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Halftime Report
Is an “Everything Rally” Coming? 10/7/25
00:44:21
Scott Wapner and the Investment Committee debate whether the so-called “everything rally” is still in the cards for the markets and what it could mean for your money. Plus, CNBC’s Kristina Partsinevelos joins us with the latest on a report that Oracle is struggling to make money renting out Nvidia Chips. And later, the Committee share their latest portfolio moves. Investment Committee Disclosures
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- [00:00]
Julia Boorstin
What does it mean to live a rich life? It means brave first leaps, tearful goodbyes.
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Jenny Harrington
And everything in between.
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Julia Boorstin
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Scott Wapner
Edward Jones, Member SIPC this ad is only 15 seconds. In that amount of time, there are likely to be an average of over.
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Josh Brown
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Joe Terranova
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Josh Brown
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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. All right. Welcome to the Halftime Report. I'm Scott Wagner, front and center. This hour is a so called everything rally in the cards for these markets. We will discuss with the investment committee. Stocks are trying to extend their record highs today. Joining me for the hour, Josh Brown, Joe Terranova, Jenny Harrington, Jim Leventhal. We'll take you to the markets here, show you what we're doing. We are red across the board. Gold's up 4,000. First time Bitcoin's been rallying. We've had the S and P at new record closes and there still is a lot of talk, Josh, about whether there's an AI bubble or not. Ken Griffin talks about a sugar high today. He is the one, of course, a week or so ago, whenever that was right on this network which said there's echoes of the dot com era. Paul Tudor Jones was yesterday on this network. I think investors are really seriously trying to get their arms around both where we are and where they think we're going from here.
- [01:57]
Josh Brown
Yeah, of course there's a bubble, but we don't know how early in the bubble we are because a lot of the people who are saying bubble today were also saying it in 2023 when in video quadrupled. So it's, it's, it's really difficult to know who to listen to. It's all subjective. I won't be the one that can tell you exactly when it's the end or the peak of the sugar rush or whatever. But obviously any time you have an environment where there's this much enthusiasm for a new technology and there are literally trillions of dollars being spent, not all of that spending is going to have a nice ROI at the end of the rainbow. Some of it in hindsight will look back and say, oh my God, can you believe so and so spent X dollars to fund, you know, XYZ ridiculous project? It's inevitable. Everybody understands this. But that doesn't mean there aren't real projects that are going to have world transforming outcomes. And it doesn't mean you should say just because there is some speculative activity. Therefore I conclude everything is speculative activity. It's very childish. So I think it's very difficult to separate out which projects are going to be the best. Even the technologists who are this close to the activity couldn't say for sure and they're honest about that. So I think it's very important to focus on trend.
- [03:23]
Scott Wapner
Let me, forgive me for interrupting you, but let's pull up shares of Oracle because it's a, it's an interesting developing story as we have this conversation. And you could see a little while ago these shares took a dip by about 5%. The information is out with a story today which says the following. I'm quoting directly from this story and this is the reason why the stock is lower. Internal documents show the fast growing cloud business has had razor thin gross profit margins in the past year or so, lower than what many equity analysts have estimated. That could raise questions about whether the AI cloud expansions undertaken by Oracle and its rivals will affect profitability and sustain investors expectations. So this really speaks to what you're talking about. But here we have, according to the information, and we're continuing to work on this and we'll try and get you more in just a little bit. Nebias is down on this. You're looking at related names really at a time where we are as an investor class sort of really trying to get an idea where we are, whether there's a bubble where there's been too much spend, whether there's been too much speculation on what the spend will result in. And at least this story right now about Oracle is sending those shares lower. There's core weave which took a move lower on that as well. Josh, I didn't mean to interrupt you, but I don't want to sit on that as we watch that stock go down.
- [04:49]
Josh Brown
I appreciate you bringing that into the conversation because that is exactly what it looks like when some air is let out of these types of bubbles. And the main point that I wanted to make, and I'll make it right now very briefly, so I know we have a lot to get to, is that not every bubble ends in a 2000-2002 style secular bear market that takes the S and P down 57%. That's not how most of the time these things end. Most of the time you'll just see certain names blow up. You'll see valuations contract. You'll see a couple of years of sluggish share price growth as we digest some of the excess of it doesn't always have to be the NASDAQ down 85%. People think there's this binary thing where either the market triples or gets cut in half. And most of market history says otherwise. It's okay if certain people are paying certain high multiples for certain stocks and then that ends. It doesn't mean all of us have to go through Great Depression Part 2. So there's room to say a lot of this activity is justified. While you can also say there are some people doing some insane things. It'll all come out in the wash and I think investors will be okay.
- [06:06]
Scott Wapner
Joe, you got shares of Oracle. Jimmy, do too. But this is about how much money Oracle is generating from the rental of its servers that are powered by Nvidia chips. And that the gross margins are perhaps lower according to the information than some analysts have modeled in which is one of the reasons obviously there's been so much optimism around this name. If you broaden this chart out, guys, if you could back to around the earnings report, there it is. I mean you can see that the move higher there on the left hand side of your chart. Remember the stock exploded higher the day that this company reported earnings. So you know, that's the move you're looking at you on the stock. What do you think about this?
- [06:53]
Jim Leventhal
I think that's the euphoria. I think it's represented on September 10th. You know, Josh is talking about a bubble. Sir John Templeton talks about the stages of a bull market. The last stage is euphoria. And in certain areas of the market there will be euphoria. And I think Oracle is a classic example of that. September 9th to September 10th, a parabolic 40 plus percent move higher and then the dramatic steady retracement ever since. Why? Because the spending here is being done by debt and that is not what the market should be encouraged by. What the market previously had been encouraged by in the early stages of 25 and in 2024 is that free cash flow was the catalyst behind a lot of the spending. You don't want to see this evolve into a debt driven cash spend on capex. That's troubling. For the market and I think it's clearly represented here. I understand why Oracle did what they did in signing the deal. They need to suffer in the near term with their profit margins for long term profitability. But in reality for them, maybe they are not best positioned like a Google is or like Amazon to accept that type of financial dynamic.
- [08:06]
Scott Wapner
So there have already, Jim, Ben, been some concerns in the marketplace about, you know, so called circular investments. There was an NBC News story that I thought laid this out. Very easy to, to understand for people if you're wondering, well, what exactly does that mean? So Nvidia plans to invest in open AI, which is buying cloud computing from Oracle, which is buying chips from Nvidia, which has a stake in Core Weave, which is providing AI infrastructure to OpenAI. Right. You come all the way around the circle. AMD did their thing yesterday, right. That stock's higher yet again today. That stock just exploded higher yesterday as well. Which only adds to the conversation about whether there's this massive bubble brewing in this space.
- [08:52]
Joe Terranova
I think it's legitimate to ask the question. I don't think we're going to be able to answer it right now. To me, just based on history, being in the markets, being in business, this feels a little bit like it rhymes with the late 1990s, but not with 1999, more with 1997. I don't want to be blase, but that's just what it feels like. Now why do I say that? Because this circular revenue stream, which is a good way of describing it at all stations along the arc, does seem to have a positive ROI return on investment. Yes, there are questions today, let's face it that they are rumors, but they are questions about the degree of profitability. But we're not talking about losing money at any point along which this circle circular money travels. I am a believer in the velocity of money theory of economic growth. I mean that's, it's a take on Milton Friedman. It's usually applied to the, to the economy at large, but I think we can apply it to the ecosystem given how important that ecosystem is to the economy at large. And as long as this money is flowing and making profits along the way, which it is, we should be fine now for a case like Oracle today. All right, here's a stock that's trading in the mid-40s as a forward earnings multiple. It's up 120% over the last six months. It's susceptible to have some air let out of the balloon, as Josh just said. I think that's a Good way of stating it. You let a little air out of the balloon so it doesn't pop and it actually sets up for the balloon to be expanded further down the line. What I'm saying here, just to summarize, feels like 97, not 99. Go ahead, Josh.
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Josh Brown
You want that skepticism. Thank God they're writing articles like that.
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Jenny Harrington
Agree.
- [10:28]
Josh Brown
You want that. Because in the absence of skepticism, this thing goes parabolic. You're at a. You're at it like a NASDAQ 30,000, Dow 65,000. That is, that's not a good outcome for anyone. And so far, as bullish as people are, we've staved off that particular concern that I would definitely share if we were doing that in markets. But the reality is not, is not that. And when people point out things like Iran and Core Weave, I just, I just default to saying, look, man, these are not the biggest market caps in the stock market. They could get cut in half and the market could survive.
- [11:09]
Joe Terranova
Let's put it another way, taking what you're saying, I mean, oracle right now, 40 times forward earnings. When the bubble in Cisco hit, it was 120 times earnings. By the way I looked the other day at ebay, I think that's one of your favorites. Back at the same time was 400 times earnings. That's what bubbles look like now. The 40 times is projected to go to 24 times for Oracle over the next two years. That is the question. Does OpenAI raise the funds, whether it's revenue or investments, to actually make all this cash come through the circle? That's the question that has to be answered. And it can't be answered by me or anyone. Not today.
- [11:40]
Scott Wapner
Let's bring in Christina Parts and Avalos who can add some insight perhaps. And she follows the space obviously so closely. What do you make of this information report which is having a dramatic impact on several stocks? You know, look, that caused the NASDAQ to. Which is now down 8. 10 of 1% on this news.
- [12:01]
Christina Parts Avalos
I think it's interesting the news comes out the week before Oracle is hosting their big analyst day on Thursday. Which for sure this is going to be a question, right? Specifically, margins on these chips. Margins compared Blackwell versus Hopper. We know that Blackwell is a more expensive chip. And so the, the overarching theme for this piece is that renting these chips may not provide the greatest ROI that we initially thought. But this is just one story, right? One source. Oracle declined to comment so far. And my assumption is that they will have something to share next week, whether it's good or bad, we don't know. But the other thing I was thinking about, you guys are just talking about leverage, right? Oracle stands out from the other hyperscalers. Given the amount of debt that attacked to take on in order to build these data centers and provide the rental. They were very oversubscribed. The proxy showed that a source close to the deal also told me that. So clearly there's appetite. It's just is the appetite warranted when you're taking on that much leverage? And then that also equates to Coral, Reeve Nevius. These are highly levered companies and so that's I guess throwing in the concerns across the board. But it's, there's no shortage of appetite for this.
- [13:12]
Scott Wapner
Christina, thanks. It will continue to follow because it's having, it's a market impact story. There's, there's no doubt about that. We were already, there was an FT story out today which pointed to the enormity of the deals that OpenAI has already signed this year. A trillion dollars, which they said raises questions about that company's ability to fund those. They had an interesting chart about again all the companies that they have done business with. It's why an analyst like Stacy Raskin yesterday on this network regarding OpenAI, there's the chart we're talking about regarding OpenAI and Sam Altman, quote, has the ability, I think to either crash the global economy for a decade or take us to the promised land. We're not sure of which. I thought that was interestingly put by Raskan who follows the chip space as you know, Nvidia, AMD and all of the Broadcom and all the names that we focus on so often. What do you think?
- [14:14]
Jenny Harrington
I love the way he put that. And it really forces you to think, you know, is it that extreme? And where I'm coming out is I don't think it's going to be either that extreme. But when he says, you know, can it break the global economy? We have to acknowledge and between your CNBC story and the FT story, like you just see that there's capital misallocation, right? And it's not everywhere, but there are pockets of massive capital misallocation. And to Josh's well, you're making a.
- [14:39]
Scott Wapner
Declarative statement that we don't, we don't know that there is.
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Jenny Harrington
Oh, we know that there is. You know why? Because every past technology bubble, sorry, every past technology boom and something new, there's capital misallocation. We don't know where it is. I'm not saying it's broadly misallocated. But there will be, we will reflect back and say investors put money in the wrong stocks at the wrong time in huge amounts. And we'll say that companies built out projects that shouldn't have been out, that been built out and then that they under built things. So money is just, there's some degree out there of money that's going to the wrong places. I think we can't underestimate the extraordinary impact that AI is going to have on our lives collectively. And that's enormous. And when it's this big, and to me this feels far bigger than the Internet at least you know, I lived through that dot com boom and the development of the Internet. This feels bigger in terms of what it's going to do to change my lives, my kids lives, all of that. So when we think about that too, it's exciting, but it's also disruptive. And as we sort through this disruption over the next three, five, ten years, parts of Stacey might end up being right where there's parts that are derailed and parts might bring us to the promised land. So it's just a tough time. It's tough to commit to anything. You know, Josh was saying, I'm not going to be the one who tells you exactly how it is. That's the smart answer because none of us can, none of us will. But like I will, I will all day say capital is being misallocated just at this moment in time. We don't know exactly where those misallocations are.
- [16:07]
Scott Wapner
Take a look at Dell. They raised their long term guide. It's a 52 week high. I'm just curious as to whether that stock has taken any kind of a move lower. It obviously has. Again this, this stock was up earlier in the session. It's just made a steady slide lower probably as many of these names are being impacted by that information report. Palantir is up 7% this week. I don't think necessarily related in any way shape or form to this group of stocks. But as you see intraday. Please, please. That stocks come off. It's low as well. So the, you know, it's the disruptors versus the disrupted.
- [16:54]
Jim Leventhal
It is. And I think why we feel uncomfortable about Open Air is because it's a private company and there's a degree of opaqueness to that. What the ultimate effect would be. So you're talking about a company that I've said all along I believe will be $1 trillion valuation. It really, really needs for the benefit of the capital markets to be a publicly traded company because it has so much of effect on it. I think what you're seeing today when you talk about some of these stocks like Dell, is exactly what you want to see in an environment where you believe, as I said yesterday, that the market can, can continue to march higher through the end of the year. You want to see a little bit of the relief taken off. You're seeing it taken off in the right places. Two names you could look at best 2s and P500 technology names year to date. What are they? Western Digital, Seagate. Why are they down as much as they are today? They're down nearly 7% just because it's that relief rally. So I think the market's doing exactly what you believe it should be doing to work off some of that relief. And I think ultimately it works out well for us.
- [17:52]
Scott Wapner
Let's take a look at shares of Adobe as well, which got a price target drop by 50 bucks at Mizuho to 410 from 460, which is obviously considerably higher than where the stock is now. I haven't really come round trip with you on this since prior to earnings you said if it wasn't an earnings report that you liked, you were finally going to sell the stock. You're still sitting in this name. As Mizuho says, from a market perspective, sentiment around Adobe has been extremely negative. There's much skepticism over whether Adobe can defend its moat as barriers to entry and design continue to fall. Much of Adobe's historical strength has been built on the depth of its tools and the learning curve required to master them. But if Gen AI enables high quality creative output without existing training, then the value of that moat diminishes. So you're still sitting in this name, which has pretty much done nothing since its earnings report. So why are you still here?
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Joe Terranova
Yeah, I don't like any of the words that are about to come out of my mouth, but I'm in it because it hasn't gone down. Okay, Scott, and I know how that sounds, but let's put the perspective to it, all right? The last nine quarters, the stock has outperformed in terms of its earnings expectations. And out of those 9/4, 8/4, it has been absolutely slaughtered after earnings. This last earnings report, it did absolutely nothing. I was surprised by that, by the way. I thought either it would get slaughtered again and I'd say, no mas, I'm out, or it would finally be redeemed. But the skepticism is still there. That's why the stock doesn't go up Even after the earnings results, as I said, it's actually longer than nine quarters that have been better than expectations. You're now seeing seeing earnings estimates go up, which is a change. So it's the combination of no bloodbath and earnings estimates going up that have me in it. For now. The skepticism is still there. The skepticism is understandable. It's twofold. It's whether OpenAI anthropic and everybody else is going to replace what Adobe does. And the second thing is whether artificial intelligence kills off the number of seats, the number of jobs that actually use Adobe. Again, till now, we have not seen those fears show up in the results. At some point, one of two things will happen. Either it will show up in the results or it won't and the market will get respect.
- [20:03]
Scott Wapner
Let me ask you question. So you're waiting until the stock goes down to sell it to me?
- [20:07]
Jenny Harrington
I just, I know, Scott, you should just sell it.
- [20:10]
Joe Terranova
But I got it. So here's, here's my final.
- [20:12]
Scott Wapner
Did I wake up like in another, on another planet today? Like what's happening here?
- [20:15]
Joe Terranova
Okay. But let's bear in mind that it is trading at about 16 times forward earnings for a company that has no debt, for a company that buys back shares prolifically and as I said, that has outperformed its earnings expectations time and time again. In terms of. Jenny, I hear you. I should sell it. And you're categorize it as quizzical. I will. Hang on. I will say this. We're getting to year end. This is a Stock that's down 20% year to date in an environment where there is an uptape. I may indeed sell this as a tax loss harvest. I'm going to give it a little more time.
- [20:47]
Scott Wapner
Okay, let's go outside a taxi tech before we get out of this a block. Look at the home builders today. Dr. KB Polti Toll. Evercore has downgraded that group. They believe margins must bottom before the stocks can re rate. We do not believe that this will materialize in the next several months. Take a look at that move in DHI down 5%. You can cycle through the others. I'm sure that must tell a similar story, right? KB Polti, Toll. Can we look at those guys? I bring this up in part because Jenny has made a move in Milrose Properties. You bought it. Mrp. What's the deal with this name?
- [21:26]
Jenny Harrington
So it's really interesting. It was spun off of Lennar in February. And it's a complex structure and a complex company. But the best, most basic Way to think about it is a land bank. And so what Lennar did was basically say, hey, we've got a really high risk, high reward, forward part of our business with high growth. And then we've got this other part that's asset heavy, slow growth, cash flow oriented. Those are two distinctly separate kinds of businesses. So let's spin off the land into this land bank called Melrose. So where you stand is they've got thousands of acres of land covered in 10 different states, very well diversified. It's got a 9% dividend yield. It. The objective of the company is to pay out all of their earnings, all of their funds from operations into the dividend. So 9% growing. They're off to a great start. Actually increased their distribution after their first, after their second quarter call a few months ago. Next one's coming up in a few weeks. Very, very well managed. It's a weird management structure where there's an external management by Kennedy Lewis. But we spent a lot of time on the phone with the management team getting comfortable with that. I think that external structure will keep a little bit of a valuation cap on this. But basically what happens is they, they give Lennar and anyone else who wants to buy their land an option. So Lenar can say, hey, we know that it's cyclically not favorable to build right now, but we also know that it's a cyclical business and we're going to want to build later, three years, five years, 10 years. So we're going to pay you a small option in the interim and then one day we're going to take down that land when we're ready to build. So Millrose is able to really manage their portfolio because they're open, always getting this cash flow. It's a cool story. If you want to buy it, I would say use a limit so you don't run the shares up. Do your own homework and go online and understand the complexity of that structure. There's no way I can do justice to it, but a really high quality company.
- [23:16]
Scott Wapner
Okay. A week ago or so you teased the fact that you were buying a staple name, but you didn't want to reveal it then because you were still buying it, I think. Right. Well, now you've obviously you've sized the position to where you want it. Yep, it's Kimberly Clark. It's KMB 52 week low today with a 4.2% dividend yield.
- [23:34]
Jenny Harrington
Okay. So this is not like, oh, Jenny has some huge edge or wild insight that no one else does. Kimberly Clark KLEENEX Huggies, cotton, L Scots, the most to me, the most consumer staple of all consumer staples names. It's trading at 16 and a half times earnings, a 4.2% yield. They, they really got rid of their international family care and professional business and I think analysts haven't fully accounted for that. So JP Morgan put out a report, I don't know, a month and change ago where they say, like, look, once we really figure out what the new numbers will look like once that business is out is kind of off the books. There's some decent earnings growth ahead. And decent earnings growth for Kimberly means like 3 to 6%, not 15 or 20%. But they've got a price target of $144 on it. Stocks at what, 122 right now. And I think in this environment, if there is wind that comes out of the overall market sales, if there is, when that comes out of the air froth driven area, this is where I want to be. A 4.2% yield, 16 and a half times earnings. Steady earnings growth ahead. Maybe some, maybe some upside as the analyst. Earnings revisions are revised up. Maybe there could be a little bit of multiple expansion. If the market does crack up a bit, this would be an obvious flight to safety recipient. So yeah, not exciting, but solid.
- [24:51]
Scott Wapner
I mean making money is exciting.
- [24:52]
Josh Brown
Are they building data centers?
- [24:54]
Jenny Harrington
You know, yeah, it's pretty boring version of exciting.
- [24:56]
Scott Wapner
All right, all right. Hey, you know, to each his own. All right, so let's do this. We got a couple other moves that we'll save. We'll still get to another one from Jenny. We got a new one from Joe. But let's take a break. When we come back, we have some investing legends from Investing Lessons from a legend. Josh Brown. He just sat down with investing icon Peter Lynch. They talked AI, they talked a whole lot more. We'll get the key takeaways from that conversation with one of the goats of this business. Next.
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- [25:57]
Julia Boorstin
Julia Boorstin sits down with Thrive Global founder and CEO Arianna Huffington.
- [26:02]
Christina Parts Avalos
What advice would you give to young people now trying to navigate this crazy world.
- [26:07]
Jenny Harrington
My advice is to pick a time at the end of the day that you declare as the end of your working day. Because let's face it, there is no end to our working day.
- [26:20]
Julia Boorstin
Julia Boorstin hosts CNBC Changemakers and Power Players. Listen now, wherever you get your podcasts.
- [26:40]
Josh Brown
How involved are you with AI stocks with your own money?
- [26:43]
Scott Wapner
Right now I have zero AI stocks and the.
- [26:48]
Jim Leventhal
Okay, I really could pronounce the video.
- [26:51]
Scott Wapner
All right, zero stocks. That was, of course, the legendary Peter lynch on Josh Brown's the Compound podcast. Lynch ran the Fidelity magellan fund from 1977 and 1990, averaging annual returns of some 29.2%. As you heard, he shared his investing lessons. Josh, what was your biggest takeaway?
- [27:11]
Josh Brown
I thought the most interesting. He said a lot of really interesting things. But the most interesting insight, and this is, I think, very apropos of the show that we do and the audience that we have, is that it's still possible to be a regular person, work a regular job during the day, come home at night, do some research, look at stocks in a way that professionals maybe aren't identify winning products, find trends in your local community or amongst your family and friends and coworkers and capitalize on them. He doesn't think that the technology advantage of professional investors or all the data or all the high frequency trading, he really doesn't think that that's changed anything for the typical viewer, let's say, of the halftime report. He still thinks people can and should embrace the risk necessary to produce big returns in their own portfolio and find great companies to invest in.
- [28:10]
Scott Wapner
I'll tell you what, I love what he said about. He cautioned against scoring, warning all investment ideas just because a stock has already rallied. He talks about sort of after the first inning. Right. Quote, sometimes you don't have to be in the first inning. I think that's such interesting advice. And it matches what I spoke about yesterday with the biotech investor Michelle Ross on Closing Bell, where a stock had gone sideways because she was in it and she was waiting for a trial to be finished to see what the event was going to be. Obviously betting that it was going to be a positive. The stock had a straight up spike. And I said, so are you selling it now? And she's like, absolutely not. Because this is just the beginning. And it's sort of the same point. Don't be afraid to invest in a name, according to lynch, just because it's already had a significant move.
- [29:07]
Josh Brown
Yeah. And there are so many examples of that. People told him in the 1980s, he missed it. McDonald's was over. And then it went up tenfold. And you know that, that example we've seen with companies like Amazon, companies like Apple, an obvious example in video, up 10,000% over the course of 10 years. You know how many people over the course of that 10 years said, you missed it, it's over, it just doubled. It just tripled. Stocks on their way to going up to 10,000%, which is really rare. Obviously they go up a thousand percent and there are naysayers. So it's, it's such a great insight, especially now. Judge, look at where we are. Look at what this market has done over the last, over the last 15 years, 16, 17 years since the great financial crisis, it's been compounding at 12 and a half percent, the NASDAQ even more. It's so tempting to look at that and say that's it, I missed it, when in reality it's just not the way the stock market works. Companies compound profits. There is multiple expansion, there are new areas companies get into and restart a growth story that maybe has been dormant for a little while. A lot of things can happen that we can't imagine. And I think it's really important to stay open minded. I think Peter made a really key point for all of us.
- [30:25]
Scott Wapner
Yeah, well, congrats on getting that. He doesn't, he doesn't obviously do much publicly. So it's one of those gets, as we say, Jenny, it's a really good.
- [30:33]
Jenny Harrington
For us all that this, that the starting point is always today. And whether you're buying or selling, you have to say the starting points today. So on that Melrose, that was at a high. On Kimberly, it was at a low. But the starting, it doesn't matter the starting points today. And it's also a good reminder that when you are a technical analysis analyst or even a momentum investor, those tend to look backwards. And what we have as an advantage as humans, which goes to Peter's point, right, is that we can look forward. We can look forward in ways that algorithmic dictated programs can't. So it is a huge advantage. It's a great reminder and really timely.
- [31:08]
Jim Leventhal
I also think that Peter was one of the pioneers of being a true growth investor. Growth at a reasonable price, Jimmy, which you appreciate. And I think at that point the market has made a dramatic turn where the market more and more has built the appreciation and pays the premium for growth over value.
- [31:25]
Jenny Harrington
Yeah.
- [31:26]
Scott Wapner
All right, let's get the headlines with sima Modi. Hi, Sima.
- [31:28]
J
Hey, Scott Johnson. And Johnson must pay $966 million to the family of a woman who died of mesothelioma. A jury found the company was liable in the lawsuit that alleges its baby powder products cause cancer. J and J has said its products are safe and stopped selling talc based baby powder in the US in 2020. Switch to tech news OpenAI said today it banned several chatbots accounts with suspected links to the Chinese government. The company says the users asked for proposals for a tool to conduct large scale social media surveillance and to promote another that scans social media for extremist speech. The bans were revealed in OpenAI's latest public threat report. And after teasing fans yesterday with an announcement of code, the decision of all decisions, LeBron James unveiled this morning that he'll be selling a limited edition of cognac with Hennessy. The announcement comes amid speculation that it would be about James's retirement, according to subhub. By the way, average ticket prices for the Lakers last game of the season jumped from $250 to$500.500 with an hour of Monday's post.
- [32:33]
Scott Wapner
Scott, we should have known better. Yeah Seema. Thanks Sema Modi alright, coming up, our calls of the Day one hedge fund tighten out with a bold call on gold. It just topped 4,000 for the first time ever. We'll debate that coming up. Plus other trade updates from Jenny and Joe. As I said, we're back after this.
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21+ sponsored by Chumba Casino Julia Boorstin.
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Julia Boorstin
Sits down with Thrive Global Founder and CEO Arianna Huffington.
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Christina Parts Avalos
What advice would you give to young people now trying to navigate this crazy world?
- [33:31]
Jenny Harrington
My advice is to pick a time at the end of the day that you declare as the end of your working day. Because let's face it, there is no end to our working day.
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Julia Boorstin
Julia Boorstin hosts CNBC Changemakers and power players. Listen now, wherever you get your podcasts.
- [34:03]
Joe Terranova
We're back.
- [34:04]
Scott Wapner
Take a look at gold today, above 4,000 for the very first time ever. Bridgewater's Ray Dalio today saying investors should have 15% of their portfolios in gold. Jeffrey Gundlach told me what month ago, 25%. That's, that's interesting from Dalio. Right. Today is like the early 70s. He said investors should hold more gold than usual.
- [34:27]
Jim Leventhal
Do you have a take on a reflection of momentum? And it's clearly the strongest commodity right now. Gold and silver for price performance. It's, it's validating that point. I do think from the standpoint of central bank policy, when you see central banks as aggressive as they are right now in adding stimulus, that is a time historically where you do want to own gold. So you have the fundamental and technical tailwind behind it. I don't know it in a particular Investor portfolio of 15% is the right number. It's, you know, your portfolio is like your fingerprint. It's individual to you. But I do think you should not look away from some form of ownership of gold or silver.
- [35:08]
Scott Wapner
You have a thought on that?
- [35:10]
Jenny Harrington
Yeah. So in a way, it's almost like how I like owning the MLPs versus oil as a commodity. I like owning the producers or the, you know, the interim step. So we own Freeport and Rio and those have some part of their businesses as gold production. I like being there rather than owning it. There's more. I think there's more utility for an investor and for a portfolio from an actual company that produces earnings versus just the commodity. Where you really are. Where you really are. At the risk of other people's behavior and other people's emotions, there's no actual intrinsic value in gold. All you have is other people getting excited about it and bidding it up or running it down. I like companies that make money.
- [35:52]
Scott Wapner
I mean, Ken Griffin talked about this at, at a Citadel securities conference in New York yesterday too, where he said, quote, we're seeing substantial asset inflation away from the dollar as people are looking for ways to effectively de dollarize or derisk their portfolios. Vis a vision. The US Sovereign risk gold has, quote, a life of its own. As you see sovereigns around the world, see central banks around the world, see individual investors around the world go, you know what? I now view gold as a safe harbor asset in a way that the dollar used to be viewed. That's what's really concerning to me. Josh, do you have a thought on that? Because he's making a broader statement clearly by making those comments. Is Ken Griffin as part of the reason why people keep flocking to gold and most don't see this run anytime, ending anytime soon?
- [36:46]
Josh Brown
Yeah, it's really bad financial advice. Consult with a financial advisor or financial planner before you put 25% of your net worth into a commodity. People need to forget. There's a lot of recency. People need to remember. There's a lot of recency bias here and people should not forget that like any commodity, gold has boom, bust cycles. It's perfectly normal, has unbelievable bull markets like the one that we're in right now. It's also had periods like very recently topped in 2011, didn't get back to that high until 2021. That's an entire decade of no returns. In the meanwhile, stocks did really well. So it's not anti gold. Not telling you don't buy some Newmont, don't buy some, you know, gold mining stocks or don't hold some gold alongside some of your cash and your Bitcoin. I would not tell, I would not tell people not to own gold. I would say don't put a quarter of your liquid assets into a commodity because if and when it does have its next lost decade, you're really going to be sorry. Because to Jenny's point, there is no cash flow here. There's no dividend, there's no valuation support. It's only a function of whether or not it's in a bull market or a bear market. Sure, but I hope it goes to 5,000.
- [38:04]
Scott Wapner
It's not so much that the bigger argument, the one that Griffin is making is that whereas the dollar used to be viewed a certain way, people are shunning their view of it. Like they have like, like ways. They just have an extreme now looking gold. They're looking at gold as a safer harbor asset than the United States dollar.
- [38:30]
Josh Brown
I mean, until it falls 20.
- [38:31]
Jenny Harrington
What, the actual.
- [38:32]
Josh Brown
Until it falls 20%?
- [38:34]
Jenny Harrington
Yeah, but it also depends on what the actual dollars behind that are. You know, and I don't know these numbers, I don't know how many dollars are going into gold versus going into US Dollar equivalents. If that's not meaningful. He's bringing up like, look, there's something big and existential here that we haven't seen before. So I agree with him on those risks. I will say one thing on my part. I'm not advising a single one of my clients to put any money in gold. It doesn't make sense for their portfolio.
- [38:58]
Scott Wapner
Quick break. Come back with those moves from Jenny and Joe. Eamon Jabers is at the White House with breaking news for us. Eamon, what do we know?
- [39:19]
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Scott, President Trump just wrapped up a rather congenial session with Canadian Prime Minister Mark Carney in the Oval Office. Took some questions from reporters. They are engaged in bilateral trade talks today and the rhetoric anyway, around all this was relatively positive. Both leaders, leaders seemingly aware of the tensions between the two countries due to tariffs and trade and the president's comments about Canada becoming the 51st state earlier in the year. They seem to be at pains to suggest that relations are much better now. No real specifics emerging from this session. Scott, in terms of Canadian trade, the president just saying that he wants to get a comprehensive trade deal with Canada that works for him. Carney, for his part, saying he wants the best trade deal for Canada, saying that he hasn't been as eager to do a deal with the United States as some of his European counterparts, perhaps because he doesn't see that deal on the table just yet. So we'll wait for some specifics here. But the president and Mark Carney in a relatively upbeat frame of mind heading into those talks. Also, the president suggesting that that issue of back pay for federal workers, he says he's aware of that. The law requires any federal workers who are furloughed now to receive back pay once they come back to work at whatever point that happens when the government shutdown is resolved. He said he's aware of the law. The law is the law, and it's correct. So that would seem to put to bed the idea that the federal workers might have to go without their back pay forever. And there were some economists who were looking at, you know, what kind of overall economic impact would that have in the United States and in particular regions around the country. That seems, Scott, now to be less of a concern based on what the president just said.
- [41:01]
Scott Wapner
Okay, Eamon, thank you very much for that. That's Eamon Jabras at the White House. Those moves from Jenny and Joe are next. Okay, let's get to those moves I promised you, Jenny, you sold easterly government properties dea. Tell me more.
- [41:28]
Jenny Harrington
So I worked out of this very carefully over the last month using a tight limit. If you're going to sell it, use a limit. But this is the company that I've loved over the last few years where they have essential government buildings like FBI buildings, DA buildings. No risk of getting cleared out. But the management really just didn't handle the debt structure well and the company could never grow. So I held on to it for three years. I lost 50% on the share price. I made 25% on the dividends. So net loss overall. New management team last year, I gave them another chance to see if they could figure out how to make the company grow because it's a great portfolio. Buildings they couldn't. I'm out. I'm just cutting the loss.
- [42:03]
Scott Wapner
Okay. Okay. Joe, you bought the xbi. You said you would and you did.
- [42:07]
Jim Leventhal
I did. I bought it yesterday afternoon. And I truly believe you need to take a little bit of a small position here. I think what we could potentially be seeing is a multi year breakout if price could exceed last November's high at 10547. I think it's supported by the fundamental change, easier monetary policy yields moving lower and clearly an improvement in sentiment towards small caps and biopharma.
- [42:29]
Scott Wapner
Okay, thank you very much for that. We also have Delta earnings tomorrow before the bell, right, Jimmy?
- [42:34]
Joe Terranova
Yep. Airline traffic has been very good. Now we are flying blind, pun intended, in terms of TSA statistics, which I know you love, Scott, so I know you miss them. Nonetheless, traffic has been good. The problem is is there's probably going to be a comment from Ed Bastian about the shutdown affecting the forward demand picture. Hopefully the stock market looks through that. It should because the airline picture looks very good.
- [42:54]
Scott Wapner
Why is the stock down 6? Would you, can you put that back up, please? I think just can look at it fast enough. All right. Six months, good year to date. Still not great. Why?
- [43:05]
Joe Terranova
You know, it never really fully recovered from that Liberation Day fall off the, the estimates by the way for this year's earnings never came all the way back. Frankly, I see that as an opportunity, Scott, why?
- [43:17]
Scott Wapner
Everything else has recovered well from Liberation Day. Why wouldn't you?
- [43:20]
Joe Terranova
It's recovered some. It hasn't recovered enough, I think. Let me just say one more thing because you and I had this conversation, Scott, not that long ago about the back of the plane being maybe a little bit more empty. By the way, that's not corroborated by TSA statistics. And more to the point, it's the front of the plane that matters for profitability. We'll see if that comes true on Thursday, Jenny.
- [43:37]
Jenny Harrington
But here's what I think on why it hasn't recovered. When we came out of Liberation Day, money flowed back in to the primary plays, the first derivative and the second derivative. And I would argue, Jimmy, that Delta in the long run should be a huge play like that should really benefit their business. They should be able to upgrade systems and change the business. But it's not seen as, as anything touching AI. So I've seen everything that doesn't touch. I just take a back seat over the.
- [44:04]
Joe Terranova
You know what, they make a lot of free cash flow a lot. They sure paying down debt and eventually they're going to Buy back shares at this cheap price.
- [44:09]
Scott Wapner
Okay, we'll take a quick break. We'll come back with finals next.
- [44:37]
Jim Leventhal
Are you following the Halftime Report podcast?
- [44:39]
Josh Brown
What are you waiting for?
- [44:41]
Joe Terranova
Look for us in your favorite podcasting app. Follow the Halftime podcast now.
- [44:49]
Scott Wapner
I hope you join me 3 o' clock Eastern today on the closing bell. Liz Thomas and Walsh, the CIO of Guggenheim, is with us today. Ashley McNeil of Vista Equity Partners, looking forward to both those guests, Jason Snipe and Martin Norton as well. Let's do finals. Josh Brown, what do you have?
- [45:07]
Josh Brown
Viva Systems. Last week was my best stocks in the market. Looking for a breakout. It broke out now about above 300. Don't say I never gave you nothing.
- [45:16]
Scott Wapner
You talked. We talked about Viva a lot this week. Right? That's. You have that.
- [45:20]
Jim Leventhal
Yes.
- [45:20]
Scott Wapner
Weiss was. Was bullish on that.
- [45:23]
Josh Brown
There it goes.
- [45:24]
Scott Wapner
There it goes. Farmer Jim.
- [45:26]
Joe Terranova
Pacific Gas and Electric. This is a California utility. It got unreasonably smacked down with the wildfires earlier this year. Its liabilities are nowhere near what the market feared and it's got good momentum right now.
- [45:38]
Jenny Harrington
Konag on theme with my boring consumer staples. Congratulations. At 10 times earnings, 7 1/2% yield. It just seems simply oversold.
- [45:46]
Scott Wapner
You just love those staples, do you?
- [45:48]
Jenny Harrington
I do. I do. It's a nice place to hide, like taking a warm back.
- [45:52]
Scott Wapner
What? You don't worry about any, all right?
- [45:54]
Jenny Harrington
Just know the money's coming to you, okay? Dividends just chinking in.
- [45:57]
Scott Wapner
Joe.
- [45:58]
Jim Leventhal
Natural gas prices moving higher recently. Equities. The way that you play it, I think we're hitting the restart button on.
- [46:03]
Scott Wapner
The bull rally stuff. Thanks, everybody. I'll see you in a couple hours on the closing bell, the exchanges. Now, you've been listening to CNBC's Halftime Report, the podcast. You can always catch us live weekdays at 12 Eastern only on CNBC.
- [46:21]
Julia Boorstin
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 halftime reportdisclaimer Riley Herbst.
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