← Halftime Report
Halftime Report
Inflation & Iran vs. Earnings & AI: Your Next Move 5/13/26
00:44:01
Scott Wapner and the Investment Committee debate the state of the markets with inflation, Iran, earnings and AI all bearing down on stocks. Plus, we hit the latest Calls of the Day. And later, the desk assesses the value of private credit names as Ares Capital is named a top pick at Bank of America. Investment Committee Disclosures
Loading summary
Transcript158 lines
- [00:00]
Julia Boorstin
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 DISH has been
- [00:32]
Steve Weiss
connecting communities like yours for the last 45 years, providing the TV you love at a price you can trust. Watch live sports news and the latest movies, plus your favorite streaming apps all in one place. Switch to DISH today and lock in the lowest price in satellite TV starting at $89.99 a month with our two year price guarantee. Call 888-add-dosh or visit dish.com today.
- [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. Listen in. Carl, thanks so much. Welcome to the Halftime Report. Scott Wachner front and center this hour. Busy day for the markets today. Another inflation read, spiking bond yields, the president arriving in China, the trade rolling on. And we of course, trade all of that with the committee. Joining me for the hour today, Joe Terranova. Listen to us, Thomas. Steve Weisberg in talking to check the markets for you here. See what we're doing. 12 noon in the East. It's a split tape today as you see Dow's under a little bit of pressure. S and P and Nasdaq just continuing really to roll on. You had the PPI report stronger than expected 10 year and 30 year, both at the highest since July of 25. We'll see what comes out of the president in China. And Weiss, I feel like there's there's a pretty good tension, I would say in some corners of the market. You've got elevated inflation, you've got worries about the war, you've got elevated oil prices against great earnings and the AI story. And as those two things but together it feels like the story doesn't feel like the evidence is there that the AI and earnings story is winning out by a lot. Fair to say?
- [02:21]
Steve Weiss
Very fair to say because I was going through sector performance both in the NASDAQ as well as in, in the S and P. And you know, it's clear. It's clear what you stating that's the AI trade that is really driving everything, creating the overvaluation. So the value and significant by the way. I mean, you're on a, you know, you're on a forward Nasdaq at about 35, 37 times versus historically in the, in the mid-20s. And that's all tribute, the trade. So and the air trade, I'd say is a tentative trade at this point because of valuations, because you're not seeing necessarily returns and just people look, if you're an experienced investor, and this is not a shot at somebody's new investor at all, they're mostly in indices or pick one of their favorite names in video. You don't understand what's going on because the headwinds and the strength, those headwinds outweigh the, the valuation where you are now. And that is true tension. I don't know what to do in this market. I'm greedy, I want to stay with it. But I've also put on some hedges because I do expect the war, the hostilities to resume in Iran. I don't see any way around that. So I think you got to prepare for a little bit of a drawdown here. But it's not going to derail the trade. It may put a cap on it at lower levels. And I think at this point this more likely than unlikely.
- [03:43]
Scott Wapner
I mean, you know, Liz, there are certainly plenty of people who are, are looking at what's happening in the market from a valuation standpoint, in some respects, from a price action standpoint, and even on the earnings front, sort of wondering whether you're, you're pulling forward so many earnings now that you're not going to be able to defend them or live up to them over the longer period of time. The idea that Jim Chanos raised yesterday when we had a conversation at SO and I want you to listen to what he thinks investors should be thinking about all of this.
- [04:22]
Steve Weiss
What investors should worry about or concern
- [04:24]
Scott Wapner
themselves about is that they don't pay too high of a multiple for what
- [04:30]
Joe Terranova
are cyclical earnings, not secular earnings.
- [04:32]
Steve Weiss
Right.
- [04:32]
Joe Terranova
And we have to make a distinction between that as to what what is getting premium pricing and is the subject
- [04:40]
Scott Wapner
of a Capex boom that might subside
- [04:42]
Joe Terranova
or at leave slow down versus what is sustainable profitability from AI models.
- [04:50]
Scott Wapner
Market obviously thinks that these are secular tailwinds, not cyclical, or you wouldn't have the stocks probably appreciating to the degree that you are now. You might. But if the, if, you know, let's just say if Chanos is correct that these are, some of these are going to be more cyclical than secular, then you would have some level of comeuppance
- [05:12]
Liz
at some point, I think the rate of growth in stock prices related to these earnings will have to slow. But there doesn't have to be a comeuppance, as you call it, that causes a big drawdown or that says earnings have to pull back and turn negative or anything of that nature. I think the speed that we've been moving, both in earnings and in capex will eventually have to slow down.
- [05:39]
Scott Wapner
And if you're not going to be able to get to get to your point, you're not going to be able. We just did 50% earnings growth rates for, for tax. Not obviously that's, that's not going to be. Nor is the Capex sustainable. Well, I mean, for the foreseeable future, it feels like the capex thing is sustainable, that's cyclical. We just don't. Well, I mean, I guess by the purest definition it is, but it feels secular. It feels like these companies just going to spend and spend and spend and spend and then that's going to change at some point. But who knows what the Runway for that is? That's part of this conversation too, that all of you have to figure out.
- [06:13]
Liz
Yeah, well, I don't think the Runway is ending anytime soon. And I think the market is dealing with two separate forces. We obviously have the Air Force force, which is still a lot of optimism, still good fundamental strength behind it. Capex that's just can't stop, won't stop. And I don't think that that's going to end anytime soon. And then we've got this other force that we're finding more out about this week in inflation. And the pie numbers are a big deal. The market broadly is not trading off of them, but they're a big deal because they mean a lot for what's going to happen to consumers later on. Now, they could be transient, I'm not going to use the word transitory, they could be transient, but they still make an impact on what consumers can spend. So I think what's going on today in the market, and you've seen this already with the change in sector, sector leadership since this morning, we finally have inflation numbers that are starting to make people worried about a growth scare. That hasn't really been the case up until perhaps now. So if we have inflation that's sticky enough and higher than anybody expected, you start to worry that consumption gets hit both on the consumer side and on the business side. So what do investors do when there's a growth scare when, when growth in the economy might be scarce by tech. Exactly. They look at.
- [07:28]
Scott Wapner
That's what they're doing.
- [07:30]
Liz
Yeah, exactly. But when the market opened today, right after we got this inflation print, you saw things like consumer staples and health care doing a lot better. So we've already gotten off the defensives train and gotten back onto the tech train. So there are two separate things going on. And I think the way you open the show. Exactly. Tech is winning still.
- [07:47]
Scott Wapner
Clients are according to bank of America and their flow show. Joe clients are big buyers of tech. The largest since mid March. You see that showing up in Nvidia for one hits a record high today. You can take a look at that stock. They report earnings a week from today. As we now know, Jensen Huang is in China with the President. A last minute addition. Nonetheless important because does something come out of that? Is there something that Nvidia comes home with out of that, out of that trip? And Nvidia has been running away from the mega caps of late into earnings up 8.5% in a week.
- [08:26]
Joe Terranova
Interesting. So effectively zero data center revenue from China. Those were the words from Jensen Huang at the Citadel conference. Remember that last year was 13%. Well maybe he comes away with slightly more than zero. Maybe that's the reason why Nvidia is at a new all time high. Maybe that's the reason why Apple today is at a new all time high. Maybe that's why Alphabet and Amazon in the last week have recorded new all time highs. This has been the consistent dominant theme for the entire second quarter. This hasn't emerged out of nowhere. The market for the entire year has been rotating from sector to theme to factor. And right now it's about growth and it's about momentum. One day ago we were sitting here and debating whether the 3% decline in momentum was something that was going to be a very isolated one or two day event or if it's going to be a multi day event. Well here you go. You learned isolated an isolated one day event and it comes back stronger than ever. I don't know how anyone can make a strong argument for the market's ability to broaden out with oil at 103 and the 10 year approaching 4.5.
- [09:38]
Scott Wapner
And you know what's interesting too Brennan? I want you to react to this. What Wells is talking about today, that the fact that the they say a closed strait of Hormuz actually fuels the AI trade bubble. In their view you can't own anything but AI. That's how a bubble forms. We expect limited downside until either growth slows core inflation meaningfully accelerates or the war evolves into a hot war. Don't fight the tape. I mean it takes, that takes a little bit of what everybody here on the desk has already said and takes it a level further. Don't fight it. Don't try to get too cute. Play the hand that you got and what's right in front of you. Do you agree with that?
- [10:25]
Brin
I mean, this is, this is Joe's market and we're just living in it because I mean, Joe hit on momentum, obviously. He runs a momentum strategy. The momentum, the energy underneath momentum stocks is parabolic. I mean if you just look at the stocks, which is the soxx, it's like 525, the 50 day is way down in the 3002, way down there. And so it's like this is where we are. And I, I think that the point that Wells and Joe and everyone else made about while the strait is closed and I think the problem is that, you know, Trump plus all of our amazing CEOs are in China right now. The problem with the strait is who is anyone actually talking to? Because the people China was talking to, the people the the US were talking to have all been killed. And so in Iran we have such a fractured government right there. I think this really complicates that, but I do think that there is a high probability that we get some good trade news because you're not going to have all these CEOs go all the way to China and come back with nothing. And so I think we're going to have some really positive green shoots we'll say come out of China around trade. You know, Boeing's been trading really solid. I think that could be really great news for the US But I go back to, you know, this is Joe's market and we're all living in it because you really can't bite the tape on momentum. And that momentum is obviously very narrow being the participants that are benefiting from this really high momentum trade.
- [11:55]
Scott Wapner
Yeah, there. So there's a lot of momentum enough that, you know, the bubble conversation is being had in, in all corners. Barclays today says they're overblown. Maybe there's some similarities to 2000. We're now in a full cycle semiconductor boom powered by real revenues and committed Capex. And that's how people try and make the distinction when you do the analog back to the late 90s. I had David Einhorn of Greenlight with me yesterday at Sohn as well, asked him about similarities from today to back then. Here's what he told me, I actually think it's a little bit more like maybe like 2007 in the sense that you can see some underpinnings that are facing real problems. I mean, gas prices are going up. The, the retail data that is beginning to come down is showing softening at retail. You're seeing a mix towards people spending their money on gas and spending less money on other things. All right, that's David Einhorn. I mean, it's a little like, you know, the suggestion that we're just whistling past the graveyard here, ignoring all of these supposed warning signs because we're, we've got tunnel vision around this trade which is just lifting the market from here to the moon.
- [13:08]
Steve Weiss
Yeah. And look, the stocks that we talk about in the show and generally public stocks are not at risk of going to zero as so many were. 99. That's the difference. However, if you take a look at the Cisco's of the world that were trading, I forget, maybe it was a few hundred bucks a share or whatever they did trade down meaningfully to $50 a share. So it showed, you know, who, as they say, whichever had closed, whichever had no clothes. So there will undoubtedly be evaluation reset as we get more than a tremor in the story. So the question is, how far can you go? You know, how long do you want to stay aboard? I cut 10%. You were out, but I cut 10% of my micron holdings.
- [13:51]
Scott Wapner
Literally. Looking at that stock squarely as you, as you're making that statement, didn't know you were going to, going to go there, but I see it up another almost 4% today. It's up 86 plus percent percent over the last month. By the way, the, the DRAM ETF, remember that Krinski flagged the day it launched. Like, hey, this could be a moment of a, of a top there now obviously proved not to be the case, but how about this stat? Since the launch on April 2, it has accumulated more than $6 billion in assets, beating even the blockbuster 2024 debut of BlackRock's iShares Bitcoin Trust. The IBIT which we talk about on this show, which many of you may in fact own yourselves every step of the way since the March low. Micron's up 125%, AMD is up 118, Marvell 90. And there's a big drop off Broadcom Lam. They're only up 37% respectively. But that trade in and of itself is why people mention the word bubble to begin with.
- [14:55]
Steve Weiss
Right? And then people come back, say well, what do you mean? It's only selling it like 8 to
- [14:59]
Scott Wapner
10, 7, like microns, like 7.
- [15:02]
Steve Weiss
Well, I think it's moved up a little bit on the earnings. But the reality is I look at the historic multiple on this and it's normally six times, right. You get spikes in the revenue, but it's always been treated as commodity. Now, I always hate to say these words. It's different because they do have contracts that through 28 for all their capacity. But nonetheless, you know, you know, as George Santa Yam said, you know, those who don't know history are doomed to repeat it. So at some point it'll reset. I think it's early for a reset though.
- [15:36]
Scott Wapner
I'll tell you, B of A, Joe, is hiking price targets for the semis. There's a chase, you know, an obvious chase. By the way, Morgan Stanley raised their S and p target to 8,000. Okay. From seven. So the great chase is on in terms of price target hikes. Let's show you a micron again, because B of A has taken a number of names up micron to 950. So you're not even at. You're knocking on the door of eight. They go to 950. They had it at five. That's how dramatic price targets have been blown by. Look at the AMD 500 from 450. You've got Nvidia up. I think we all know about that. Marvell gets a lift. Joe, you got a lot of exposure
- [16:22]
Joe Terranova
here, of course, because that's where the momentum is. The rate of appreciation that we're currently seeing can be identified by one word, parabolic. And generally parabolic is cyclical. Parabolic is not secular. Now, you have two choices. You could ride along with the momentum, or you could sit out on the sidelines and wait for the market to ultimately turn. As a professional, I choose to participate in the current momentum wave. I believe that's the right thing to do. I'll be able to understand when it's time to remove some of the exposure that I have in that direction. By the way, Brin and I just want to be clear, I want to be totally humble about this. Brim is Brin is saying, it's my market. It's a momentum market. I'm underperforming because I have the quality overlay. You can't have any overlay right now. It is all about specifically momentum in its purest single form. But the other alternative you have right now and sitting out on the sidelines is where do you go with Your capital, where you want to put it in bonds, do you want to put it in health care, do you want to put it in financials?
- [17:23]
Steve Weiss
Where do you turn?
- [17:24]
Joe Terranova
Right now the only place identifiable that you see the sustained revenue growth is in technology and it's related to, to the AI. Build out cloud infrastructure, utilities, nuclear, it's that entire universe. But it's very narrow, it's very concentrated and candidly it's a difficult environment for a money manager.
- [17:43]
Scott Wapner
I'll tell you what, it's concentrated even within the momentum space. Like if you look at the MTM and you are just assuming that, well of course it looks like that because it's loaded with exclusively tech names. No, there's financials, there are other things within the mtu. Not everything has participated in this incredible run. Excellent point from the March low, Liz. I wonder what you make of this just ridiculous chip move. It's hard to come up with the right words to describe what the charts are showing. Sometimes maybe it's just better to be quiet, look at the chart and then lean on you to tell me what that says.
- [18:25]
Liz
Well, I mean clearly it says we have a more narrowly led market than we did perhaps pre war. The, the rebound that we've seen, I would say is, is more fragile because it's narrowly led. But here's what I would come back to. So what if it is a bubble? So what? Why not enjoy it for a while? Because if you look at where we are, even if it is inflating, when I think about what a bubble is and what would pop a bubble, it is a clear sign of excessive risk taking in financial markets. Are we seeing that? I don't think we are yet. We're seeing extension, maybe pockets of it. We are, but not broadly. You'd have to see leverage really fall apart. You'd have to see credit spreads start to blow out. You'd have to see some obvious insane moves and spending that doesn't make any sense.
- [19:11]
Scott Wapner
Well, some people would say what's happened with some of the chips, like a micron for example, is all the indication you need. It doesn't need to be as broad of a bubble tell as you're painting, it could simply be, well this could be a sign that this is getting a little out of hand. But even as you're saying if you think it is getting a little out of hand, but I told you that it's going to go on for another year or two, like what are you going to do? You're going to sell out of these names Today.
- [19:40]
Liz
Exactly.
- [19:41]
Scott Wapner
You, that's the point you're making. And that's kind of the point that Paul Tudor Jones made the other day is, I mean, okay, there's some rhymes with, with prior history, but this could go on for another year or two.
- [19:52]
Liz
Right. And the, I mean, it's fair to talk about the 90s as a comparison, but the reality is when you look at the names that are driving this market higher, the multiples are nowhere near where they were before that bubble burst. So I think there's still time. And anecdotally, a couple weeks ago I was in front of a room full of 600 people. I asked them, do you think we've reached the peak yet? How many of you think we've reached the peak yet? One hand went up, the other 599 said we haven't. So even that alone, even if they're wrong, they're, they're going to drive the market higher because if we don't think we've gotten to the peak yet, people are still buying.
- [20:25]
Scott Wapner
They are like I told you at the top, like what bank of America's flow was that you've had the biggest buying in, you know, whatever period of time that, that I ended up citing off the, the, off the top of the, of the program that the biggest buyers of tech's the largest since mid March as I look back. By the way, you're going to get an ipo, a hot ipo, and that's Cerebras, which is preparing for an IPO this week, which is going to be a very big story. They're going to price it after the bell today, likely above the range as most of the reporting has suggested. I should give you a heads up too that Brad Gerstner is going to be here at the New York Stock Exchange on set with us. They're a big holder of that name. So we'll get his take in the Trump trip to China. Jensen Huang there. What could he come back with if anything? So that's a well timed visit from Mr. Gerstner. We mentioned Apple hitting a new high today. Alphabet's a top pick, Amazon's overweight at Morgan Stanley. And how about this? We continue to watch software too, which is trying to run off that four week win streak. The comeback still down a lot obviously, but nonetheless the comeback has some wondering. Have we seen the worst? Is the rebound legit? Here is Orlando Bravo yesterday with me at.
- [21:49]
Steve Weiss
So it's so hard to predict the markets, but I really think so. I mean these software stocks, many of
- [21:56]
Joe Terranova
Them are great leaders.
- [21:57]
Steve Weiss
They're in an excellent position for this AI wave and they're pretty cheap.
- [22:01]
Scott Wapner
So I do think we're pretty close to a bottom. All right, Dan Ives goes Oracle 275. Bryn, how about that? Close to a bottom. You've had a nice rebound to say the least. Datadog outlier up 90%. We get it. Oracle up 38%. Zoom 29. Snowflake 25. Applovin up 16.5%. That's from just April 12th.
- [22:23]
Brin
Yep. I think that go back to IGV, which is that good basket of software names. IGV could go to $100 with just a little bit of positive sentiment. That's, that's going to be, that's going to be the 200 day moving average. And so I think $100 is fair. What's interesting about these companies, Microsoft, Adobe, ServiceNow, look at the cyber stocks. The earnings are going in the opposite direction of the stocks. Regardless of what people may think may happen in the future, the earnings of these software companies just continues to get stronger and stronger. Which is, I think what's frustrating a lot of investors is just there's no energy going to these names. And so why do stocks go higher? Because there's more buyers than sellers. Why do stocks go lower? Just the reverse. And so I think until we get some type of event, $100 seems fair that we can see IGV. But I just don't think these stocks in general are just going to start running because there's no energy around buying these names and holding them long term. So I mean I added to Microsoft the other day at 4:11 and I think it's at what, 404? It seems like it's going to go back above, back below 300, 300. So it just like is what it is. This moment in time when no one cares about these stocks outside of central technical moves upward.
- [23:41]
Scott Wapner
Joe, Cisco, just finish off our A block with just one more word on tech. They report after the bell today.
- [23:49]
Joe Terranova
Yeah, you're looking for about 15 billion in revenue. That's up 10% on the year. Networking equipment is going to be dramatically in demand through over the coming quarters.
- [23:58]
Scott Wapner
Remember one thing, bread and butter business of theirs. Sure is.
- [24:01]
Joe Terranova
Remember one thing about this company last quarter. If we could pull that chart back and show the response after the quarterly earnings, they had a precipitous decline, the biggest decline in four years. Why? Because of the challenges related to supply of memory. And those challenges affected Cisco's earnings. So kind of watch out for that tonight, see if they've repaired that condition. If they have, expect a good earnings report. We'll see what the stock goes.
- [24:26]
Scott Wapner
Okay, we'll take a break. We'll come back, we'll do our calls of the day. And it's a sign of the times, I guess this market. Six bullish calls on six committee stocks later. We're also seeing some big options activity today in one of Steve Weiss's names. We're going to go to Chicago for the very latest options action there. We're back right after this. What made you confident that you could
- [24:48]
Liz
do something that hadn't been done before? I have no fear of failure.
- [24:52]
Julia Boorstin
Trailblazing women, changing the game.
- [24:54]
Brin
One of my favorite pieces of advice, think about what your boss's boss needs.
- [24:59]
Liz
Leadership can look in many, many different forms. It really does come down to just trusting yourself. Life is short and you just gotta think big to accomplish big things.
- [25:08]
Julia Boorstin
Julia Boorstin hosts CNBC Changemakers and Power Players New episodes every Tuesday. Wherever you get your podcast.
- [25:30]
Scott Wapner
Calls of the day. Top pick at B of A is Robinhood Brin. Valuations 50% cheaper over the last six months. Opportunity knocking here.
- [25:41]
Brin
Yeah, I saw that. I feel like that's more of an observable fact versus a catalyst. I think this is a good example of a Stock that was at 150 a year ago looked kind of parabolic and now it's settled in. I still own the name. I'm actually selling calls right now. I have some calls that expire next month at 80. $80 is some resistance for the name. So I'm happy to sell calls because it's the stock still has high premium but I don't think the Stock being down 50% is an observed is a catalyst to go higher.
- [26:09]
Scott Wapner
It's hard to Weiss I guess be bullish on the trade and sort of only focus on the technology side of it and not the industrial. Which is why UBS today reiterates their buys on Vernova and Vertiv.
- [26:23]
Steve Weiss
Yeah, I mean those are directly and look there once a power source which is sorely needed. We see headlines every day about towns, you know, rebelling against data centers. A bunch of reasons but part of it is the increase in their utility bills. Yeah, I think that's got to be worked out.
- [26:39]
Scott Wapner
And the zapping of their water supply.
- [26:41]
Steve Weiss
Zapping the water supply.
- [26:42]
Scott Wapner
Water pressure.
- [26:43]
Joe Terranova
Yeah.
- [26:44]
Scott Wapner
Issue that came up. This is a, this issue is going to be and going to remain a extraordinarily hot button one in every election cycle for the foreseeable future.
- [26:55]
Steve Weiss
Right. And we're invested in a company, Mainspring Energy, which makes a linear generator. It's agnostic as to what their power sources for lineage. They use the food waste. It could be hydrogen, it could be ammonia and it could be nat gas. So those are the type of things that we're getting good traction there with some of the hyperscalers. Those type of things you're going to see.
- [27:17]
Scott Wapner
What about cat neutral at Rothschild and Redburn raising estimates on their capacity upgrade quality. Cyclical. I mean the chart. Let's pull that chart out. I don't know if you want to do year to date or whatever you want to do. But the stocks had to run, obviously, right? To say the least. There it is. Year to date, up 50, 58%.
- [27:36]
Steve Weiss
Yep. And up. I'll own it a year on May 26, I believe. And at that point I would expect to see after 150% gain my position come down quite a bit.
- [27:49]
Joe Terranova
You own more of it than you know. We bought it on April 30th for Jyoti and it's. It's in that entire universe. GE, Vernova, Trane Technologies, Quanta. Those are the names right now that are benefiting in different regards whether it's cooling, power generation.
- [28:06]
Scott Wapner
Are you. Are you overexposed now or are you good? You realize what he's doing?
- [28:11]
Steve Weiss
Large position. I'm actually looking to. Are you a buyer of more? I may have some for you in a couple furtive.
- [28:16]
Joe Terranova
We've got the whole universe.
- [28:19]
Scott Wapner
All right. Heiko, initiated by it. Same firm, Rothschild, Redburn, price target 360. You own that?
- [28:25]
Joe Terranova
Not particularly happy about this one's down 11% year to date.
- [28:28]
Scott Wapner
What's the problem here?
- [28:29]
Joe Terranova
The problem is in the aerospace industry. They are challenged right now in the aftermarket you're seeing contractions for growth and margins. They're being punished for it. Maybe from a valuation perspective, you can make an argument that the 290 area is an area that you want to defend. But from the momentum factor standpoint, it's deteriorating significantly.
- [28:49]
Scott Wapner
That's all.
- [28:50]
Steve Weiss
Aerospace defense sector is been taken on a chin and I. And when you think about it, it's
- [28:55]
Joe Terranova
a great environment for the margins are contracting across the board.
- [29:00]
Scott Wapner
Let's hit energy transfer. Brin. The target gets bumped by a couple of bucks to 24 from 22. Reiterated by it at B of A they love the dividend, which they call one of the most compelling in the entire space.
- [29:15]
Brin
Yeah, it's great. I mean I've owned this name for a very long time time we've you should expect around a 6 to 8% distribution yield. I will say if you don't own it, this stock does give you a K1 by the way versus the 1099. So just you you need to know that. But I love this name. Great growing I would call it distribution yield versus a dividend and continues to be a core name in that midstream area.
- [29:38]
Scott Wapner
All right. Angelica Peoples has the CNBC news update for us there.
- [29:42]
Brin
Hey, Scott.
- [29:43]
Angelica Peoples
Israel's ex premier Naftali Bennett has launched his second campaign to oust Prime Minister Benjamin Netanyahu, who has led Israel for 18 of the last 30 years. Naftali, a former aide to Netanyahu, is promising voters a rebuild of the country as Netanyahu's leadership has been marked by the wars in Gaza, Iran and Lebanon. The army is reportedly cutting training as it faces a budget crunch. According to ABC News, internal documents show the move is up to make up the budget, a shortfall of 4 billion to $6 billion. A US official told ABC that costs from the Iran war and troops at the southern border are the major drivers. The army also dealing with the cost of stepping in during the Department of Homeland Security funding shutdown. And Metta announced it's rolling out an incognito mode for WhatsApp users to have private conversations with its AI chat bot. Mehta won't have access to the messages and they will disappear when the user exits the session. Meta says the move is intended to ease privacy concern that users might have about sensitive information in their chats. Scott, back over to you.
- [30:45]
Scott Wapner
All right, Angelica, thanks. Angelica Peoples, Coming up, your options, action. Oliver Renick, he's flagging some big bets on one area of tech today. He's going to tell you exactly where when we come back and head up to or out to Chicago, up and out, I guess.
- [31:05]
Joe Terranova
As America celebrates its 250th anniversary, CNBC spotlights the leaders driving business and the nation forward.
- [31:15]
Steve Weiss
The entrepreneurial spirit in the United States is our secret sauce. It's what makes us the great country we are. The DNA of entrepreneurialism was in this country at its founding. There had to be an entire new way of governing the country set up. And a bunch of really smart people got together and did in fact come up with the most sustainable and incredible democracy that anybody's ever known in the United States. There's a big tent for everybody. Everybody can come in and if you're motivated, want to put your head down, want to work hard, you can find a path for yourself in this country.
- [31:54]
Scott Wapner
What made you confident that you could
- [31:56]
Liz
do something that hadn't been done before? I have no fear of failure.
- [32:00]
Julia Boorstin
Trailblazing women, changing the game.
- [32:03]
Brin
One of my favorite pieces of advice, think about what your boss's boss needs.
- [32:08]
Liz
Leadership can look in many, many different forms. It really does come down to just trusting yourself. Life is short and you just gotta think big to accomplish big things.
- [32:16]
Julia Boorstin
Julia Born CNBC changemakers and power players. New episodes every Tuesday, wherever you get your podcasts.
- [32:37]
Scott Wapner
All right, welcome back to the Half. Let's go to Chicago now. Oliver Renick at the CBO Global markets with today's options and action. Hi there,
- [32:47]
Oliver Renick
Scott. Broad market is firm, but small caps lagging behind. There's a lot of action in China. Let me run you through it. Firstly in the Russell 2000, it's down about 2% from its high last week. Options action in the small cap ETF IWM does look a bit bearish. Puts out number calls 2 to 1 by volume compared to an even spread in the qs or the spy. And the 100% million of premium traded in IWM this morning, about 60% of it was in the puts, which is almost the inverse of what we see in the big cap indexes. It might be a message about interest rates. The 10 year yield is trading at the highest since last summer and small caps are generally seen as more interest rate sensitive. For example, the regional bank ETF KRE is on pace for five straight days of selling. It's something to monitor, but it also might just be symptomatic of rotation in the market as bulls look for new trades, which is the story of the day in Chinese stocks as Alibaba traders completely ignore that stock's earnings miss and call. Buyers stampede in to the tune of $100 million in premiums. For Baba. The Chinese Internet ETF Kweb is now the seventh most popular ticker of the day with over 500,000 contracts traded and a heavy bullish lean with 20 times more calls trading than puts and eight of the ten biggest trades. Buyers of calls expiring within the next three months.
- [34:13]
Scott Wapner
All right, good look, Oliver. Thank you. And we can trade it here because. So you have Alibaba.
- [34:18]
Steve Weiss
I do. Right.
- [34:19]
Scott Wapner
So the K Web, best day since mid January. Alibaba had had earnings. What's, what's your take on, on this name?
- [34:25]
Steve Weiss
You know, watching stock in the premarket. Right. It was down. It was up marginally and it was down. And now it's trading up 7% this is the same story if you took off the ticker and you, you know and you swapped with meta you'd hear some of the same dialog which is that, which, which is that they're overspending to critics on AI and that they're, they're not seeing the return. But cloud growth was 38% of I believe 37, 38% and that's the engine they took the hit you know in terms of investing in the company and it's not a lot of capex near term expense so it brought down the earnings meaningfully. Overall I think the story is well intact that it's, it's my way of playing AI in, in China so that's why I'm there. What about this is cheap stock?
- [35:15]
Scott Wapner
What about the small caps?
- [35:16]
Liz
Can I talk about K web and stuff?
- [35:18]
Scott Wapner
Ed?
- [35:19]
Liz
I've been in K web for a long time to it when it was down over the last call it six months or so and I'm with Steve. I think it's a great way to play the build out in China. I don't think that it has to be that either the US wins or China wins. I think both eventually win and China continues to put itself forth as the low cost producer. I don't think that changes. And as demand continues to ramp up I think we benefit from that.
- [35:44]
Scott Wapner
You got anything on the small caps? Do you want to phone a friend?
- [35:47]
Liz
No, I just.
- [35:48]
Scott Wapner
You want to pass?
- [35:50]
Joe Terranova
I've got something back. I was really.
- [35:53]
Scott Wapner
You can give a handoff
- [35:56]
Liz
honestly, I
- [35:57]
Joe Terranova
mean why should this time be any
- [35:58]
Scott Wapner
different than the other time?
- [36:00]
Steve Weiss
I stay on brand.
- [36:00]
Scott Wapner
I'll go to Joe.
- [36:01]
Joe Terranova
So you have a double digit return for the IWM so far year to date and what is really saving it? It's not the economic condition conditions. It's not a healthier economy of broadening out. It's that momentum in small caps can actually and is be more intense than it is in mid caps and large caps. So the momentum is not isolated to that singular equity size class. It's universal and that's benefiting small cap.
- [36:26]
Scott Wapner
All right, we take a break. Santoli next with this midday work. All right, welcome back. I want to ask you Mike, Mike Santoli is here, our senior markets commentator, overtime co anchor of course this Krinsky note which, which just dropped. Something's got to give as divergences continue to grow. NYSE breadth has been negative on four of the last five days. Yet the S&P is up 100 handles over that time frame. Each of the last four days have seen more than 5% of the S&P components making a 52 week low.
- [37:18]
Steve Weiss
Yes.
- [37:19]
Scott Wapner
So what do you, how do you
- [37:20]
Mike Santoli
assess by the way? Today it's like closer to 9% of S& P components making new lows. I think it's 44 stocks making new lows.
- [37:26]
Scott Wapner
What's that mean to you?
- [37:27]
Mike Santoli
Well, it tells you, I think what we've observed which is this sort of narrow avenue of high conviction. Capex oriented companies are managing to support the index and everything that touches higher oil prices or consumer real incomes is suffering in response. You do have the bond market I think having a measured reaction to pie today, but it's still fueling that that bifurcation. One of those dates that Krinsky notes, in fact the last one was I think October 29th of 2025. That was the previous peak of the MAG7 dominance of NASDAQ dominance. We are now higher than that in terms of relative performance of the NASDAQ 100, let's say relative to equal weight S and P. I was just looking at that. Well higher than that. So you know, for people who worry about the narrowness of the market, it's okay when the rest of the market market is kind of just hanging out or participating higher to a lesser extent. And I think what this mostly is showing is to the degree macro matters to parts of the market, it's weighing on, on returns now. I don't think it means big down. It just kind of means it can't keep going in this particular way for that much longer. You are creating further imbalance.
- [38:39]
Scott Wapner
Okay, so you agree with the notion. I guess the where he goes to is something's got to give. Yes, but eventually something's got to.
- [38:46]
Mike Santoli
Yeah, I mean eventually. Look, the market has shown signs this week of letting the pressure out of semis a little bit and having other stuff get a little bit of a bid. We did that on Tuesday, I guess so I mean maybe, or Monday rather and maybe it could work. I just don't think that's a lot to ask of the market for it to be happening in a dramatic way where you really have a sharp correction in semis and the rest of the market just sort of shrugs it off.
- [39:11]
Scott Wapner
Yeah, it'll be interesting to watch what happens in China too. You know, no one's going to get negative semis before hearing from Nvidia. Theoretically in a week probably not going to be hard to maybe say that.
- [39:23]
Mike Santoli
I should say no earnings kind of let people off the hook for three months worrying about Capex budgets and we're going to use up that time.
- [39:30]
Scott Wapner
Yes, but too like what are you going to get all negative on Nvidia after this? You know, record setting run run is now. Jensen Huang is, is over there.
- [39:38]
Joe Terranova
Well, we'll see.
- [39:39]
Mike Santoli
I mean you know we'll see if that's, if that was just for show or not, you know. But I agree in general I think it's the B of A note today by the way that is much more behind what's happening with Nvidia getting a little bounce today than anything else because it shows demand out to 2030 in a very, very defined way.
- [39:55]
Scott Wapner
Okay, we'll see a little bit later. Michael, thank you. Coming up, a big call on one of this year's worst performing private credit names. One firm says now it's time to buy it. We'll tell you which one next.
- [40:27]
Steve Weiss
I mean look what I own.
- [40:30]
Scott Wapner
Yeah. Okay, we're back. In case you didn't know that we have a big call today on Aries. As B of A names it a top buy they say it is. Brin, you own Ares Capital Corp. The number one private credit manager globally. Strong performance overall underappreciated, appreciated defensive qualities and profit growth visibility from mature Euro waterfall fund realizations and shadow A. So that's, that's the call on Aries today.
- [41:06]
Brin
I mean I think ultimately comes down to does Aries writ large do high quality underwriting across equity infrastructure and credit? It's way more than just credit and they do. And so I think these fee related earnings as they continue to raise capital, especially more on the infrastructure side, those fee related earnings are locked in for a long period of time. So you have visibility. So I like the call. I own ARCC and continue to the BDC and continue to collect I don't know, 10 or 11% distribution yields and I feel those are very solid. So I continue to think that these high quality managers are undervalued and ultimately that will reveal itself in higher stock prices.
- [41:43]
Scott Wapner
Yeah, I mean that the stock prices are down a bunch quite obviously in almost every name. Mark Lasry was also with me yesterday at so and if you recall a couple of months ago he, he had come, come on the show and said yeah, people have a right to be concerned about, about what's happening with private credit. So I asked him, you know that feeling then versus what he thinks now. Here's what he said.
- [42:06]
Steve Weiss
What people are nervous about on the credit side is they want to be able to sell that day. Well, that you can't Do Right. You.
- [42:14]
Scott Wapner
Because they're liquid.
- [42:14]
Steve Weiss
It's a liquid. And, you know, people think, oh, well, it's supposed to be liquid. I should be able to get out. Well, no, that's hard. And if you want to get out, you can. But there's a discount to that. And I think that's what people are upset about.
- [42:27]
Scott Wapner
We think about this.
- [42:28]
Joe Terranova
I think he's spot on. I think it's the growth of an industry that during a period where we saw a dramatic rise in rates, there was an attractiveness to private credit. I think a lot of people gained exposure to it that weren't participating before and they were intoxicated with the return and didn't understand the guidelines and the guardrails that are in place.
- [42:46]
Scott Wapner
Yeah. Weiss should view all this.
- [42:49]
Steve Weiss
Yeah. I mean, look, it's. I think it's tough space. It got very crowded very quickly. So I'm not enamored with it. I do think that you're looking at a survivor there and the big firms that will survive. But the returns are middling now. So what capital is it going to draw? I'd rather be in Treasuries or go out, you know, and, you know, have less risk.
- [43:10]
Scott Wapner
Fundraising takes a hit after all of
- [43:13]
Steve Weiss
this, you know, it's showing that it's not actually. It's showing that institutions are putting more money in and fundraising. They're raising more capital than they ever have.
- [43:21]
Joe Terranova
In particular, hard assets.
- [43:23]
Steve Weiss
Right. Retail is where it's taking a hit and that's not what's driving it. So that.
- [43:28]
Scott Wapner
Well, it was. Well, retail, though, I think you could probably suggest was driving the fantastic growth.
- [43:35]
Steve Weiss
Right, right.
- [43:36]
Scott Wapner
At least the growth trajectory of what these firms thought was a new pipeline of capital.
- [43:43]
Steve Weiss
Right, right. But, you know, that just. That just buffers my case because you're still raising a lot of capital. It's still more crowded. It's more crowded in terms of what you can actually of who you can lend to because we're seeing the defaults. So everybody's going off same credit, so that's going to drop down returns. So I think it's okay, but I don't think there's any excitement. To keep in mind, the returns used to be mid to high teens. And now where are we? Where are we? Mid, Single digit.
- [44:10]
Scott Wapner
Yeah. All right, we'll take a break. We'll come back. And finals are on the other side. Foreign, We'll see at 3 o', clock, closing bell. Look at NASDAQ right Now is up 300 points. More than 1%. Be all over that. Over the final stretch today. Richard Saperstein, Abigail Yoder, Sherry Paul anchor Crawford. So we got a good lineup. Bryn, what's your final trade?
- [44:44]
Brin
Boeing chart looks good. Kelly Ortberg's in China. I think there's a good probability with get a deal.
- [44:49]
Scott Wapner
Okay. Stephen.
- [44:51]
Steve Weiss
United Health. You know, I was just noticing that 52 week high. I think still some legs. And while it, you know, while the market hasn't brought all of health care, it has brought UnitedHealth.
- [45:02]
Liz
Okay, let's you're looking for an AI play that's decidedly not in a bubble. K Web.
- [45:08]
Joe Terranova
All right, Joe T. Fourth time since March 24th. I'm going to buy Apple on the close.
- [45:12]
Scott Wapner
Wow. All right. About 300. I'll see you on the bell. You've been listening to CNBC's Halftime Report, the podcast. You can always catch us live weekdays at 12 Eastern only on CNBC.
- [45:28]
Julia Boorstin
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 and 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 halftime reportdisclaimer what made
- [46:03]
Liz
you confident that you could do something that hadn't been done before? I have no fear of failure.
- [46:09]
Julia Boorstin
Trailblaz pleasing women, changing the game.
- [46:11]
Brin
One of my favorite pieces of advice Think about what your boss's boss needs.
- [46:16]
Liz
Leadership can look in many, many different forms. It really does come down to just trusting yourself. Life is short and you just gotta think big to accomplish big things.
- [46:25]
Julia Boorstin
Julia Boorstin hosts CNBC Changemakers and Power Players New episodes every Tuesday. Wherever you get your podcasts.