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Halftime Report
How to Trade Today's Volatile Market 3/11/26
00:43:54
Frank Holland and the Investment Committee debate how to navigate the volatility as markets fall and oil rises. Plus, we go over the bull/bear case on software and how you should trade it. And later, we hit the latest Calls of the Day.
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- [00:00]
Jennifer
A rich life isn't a straight line to a destination on the horizon. Sometimes it takes an unexpected turn with detours, new possibilities, and even another passenger or three. And with 100 years of navigating ups and downs, you can count on Edward Jones to help guide you through it all. Because life is a winding path made rich by the people you walk it with. Let's find your rich together. Edward Jones Member sipc Thy ticket, Lady Jennifer of Coolidge. Well, many thanks, good sir. Here is my Discover card. They accept Discover at Renaissance Fairs? Yeah, they do here. Discover is accepted at the places I love to shop. Get it with the times. With the times. You're playing the loot.
- [00:52]
Scott Wapner
Yeah.
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Jennifer
And it sounds pretty good, right?
- [00:54]
Jason
Discover is accepted at 99% of places
- [00:56]
Jennifer
that take credit cards nationwide. Based on the February 2025 Nielsen report.
- [01:01]
Scott Wapner
I'm Scott Wapner, and you're listening to CNBC's Halftime Report, the podcast the most profitable hour of the trading day. We record this live weekdays at 12 Eastern.
- [01:12]
Joe Terranova
Listen in.
- [01:17]
Scott Wapner
Thank you, Carl and Sarah. Welcome to the Halftime Report. I am Frank Holland in for the judge. Scott Wapner, front and center at this hour. Navigating the Volatility. More big swings in store for stocks as geopolitical uncertainty looms large. The investment committee is standing by to break down the setup for your money and much more. Joining me for the hour, we have Joe Terranova, Shannon Sokotia, Jason Snipe and Steve Weiss. But first, very quick check of the markets. Take a look. We're in the red across the board, as you can see right now. The Dow pulling back almost 500 points. The s and P down just about a half a percent. The NASDAQ pulling back a quarter of 1%. And look at oil. Oil actually up over 5% right now, crude trading just under $88 a barrel. And really, I think, Joe, that's where we have to start at. We've seen so much volatility in the markets in recent days, a lot of it driven by the price of oil. Oil is up 5% even after a historic release by the IEA. And we're certainly in a headline driven market. How do you navigate all this?
- [02:08]
Joe Terranova
It's interesting because I think there's two different perspectives on this. If you are in the wealth management industry, you are looking at the environment right now. You're asking yourself, do you believe fundamentally we're at some form of an inflection point that warrants going in and adjusting portfolios? And I think the answer to that is no, based on the evidence, I don't think this is an inflection point. I think this is more of cyclical volatility, more of a cyclical correction. If you are paid on your revenue production, if you are a hedge fund, which Steve knows that world well, if you're institutional, you're focused on alpha generation, this has become a horrible environment to do that. And less is more and you are participating less. The extreme volatility driven by whether it's a tweet or a headline, that's a very punitive environment to be in. So the people in that world that I speak to, they are providing less liquidity, they are stepping back, they are awaiting some degree of certainty involving the oil market. And then we do have two other headwinds in front of us, one of which is software. We'll talk a little obviously about Oracle in a little bit. But the other is the financial sector. And let's remember, the financial sector right now is down Most of the 11 major s and P sectors year to date. It's having another awful day once again today. And I think that is also a very significant drag on the major indexes wise.
- [03:37]
Scott Wapner
I mean, he just talked about you and your other peers in the hedge fund community. Is that how you see things? You just want to just pump the brakes a little bit right now, hold off and make it. Any moves into the volatility dies down.
- [03:47]
Steve Weiss
Yeah, look, you know, return is defined by your point of entry. And right now we don't know if the point of entry is the right point of entry. Now if you take a very long term view and you say, you know what, so and so stock has gotten cheap enough for me, I'm going in and falls another 10%, who cares, right? Just taking a long term view. But look, markets are hard to predict normally and predicting all the crosswinds, you know, tailwinds and headwinds, how they're going to fall into place and if they come into existence is virtually impossible now. So for me it's pretty much, you know, staying where I am and I've got a quality portfolio staying there. If something gets ridiculously inexpensive like a Netflix or Microsoft I've added recently or Alibaba, which apologies to the producers I added to yesterday, then that's fine, you know, because I know what the long term story is for them, regardless of market volatility in the market. So my advice is don't, don't get, you know, upset about the volatility, don't try to trade this volatility because that's that's really a sucker's bed here. The best people I know aren't willing to trade it and I think just, just hold what you have, you know, don't panic out. That's always the worst thing to do and we'll just see how it turns out. Nobody knows what the critical impact is going to be in my view is not only how long oil stays elevated. And I'm not surprised to your point that it's not responding to, you know, the massive, you know, release of the reserves because that's been well advertised. If they didn't release it, then you've seen something else in the market. But we're also going to hear more job cuts, substantial job cuts from AI and to me that's a short term positive, but into, you know, medium term negative. So I would stay away from consumer discretionary stocks.
- [05:51]
Scott Wapner
All right, you mentioned two interesting points. Number one, the uncertainty and also the entry point. Shannon, I want to come over to you. Bank of America actually out with a note about this earlier today saying in part policy uncertainty is the highest since 2025 Liberation Day. We all remember that about a year ago. And history shows that extreme uncertainty has often marked good entry points for long term investors. Now, everybody in this market is not a long term investor. What do you think about this volatility near term? And if you are a long term investor, where do you put money at right now with the thoughts that things are going to rebound and settle down?
- [06:19]
Jennifer
Well, we are certainly long term investors and so I think one of the challenges here is balancing out to your point, what our views were coming into this year in terms of what we felt would outperform and what was kind of relatively well situated with the acknowledgment that we expected there to be some additional volatility, particularly on the policy side. So if you're in an environment where you expect there to be dispersion, our view was that the underlying economic momentum and the fundamental aspects of things like the transmission of the triple B a, you know, kind of tax relief coming through, lower interest rates, improved sentiment and you know, potentially an uptick in M and A activity, all of that pointed us towards what we felt was a basket of quality stocks, not just here in the United States, not just large cap stuff, small and mid cap stocks, ex US developed emerging markets who frankly, you know, for many of those economies have hit the inflation challenge head on and have a really nice balance sheet and current accounts. So our view is that in this environment all of those things can continue to be allocated to in alignment with your allocation that you started the year with. I think tactically you're also starting to see signs that there may have been some overselling in some of the areas that, you know, perhaps we were not as constructive on coming into this year. So technology, for instance, you've seen a meaningful rerating. But most importantly, I think the dispersion, the divergence, the differentiation between names that we anticipated this year has really come to the fore on the fixed income side. You know, Frank, we don't talk a lot about that here, but there's actually some opportunities in duration right now. I think we're all focused on credit and credit quality. You know, you look at what's happening in the high grade bond market, the issuance this week, you're looking at the potential for further curve steepening, especially if we move past the, the Middle east conflict. So I think kind of reiterating where you stood at the beginning of the year, looking at the underpinning of that thesis and then taking these opportunities as they're being presented to you is critical if you're looking past the next six, eight, 12 weeks.
- [08:23]
Scott Wapner
All right, Jason, come over to you. Joe mentioned the wealth management business. That's the business you're in as well. What are you telling clients right now? I'm sure some people want to take some chips off the table, I would imagine because some parts of their portfolio have been under pressure. Where are you seeing the opportunities? Where are you seeing areas that you think might be seeing long term damage?
- [08:40]
Jason
Yeah, no, I think it's, I think it's a little bit of the play that's already been moving so far this year, which is obviously the infrastructure beneficiary stories. Eaton's a G venovas the cornings of the world. I think those stories still remain intact. I think the other opportunity is, to Shannon's point, what's going on with tech. The hyperscale is obviously having meaningful participated so far this year. And I think you always, you know, in geopolitical events like we've experienced, there will always be dislocations and you always got to do a pulse check on where we are in the cycle. So I do think, you know, the hyperscalers are an opportunity. You know that, that's another, that's another place where we're looking at and I think software, software now trading at 16 times forward, which is below a market multiple. I think there will be opportunities there as well because I think there's a harmonious play with AI and software and software on demand. We'll see how this story continues to play out. But I think those are few of the areas where there's opportunity.
- [09:35]
Scott Wapner
Yeah, a number of recent notes saying this is an attractive entry point for software. One of those areas that a lot of people seem to be putting some money in. I think we have to go back to oil. I'm looking at oil right now up about four and a half, almost 5% right now. And I said this on closing by the other day. We keep having people come on, whether reporters or, or traders like yourself, saying ever biggest release from the strategic reserve ever or since WTI had one of the biggest price moves yesterday since 20. Joe, you made some moves in the oil space. How do you play oil here? Or should you even, should you even try with so much questions going on about the Middle East? And I just want to point this out in my world. Maersk reporting an issue in Oman just a short time ago, about an hour ago, saying that they're shutting down operations there. So we continue to see issues outside just the oil market with this conflict.
- [10:20]
Joe Terranova
So you had to, I think, get in front of it in terms of energy allocations in the fourth quarter, it was very clear to Jason's point, the market was making a shift, a shift away from high beta, a shift away from momentum towards quality, towards defensive health care. Leading sector energy began to make its move in the fourth quarter. So in front of that refiners were clearly some of the energy names that you wanted to own. I own Valero, I own Philips 6, I own Marathon. Till this day, I still own Valero. I think you maintain exposure there. In addition to that, I have eqt. So I think you had to be kind of in front of it. If you're now in the moment and you're trying to race to catch it, you're not going to because it's the equivalent of the Rocky movie where he's chasing the chicken trying to catch it. You're just not going to catch it. And if you think about what's going on here with the actual spot oil market, I gave some statistics the other day. I said at the end of February, the average volume for spot crude oil was somewhere around 300,000 contracts per day. We had bumped that up to a million once we had the conflict that began with Iran. Now what we're seeing is that figures coming down once again. What that's telling me is that professional oil traders are doing exactly what I'm suggesting. What I'm advocating for this stepping back and saying, wait a Second, these headlines, they're, they're just dizzying. The tweets, they're dizzying. I can't get in front of. I can't profit from a headline or from a tweet. And I think a lot of people are basically stepping back. So I don't think you're chasing it here. I think if you were fortunate enough to have the energy exposure coming into it, you maintain it. But certainly I think at this point, oil could go up or down 10 or 15% on the next headline or tweet.
- [12:14]
Scott Wapner
You know, when you said the Rocky reference, I thought you're going to go, Adrian yelling at Rocky that you can't win when he was supposed to fight Mr. T. Because it's kind of hard to win with this oil trade right now. Shane, I want to come over to you. There's another side of this position. Piper out with a note saying in part, not your 1990s oil shock. They go on to say, in fact, unless prices for oil are above $100 for sustained period, many months, the impacts to core inflation and GDP are likely to be surprisingly modest. And that's the economy, not the market. Do you agree with that? Take that. Perhaps some of the reaction to this may be overdone. And unless this lasts many months, which it could, nobody knows. And why she'd been great pointing that out. We don't really know, we don't know what's happening over there, that this isn't as big of a deal as it seems to be.
- [12:52]
Jennifer
I think what you have to really differentiate between is, is it the energy price movements and how they're impacting today's kind of discretionary and non discretionary basket for the US consumer consumer, or is it a longer term period where higher oil prices transmit through a number of different industries and then become a pass through to the consumer? And I think that requires a significant amount of time in terms of the duration of this oil shock. It's also important that we understand that, you know, the part of the rationale for the US perhaps holding up a little bit better from a market perspective than what we're seeing for our colleagues in Europe, for instance, is that we have access to more diversified production from an energy perspective today than we did 30 years ago or whatever point in time you want to reference. And so we are not insulated from these moves in, in gas and oil prices, but I think that we're better insulated than our compatriots over in Europe, for instance, and to some extent certain economies in Asia. So I think that is an important piece is the duration is not just about how long the U.S. can consumer or U.S. businesses can digest higher energy prices in the here and now. It's having to then factor those in to end prices along the supply chain which as we know is much less transitory and has the threat of being more structural.
- [14:13]
Steve Weiss
Yeah, I think the issue is to your point exactly is that look, there are certain businesses that have a fuel surcharge and that may be freight, but when you click on Amazon, you're a prime member. Free delivery in two days, somebody's paying that surcharge.
- [14:30]
Scott Wapner
Right.
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Steve Weiss
And ultimately to be the consumer first, it's going to be the company. Now when you raise prices because energy prices are going up, I don't think we ever really see those prices come out if it's not as a surcharge. So longer term effects of inflation are going to exceed the time frame of the war and the destabilization in the, in the energy market markets. So that's what you have to be careful of then. The reason why I wouldn't touch consumer discretionary, wouldn't touch retail here is because two thirds of the country lives paycheck to paycheck and they're already making decisions unfortunately, what do I not buy? So I put food on the table where we've seen prices go up. I've got to use my car to get to work. I'm worried about my job. So what's that all come down to? It comes down to less shopping at the Gap. Less shopping ticket. Right. So those are the issues. And those issues aren't going to go away. When you have a president whose approval ratings are so low and the general consensus on his handling of the economy is so low, there's a fear factor out there. So that informs consumer spending habits of the 2/3 of the economy that really matter. And that's where I'm concerned. Throw in the air job losses and I think you've got a major problem.
- [15:52]
Jennifer
But don't you think there are some opportunities being created in areas like fast casual, in areas like travel, which frankly TSA throughput has been continues to rise actually over the course of the last couple of months. So I don't disagree with you Steve, on that. I just think one of the things is to really look at again is that dispersion and try to price in, you know, what is that additional impact that we could see if we're only looking at a two or three week duration from here on out, except you
- [16:19]
Steve Weiss
know, for, for dining like Fast casual dining and travel. Yeah, they've been holding up pretty well. And because the airlines has faced it, they're all monopolies in markets. So they own the pricing and they're and their bookings generally are pretty far out where they were booked before the fuel surcharges and all that. So they will. Somebody's going to suffer a hits of margins but I guarantee they can make it up.
- [16:44]
Scott Wapner
But if you look at ticket prices right now, I think you're going to some of the impact. Those people got a discount already.
- [16:50]
Steve Weiss
Insane.
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Scott Wapner
Well, I mean compared to what it is now. If you bought a few weeks ago, that was a discount. Jason, want to come over you. I want to go away from the economy for a minute and come back to the markets. Does this rise in oil prices? We're looking at the Dow today showing it just now down about 1%. Does this, does this change the broadening of the market? Does this change the attractiveness of the halo trade? I believe that was christened right here or another trade that actually came from Bernstein. Dave Vernon, great transportation analyst. The iron trade infrastructure, Real assets, optimizable network effects, that's another acronym that he's put out there. But the idea of these real economy trades, does it change that narrative?
- [17:25]
Jason
I think in the short run, absolutely it does. And I think to everyone's point, it's about the duration on how long this actually lasts. If I think about the strait, 120 ships pass through that strait every day. In a normal environment, there's no movement. I think that's probably possibly why, you know. Yes, I think this, this release today, it's a significant release, is baked into the market. But it takes a lot of time to get these ships moving again. You know, this is a weeks and weeks story. So I think the longer, the longer we continue to deal with this, the more impact it will have. I think to Steve's point, again, you know, 70% of GDP is consumer spending. The disproportionate wallet share, 50% increases, payment at the pump hurts these folks and how they kind of change what they're doing from a consumer and discretionary spending perspective. I think as we look at transports as well, you know, the FedEx is the UPS is of the world is obviously a pullback. You know, I think the Amazon point is well taken. But I think this is, it's all about duration, how long this continues to play through. And I think we need, we need to get movement. Everyone knows that. But that that's the real story here
- [18:37]
Joe Terranova
for me I think the consensus expectation is that $90 oil is not going to be the price as we move towards the fourth quarter of 2026. And that's why I said this isn't an inflection point. If you're in the wealth management industry where you're thinking about making significant portfolio reallocations, I think where you lose comfort in the economy is if in fact yields were to begin to spike. And now look, we're up five basis points today, the 10 years at 421. That's not overwhelmingly troubling, but it's going in the wrong direction. I don't think the market likes it very much and it shouldn't like it very much. To me, that's more of a concern. When you think about going forward into 2026, rising oil prices, I think there's a remedy for that, rising interest rates. That's a little bit harder just to
- [19:25]
Scott Wapner
put a button on this. And to your point, Jason, actually Maersk came out today. So they have a hundred container ships stuck in the Middle east and they say it take about a week to 10 days to get things, quote unquote back to normal. As we all adjust to this new normal, want to switch gears now to one of the bright spots in the market today and of course that's Oracle. Take a look at this chart right now. Oracle shares up almost double digits right now after earnings. I think the question is here with Oracle. This has been a very volatile stock. It's fallen well off of its highs. But just a couple of months ago, a lot of questions and Jason, I see you nodding here. All the questions answered are all the questions answered when it comes to Oracle. And is this just about Oracle? Because we've also talked a lot about Oracle being the public proxy for OpenAI. OpenAI making some deals and some controversial statements in recent days and weeks as well. So is this just about Oracle or is it a read on something else?
- [20:11]
Jason
Well, let me, let me just speak to the, to the print. I think the print was obviously a phenomenal print. I remember we were here several months ago talking about the RPO numbers, right. North of 500 billion.
- [20:21]
Scott Wapner
But those came under question. Almost got to be at the competitive execution. Right, Right.
- [20:26]
Jason
But this is the first quarter in 15 years that we've seen double digit 20 plus percent EPS and an organic growth return for the quarter. So I think that that was a big story. I think the other story is reaffirming the guide in terms of Capex, which is a $50 billion number and I know this is these are major dollars but when you on a relative basis compared to the other hyperscalers, they did not realize raise capex. So I think that was a big story for the print. And then when you talk about this 10 gigawatt data center build out, they are moving forward to strategy where there are folks that are prepaying and bringing GPUs to the table. And I think that is also an important story as you look at what has been the chinks in the armor. Negative cash flow, negative free cash flow. I mean, I think that's been a big story. So I'd like this print. Let's see where the momentum takes us going forward.
- [21:19]
Steve Weiss
All right.
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Scott Wapner
Jason, you're a shareholder. Joe, you on this one in the Joti ETF as well.
- [21:22]
Joe Terranova
Yeah, I believe it advances the premise of stability and I think in beginning of early February you are questioning that. Around February 5th we reached a low somewhere around 135, $136. You've stabilized price since then. What this report does is it gives you a degree of confidence that there actually is the cloud computing execution that allows them to go forward with that 50 billion in capex which they've talked about. OCI, the Oracle Cloud infrastructure, coming in with a really strong number, up 68% quarter on quarter. That's better than expectations on a year on year basis. Coming in above the consensus at 79, at 84% again, that's a really strong quarter. So is it blue skies? No, and it shouldn't be blue skies because there's real questions as you look forward into the future. But I do think this conglomerate has seen some of the massive storm clouds that were present at the end of January into the early days of February dissipate.
- [22:24]
Scott Wapner
Yeah. So Shannon, I want to come to you. I know you don't own Oracle and I know you're not a tech analyst, but I want to go back to that RPO number and Dan Ives came out with a note saying the story just remains all about their backlog, which is RPO minus open air. I'm looking at this number, $553 billion quadrupling year over year. Now, is this a bellwether of what's going on in tech in general? Can we look at it that way? Or is this a single stock story with tie ups to some big private companies?
- [22:49]
Jennifer
So I think the challenge here is that we've come, we came into this year and we were battling this tension between oversupply and then obsolescence. And now I think frankly, the company conflict in the Middle east has allowed investors to take a step back and understand that the story is somewhere in the middle. I think that there's no doubt that if you look at, especially the, the scrutiny that Oracle has been under, under over the last year or so, that it's incredibly important for them to come out and allay the fears in terms of, most importantly, the debt that they've taken on to be able to service and build this backlog. Right. So I think the challenge is here is that with the, each of these announcements you get a more and more nuanced story and that's incredibly important for this market because there's questions about the monetization, there's questions about the duration and the timeline of when these investments are going to pay. But I think, more importantly, I think people have had a few weeks to take a step back, maybe put the pot on the back burner, on the simmer and have time to look at the fundamentals. And so I do think it's important, not only from an equity perspective, but perhaps even more so from the, the credit perspective where we have seen a lot of pressure on tech.
- [23:54]
Joe Terranova
It really isn't lifting though the software industry today, when you look at it, the IGV is still down. You have Salesforce down, you have Adobe down. The names that we own in the etf, Palantir, Zoom, Cadence, they're all down as well. So it's not like there's this universal feel good story surrounding software today because of what we heard from Oracle, which I think some would have expected, but
- [24:18]
Jennifer
that's something because it. Don't you think that's. Because it's somewhat idiosyncratic in terms of that story with Oracle over the last
- [24:23]
Scott Wapner
year or so and also in offers, Salesforce is actually down on a downgrade from Moody's as well, which may be dragging the sector today because sentiment's been pretty high. We have a lot of notes D. Davidson saying for the first time in five years it's investable. On Monday, Deutsche yesterday, upgrading tech to overweight. I mean, we said. I want to leave you out of this conversation. How are you looking at software right now? Are you looking for opportunities, whether at an ETF level, sector level or maybe a single stock level?
- [24:47]
Steve Weiss
For me, it's Microsoft. Look, I think software is going to be very challenged. I mean, when you can write code without ever having learned how to write code, that's problematic for software companies. And that Salesforce, and that's Adobe for sure. It's all the Others, I mean, look, I mean, it's. People want to say, well, that's ridiculous. Deals can't get rid of Adobe. It's not so ridiculous. We've seen plenty of companies that were the company in that space that are far less relevant today than they were before. That's an intel, that's an IBM. The list is legion. So we just don't know. So you go to the one that was earlier and AI, that has other major revenue streams and that is an innovator. And to me, that's Microsoft. That's the only place I'm really willing to bet. I see no reason to go to Salesforce because when you talk about CRM, you know, that's easy to replicate. Now, I'm not saying it's easy. Anybody can do it. I'm saying if, if you're a company and you take a look at the IT budgets and I've heard them talk about as JP Morgan at BlackRock and others, those are massive budgets. I mean, take a look at what their license fees are to a Salesforce and to others. They're highly motivated to create that product internally for their uses. And that's exactly what they're doing. And we've seen them do it already, you know, in terms of being able to get rid of analysts, for example, investment banking, because it's automated and we look at companies all the time for our analysts do the same thing. So I just think it's treacherous catching a falling knife. You can, you can look at what the mistake people make is that they say, well, the valuation historically was 25 times EBITDA and now it's 15 times EBITDA. So that's on sale, that's a buy. But the fundamentals have changed, so the old valuation metric just doesn't apply. Maybe it will, but nobody has the vision to know if it does or doesn't.
- [26:48]
Scott Wapner
Yeah, a lot of uncertainty out there. And to Joe's point, the IGV down over a half a percent, falling more than the broader markets. Speaking of the issues for software. All right, coming up next on Halftime, we're paying for private credit as one big bank moves to limit its exposure to the group. Our Leslie Picker is following all the money for us. Halftime, back in two minutes.
- [27:12]
Jennifer
Get in the game with the college branded Venmo debit card. Wreck your team with every tap and earn up to 5% cash back with Venmo. Stash a new rewards program from Venmo. No monthly fee, no minimum balance, just school pride and spending power. Get in the game and sign up for the Venmo debit card@venmo.com collegecard the Venmo MasterCard is issued by the Bancorp Bank. NA Select Schools available. Venmo stash terms and exclusions apply at venmo.me stash terms max 100 cash back per month. Oh, could this vintage store be any cuter? Right. And the best part, they accept Discover. Accept Discover in a little place like this? I don't think so, Jennifer. Oh, yeah. Huh? Discover's accepted where I like to shop. Come on, baby. Get with the times. Right. So we shouldn't get the parachute pants. These are making a comeback, I think.
- [28:05]
Jason
Discover is accepted at 99% of places
- [28:07]
Jennifer
that take credit cards nationwide, based on
- [28:10]
Steve Weiss
the February 2025 Nielsen report. The wrongs we must write, the fights we must win, the future we must secure together for our nation.
- [28:25]
Scott Wapner
This is what's in front of us.
- [28:29]
Steve Weiss
This determines what's next for all of us.
- [28:34]
Scott Wapner
We are Marines. We were made for this. And we are back on halftime with a market flash. Angelica Peebles joins us now. Angelica.
- [28:50]
Jennifer
Hey, Frank. Papa John's has received a bid to take the company private from Qatari backed Earth Capital Management. That's according to the Wall Street Journal. The Wall Street Journal reporting that the deal would value Papa John's at about $1.5 billion. That stock was up, as you can see. It's up now about 22%. It was halted for a little while. And we have reached out to Papa John's. We don't have comment. We'll be back to you with anything we hear from them.
- [29:13]
Scott Wapner
Frankly.
- [29:13]
Jason
Yeah.
- [29:14]
Scott Wapner
Looking at Papa John's share spiking right now, up over 20%. This bid, it looks like it follows a bid that came from Apollo last year. In November, they actually withdrew that bid. But now more interest for Papa John's again, shares up just about 20%. Angelica, thank you very much. I want to turn to the financial space alternative asset manager names. There are some pressure after reports that JP Morgan was marking down software portfolios and limiting lending to private credit groups. Our Leslie Picker joins us now with much more on that part of the story. Leslie.
- [29:41]
Jennifer
Hey, Frank. Yeah. This involves leverage that JP Morgan is providing to private credit funds that the asset managers have historically used to juice returns. It's known as back leverage. The collateral for this type of financing is the underlying loans for those private credit funds. A lot of software in there, as you mentioned. And that is what is being slightly marked down according to sources close to the situation. I'm told that JP Morgan took this moment, did some additional due diligence across the financing portfolio and name by name, and then they had an overlay of what's going on in the macro environment, what's going on on a sector basis. And from there they determined that the loans were too highly valued in this environment. A lot of this has to do with the revaluation in software. Now what does this mean? First, let's be super clear here. This is not JP Morgan clocking a bunch of losses, but rather what they see as a preemptive move. One source described it to me as pumping the brakes versus hitting the wall. There are not an onslaught of margin calls as a result of this. It also does not mean that private credit clients necessarily need to immediately post more collateral only if they want more leverage. Now what this does is limit the borrowing capacity for some private credit managers for JP Morgan lines specifically. Now you can see, as you mentioned, Frank, shares of the major alternative asset managers, they're slumping today and down quite substantially year to date.
- [31:03]
Scott Wapner
Leslie Picker live in CNBC headquarters with the very latest in the private credit space. Leslie, thank you very much. Jason, want to come over to you here on the desk. You have ownership in the private credit space with Apollo and Blackstone. What do you make of this report?
- [31:15]
Jason
Yeah, so I mean, obviously, I mean this storm has been very difficult so far this year. I mean essentially all the old managers are down 30% I think as it relates to Apollo for me. You know, I think about their, their insurance business, a theme which I think insulates them to a certain degree from all the mess that's going on. I'll also add their retail business, bdc, you know, as it kind of, we talk about the software story and what's going on there. They only have 2% exposure and they've also guided to 20% growth in fee related earnings. So, you know, it has been a difficult trade so far this year. But I continue to like this one. Blackstone, you know, another one obviously is down 30 so far this year. They deployed over $138 billion in 2025. And I think the realism environment will continue to improve. So I have kind of been patient and staying steady with these names here.
- [32:07]
Scott Wapner
I want to pivot over to financials with you, Joe, really quick. PIMCO actually blaming what they call sloppy underwriting for some of this private credit reckoning, saying it's not just a crisis of confidence, it's a crisis of really bad underwriting. Does this make you concerned at all about the broader financial space.
- [32:22]
Joe Terranova
First of all, the financials coming into the year as it relates to positioning and sentiment, overwhelmingly you had bullishness and that bullishness was expressed in overweight positioning. So that's, that's the first thing to understand. The strength right now in financials is in the exchanges, cme, IBKR and a lot of the insurance companies. Travelers Chubb. Here's the challenge in front of us. We have right now lending to software companies where we don't have the visibility and the transparency on what price discovery ultimately is for the value of the loans. We have something in front of us that can be very constructive if in fact the Federal Reserve actually does their job. The Federal Reserve raising, lowering rates. Yeah, we all understand that. But if Steve Liesman's watching, you want the question asked of the Federal Reserve chairman at that meeting during the press conference. What is the case communication line right now with Wall street lenders? Do they have the transparency on the true value of these loans? Candy of the marketplace, a degree of comfort that they are on top of the situation? We need the Federal Reserve to get in front of this situation and to let the marketplace know in fact, where they believe the real valuation on this lending ultimate.
- [33:40]
Steve Weiss
Let me give you a very, very short primer on private credit. Private credit, they raise funds, capital and then they're forced to put that to work. They're not raising capital for lending and substandard lending in cases, you know, to hold it and pay, you know, whatever a money market rate on. So their job is purely raise the capital, put it to work. Now it's become very competitive finding great credits. So what are they going to do? They're driven by fees. So they want the fees on lending. They don't get fees if you just do cash management. So that's the whole game. Now. You don't have the same regulatory oversight, so you don't have the same reserve requirements and all that. So it's a shadow lending system that we were all concerned about that really grew exponentially and that we were all concerned about. Now, I wouldn't worry so much about the Black Rocks. I wouldn't worry about the Blackstones. I'd worry about the second and third tier players because they're the ones that didn't have, that didn't spend on the risk controls and the underwriting management. If I own those like you do, I wouldn't be a seller. I want to buy them because they're cheap. But I don't see any catalyst right now and maybe not for this next six months, a year depending upon if we go in recession not like we did from the oil shock we 70s where it just doesn't make sense to to load up on these now. I'd rather miss the first 10% up than catch the next 20% down.
- [35:07]
Scott Wapner
Understood. Got to the conversation there when a switch Shift gears right now and turn to our Mackenzie Sagalos with your CNBC news update. Mac.
- [35:16]
Jennifer
Hey, Frank. Iran's new leader was reportedly injured in the early hours of the war. The New York Times reports that most of us suffered leg injuries but that he was alert and sheltering in a secure location. In the three days since he became Iran's supreme leader, Khamenei has not appeared on video or issued any written statements. Jeffrey Epstein's longtime accountant is meeting with the House Oversight Committee right now for a closed door deposition. Richard Kahn served as Epstein's accountant for more than a decade and several of Epstein's victims alleged that he helped enable Epstein's crimes by creating a complex financial structure around him. Khan has consistently denied any wrongdoing and says that he was unaware of Epstein crimes. With passengers facing long lines at US Airport security, the Department of Homeland Security has restarted the Global Entry program two weeks after suspending it because of the partial government shutdown. Global Entry allows pre approved low risk travelers to get expedited clearance through customs. Frank, back to you.
- [36:13]
Scott Wapner
All right, Mackenzie Segalos with our CNBC news update. Coming up, navigating even more volatility. Christina Pratsunnevolis has your E ETF edge coming up next.
- [36:29]
Jennifer
Oh, could this vintage store be any cuter? Right? 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. Come on, baby, get with the times. Right. So we shouldn't get the parachute pants. These are making a comeback, I think.
- [36:52]
Jason
Discover is accepted at 99% of places
- [36:54]
Jennifer
that take credit cards nationwide.
- [36:56]
Steve Weiss
Based on the February 2025 Nielsen report, a KFC tale in the pursuit of flavor.
- [37:02]
Scott Wapner
The greatest insult the colonel ever suffered was being served a wrap that was just a snack by a friend. So he took two crispy tenders, lettuce, tomatoes and pepper mayo and wrapped them in a soft tortilla. It wasn't a snack, it was a meal. He called it a twister and never called that friend again. The colonel lived so we could chicken the twister. Now back at kfc Classic or with bacon. Also try it spicy. It's finger licking. Good prices and participation may vary.
- [37:30]
Jennifer
The Jack Welch Management Institute at Strayer University helps you go from I know the way to I've arrived with our top 10 ranked online MBA. Gain skills you can learn today and apply tomorrow. Get ready to go from make it happen to made it happen and keep striving. Visit strayer.edu Jack Welchmba to learn more. Strayer University is certified to operate in Virginia by CHEV and its many campuses, including at 2121 15th Street north in Arlington, Virginia. We're back on halftime. I'm Christina Partznevolous with your ETF Edge headline. Risk has dominated the equity and commodities markets as of late, but in the ETF market the impact has been a little bit more muted. Joining me now is John Davy, CIO at Astoria Portfolio Advisors. John, I'm going to jump right into the questions. You have the majority of equity markets in oil that are swinging hard every single day on headlines lately, yet you maintain that ETF investors especially should not lose sight of their own long term objectives. Why is that?
- [38:31]
Scott Wapner
Well, I think geopolitical risk is something that the market historically can model out and look at the distribution of outcomes. So the research shows that typically markets do get past this point and then do go up over time. I think the bigger concern I have is more about what's going on in the private equity and private credit space where if you look at Blackstone, KKR, Blue Owl, some of these stocks are down 30, 40% in the last three months. I don't think that it's systemic at this point. So we're looking at like the spread between double Bs versus triple Cs and that spread is around 750 basis points, which, you know, the range of the last two years, let's say, is, you know, 900 to 550 somewhere around there. But it's definitely worth keeping an eye on for sure.
- [39:19]
Jennifer
So if you're bringing up private credit and let's say my focus or investors are longer term horizons, are you saying avoid private credit or are you suggesting any other way to put your money to work right now?
- [39:30]
Scott Wapner
Yeah, I think it's more about looking at where can you get the best return per unit of risk. And obviously that space is challenged to the point. I think there's plenty. I think our underlying thesis is that the US Economy is still quite strong and between tax cuts, tariff cuts, rate cuts, there's a good, there's plenty of opportunities. We just think it's not in the Mag 7 stocks. It's in the broader, let's say mid cap space, equal weight space and some of these sectors like industrials, energy, materials, sectors that can benefit from an elevated, let's say stagflation environment, which I think is also another big risk in the marketplace, more so than geopolitical.
- [40:13]
Jennifer
Thank you, John. Short and sweet. And remember, you can all find our content@etfedge cnbc.com Frank, back over to you, Christina.
- [40:23]
Scott Wapner
Thank you very much, Christina partzonevolis with today's ETF Edge. Straight ahead, more calls on committee stocks. Halftime's back right after this. And welcome back to HAT time. Let's hit some stocks on the move. First up, Eli Lilly getting a price target increase at Wolf Joe, you own this one in the Joe T. ETF shares pulling back about a half a percent today.
- [41:00]
Joe Terranova
Stock has been pulling back. If we could, while I speak, pull that chart back to the beginning of the year. You'll see that early in January that was the high price point for Eli Lilly. I think the market cap now has fallen below $1 trillion. Recently announced CAPEX of 3 billion to expand the supply supply chain in China. We know about the very strong fundamental tailwinds that exist for this company. But something interesting that I've noticed about Eli Lilly and I've mentioned this on air now for the better part of the last 18 months. It trades like a biotech, doesn't it, Jason? And biotech, if you look at the XPI again, you will find the XPI kind of peaked in late January. So right now in the health care sector, it's really about names like Vertex, Gilead, Amgen, Abbott Labs. That's where I'm seeing the strongest health care momentum.
- [41:49]
Scott Wapner
You know, really quick. They're waiting for approval of their weight loss drug in China. Do you think that's priced into this stock? You mentioned it slipping below 1 trillion.
- [41:57]
Joe Terranova
I think to a certain extent maybe it is. I don't have enough confidence on that to to say one way or another, I believe it's priced in.
- [42:05]
Scott Wapner
All right, moving on to the rideshare industry. Uber announcing a strategic partnership with robo taxi company Zoox. Jason Yoan, Uber, listen, it's another example
- [42:14]
Jason
of their foray kind of into the business. I mean, this is one of many deals Zoox was. Zoox is the latest. But wave Wabi lucid, you know, so it's all about the platform. It's nice to see a little bit of a bump to, you know, almost 3% today. Stocks down about 10%. You know, gross bookings were up 23% last quarter. Mobility up 20%. I continue to like this stock in the long run.
- [42:35]
Scott Wapner
Take a look at the charts. Up about four and a half, five percent over the last month. Steve, you actually still sold out of this name? Yeah, not too long ago. Just your view on this partnership? We talk a lot about these partnerships when it comes to autonomous driving. Is this meaningful to you? That is with Zoox obviously a subsidiary of Amazon.
- [42:50]
Steve Weiss
What's meaningful to me is that when you partner with somebody to for rides that your margins are a lot lower. You've got to share it with somebody. So that would be. So that's troubling to me. I don't think the stock should necessarily be up on that because we don't know what the economics are. Right. And.
- [43:11]
Scott Wapner
But wouldn't the autonomous vehicle still be cheaper than the driver?
- [43:15]
Steve Weiss
You tell me. We don't know. Okay. Drivers pay for the maintenance, they pay for the insurance, they pay for the upkeep car. They pay for the car. Okay. If you don't have a driver to do that, who's bearing that cost?
- [43:27]
Scott Wapner
That's a fair point.
- [43:29]
Steve Weiss
Right. So we just don't know the economics.
- [43:31]
Scott Wapner
All right, we're going to move on to something we do know. Micron's price target hiked at Wolf head of earnings next week. Joey on this one in the Jyoti.
- [43:37]
Joe Terranova
So this, this is a high beta technology play. This is alpha generation on steroids. This is being played on the institutional side, the hedge fund side and from speculators. You have to understand the characteristics of what this is. It's hyper volatility. In the last six months it's upgraded than 175%. You're going to hear next week in the earnings that both earnings and revenue growth is going to be up once again triple digits. DRAM Dynamic Random Access memory, it's up expected another 170/% 2026. So you have to be careful with something like this because of the hypervolatility and understanding that when you begin to see the moderation in DRAM pricing, that is when you're going to see the correction unfold for Micron. What do you do with that? You maintain a position accordingly that incorporates that hypervolatility into the story. Lastly, you do want to hear from them how they're going to be managing the high bandwidth memory relationship that SK Hynix and Samsung has developed recently from Nvidia. That could be a little bit of a competition challenge for Micron.
- [44:45]
Scott Wapner
All right, here we go. Micron shares up just about 4% right now. Coming up next Mike Santoli joining us with his midday word. We're back right after this. And we are back on halftime. Senior markets commentator and overtime co anchor Mike Santoli joining us with his midday word. Mike, what are you seeing in this market? We've been talking about it quite a bit here on the show. A lot of volatility, but today relatively muted. You know, the dow is down 300 points but still pretty muted.
- [45:10]
Steve Weiss
Yeah, for sure, Frank. I mean it's still a lot more churn. I mean, I've been saying for over a week that the market is rationally hopeful about maybe that this crisis can remain somewhat contained. It's not going to exit this window of a few weeks where you actually have energy costs, you're going to have to extrapolate this for the rest of the year, etc. I think there's a way of looking at the market action today. Even if crude is up a few bucks, it's still within yesterday's range. I know that's not saying much was a massive range yesterday, but it's not giving you that much new information if crude is up a few bucks on a given day like this. So the S and P is in wait and see mode. I'm more focused on things like the churning, the rotations inside the market, the big bank index BK X that's challenging its 200 day moving average on the downside, that's not that great if you lose the banks. In this instance, the S and P is out of the breakdown zone at the lows of a couple of days ago. But we're still only at levels that we were hoping, hoping were going to be the floor last week. So it's very much indecisive. I would say that considering the closing of the strait was, was thought to be the worst case scenario and oil prices are not yet at super punishing levels, I think, I think you can explain why the S and P is managing to hang in there. Finally, the hardware trade reasserting itself is necessary to stay supported. It's not good breath today, but you have enough strength. The big tech names that were kind of staying in the game at least.
- [46:34]
Scott Wapner
All right, Mike Sanchez with his midday word. Mike, we'll see you coming up on ot. Stay with us. Final trades. They are coming up on halftime. And we're back on halftime with final trades. Weiss, you're up first.
- [46:45]
Steve Weiss
I sold FTAI in February. I bought it back as a trade. I'll be at higher levels.
- [46:50]
Scott Wapner
I'm going to add Jason, Goldman Sachs
- [46:53]
Jason
are getting caught up in the private credit storm.
- [46:55]
Scott Wapner
I like this one here Janice.
- [46:57]
Jennifer
Regional banks not getting caught up in the private credit storm, but being pressured downward with the rest of financials opportunity with lower rates coming.
- [47:04]
Scott Wapner
Joe Lam Research There we go. That is it for halftime. The exchange starts right now. You've been listening to CNBC's Halftime Report, the podcast. You can always catch us live weekdays at 12 Eastern only on CNBC.
- [47:22]
Jennifer
All opinions expressed by the Halftime Report participants are solely their opinions and do not reflect the opinions of CNBC or its parent company or affiliates and may have been previously disseminated by them on television, radio, Internet or another medium. You should not treat any opinion expressed on this podcast as a specific inducement to make a particular investment or follow a particular strategy, but only as an expression of opinion. Such opinions are based upon information the half time Report participants consider reliable, but neither CNBC nor its affiliates and or subsidiaries warrant its completeness or accuracy and it should not be relied upon as such. To view the full Halftime Report disclaimer, please visit cnbc.com halftimereportdisclaimer the Jack Welch Management Institute at Strayer University helps you go from I know the way to I've arrived with our top 10 ranked online MBA. Gain skills you can learn today and apply tomorrow. Get ready to go from make it happen to made it happen and keep striving. Visit strayer.edu Jack Welchmba to learn more. Strayer University is certified to operate in Virginia by Chevin as many campuses, including at 2121 15th Street north in Arlington, Virginia.