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Halftime Report
Is it Time for Risk-Off? 2/25/25
00:43:13
Scott Wapner and the Investment Committee debate the troubled tech sector as the Nasdaq heads for its 4th straight down day. Plus, Jenny Harrington details her latest portfolio moves. And later, Josh Brown reveals his two best stocks in the market.
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- [00:00]
Laura Castleton
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- [00:02]
Jenny Harrington
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- [00:06]
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- [01:03]
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. Hi, welcome to the Halftime Report. I'm Scott Wapner. Front and center this hour, Trouble Tech. The Nasdaq on pace for its fourth straight down day. Many momentum names continuing to unwind as well. We've been all over that, which means we'll trade all of it with the investment committee. Joining me for the hour today, Josh Brown, Jenny Harrington, Shannon Sokotia, Jim Labenthal. I'll show you what the markets are doing at this moment. Dow is barely green. Elsewhere, though it's not great. S and P off 2/3 of 1%. It is the NASDAQ, as we said, where the weakness persists, down 1 1/3%. Josh. So we've got that. We've got Trump talk in Mexico and Canada, tariffs going forward. The president, you have worries about a slowdown. The 10 year is lowest level since December 13th. Consumer confidence was a miss. The Vix is near 20. The momentum trade continues to unwind. I set the table for you. Now I'm going to let you cook.
- [02:11]
Josh Brown
All right, Ready to cook. Rates are not just down in the ten year. I think it's important to point out every duration and specifically the belly of the curve is where you find rates down the most. The seven year is off 10 basis points. The five years down nine to 10. The 10 two year spread, which I think is the most instructive thing to look at actually Hit a high this year back in the middle of January when we thought the coast is clear. Trumponomics, here we go. Today that spread is down 2.27 and falling. That is happening along with consumer sentiment. We got conference board dropping seven points on consumer confidence. That is the biggest monthly decline. You have to go back to August of 2021 to find anything like it. And along with that you've got the S&P 500 down 3% in the month. But momentum, Scott, to your point, is really where the action is taking place. We'll start with the MTUM etf, that shorthand for how bullish or bearish the most aggressive traders in the market are feeling these days. And the answer is not at all. MTUM down 3% in a month. It's still positive. 5% on the year. Look at the top five holdings. You've got Broadcom, JP Morgan, Wal Mart, Nvidia, Costco is in there. Those five names alone are about 23% of that ETF. And they're all coming in and for different reasons or for a big broad reason, which is that people are abandoning that strategy. The only one of those top five names still above its 50 day is Costco. Wal Mart's close year to date. Through February 19, momentum was the best performing factor, up 9% on the year. Now it's up just 4%, almost 5%. It's below low volatility which is the best strategy, plus 5%. Look, take a look at PM, the old Philip Morris if you want to get an idea of where people are buying. And quality is up 4%. So that momentum and even bitcoin, by the way, I have to mention in a 14% drawdown below the all time highs, Bitcoin's worst drawdown in recent memory was the the carry trade, Japanese thing. That was last August. It bottomed in a 25% drawdown. Right now, still only down 14%. There's more room. And then you look at the Tesla's of the world. People just do not want to be in these trades today. I think what that adds up to though as an investor is this continued idea that 2025 does not have to be a bad year and it doesn't have to look like 2024 in order to be a good year. We would all agree 24 was a great year for stocks and a really great year for momentum. This year you can have a good year for stocks but just do something else later on in the show. As a little bit of a tease, I'm going to Talk about the quote unquote something else stocks, but we'll leave it here for now.
- [05:17]
Scott Wapner
Shan it feels like the market's not going to be able to fully stabilize itself until the unwind in momentum is over, which it clearly isn't. We'll just show you some of these names again. Palantir, down again Applovin, crowdstrike, Vistra. Josh mentioned a number of the others, Dave Lutz of Jones Trading Points that the worst three day slump for this factor for the MTUM since the yen carry trade unwind back back in August. Wolf Research says there's a bit more pain ahead for momentum. So until that settles, are we going to be in an environment that's a little dicey? The Vix up 10% today, north of 20.
- [05:58]
Shannon Sokotia
Yeah, this really wasn't supposed to be how it played out. Scott if you think about, you know, the concerns about when tariffs were first announced, it was really all about inflation. And as you and I have talked about on the show now what we're seeing is we're seeing that that second layer, that concern about growth really coming into the market. More importantly, Scott, we were expecting to see some liquidity coming into the market over the course of the next eight weeks or so coming from the treasury general account. And so if you're expecting there to be this infusion of liquidity and you're anticipating that maybe tariffs aren't going to be quite as bad, that was sort of setting the stage for potentially some strength in the equity market. Now what you see here is people are getting very skittish. They're watching things like the ten year. Josh made a great point. The ten year and economic surprises have been very much tied. And so you're seeing those break lower. You're seeing the 10 year break lower. You're looking at again you talked about the yen unwind. It's really comes down to liquidity, Scott, like where's the money going into and investors right now are concerned about these momentum names. They're looking for some safety because uncertainty is ticked up economics, economic data is surprising to the downside side and people are looking for some protection in this particular market.
- [07:06]
Scott Wapner
Feels like Jim I mean it's not even just feels like the data would tell you that it's retail running for the door in some of these names, the Robinhoods, the Palantir's, the Applovins, the ones that had generated all of this excitement and activity. JP Morgan on retail today points to the first two hours of yesterday, yesterday's session as something they hadn't seen where Retail investors net sold $1.1 billion. It was the largest outflow ever for that time of day since March of 2020. So it's been a long time since they've seen numbers like that. Palantir Baba, all of the mag sevens were net sold according to that data in video. And Tesla. Tesla's down 25% in a month. It's below a trillion in market. Cap met is down 5% in two days after being the darling of the market. Up 20 straight days. Well, it hasn't traded like that lately.
- [08:06]
Jim Labenthal
So when I think about a lot of the names, not all of them, but a lot of the names you just mentioned their names that traditional investors like Shannon, Jenny, Josh and myself would look at and say, wow, how did they ever get to these valuations in the first place? And the answer to that is most likely retail. So. So retail cuts both ways. It rides hard on the way up and when the cracks start to form, they head for the exit.
- [08:26]
Scott Wapner
Broadcom, ge, Vernova, they're in that group.
- [08:30]
Jim Labenthal
So here's. I purposely said most of the names that you just mentioned. I was thinking about Palantir, I was thinking about Tesla, Royal Caribbean. Okay, okay. But then when I talk, when you mentioned Meta, I thought to myself, valuation there is actually pretty good. Broadcom, Expensive, but not ridiculously so. It's, it's, it's a broad brushstroke to just say retail is heading for the exits on these. I do think though in these most momentum oriented names, the app lovings of the world, that these things have been written up on retail that couldn't give a wit about what valuation is. And when the tide turns, they go out with it. Now I think for the rational investor, you have to have a steady hand on the tiller at this time in the storm. And it's a little storm, it's not a big, you know, we're not talking about a recession here, we're not talking about a bear market. The analogs we've used here are to July and August when we had the yen carry on y lasted a month. It was a good old fashioned correction. A little more so in the nasdaq I think that's what we're in here. And if you are an investor, you have to stay true to your investment discipline. If you're a growth investor, be a growth investor. If you're a value investor. I look at you, Jenny, myself and you pay attention to valuation. You were never in those stocks that begin with and you didn't have the gain of balance here. You don't have the drawdown. Now.
- [09:42]
Scott Wapner
Part of the problem, though, is that I've heard a lot and as have others about, oh, the broadening. The other, the 493. These are the stocks that are going to do well this year. Now's the time for small caps. Well, small caps are in a correction. Your IJR is down 13% from its high. If you're going to have a growth scare, you're not going to get good production from the Russell small caps.
- [10:09]
Jim Labenthal
Your point is excellently made. Allow me to start where you started, which is to say the broadening of the trade or the broadening of the rally is going to be about more than just small caps. You're factually correct. Small caps are in a correction right now. And that is because when these growth scares happen, which is what I believe we're in right now, people tend to think that the worst is about to befall, that maybe it's federal workforce reductions are going to lead to a rise in unemployment, a reduction in consumption, and we're going to get a recession. I don't believe that to be the case. So I am not running from small caps, which will perform badly in a recession. But if you don't get a recession, should perform nicely when we get to the other side.
- [10:45]
Scott Wapner
Like industrials, those are down 5% in a month and discretionary is down 9% in a month. Energy's down almost 3 energy.
- [10:53]
Jim Labenthal
But okay, fine. I mean, in the short term, I'm just saying, like, you know that you're speaking factually. Those sectors are down. I think industrials, just to be specific, have had a heck of a run. This, to me smells like a consolidation in that sector. I think we're seeing the same darn thing in financials. I don't think that trades over for a long shot. Health care's had one heck of a good rally here. It's due for a little pullback. It's not even giving you that pullback. It's not even giving you that pullback. I think, really, just to be clear about what I'm saying, I strongly think the broadening is still continuing and this is a consolidation going on. And by the way, the downturns in these sectors are nowhere near what you're seeing in momentum.
- [11:28]
Scott Wapner
Jenny, just bear with me for a moment. I'll get you and I'll give you ample time, I promise. But we do have a news alert. Since Jim was talking about health care on UnitedHealth. It is Bertha Coombs who delivers us this news.
- [11:37]
Bertha Coombs
That's right, Scott. UnitedHealth down about one and a half. It's just off of the lows after a Wall Street Journal report that Senator Chuck Grassley, the Senate. The chairman of the Senate Judiciary Committee, has issued a letter to Andrew Witte, the CEO of UnitedHealth Group, demanding information about the claims in the recent Wall street journal report that UnitedHealth would essentially inflate their their coating on patients in order to get higher reimbursement. According to the Journal, the letters demanded, saying the apparent fraud, waste and abuse at issue is simply unacceptable and harms not only Medicare beneficiaries, but also the American taxpayer. It goes on to say that they would like to turn over training manuals and guidance documents that were cited in the report. UnitedHealth has responded to the report saying we welcome the opportunity to share the facts with Senator Grassley, especially given the ongoing misinformation campaign by the Wall Street Journal. Medicare Advantage plans are doing exactly what the program was designed to do, meet the government objective of delivering better health outcomes and lower costs for seniors and Medicare overall. Of course, the Journal earlier this week, Scott reported that the Justice Department was looking at these practices and looking at potentially bringing a dispute. There is already a lawsuit along this lines that has been winding through for more than 10 years now. Back to you.
- [13:11]
Scott Wapner
All right, Bertha. Thanks, Jim. You own the stock.
- [13:14]
Jim Labenthal
I did not expect the kleeglike to be as hot as it is currently getting for UnitedHealthcare. That was a mistake on my part.
- [13:19]
Scott Wapner
However, wasn't the writing on the wall?
- [13:22]
Jim Labenthal
In retrospect, yes. I mean, let me continue on from that. Yes. However, and by the way, I frankly thought the Senate would have much more to do, much more on its plate, and it really does, than go after the company that is financing health care procedures for a lot of this country.
- [13:38]
Scott Wapner
You're just figuring out how DC Works.
- [13:41]
Jim Labenthal
Good point. Let's go right there, because how does D.C. work? Senator Grassley, bless his heart, is trying to get a press release out there. Look what I've done. Pound your chest. I don't think that they're actually. He said these words, fraud, waste and abuse. Okay, prove it. And if it's proven in court, then I'll change my tune. However, I actually think that UnitedHealthcare provides a vital service in financing the healthcare procedures for a lot of this country.
- [14:05]
Scott Wapner
Okay, so we'll watch those shares. Jenny, thank you for being patient.
- [14:09]
Jenny Harrington
Always pay.
- [14:10]
Scott Wapner
So, of all the things that are going on, whether it's the unwind in momentum. The uneasiness in the nasdaq we obviously have in video tomorrow. Tesla is weak. Metta is down. You own that in 5% in two days. Bitcoin's below 90. The small caps are in correction and truist comes out and downgrades US equities to neutral. So just riff on what you're thinking and what you're hearing from your clients clients and what you would advise people to do.
- [14:38]
Jenny Harrington
Okay, so I'm not sure if it's as simple as a consolidation. I think it might be more of a rotation. And then I think about why is there a rotation happening? And it goes to what Shannon said. She said uncertainty has certainly ticked up. That's very true. And what do we know? This market hates. This market hates uncertainty. We went into this year at a 22 times multiple. That leaves no room for error. And uncertainty is really uncomfortable. I just, you know, as the show was starting, I said I've spent probably between 7 and 12 hours on the phone with my clients over the over Friday and yesterday talking about the political situation. And a lot of them are scared. And I would say I've got a very evenly mixed client base. You know, I would say most people, probably all of my client is quite close to center, some left, some right. But people are really uncomfortable. The amount of noise and uncertainty out there is extreme right now. And what happens when people get uncomfortable? They're uncomfortable paying 23 times for a great story right now. At the same time, I don't think people are thrilled about buying bonds because the yields have come down a lot. And if you're uncomfortable with the US Government, you might not want to buy US treasury bonds. So I see it as more money rotating and you see it in things like the S and p being up 2% and the Dow Jones Dividend Index being up four and a half. You see the NASDAQ down on the year now and the bark. And then now it's the Bloomberg Aggregate Bond Index up one and a half percent. So I've seen this real rotation. But I really think, I think the danger. And you guys started to touch on this too. The danger comes from if the consumer slows down. Right. And I saw an interesting. Actually, Brian Sullivan tweeted it out. It was on an Apollo study that said the number of government employees that are expected to be laid off are 300,000. That's out of 160 million employed people in the U.S. so the number is not that bad. It could be bigger than that.
- [16:24]
Scott Wapner
Tell that to the People who are going to lose their jobs. Not only that, if you put it into perspective, it's that the magnitude of 300,000 people losing their jobs compared with what the largest private sector job loss ever was, an IBM layoff of some 60,000 people many, many years ago. It puts it into perspective the headlines that are driven off of stories like that and off of tariff headlines and off of the Steve Cohen's and Ken Griffin's talking about the level of uncertainty creates an environment in which the consumer becomes less confident. Oh, by the way, they're sick and tired of paying 10 plus bucks for eggs too, right? So you know, you look at Wal Mart's outlook, some have hung on that, you point to other factors and that's why you have what feels like a growth scare and maybe nothing more to this point.
- [17:15]
Jenny Harrington
No, I think it is a growth scare. I don't think it just feels like that. And one of the things that I wrote about in my year end letter was we thought the areas of the market that were most at risk were those with excessive concentration and excessive. Where we saw excessive concentration and excessive risk taking. And what's coming off now, right, you see, you see microstrategy just pummeled. Well, what was that? That was, that's a leveraged bitcoin play. You see money coming out and Scott, you had that list of stocks that are down 31% and sure GE Vernova is on there, but that's only down, I don't mean to make this sound silly, but that's only down 18%. Whereas there are many other stocks that in a week are down 31%. The ones with 31% are in the areas of the market where there was excessive leverage, excessive risk taking, excessive concentration. And when people are uncomfortable, they run for the hills.
- [18:02]
Scott Wapner
Some do, not all. Some look at the upset in momentum especially and say opportunity knocks. Like Bill Baruch who joins us now, of course a member of our investment committee who established a new position in Palantir, the poster stock of the momentum unwind. Why was now the moment?
- [18:25]
Bill Baruch
I think there's panic setting it. You all described it right now and I like to look at sticking to my game plan and for now that's exactly what we're doing. I was in the show last week and I said I would have alerts below 90 and Palantir, listen, this is a leader in cutting edge cybersecurity defense AI and it's aligned with the new administration. This is the level it also broke out. So we're starting a new position here, 1% allocation to Palantir and getting our toes in. I don't think this momentum trade, although it's become very watered down using this panic as an opportunity which you've also.
- [19:03]
Scott Wapner
Done by the way in Broadcom and CrowdStrike. So tell me about that. I mean I read through. I don't know. There are a dozen names at least on my list and probably more on others that have been caught up in the unwind of momentum. Those two, Broadcom and CrowdStrike among them.
- [19:20]
Bill Baruch
Yeah, the for Broadcom first. Now in the space that it is, we like this valuation 3030 multiple leader in the infrastructure, the connectivity. It's trading back to 200. This is the range that it broke out from from that December report that really took it sky high. We also, you know, in the news talking about being, being looking at Intel. I thought that was very attractive. The fact that it's in a position feels comfortable doing that. Does a tough business. Don't want to go down that road right now. But I think those are the signs. You want to look at a company that you want to continue to own. We own Broadcom at a more than 4% waiting. What we're doing here is taking some cash and topping that position off after it's come down. It's down a little more than 10% on the year. And CrowdStrike, I spoke about this last week. I think there's some actual negativity around the earnings report but we're pretty hopeful. We think the with the earnings they're looking at year over year growth being coming down, being negative. I think the revenues as well being sideways. I think all this is very attractive because it sets the bar for potential beats recurring revenues. You know, is something there that I think is important. It's a magnificent company in the right place of cybersecurity. Yes. I'm not a big fan of the valuation but I think there's a lot of reasons to then you want to own this stock. And so that's, that's what we're doing here is taking some of the cash and we're putting it towards these names.
- [20:41]
Scott Wapner
All right, good to hear from you today about these moves. Really interesting. In the face of what is still an unsettled area of the market, the question, Josh, is whether tomorrow is a seminal event in this latest stage of what still is a bull market. And that is in video, of course, whether it stabilizes technology and some of the selling or only adds to it. Are you thinking about it?
- [21:07]
Josh Brown
So I talk to people like Dan Ives about the topic. And I talk to people who aren't necessarily huge bulls on Nvidia, but the one thing everybody seems to agree on is that commentary is going to be way more important than the magnitude of the beat. Of course, like both are important, but I really feel that we've got the one leg of. The first leg of the stool we got was when all the mag7 names reported earlier this month and every one of them said they were either sticking to their guidance on Capex or raising it, which I thought was probably a really good reason for the market hanging in as well as it did during earnings season. We did not get like a sell the news even though a lot of those stocks were up, up big. So that was important. The next leg of the stool that you're going to get I think is Jensen Wang's contract commentary on a go forward basis. And when, when you think about what the past earnings reports results have been and whether or not they've correlated to a rally in the stock or a sell off in the stock, it's so all over the map that even if I gave you the proverbial you, anyone watching the show, even if I gave you the number, you could not use the last eight quarters to predict up 5%, down 10%. It's, it's literally impossible. So let's just focus on the numbers themselves for a moment as a level set because I want people to understand how incredibly this company is still expected to report 38.2 billion in revenue. That would be a 73% year over year top line growth number. If they exceed that, it could be 80. We just, we have no way of knowing. Ebay should be 24.6, that's up 66%. Earnings per share should be 85 cents. That would be a 64% annual gain. So if you think about just like how monumental this stock is in terms of its size in the S and P, its size in the Nasdaq, how meaningful its commentary is for the share prices of the next 50 largest companies, it's definitely a big event. Some would call it a potentially market clearing event. I would just say if you are too big going into this number, not just on Nvidia, but on any of the other names in the trade, if you are too big, you got one last chance to do something about it. If you can't withstand a 10 to 15% drawdown from today because there's an adverse reaction, you could do something about it right now. And that's really the best thing I can tell you going into that number, which of course I'll be paying close attention to as well as the commentary.
- [23:52]
Scott Wapner
Yeah, of course you will. Jim will be too. Barclays calls it a crucial moment for equities. Wolf says it could change market sentiment. I think that's what we're alluding to in having this conversation. Given where sentiment seems to be. Tom Lee says the earnings will be key in determining if the pullback proves to be only a quote, unquote, flesh wound before the markets stabilize. What do you think?
- [24:19]
Jim Labenthal
I think, I think all of that is true. I think this is a very, very important moment for the market, particularly in a wobbly market for momentum and tech and AI names. Here's what I think. I think they're probably going to beat the numbers. And this is queuing off of what Josh just said. I think the guidance will be just fine. And who knows how the market's going to respond because as Josh pointed out, for the last several quarters you've had fabulous numbers, fabulous guidance and it's been all over the map, mostly down. But more to the point, while I think this can support the market in the short term, I recently trimmed the stock and I did that on the belief, not that 2025 is going to be bad for Nvidia. I think it's going to be fabulous. But I think in 2026 that some of these little rumblings you're hearing right now, things like marketing, Microsoft announcing that it's or Cowan saying that Microsoft is pulling back on data center leases, maybe there's validity to deep seek that some of these things will come home to roost. Let me put this into perspectives with numbers, just as Josh did. Earnings for the full year 2025, excuse me, fiscal year 25 ending in January 31st, going to be up over 100%. This year ending 1-31-26 will be up 50% at 30 times forward earnings. The stock is attractively priced. The problem is not this year, it's next year. The growth rates have to come down.
- [25:31]
Scott Wapner
So the numbers are going to be one thing, the call is going to be another. And then what may be an even bigger event because it's going to be a one on one interview. It's a CNBC special report. It is tomorrow evening at 7pm when John Fort interviews Jensen Huang. He's going to ask all the questions that you need to know about. Obviously on the other side of the earnings report on what it means for the hyperscalers, quickly, the former JP Morgan chief market strategist Marco Polonvic has posted on social media the next AI race will be how quickly can companies cut committed AI Capex. Let's see what Nvidia has to say. Let's see what they have to say about all the capex that the hyperscalers are spending on its products. It's going to be a huge event tomorrow afternoon. We're going to take a quick break and coming up here we will check a lot of today's movers. One big name leading the Dow today that you need to know about. Jenny is making several moves in the energy space. We have the trades next.
- [26:30]
Laura Castleton
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- [27:11]
Josh Brown
Get out there and do it.
- [27:13]
Laura Castleton
Go to CNBCmakeit.com side hustle special offer ends April 1st.
- [27:18]
Bill Baruch
All right.
- [27:19]
Scott Wapner
We're going to hit some stocks on the move. Josh always comes to us with his best stocks in the market list. Maybe we need a worst stocks in the market list for ones that have just performed badly. Cleveland.
- [27:36]
Jim Labenthal
Yeah, Cliffs again. Factually, it has performed bad.
- [27:40]
Scott Wapner
It's down. You don't need to confirm that. I although I very much appreciate trying.
- [27:47]
Jim Labenthal
To get in front.
- [27:47]
Scott Wapner
I very much appreciate that. I'd be disbarred if everything I said was a lie. Right. 50% down in a year.
- [27:54]
Jim Labenthal
Yeah. Okay. So the reason it's I hear you, Josh. The reason it's down today is because of the miss on fourth quarter earnings. This story is not about fourth quarter earnings. I've been consistent about this for most of the last nine months saying this is a story about steel pricing. Steel pricing this time last year was over $1,000 for hot rolled coil per ton went down to 660 right now. And you can look at this, the Chicago Mercantile Exchange website. It's around 920. Okay. IT steel pricing is coming back. The fourth quarter is in the past history. The stock is selling off because of the miss. Okay. But going forward now you've got a steel prices going up, volumes going up for the company because they've acquired Stelco. There's also because of Trump policies, whether you like them or not, okay? Domestic production is going to be picking up and it's going to include domestic steel, all of which in yours to Cleveland Cliffs.
- [28:50]
Scott Wapner
Theoretically, you would assume that if all that were a net positive positive, the market would look through a current earnings report and focus more on what you're talking about. It isn't now. I don't even really like talking about this stock anymore because it feels like. It feels like it does nothing but go down.
- [29:13]
Jim Labenthal
Yeah.
- [29:14]
Scott Wapner
And for lack of a better description, you continue to talk about it as if our viewers should buy it and, and believe in it. Yeah, when I'm not so sure about that.
- [29:28]
Jim Labenthal
Counsel, you're being gentle in your criticism and I can take more than that. But I want to say this. You know very well my style of investing that if the investment thesis makes sense to me, I will stick with it. Folks, let me be clear. Sometimes it doesn't work out. I will no to you right now. JCPenney and Paramount did not work out. Sometimes they do not work out. Far more often than not, they do. And what I mean by work out is where I come to you with an investment thesis, as I've gone over many times with this, that this is the crux of this is steel pricing and I see the steel pricing going up. And I will be patient and stick with this. I ask the viewers to stick patiently with it with me as well. But I have to say this is one stock out of a portfolio of 25. If you're out there loading up your entire portfolio on one stock, I've never suggested doing that, never recommended that. I do believe this stock will be meaningfully higher from here. I don't always get it right. More often than not, on these things where I'm patient, I do part of the issue too.
- [30:29]
Scott Wapner
By the way, the CEO is going to be on overtime today at 4:00. It's a first on CNBC interview. You have said numerous times times on this program that you speak to Mr. Gonsalves. Right. You're pretty close to this too, which is a. It makes it more difficult to potentially say I'm done with the stock.
- [30:53]
Jim Labenthal
Yeah.
- [30:53]
Scott Wapner
Does it not?
- [30:54]
Jim Labenthal
Yeah. So a couple of things here. I will, I will sell the stock if I think it's appropriate to sell the stock and if Lorenzo Gonzalez wants to excoriate me on air personally, whatever, I don't care. My clients come first. I think I can speak for Shannon, Josh and Jenny, everybody. On this show, our fiduciary duty always comes first. I am in this stock because I believe it will make money not just from here, but from my original purchase price. When I think about the conversations I have with Lorenzo Gonsolves, believe me, Scott, the thought is in my head, am I just being a useful idiot? I don't think I am. All right. I am looking at things like steel prices, car production, the average age of cars on the road, the fact that we've under produced, and how much car production matters to Cleveland Cliffs, albeit less now after the Stelco acquisition. These are the things that I do the talking to. Management helps, but it is not the crux of why I'm in the stock.
- [31:46]
Scott Wapner
Let's get one with Jenny. Realty Income, which is yours, cut to neutral today at BMP price target. And I appreciate you on that.
- [31:53]
Jim Labenthal
Dude, you're 100. You don't need me to tell you this, but I know how badly the stock has performed and I deserve the heat.
- [32:03]
Scott Wapner
Realty income, okay, to 61 from 66.
- [32:07]
Jenny Harrington
Right.
- [32:07]
Scott Wapner
So they, you just bought the stock last week.
- [32:09]
Jenny Harrington
Right. And they announced earnings yesterday and earnings are fantastic. AFFO was up 4% year, year over year. They are actually increasing their dividend by 2 1/2 percent, which is the 109th quarter in a row that they're increasing the dividend. They said next year's AFFO gross growth might be like 1%, 2%. So maybe a little bit less than what people thought. But if you look at this downgrade, it's so silly. So they say, okay, we're downgrading it to neutral. We're going to take the price target from 66 to 61. It's at 55 right now. So that would suggest 10% upside on the share price. If they're right, tack on a five and a half percent dividend yield. So your total year return for the next year would be 15 and a half percent. Like that sounds pretty great to me in this environment. Plus, again, again, a dividend that for 109 straight quarters has grown. Don't love the downgrade.
- [32:55]
Scott Wapner
You have a number of moves too, which we're going to get to. We'll take a quick break. Jenny has big moves in the energy space. Josh Brown, by the way, still has his best chart in the market. A couple of stocks being added to his list as well. But Silvanao has our headlines for us today. First, Silvana.
- [33:11]
Silvana Henao
Hey, Scott. Good afternoon. More than 20 federal technology workers have resigned from the Department of Government Efficiency. In a joint resignation letter obtained by the Associated Press today, the staffers wrote they refused to use their expertise to, quote, dismantle critical public services. The employees warned that many of those musk enlisted to help him reduce the workforce were fervent political followers. Our cargo ship linked to China has been detained by Taiwan after an under siege cable in the Taiwan Strait was disconnected. Taiwan's Coast Guard said it didn't rule out that China could have done this intentionally, adding that it needs to investigate further. Taiwan has complained about Chinese activities around the island designed to apply pressure without direct confrontation. And the Arctic Doomsday Seed Vault today received more than 14,000 new samples. The facility's custodian said the new sample samples include seeds from Sudan, Sweden and rice from Thailand. The Global Seed vault is built deep inside a mountain in the Norwegian Arctic to house backup crop seeds from around the world. Halftime report. We'll be right back.
- [34:21]
Shannon Sokotia
My side Hustle brings in over six.
- [34:23]
Josh Brown
Figures, about $10,000 a month.
- [34:25]
Shannon Sokotia
Over $500,000 since its beginning.
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Laura Castleton
Find your hustle with CNBC. Make it's new online course how to start a side Hustle. Three industry experts break down proven paths to success.
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Jim Labenthal
There's a tremendous amount of opportunity out.
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Laura Castleton
There and help you choose the one that fits your life schedule and goals.
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Jenny Harrington
Find your own path to building multiple income Streams.
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Laura Castleton
Register@cnbcmakeit.com Sidehustle special offer ends April 1st.
- [34:52]
Scott Wapner
Okay, let's talk about these moves of yours, Jenny. Many in energy. You sold one Oak, right? Why'd you do that?
- [35:00]
Jenny Harrington
Okay, so it was really a pair. I sold One Oak and in its place I bought with some extra cash, I bought planes, but the Plains gp, so PAGP and Enbridge enb, so I managed it. This is for our dividend income strategy. The objective of the strategy is to deliver a 5% or better dividend income yield. And what happened last year was you saw a bunch of these midstream energy companies get caught up in that like data center. We need energy play. And even though they're great businesses, the share prices ran up too much. So on One Oak, which is a terrific company, you saw that dividend yield drop to just about 4%. So what I did was I sold one oak and I replaced it with two that had stayed out of that crazy run up last year, which was Plains and Enbridge. Now to be really specific, we run two similar strategies. One has the midstream companies that are still old school cash K1 payers and in the in the portfolios where people are comfortable with that. We own Enterprise Products, energy transfer and mplex. In the portfolio where people hate the K1s, we now have Kinder, Morgan Williams, Enbridge and Plains. But again the Plains is not the PAA one that still has a K1. They created a tracking stock where you can get just regular 1099 income. And so those like planes right now has about a 7% yield. Enbridge has a 6 and change percent yield if you put them together plus the other two in the portfolio. What I really have is just a huge network of midstream energy pipelines in the US and collectively they're paying about a five and a half percent, six five and a half to six percent dividend yield. That's what I want. I don't really care that much in this case about the individual company. I really care about the pipeline assets. So Plains has a lot of oil. They really focused in the Permian. Enbridge has oil and gas. They're really widely diversified. You pair those up with Williams and Kinder and you just have this huge beautiful like I don't even know how many hundreds of thousands of miles of midstream energy pipes and.
- [36:58]
Jim Labenthal
Yeah, go ahead Jenny. To what extent do these stocks all trade together, these MLPs? And I'm asking because I mean Cheniere, I've been in Kinder, Morgan, Enbridge, I know all these names and sometimes you get a little bit of distinction but it really feels they trade like a block.
- [37:11]
Jenny Harrington
Generally they do, but it really, it really bifurcated last year. So you saw Williams and Oneok really break out. They were up 50, 60% last year. Whereas you had things like Enterprise Energy Transfer, they, they were still up 30ish percent but they weren't up quite as much. Plains and Enbridge were really, really left out of that. I don't know exactly why. It doesn't make complete sense to me.
- [37:32]
Jim Labenthal
Do you like Cheniere?
- [37:33]
Jenny Harrington
I mean I don't own it doesn't have enough dividend yield for me.
- [37:36]
Scott Wapner
That's yours. You like that?
- [37:37]
Jim Labenthal
Yeah, I do liquid natural gas exporting, but Jenny just explained why she doesn't. It doesn't have enough dividend.
- [37:43]
Scott Wapner
Okay, straight ahead. The best looking chart in the market right now according to Josh Brown. The reveal is next. All right, welcome back. Josh Brown recently talked about Starbucks as one of the best stocks in the market. Today he has named it the the best chart in the S and P right now. Tell us more.
- [38:05]
Josh Brown
So I want to be clear what I mean by that. The actual best chart in The S and P right now is Altria if you look at pm. But that thing is. You missed it. It went vertical. It looks like the Empire State Building. RSI is in the 80s. It's the most overbought name on my list. This is the one that could do that. Not saying well Starbucks right now has an incredible setup. Obviously I like the fundamentals here but just purely from a technical standpoint this thing looks coiled and I think the next, the next move is a break above Patty, give me that three year chart. Guys, look at this. Back in May of 2023 which is almost two full years ago is when this chart peaked out and it peaked peaked below the prior highs set back in 2021. It failed. It spent almost two full years consolidating. Now we could be off to the races. The stock is up 24% year to date. It is the sixth best performing stock in the S&P 500 this year. Just reported a kitchen sink quarter. It's actually it's up in a tape where the XLY is negative on the year. It's 10% below all time highs. There's no real resistance here. Once it breaks 114 all the way up to like 125, 126 that should be the next stop and then maybe it needs some time before it can break above there. One of the crucial problems with the stock in addition to what you all already know is the China overhang. They are getting beaten up by Luckin and other local chains in China. There's a catalyst on the horizon where and executives have just flown to China recently to try to figure out a sale. They're going to sell a big chunk of this to a local Chinese operator, big company in China and I think that should alleviate some of the stress of those sales declining in their second biggest market. And if that's the catalyst, so be it. But I think we're going to get a breakout here and I'm staying long.
- [40:12]
Scott Wapner
The other one you like which is added to the best stocks in the market list this week in fact new is. Well there are two names but first McDonald's which is green in a Ben Green in a pretty, I don't know, uneven tape I guess.
- [40:27]
Josh Brown
Pay attention to the up stocks right now. This is one of the areas look I agree with like 95% of what gave Jim and Jenny say about their investment process. So where I deviate from them the most is that I really care about price a lot and I think the market is smart. I'm not, I'M not someone that's looking for like what's the stock that just went down 50% because the market's wrong. I'm saying like the sum total of all the people managing money have decided to be buying and accumulating McDonald's in a. In a choppy tape. I believe that there's signal there and I think that investors are smart. So this is an RSI of 66, which means it's up. There's momentum, but it's not overbought. It's about 3% below its 52 week high. It could take that level out on one green day. This name is up 8% in the past month where most stocks have struggled. And what's really interesting is Bill Gates, the Gates foundation, which is a $42 billion pool of capital, just initiated a brand new position in McDonald's while selling down Microsoft and selling down Berkshire Hathaway. He. I say he. The Gates foundation bought 334,900 shares at an estimated average cost of 297 40. That's right around here. It's about 100 million worth of stock. Not a big position in the context of a $42 billion pool of capital. Which means that position could be more, not less.
- [42:03]
Scott Wapner
Real quick, another one. ITW, that's Illinois tool.
- [42:08]
Josh Brown
Yeah, this thing's going. IT W has an RSI of 58. It's above both moving averages 50 and 200 day five, 5% from 52 week high. This is a dividend king. Most people don't even know what that is. Jenny knows. Not a dividend aristocrat raising dividends for 25 years. A dividend king has been raising dividends consecutively every year for 50 years. There are only 53 of these in the entire US stock market. Illinois Tool Works is one of them. 23 times trailing P E. Right sector, right time. I think this one breaks out as well.
- [42:45]
Scott Wapner
All right. Jenny's getting to work on it as we speak. She's punching stuff up. We got to go. We got to go. I'm sorry. We got to go. Santos. On the other side, senior markets commentator Mike Santoli here at post nine with us. What's on your mind today?
- [42:59]
J
I mean, sort of bent without breaking again this morning. A few things seem to line up maybe to get the market to sort of at least try this stabilization move. You did have The S&P 500 go back down to a 100 day moving average. That's kind of been where the dips have gotten bought in the last year or so. You haven't spent more than a few days below that level over the last year. Nasdaq 100 is pretty oversold at this point, too. If you look at just basically simple readings of oversold, it doesn't get much worse again in an uptrend. So all these things coming together and then the intensity of the retail trade flush anything that was meme ified, really getting thrown overboard and getting disorderly. Yeah, I think that created the sense maybe of a reset. We're trying to get through it with rotation. Remains to be seen if it'll be successful.
- [43:44]
Scott Wapner
Nvidia tomorrow. Obviously the stock usually trades better than this going into a print. I wonder what that means.
- [43:51]
J
Yeah, it's, it's. I mean, it's technically a little bit challenged. Revisions haven't been dramatic, so it hasn't been as if you've raised the bar a lot recently. But it's been this sort of standoff, honestly, at these levels in the 1 120s up to 140. So I think everyone's just trying to keep their feet balanced as opposed to leaning too far one direction ahead of it.
- [44:11]
Scott Wapner
All right, well, see you in a couple of hours of Closing Bell. That's Mike Sentoli, our senior markets commentator. We'll do finals here next. Post nine is going to be crowded today. Halftime. I mean, Closing Bell Rick Reeder, Tony Pescarello, Oswatimoto and everybody in the house. Happy birthday, Josh Brown. What's your final trade?
- [44:29]
Josh Brown
Starbucks. Staying long?
- [44:30]
Scott Wapner
All right, thank you, farmer.
- [44:32]
Jim Labenthal
Jim AstraZeneca Shannon yields lower by REITs.
- [44:35]
Jenny Harrington
Jenny H. Western Union 9% yield all right, good stuff.
- [44:38]
Scott Wapner
I'll see you in a couple hours on the Bell. You've been listening to CNBC's Halftime Report, the podcast you can always catch us live weekdays at 12 Eastern only on CNBC.
- [44:54]
Laura Castleton
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 find your hustle. CNBC make it's new online course, how to start a side hustle three industry experts break down proven paths to success.
- [45:42]
Josh Brown
Get out there and do it.
- [45:44]
Laura Castleton
Go to CNBCMakeit.com side Hustle Special offer ends April 1st.