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Halftime Report
Is a Year-End Run Likely? 12/13/24
00:44:15
Scot Wapner and the Investment Committee debate the year’s final stretch and whether another run for stocks is likely. Plus, Broadcom surging today after earnings and hitting a trillion-dollar market cap, it’s our Chart of the Day. And later, the desk detail their latest portfolio moves. Investment Committee Disclosures
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- [00:00]
Scott Wapner
Are you still quoting 30 year old movies? Have you said cool beans in the past 90 days? Do you think Discover isn't widely accepted? If this sounds like you, you're stuck in the past. Discover is accepted at 99% of places that take credit cards nationwide. And every time you make a purchase with your card, you automatically earn cash back. Welcome to the now it pays to Discover. Learn more@discover.com creditcard Based on the February 2024 Nelson Report what's your boldest, truly ambitious life goal?
- [00:33]
Josh Brown
Everyone has one and everyone deserves a.
- [00:34]
Bryn Talkington
Way to get there.
- [00:35]
Josh Brown
That's why Estate street offers a wide variety of ETFs to give all investors access to the market and the chance to reach their goals. Like with DIA where you get 30 US blue chip stocks in a single trade.
- [00:45]
Bryn Talkington
Wherever you're heading, getting there starts here with State Street.
- [00:48]
Steve Weiss
Before investing, consider the fund's investment objectives, risks, charges and expenses. Visit ssga.com for perspectives containing this and other information. Read it carefully. DIA Subject to risks similar to those of stocks. All ATF's are subject to risk, including.
- [00:58]
Scott Wapner
Possible loss of principal.
- [00:58]
Steve Weiss
Alps Distributors, Inc. Distributor 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. Welcome to the Halftime Report. I'm Scott Wapner. Front and center this hour, the year's final stretch and whether another run for stocks is likely. We will discuss and debate with the investment committee. Joining me for the hour today, Josh Brown, Bryn talking to Steve Weiss, Kevin Simpson. We will check the markets here. A little bit of work to do before we hit the weekend. Today. We're in the red across the board, but our big question, Josh, today is two and a half weeks to go in the trading year. Do we have another run left in the tank? I think that's what all investors are wondering today.
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Kevin Simpson
Yeah, it's a good question. And my, my tendency would just be to say seasonally speaking. Yeah, we probably do. This is a year where you don't have a lot of tax law selling. There's an interesting stat that's been floating around at my firm about how many stocks have outperformed the index this year. And it's a huge number relative to prior years, which means market wide you just don't have this same tendency that you might have for people to be blowing out losers. There really aren't any. And so that's like a, I think a nice underpinning and Then you just have this NASDAQ story. You basically have a situation now where anyone who's been underweight tech, anyone who's been underweight, top 100 market cap type names is going to be pulling the trigger on the long side and not on the profit taking side because it's been almost just impossible to keep pace with that index. But a lot of people are paid to do exactly that. They're not buying cheap stocks. The forward PE for the Nasdaq now is 29.9. That's not higher than where it was in 2021 but it's, it's fairly high. When you look at the mega caps judge and this is, these are, this is like the new benchmark basically for active managers. Six of seven are within 5% of all time record highs. The only one that isn't is Nvidia which by the way doubled. So it's, it's that type of market. And I think what that favors is that next tier of stocks, not MAG7 per se, but like the next 50 stocks that they met, they might be giant, they might already have gains. But I still think you're going to see people pouring into those stocks to dress up their books. It happens on the heels of every type of year that went the way this one did. We didn't have a correction this year. We didn't really have a pronounced dip. And now people are just like I'm still, I'm still too defensive or I'm still sitting in too much cash.
- [03:54]
Steve Weiss
Brent, seasonality points to these last two and a half weeks being strong. I got some great stats for you too since Josh went the way of the mega caps. According to Dow Jones Market data, as of Wednesday's close, Mega cap tech companies have seen a collective valuation surpass $18 trillion for the first time ever. That means their shares are now worth more than the annual GDP of every single country in the world. In the world with the exception of the US and China. That's astounding.
- [04:29]
Josh Brown
Yeah, yeah. And I think that, that, that that end doesn't see anywhere near in sight. I think just thinking about these stocks relative to the rest of the world, if you have the misfortune to own international stocks this year, the IFA is up around 7 and a half percent year to date. And so it's like there has been this vacuum and this sucking sound going out of every other country into the US and then even more so and I would say mid cap growth companies and these mega caps. And so it looks right now especially going into the inauguration. I think seasonality is going to be different this year. I think seasonality or the trend is going to definitely push through towards the inauguration with the excitement around that. And I think that, you know, these mega caps especially that some of them were sleeping for a little while, have woken up and people are reallocating back into those positions. I do think that what's interesting underneath the market, you know, we have a position in the equal weight RSP and really since Thanksgiving you've seen this breadth under the market of those stocks just more deteriorating while the mega caps are going higher. So it's definitely that whole idea that we're going to continue to get a broadening of the market. I see it in the mid cap growth names but I'm not seeing that definitely in these equal weight names. And so to me, I think as the year comes to an end, the volume becomes way lighter. We are going to see the direction of the market higher. I think the magnitude though is going to, is going to be not so much just because we're going into the end of the year and we've had such a banner year already. I really want to see that equal weight, those start to pick up and carry its weight.
- [06:14]
Steve Weiss
How about this Weiss? All nine days of the all trading. All nine trading days of December thus far there's been more decliners than advancers. You had negative breath in this market. Exactly what Bryn is talking about. Which is why you have people like Pascarello at Goldman today Talking about the Mag 7 being a freight train. Find the freight trains and get on them. How about this? 12 years ago the market cap of the MAG7 was $1 trillion. Today it's 18 trillion. Right. I just read you the 18 trillion note. And surpassing the GDP of all basically the world except for the US and China. But is that freight train going to just keep going to the next station, to the next station, to the next.
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Bryn Talkington
Station in those 25, you know, factoids that that Tony put out in his note. Yeah, they were all really interesting. So. So Tony, thank you for that.
- [07:06]
Steve Weiss
Yeah, he talks about these companies, they reinvest 60% of their cash flow, three times the growth rate of the 493. So it makes the case of why you have been there and why you should continue to be on that freight train.
- [07:20]
Bryn Talkington
Yeah, and as you know, I've never left that. So the only time cut back positions is after I've added to them for trading positions when they've sold off like Google, like Metta, etc. So I still think It's a place to be as you look forward. In addition to bitcoin, which again, I don't believe has any fundamental case for it, that's the safest trade right now, Bitcoin. And I believe, as you see this parade of CEOs to mar a Lago and the contributions to the inauguration that that's going to continue. They all know that now they've got to play nice with Trump to appease him because that's a recipe for not only cabinet position, but also for your.
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Steve Weiss
Business being Amazon contributing a million to the inauguration. We've heard about Mehta doing that after Zuckerberg had dinner with the president elect down there and Pichai was there, you know, yesterday as well, there's a parade.
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Bryn Talkington
So as you take a look, and you maybe have some uncertainty about the economy, as we're seeing, going back to your question about nine days with negative breadth, you saw a lot of pull forward immediately after the election, as a fact, in fact, leading up to the election. So now, despite the massive inflow of capital into equity funds that we've seen, the question is the right one. I agree with Josh that the seasonal, the seasonal pull is so strong you're likely to see continued movement into the end of the month. But if you take a look at today, the reversal pretty stark in Nasdaq. So I don't think you're going to see a big move up. But I think on the margin you.
- [09:00]
Steve Weiss
See now, part of the issue is if you have a trading strategy like yours, Kev, you get an Apple, for example, called away from you because the stock has been on this nine day in a row, intraday high streak, the market cap approaching $4 trillion. It's been a runaway freight train to borrow. Pascarello's phrasing again, you did have the stock called away. Can you give us more details?
- [09:27]
Josh Brown
I feel like we went over the same trade a year ago. And I remember this is the, this is the 10th time in the past 13 years that we've had our Apple position called away in its entirety. And you never like to see it go because we love the company. But from a valuation standpoint, I'll give you a few stats as to why we might be able to get a re entry point a little bit lower. And going back in history, of the nine previous instances in which this has happened, seven of them we were able to get back in at Apple at lower prices, in some cases much lower. There were two times, Scott, where we just had to go back in and pay up a Little bit. Now, I didn't brag about those two instances, but number 10, we have to wait to be seen. But over the past three years, we haven't really seen the earnings growth or the revenue growth that we have with some of these other mag sevens. I mean, you're Talking about probably 10% revenue growth in the 12 months ending in 2021, September they did 366 billion. Same time period this year it was 390 billion. So it's not as explosive as we might think. If you like to look at multiples, the multiples are a little bit stretched on the trailing, little bit stretched on the forward. So we may get a chance to buy this stuff stock back. Stay tuned. We'll see what happens with number 10.
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Steve Weiss
You'll see if you get a pullback, but it's been a runaway express. And the price target today goes to 260@ Baird. The price target goes to 273 from Woodring at Morgan Stanley. This thing's been pretty much incredible, right? And some have suggested, I mean, I raised the question to Woodring the other day whether, you know, Tim Cook's been so deft in how he's navigated his relationship with President, then President Trump. And now we'll see what the residual impact is. Sure, we'll see what the impact now is with, with Trump, you know, in the White House yet again. But he's, he's deftly managed that. And that's not lost on people who follow the stock either. And then now if you just assume that the upgrade cycle is going to take hold, you know, sooner now rather than later, we've been waiting a while. What's to keep the stock down?
- [11:26]
Bryn Talkington
Yeah, so. So I had thought when they talked about Apple Intelligence, this would be the biggest upgrade cycle ever. And I still think that's going to be the case. And the move you've seen recently in the stock is, I believe, highly correlated to the release, the new release of Chat GDP and Gemini. So we've seen now they are adding that AI functionality. If you read Joanna in the Wall Street Journal, who I highly recommend, she said, look, this is, we're finally getting there, but there's enough reason to go out and buy the phone just yet for this. And she said I wouldn't, basically. But nonetheless, it's coming. So the, so they'll put these incremental advancements with AI and I think that'll keep the stock going. And so even if they have another squishy quarter, I don't think it matters because that's what's happening to the fundamentals.
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Steve Weiss
Rin, what do you, what do you see when you look at this stock? Again, let's just underscore a three and three quarter trillion dollars. It's getting closer to becoming the first $4 trillion company ever.
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Josh Brown
So I had said, you know, for the past couple of months, I think Apple would move along with the market. And so if you look at, you know, the Qs, the S and P are getting close to the qs are at 30%. Apple's around the same. And so I think it's just, it's moving along with the market. I own it, I have all the products.
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Steve Weiss
But I do, I wonder if that's backwards. I wonder if the market's moving along with Apple.
- [12:56]
Josh Brown
Yeah, that could be the case. Right. Because it is such a big constituent of both. So you're spot on. I do think though that these and Apple, we get that they juice their earnings because they do so many buybacks, but ultimately you do want to see revenue growth actually start to come in and be in there. And so I think to Kevin's point, he's seen, you know, he got called away. I think that he could easily get back in the name. And so I do think there's a lot of theoretical things that are going to happen with the Apple AI. They've had a good history of delivering wonderful products. These are not their products though. These are CHAT GBT products. I'm just not sure. And so I would be open to the idea that when earnings come out over the next two quarters, if we don't see a pickup in the 16 and we're not actually seeing a push through of anything monetarily in the earnings, does it then deserve to have the continued market performer, whether it's leading or lagging, it's following along with it. I think that's an important question for 2025.
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Steve Weiss
Hey Josh, what do you make of speaking of mega caps that are on the run? Alphabet up 10% this week alone.
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Kevin Simpson
Yeah, I probably should have waited to trim it by a week, but that's how the ball bounces. Can I go back and say one thing? On Apple, this is the most incredible thing. The largest, most famous investor in the world basically liquidated his position and the stock responded to that by rallying 25%. This is just. We have never seen anything, we have never seen a stock like this ever included inclusive of Nvidia. Just given how long this has been going on for this, this rally, how large the company is, and it almost Works regardless of the feedback on product because this iPhone was not particularly well received. Nobody was blown away by the embedded AI tech. Maybe they will be as things develop and the stock worked anyway. And it just calls into question so much of what market pundits chatter about when they try to linearly connect a product cycle with a stock price. It just very often, Apple in particular just very often defies what any of us think is the way the market actually works. So I think it deserves to just be mentioned how the second half this year has been for Apple.
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Steve Weiss
It's a good point, especially related to the Berkshire thing, because we wondered what the impact was going to be when they were selling such large chunks of their stock there. And yet the, the market, the, the stock itself hasn't really. You want to hit on Amazon too, by the way, the price target today goes to 260 over at Baird. So here we go once again that, you know, as these stocks elevate here you have chase. The street continues to chase.
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Kevin Simpson
Well, I had trimmed Alphabet so that I had more capital to buy Amazon because I'm not looking to increase my exposure to the Mag 7, but I just felt Amazon was the better setup. It's nice that Alphabets rallied. I'm still there, but this is really, this is the one. This stock broke out above, effectively resistance dating back to the middle of 2020. It spent the last three and a half years in the penalty box owing to excesses from the pandemic era and post pandemic turnaround. But I think you'd have to say technically speaking, Amazon looks as good as any stock in the S&P 500 right now. It is clearly under accumulation. This breakout has been extremely powerful. It's been accompanied by high volume and I would say if I had to only own one Mag7 name into 2025, this would still be the one even at today's. You have to keep in mind how long this stock has sat out the rally and now I think it's playing catch up. If you're not long Amazon, I think it's going to be a situation where you're going to say three to six months into this coming year. I can't believe I sat that out. So I'm super bullish and I really feel that as an AI player, this is still an underrated name. Given the progress they've made in chips and given how powerful that ecosystem is as a layer of AI, they're going to be everywhere this year. When we talk about the AI story, Weiss.
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Bryn Talkington
Yeah, look, it's I own it. I own all the max.
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Steve Weiss
You agree with that assessment? I may be the best of the bunch. Yeah.
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Bryn Talkington
I don't know about that. I don't know about that. I think it's, I think it's going to do well. But I also think that a lot of their business obviously is predicated by the consumer. Even though the money, most of the money is made in the cloud now keep mine in the cloud. That they paid 10 billion to Microsoft to use their cloud tools. That's in addition to the other expenditures they have on data centers, etc. So that's going to drive, in my view, it's going to continue to drive the earnings. And they are building their own tools and like Metta and like Apple, they're building their own chips.
- [18:26]
Steve Weiss
You feel great about your position in the stock today?
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Bryn Talkington
I do feel pretty good about it. I do feel pretty good about it because they just continue to, to be a leader in both areas.
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Steve Weiss
Let's talk about our chart of the day. It's tech, it's Broadcom. It did hit $1 trillion in market cap on the back of an earnings beat. Revs did miss. But their AI revenue for the year has more than tripled. You take a look at that performance right there. You don't see that very often. 6 price target increases today. Stacey Raskin over at Bernstein. Overall, the AI story really seems to be coming into its own. Perhaps Hawk, he's talking about Hock Tan. The CEO might think about shopping for a leather jacket. Obviously referencing Jensen Huang of Nvidia. Kev, you own the stock.
- [19:10]
Josh Brown
Yeah, I mean I think that the numbers were decent. The reaction to the share prices is unbelievable. This is one that we don't have a covered call written against it. So that's even better.
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Steve Weiss
No, that's better. This is no call away here.
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Josh Brown
Yeah, we don't have to talk about Apple. So the you talked about the revenue. They were up 44% year over year. 51 billion in revenues is an all time high. 19.4 billion in free cash flow. And if you look at valuations, which I was critical of Apple on this thing at 35 times earnings is not egregious by any means. Especially if they're five year projections of 21% earnings and 44% revenue can continue. You can make a case that it's still cheap here. But I probably got to write a call soon and get it covered up.
- [19:49]
Steve Weiss
Yeah, Bryn, what about the chips now, right. Which have so dramatically underperformed software? For example, six losers over six months out of the SMH. Qorvo's down near 40%. Microchip tech down 34. ASML is down in the 30s, as is intel and Micron. Applied Materials is basically at that level of decline. Lam Research just below that, down 27%. You have Nvidia. Obviously that stock has underperformed the other MAG7 names. Mellius today wonders whether it's getting set to reload in 2025. Now maybe the chips are going to end the year with a bank too. I don't know. Maybe Broadcom's move today does that. They suggest that people are going to walk into 25 and realize they're underweight in video by accident and be forced to load up once again.
- [20:37]
Josh Brown
I have never been a fan of smh. I think that the semis in general have been very specific ones. You've had AMD over time. But this year Broadcom, Broadcom and Nvidia are what you've wanted to own. And so I don't see next year all of a sudden saying I want to have a basket of these names. I think you could have investors say, hey, Broadcom, I'm going to lean into Broadcom and in video. But I think you have to question the general basket because investors have become, I think, very laser focused on not the general basket, whether it's software or semis of which companies are actually going to benefit in the near term from this spend. And I think last night, while they're while to Kevin's point, their earnings were fine. What they're predicting in a new revenue stream by Broadcom in 2027 is just exorbitant. And so I think that's what the Stock is up 20% for. So I think you want to stay narrow in this space, stay away from SMH, because if you look at the median performance of SMH, I think the median stock is up 1 or 2% this year. So stay specific, stay narrow in the names that are working. And I think that in video and Broadcom will be beneficiaries clearly in 2026 because everyone else is telling us they will be all the other hyperscalers.
- [21:57]
Steve Weiss
Let's talk about some moves real quick. And it the first one to me relates to what's happened in Momentum this week, which has been wrecked. Mongo is down 18 and a half, for example. Supermicro17. I've mentioned AppLovin every day because it's been an extraordinary drop of 17% this week too. Robinhood, I think you can pair it in that list if you want to down 4%. Why do I bring that up? Because you bought it, Bryn. It's a new buy. And why.
- [22:22]
Josh Brown
So, yeah, you know, I think we all lived through robinhood in the GameStop days of 2021. And I was definitely no fan of a lot of things that were going on within the company. And I think over the last couple of years we've really seen this company grow up. And I think what's spectacular as an investor, you can actually go on their website and they print out, they show their monthly metrics, which I think is very helpful for a young company like this. And when you look at what's happening, you know, just looking at this year, their assets under custody have gone from 100 billion to 100990 billion. And their crypto trading, which was 5.9 billion in January, in November was 35 billion. And so I think you have this company that is continuing to grow and get market share from the coinbases, the Schwabs, the fidelities. But you have this intersection and Vlad talked about this of you have this two decade wealth transfer between the baby boomers and the kids and the grandkids, which is a secular trend. But in the short term, you know, in Q and Q in February, we will get their earnings and they're looking for revenue and earnings growth of 70 and 200%. And so I think this is a really.
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Kevin Simpson
Yeah, I wanted to ask you about that. So the stock has been an incredible performer this year. Yeah, it's really one of the biggest back from the dead stories in the markets in 2024 and they deserve a lot of credit. From my perspective, it seems like they're not picking a lane and they are expanding horizontally into two areas that seem to almost be counterproductive vis a vis each other. At the Market Council summit in Vegas this week, Steve Quirk, who's their head of brokerage, formerly of td, was walking around talking about the custody business, which they're now in via the acquisition they just made.
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Bryn Talkington
Yeah.
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Kevin Simpson
But then they issue a press release saying we're going to do sports gambling. Will a lot of financial advisors want a custody on a platform that's also open to people gambling on football and basketball games? So I guess I Wonder, going into 25, what is this company going to be? Is it for gamblers or is it for people entrusting their retirement savings?
- [24:43]
Josh Brown
Yeah, I think Vlad would say he, that they aren't meaningfully going into sports gambling. And so he was on, I think with, with Andrew and Joe and was saying that's that's not what they're going to do. So I would, I would, I would question that could be wrong. I don't think I am. And so I think where to me though as an investor which you know, Fidelity and schwab have what, 13 or 14 trillion. This company has 190 billion. But I think what's important, what I think they're doing to help younger investors is the Robinhood retirement program has 10 billion in assets under custody. So very small relative to the world. But as these newer investors are getting onto this platform, I think it's going to be very sticky. But they're also doing this Robinhood retirement, they'll do a matching which to you, Josh, you and I are in the same business that's so important to get away from this meme ification and doing zero day options. And so I just think this is a company that I wanted to take a toehold position. I like what they're doing. Their metrics are great. And I just think going into the next, the next decade or so this has the potential to be a much larger company with a much bigger impact.
- [25:50]
Steve Weiss
All right. We will watch that chart. Bryn, thank you for that. And we'll take a break. We'll come back. We do have more moves. Kevin Simpson's got a couple. Steve Weiss has one. Josh has made one that he talked about at the very end of our show yesterday. He'll go into more detail after this break.
- [26:11]
Scott Wapner
Are you still quoting 30 year old movies? Have you said cool beans in the past 90 days? Do you think Discover isn't widely accepted? If this sounds like you, you're stuck in the past. Discover is accepted at 99% of places that take credit cards nationwide. And every time you make a purchase with your card, you automatically earn cash back. Welcome to the now it pays to Discover. Learn more@discover.com creditcard based on the February 2024 Nelson Report.
- [26:41]
Josh Brown
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- [27:14]
Scott Wapner
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- [28:23]
Steve Weiss
We are back. More committee moves to talk about you bought more cme. Tell me about that please.
- [28:29]
Josh Brown
We did. I was teasing this for the past couple weeks where we were looking for a special dividend which they've consistently paid in December, January this year they did announce a $5.80 special dividend up from 5:25 last year. Almost a 10% jump from that. When you add that 580 special dividend to the standard dividend, we're getting a 5% yield on CME. Great company. Playing off the Robinhood trades. This is where people will trade next year. We think the stock's cheap here and will go higher.
- [28:56]
Steve Weiss
Okay, you have a new buy, a new position in Raytheon.
- [29:00]
Josh Brown
Yeah, we wanted to get back into defense. We had Lockheed called away last year. We've owned Raytheon off and on over the past decade. Again from a valuation standpoint, very low price to earnings ratio which we like. Record free cash flow, record record earnings. We live in a scary world, Scott. It's important to have defense contractors in here also for aerospace as well as airplane manufacturing. As Boeing has problems. It benefits Honeywell, it benefits RTX. We like the space and went from 130 down to 115. So we took a shot at it.
- [29:29]
Steve Weiss
Okay, we will watch that one too. Vertif you bought more.
- [29:32]
Bryn Talkington
I did buy more. Look, you know, a couple of conversations with the company, it's just too cheap here. There's nothing, there's nothing negative going on. A couple of insiders did sell but the big guy there and CEO hasn't. And everything you hear, whether it's Broadcom or it's in video or it's Taiwan semis all about data centers and guess What? You're not building data centers without these guys. So to me, it's a phenomenal opportunity to get in at this level. Stock was over 140.
- [30:02]
Steve Weiss
Okay, Josh, at the very end of our program yesterday, I didn't want to get lost in the shuffle. You mentioned you were buying more Uber. It's been a dip, you know, just to say the least. Shares are down 25% from the all time high hit just a couple of months ago on October 11th. You want to just take us through why you decided now is the time to buy more?
- [30:25]
Kevin Simpson
There's this weird dynamic going on in the market where they like, they equate everything that's good for Tesla as being bad for Uber, which is really weird because there are no cyber cabs on the road and there aren't going to be tomorrow or the next day. But for whatever reason, every time Tesla rallies, Uber sells off. So there's like this misperception in the market and they also equate Waymo developments with being bad for Uber when meanwhile the number one problem Uber has is capacity. They don't have supply. They want more. They want there to be more potential rides on the road, not less. And they have a partnership with Waymo that they're testing in Austin and Atlanta. And I think it's like a kind of situation where people just don't understand the way this ecosystem is going to develop. They think it's going to be this winner take all thing and all of a sudden no one's going to need an Uber because there's going to be 20 million Waymo cars on the road. And of course that's not what's about to happen. So the stock is 30% off the highs. It's in its worst drawdown since the 2022 bear market and the third worst drawdown since inception. It's 30 times trailing earnings, 26 times forward earnings. Way too cheap when you consider the growth rate. The RSI is completely washed out at 28, severely oversold. And if you look back at the average return for Uber, one year later, following an RSI of 28, it's 48%. So I think the stocks are screaming by Goldman Sachs today. Agreed with me. Their analyst Eric Sheridan made it the number one pick, the top pick in the space because of that risk reward that they talk about. Their target is 56% higher than where it's trading. A 96.
- [32:23]
Steve Weiss
$96.
- [32:25]
Kevin Simpson
Yeah, he. Here's what he has to say. Uber is mired in a series of short term debates. I agree the debates range from inflation and pricing to the rise of autonomous vehicles. I think the bears are on the wrong side. Goldman's CAGR expected. CAGR is 16% on gross bookings and 39% on EBITDA between the years 2023 and 2026. And after listening to the CFO speak at Barclays earlier this week, I've never been more confident that this company has, has everything going for it. So I wanted to add to it. It's an average up. My average cost is significantly lower than where it trades, but I don't care when it gets to 100, which is where I think it's going. I'll have that much more to celebrate.
- [33:19]
Steve Weiss
Okay. All right. Good stuff. Bertha Coombs has the headlines for us today at Bertha.
- [33:23]
Bertha Coombs
Hi, Scott. Former speaker of the House Nancy Pelosi has been admitted to a hospital after she sustained an injury during a congressional visit to Luxembourg. The Pelosi spokesperson said she is recovering, quote, an excellent treatment, but didn't share details of the injury. Pelosi was traveling with a congressional delegation for the 80th anniversary of the Battle of the Bulge. A suspected Chinese spy with business ties to Prince Andrew has been barred from the UK over concerns that he could be a national security threat. That, according to a British immigration tribunal, which said Thursday the government determined that the unnamed Chinese national could have misused his influence because the royal was under, quote, considerable pressure at the time. And the U.S. air Force confirmed today that unidentified drones were spotted earlier this month flying over Ramstein Air Base in Germany, as well as other sensitive locations. A spokesman said the base's residents and infrastructure were not impacted and that the military continues to monitor the airspace around the base. A lot of those mysterious drones.
- [34:35]
Steve Weiss
Back to you, Bertha. All right, thank you, Bertha Coombs. Coming up, we're going to trade school. As Bitcoin fights to stay above 100k. It's above 101 right now. Kevin Simpson just made a remarkable trade in the options market. To capitalize on the crypto boom, he's going to run through his strategy. He'll take you to school. Coming up.
- [34:58]
Bryn Talkington
Is it time to reimagine your future? The right business skills may make a difference in your career. At Capella University, we offer a relevant education that's designed to focus on what you need to know in the business world. We'll teach professional skills to help you pursue your goals, like business management, strategic planning, and effective communication. And you can apply these skills right away. A different future is closer than you think with Capella University. Learn more at capella. Edu.
- [35:29]
Josh Brown
Oh my God, it's the coolest thing ever. Hey guys, have you heard of Gold Belly? Well, check this out. It's this amazing site where they ship the most iconic famous foods from restaurants across the country, anywhere nationwide. I've never found a more perfect gift than food. They ship Chicago deep dish pizza, New York bagels, Maine lobster rolls and even Ina Garten's famous cakes. Seriously. So if you're looking for a gift for the food lover in your life, head to goldbelly.com and get 20% off your first order with promo code GIFT.
- [36:15]
Steve Weiss
Bitcoin crossing back above 100k today. And while Wall street might be embracing the crypto craze, Main street yet to fully buy in. Senior economics reporter Steve Leesman joins us with what the data says from his latest All America survey. I suppose you could look at this two ways, hesitancy or some might suggest opportunity as a result.
- [36:35]
Steve Leesman
I think that's just the way to look at it. Right, Scott? You know, it may be the hottest thing on Wall street, but that's not true on Main Street. Yet we do show in our CNBC All America economic survey reluctance among Americans to embrace it. Yet there is some opportunity for the virtual currents if they can gain the confidence of the broader public. 13% say of all adults are 1000 adults surveyed say they own crypto. And you can see 32% of those are 18 to 34, 9% 65 and older. They're more college grads than they are have high school education less than they're more Republicans than they are Democrats. We don't know who's smarter, but perhaps we know given the rise of bitcoin, who is richer at least for the moment, just 7%. We asked what I think is the ultimate confidence question, would you take your salary In Bitcoin? Just 7% say yes, 22 say 32% say no, but maybe someday and 61% say never. With 10% being unsure. Now crypto is finding greater acceptance as an investment. But Scott, old fashioned stocks that are really hot right now, take a look. We asked about the best investment, real estate down 9 points, stocks up 9 points, gold about even savings account and cash a little bit more popular given what the interest rate on those accounts right now. And you can see crypto up 4 points as we asked in 2022. Just Scott, real quickly, 40% saying now it's a good time to invest in stock. That's the best we've had since 2022. Comes with Republicans being more optimistic about the future and about the stock market.
- [38:04]
Steve Weiss
Can you. Do you know what the age breakdown of your survey is? Because you could say, you know, if it, if it, I don't know. What is it? Do you know?
- [38:13]
Steve Leesman
I don't know, Scott. But typically what we do is we try to model what we believe the population to be so it shouldn't skew either younger or older. In this survey, we basically try to model both the voting public, usually this is all adults, but generally the voting public, the Democrat, Republican split and the age group split as well.
- [38:32]
Steve Weiss
Yeah, I mean, you know why I guess I asked that is because if you did a survey, I'm sure of a much younger skewing investor, you may have a higher number of or less hesitancy relative to crypto, just given what's happened recently. But I don't know. We'll see. Steve, thanks.
- [38:48]
Steve Leesman
Okay, sure. Go ahead. Say Pew Research did a survey as well. They found very similar demographics to what we felt. We found 17. They found 17% ownership of crypto out there. So in that range is about where you want to think about it. I don't know. 11 in 6 maybe is probably a way to think about it. And like you said, this survey shows if they can gain the confidence, you could probably gain acceptance and have more people owning it.
- [39:14]
Steve Weiss
Yeah. Good stuff, Steve. Thank you for that. Steve Leesman. So we already know Bryn owns the iShares Bitcoin Trust ETF and Grayscale Weiss has been buying Bitcoin. I want you to take us through what we teased though this trade related to MicroStrategy. Tell our viewers exactly what we're talking about here.
- [39:32]
Josh Brown
So we're talking about MicroStrategy. We think about it in our growth portfolio as a proxy for Bitcoin, a leveraged up proxy. When I talk about covered calls or when Brent talks about covered calls, it's often so boring. We're putting 50 cents in the cookie jar. Dollar in the cookie jar. Forget the 50 cents or the dollar. When it comes to trading options on MicroStrategy, it's insane. And I don't think that's an overstatement. So we own the stock. Let's just say we bought it for 350. It's trading around 390 right now. We wrote a covered call with the $700 strike price. Keeping this really simple. It allows us to double our money on MicroStrategy from 350 to 700. And we have one year in which to do it. So not A short term call for two weeks or a month. We did this for one year, but we brought in $160 a share, $160 a share for it to double. So effectively, if we get called out of MicroStrategy in January of 2026, we're out at $860. And what that illustrates isn't the gambling nature of the option market, but how options are priced based on volatility. Rarely we see this type of volatility again, but just a very, very interesting thing to take advantage of. And for us to bring in $160 as a hedge against a $350 stock seems like a very prudent and conservative way to play.
- [40:48]
Bryn Talkington
I imagine if you look at the puts, you wouldn't be in the money puts till 240 hours. Right.
- [40:54]
Josh Brown
It's insane.
- [40:55]
Bryn Talkington
Yeah, it's insane. So it cuts both ways. But look, and this is an extreme example, but I always look at some calls and puts on, on some typically calm names in the defense sector and they're not that common anymore. Some come down 30% and you can't make money selling calls against them. Right. And on that sector. Right. Unless they really, really skyrocket and you can't, unless they really collapse. I'm sorry. And then you're only taking that small premium and you can't make money buying puts on them. So you sort of stuck with what you have here. But that's an unusual example and I'm actually going to take a look at it.
- [41:33]
Steve Weiss
All right.
- [41:33]
Josh Brown
Yeah, I've never seen anything like.
- [41:35]
Steve Weiss
Yeah, yeah. Well, the rise since the election alone has been extraordinary and we'll keep chatting with you about that. So Mike Santoli's coming up next with his midday word right after this quick break. Our senior markets commentator Mike Santoli is here at post 9 for his day word. We've been entertaining the questions off the show. Is there enough gas in the tank for this last two and a half weeks to have a run?
- [42:21]
J
It's, it's interesting because there's one way of looking at the last two weeks which has really developed into a pretty determined sell down of the average, average stock. We're down 4% and the median S and P stock and say that's actually the way of rebuilding fuel for, for a run into the end of the year. You had to burn off definitely some excessive optimism and froth. You had huge inflows in the few weeks following the election. So maybe this is just the market kind of, you know, resetting its feet and, and trying to get going. But I do think you have to be alert to the fact that, you know, yields keep creeping up. The cyclical parts of the, of the market are not easily able to tolerate it. The homebuilder stocks look like they're very wobbly at this point. And you just wonder if people are starting to question the universal, you know, economic nirvana, nirvana case for 2025. You don't want to declare anything. We're only 1% off the highs in the S and P. Sure, it's not a big deal, but I do think you have to sort of be attuned to the, to the message and the short term while also granting that the first half of December was supposed to be weak and you should start to pick up some seasonal tailwinds.
- [43:27]
Steve Weiss
Yeah, that's right. Seasonality is on the bull side for sure. I'll see on closing belts. Mike Santoli up next, going under the radar for an update on the three stocks that Josh flagged as potential breakout candidates. Part of his list of the best stocks in the market. He's. That's a new name. He added a new name. He'll tell you what it is. All right, we're back with a trade update now on some of the stocks that Josh has told us were poised for a breakout. On December 5th, our program accomplished cloud flare was one Johnson Controls and Ferguson Enterprises. Josh, you want to give us an update here? Cloud flare is up a bit. Obviously Ferguson is a, is a big loser here, down more than 15% after a big earnings miss. Just take us through this. And I tease the fact that you do have a new name, presumably because Ferguson is being bounced to the garbage can.
- [44:32]
Kevin Simpson
Yeah, Ferguson reported for Ferguson reported earnings and it comes off on a weekly closing basis. And part of the strategy is not getting married to stocks that are either breaking out or on the verge of a breakout. Because when breakouts fail, the part the whole purpose of being involved in the name is gone. And so moving on is important. I think Cloudflare really looks the best of the bunch still. And JCI Johnson contrast still on the list. Look, these are stocks that have been working all year. What this is not is a value strategy or trying to buy a dollar for 60 cents. That's not what we're doing here. What we're saying is these are the best stocks in the market at the moment and trying to identify a setup where we can either capitalize on a breakout or anticipate a breakout and have a predefined amount of risk and have that kind of as a stop so that if these don't work, you're on to the next. Speaking of the next, I want to show you guys Emerson Electric. I'm not in this trade yet. EMR is the ticker. There's something really remarkable fundamentally happening with this company coinciding with the rally it's had this year. Basically, Emerson Electric is a company that's been around since since 1890. It's one of the most well known industrial stocks. But not a lot of people understand the technological transformation the company has been going through. They have a new CEO as of 2021. He basically sat down with the outgoing CEO and said, here's everything that's wrong with the company. The outgoing CEO said, maybe you're the guy for the job. The rest is history. If you look at gross margins at this company, they are climbing and climbing and climbing. And the reason why is because of the software business. They just completed an acquisition of a company that they owned a lot of already, Aspen Tech. And they are now becoming a tech company out of the shell of an old industrial company. Worth watching this thing as it breaks 130.
- [46:40]
Steve Weiss
We will. It's at 131. All right, thank you for that. We'll do finals next. Hope you join me on closing bell, 3:00 Eastern. The former Cleveland Fed president, Loretta Mester. I swat the motor. And he is the dean of valuation, Courtney Garcia as well. Bren, final trades. What?
- [47:01]
Josh Brown
Yeah, if you want to own the Qs but also have income. J P Q, 11% current distribution yield.
- [47:06]
Steve Weiss
Thank you, Josh.
- [47:09]
Kevin Simpson
Starbucks under 100 is a steal.
- [47:11]
Steve Weiss
Kev Simpson, CME Group.
- [47:13]
Josh Brown
I mentioned the special dividend. It goes Exxon 1227.
- [47:16]
Steve Weiss
All right.
- [47:16]
Bryn Talkington
Weiss Bitcoin 100,000 was resistance. Now it's support.
- [47:20]
Steve Weiss
All right, trying to get to 102. I'll see you on closing 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.
- [47:37]
Bryn Talkington
All opinions expressed by the halftime report participants are solely their opinions and do not reflect the opinions of CNBC, NBCUniversal, their 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 an opinion. Such opinions are based upon information the halftime 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 Is it time to reimagine your future? The right business skills may make a difference in your career. At Capella University, we offer a relevant education that's designed to focus on what you need to know in the business world. We'll teach professional skills to help you pursue your goals like business management, strategic planning, and effective communication, and you can apply these skills right away. A different future is closer than you think with Capella University. Learn more at Capella. Eduardo.