well. Much my surprise through this whole downdraft.
- [39:55]
C
We're talking about a lot about the impact of rising oil on the economy. Wolf actually out with a note saying they see Costco as one of the winners with WTI getting trading close to 100. They say it's 100 plus. They say expect to trade down to consumables and non discretionary items. Joe, you own this one.
- [40:10]
B
Costco has made a remarkable recovery from where it was in the fall. We're seeing a little bit of a pullback here in names like Walmart, Walmart and some of the discount retailers I would include in the conversation. Costco, TJX5 below Ross Stores. Those are the names that I think as consumers continue to be value oriented looking for bargains, I think in retail they will be the winners.
- [40:39]
C
All right, Jimmy, I want to come to one of your names. Apple maintained as a buy at city with a 315 price target. They believe that Apple can navigate the memory component price hikes much better than tears. They see incremental pressure on gross margins.
- [40:52]
E
I own Apple so I am bullish on it. However, I do have to point out that I own it at 1/2 the overall market weight, which is my way of saying that I think there will be an opportunity to add that other half back. I recently did that with Microsoft at 386. So I'm not saying that from here to the sky is where Apple is going to go. There might be a pullback just based on valuation low 30s based on the growth rate of the net income. It just, I don't think that's the right price. But I'm not giving up on the shares I have. I'm looking to add.
- [41:20]
D
All right.
- [41:20]
C
Speaking of memory, Joe, I'm going to come back over to you, Microm, big upgrade from also Citi actually 385 up to 430. They say the stock has sustained gains this year. However, our performance could moderating to Q2.
- [41:33]
B
I should say so I believe they report next Wednesday the 18th. We want to sit and kind of wait patiently for that report before you take any action. We are long in the ETF and a lot of our ability to be long is predicated on the remarkable momentum that this stock has experienced. It's up nearly 200% over the last six months. And why is that? It's because of the strong pricing environment for dynamic random access memory dram. Now at some point, the appreciation, the significant appreciation the expectation is in 26, you could see DRAM pricing upgraded than 150%. At some point that's going to level off. And generally if you go back into prior cycles, Micron has proven itself that it will peak ahead of that. So at some point in 26, you're probably jumping off of what's really been a strong train. In addition, they have to answer the questions surrounding the relationship that Nvidia has announced with SK Hynix and Hynix and Samsung. That could be somewhat problematic as well. So take a wait and see approach. Let's hear what that report is and get to the other side to make a decision.
- [42:43]
C
All right. We're going to leave it there. Coming up next, Mike Santoli joins us with his midday word. We're back right after this. And welcome back to Halftime. Taking a look right now you're seeing the S and P just fractionally below turning to the green. Just a short time ago we showed you the NASDAQ now firmly in green territory. Ross, looking at WTI crude right now trading at about 93.75a barrel, well below 100, still up about 3% but well below 100. A lot of headlines related to the oil market just being released, including G7 ministers actually meeting up. Talk about releasing strategic reserves. And with that, we want to bring in halftime. Excuse me, want to bring in senior markets commentator and overtime co anchor Mike Santoli joining us with his midday we're got ahead of myself there, Mike. I Don't know if you were listening. Earlier we talked about the word resilience perhaps being overdone and right now we're seeing the S and P trying to get back into positive territory. The NASDAQ already there.
- [43:42]
B
Well the first thing is it's been the stock market's been trading as inverse crude oil for a week and so it makes all kinds of sense at end the that's exactly what we've seen. Crude goes from 115 down to mid-90s. You're going to get this bounce the way it's done. It is interesting and by narrowing out back to the winners that's what's up today, that's what's supporting the market. Still got big banks down 2%. The equal weight S&P is down almost 1%. I do think that a lot of folks came into the week looking for the ingredients where you might find a little bit of a short term flush. That meant we overdid it. On the downside the S and P futures hit the 200 day moving average overnight. Is that enough? Maybe we touched it. I do think there are some things that are lining up that suggest we've moderated valuation sentiment is a little bit less, less frothy than it was for sure. And you know if crude's going to have peaked if we get this buying panic overnight in oil maybe that's enough clearance. Still we're rallying in the equation S and P to levels that we were hoping last week we would hold on the downside, that's the December lows. So I don't want to get ahead of the idea that somehow it's an all clear but it's constructive action and resilience is based on what you would otherwise expect the market to be doing. I mean we had a mini crash less than a year ago. Market wasn't resilient last, last April it bounced back from it. It was a V bottom but it also had a absolute mega oversold get into it. So I guess it's a matter of semantics in terms of how we describe it. I think the difference from last April was the volatility that you saw in the treasury market share. Significant volatility. I think the comfort as I said before this time around is you're not seeing that it's a really tight range for fixed income, a very tight range. A lot of people would love to see bonds rally more perhaps, but maybe I don't really think that's the case because that's me. That means the market's going to run to the recessionary scenario by having the long end.
- [45:35]
C
Yields come in a lot to that point. Look at the 10 year right now at 4.11. All right, coming up, final trades. They're on halftime. Stay with us. And we are back on halftime with final trades. Jim, you're up first.
- [45:51]
E
So this company, you may have heard of it in video, has sold off after great earnings, great guidance. We understand the drivers here. It's a great valuation nation. Final trade. Nvidia.
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C
I have heard of that name. I have heard that name. Weiss, you're up.
- [46:03]
D
Netflix. I think you get to play offense and defense with Netflix. It's been through the wars already. It's correct. And I think it's on the upswing right now.
- [46:11]
B
Joti Live Nation reach a settlement with the doj. They get past that obstacle. Strong momentum heading into the summer. A lot of activity.
- [46:20]
C
All right, they go, your final trades. One quick look at the markets before we let you go. Right now, as we mentioned, the Nasdaq firmly in the green. Right now, we're looking at the S and P. It's pulled back a bit from the levels we saw, down about a quarter of 1%. The Dow down over a half a percent as well. That does it for halftime. The exchange starts right now.
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C
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C
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A
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We understand what's needed from us to
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face each threat head on.
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C
We've earned our place in the fight
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for our nation's future.
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We were made for this.