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Halftime Report
Navigating a Stock Market at Record Highs 8/4/26
00:58:13
Scott Wapner and the Investment Committee debate their strategy as some key earnings reports boosts the markets to record highs. Plus, we hit the latest Calls of the Day. And later, Josh Brown spotlights some Biotech names in his "Best Stocks in the Market."
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- [00:01]
A
I'm Scott Wapner and you're listening to CNBC's Halftime Report, the podcast the most profitable hour of the trading day. We record this live weekdays at 12 Eastern. Listen in. Carl, thanks very much. Welcome to the Halftime Report.
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B
I'm Scott Wapner.
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A
Front and center this hour, stocks at record highs and some key earnings reports boosting the markets today. We're trading all of it with the investment committee. As always, joining me for the hour, Joe Terranova, Jim Laventhal, Rob Seachen, Josh Brown. We'll take you to the markets. Highs that day across the board. Nasdaq's good now for 2% at a near 900 point gain for the Dow, that's 11 2/3% above 54,000. So we've been at record highs. The Russell's ripping, Carl was telling you again, oil is lower today. Getting some relief there, yields as well. The treasury secretary telling Squawk Hormuz deal is near. Caterpillar, Palantir, their earnings. The chips are ripping. I mean, you can pick your catalysts because there are many.
- [00:59]
C
And what's the common denominator for Palantir, for Caterpillar last week, for Alphabet, it is just these staggering earnings. They continue to exceed expectations. I believe we came into the year with earnings into the quarter out of with earnings expectations somewhere for growth around 24%. What are we running close to 50% right now with 60% of the S and P reporting. So it's, it's earnings above all else. And it really is broad based. We have 10 of 11s and P sectors that are now running with double digit earnings gain. That is absolutely remarkable. And what it's doing is it's kind of restoring the confidence once again as it relates to the spending on AI and the belief that you continue to invest in that direction because you will be rewarded for it.
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A
Josh, you know, what's your, what's your read here? Because this market looks like it's primed for something now that we got tech earnings at a clearing event. You know, if you get a resolution in Iran, you've got some, some other critical earnings that seem to be meeting the moment and then this momentum trades back.
- [02:03]
D
Yeah, we have a lot of the stocks that had gotten us here in the first half stumbled in July. We're coming here into early August with a lot of those pieces back on the board to help support this bull market. I think it's one of the healthiest tapes I've ever been in, quite frankly. I'm doing this now 29 years professionally. And it's just like it's textbook if you were able to write it up and submit it. This is what I want the bull market to look and feel like and act like. That's, that's what we have in front of us. We have this unbelievable sector by sector, industry group by industry group rotation that's happening. When we lose one group, another group steps up to take its place. That keeps us right at all time record highs. Even when we have some really notable important index moving blue chips like Microsoft, like Metta that temporarily go down for the count, it does not sink this market. And I think the price behavior itself is probably the second most important thing. To double click on what Joe said, the actual earnings are the most important thing and very important here. This is a bull market that's being driven by the actual results, not P E multiple expansion. You got 64% of company reports in the can. We're talking about a blended plus actual rate of 29% earnings growth. This is corporate America once again continuing to defy the odds just as it has in each of the last four quarters. We got 137 reports this week. And if we're even close to what we've seen on average so far, we're talking about an 85% beat rate which is absolutely off the charts. The five year average is 77%. We may not settle out there at 85, but my God, could you ask for a better environment? This much participation, the rotation keeping us healthy, companies getting knocked down and then coming back once the sellers have been cleaned up and bottom line growth like we haven't seen in a very, very long time across sectors.
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A
I thought the most important piece of commentary today comes from Scott Rubner of Scott Citadel securities who put out a note late yesterday on the, on his latest thinking on the markets and kind of where we are. Early summer excesses have largely been unwound is how this note begins today. Quote, we believe much of the global technical reset is behind us. Importantly, the reset occurred through rotation deleveraging and stronger fundamentals, not through a deterioration in the macroeconomic backdrop. July did not change the structural bull market. It reset it. So let's jump off with that because I feel like it's the most important commentary and really sets the stage for what may lie ahead.
- [05:03]
E
What he's saying is it was a positioning reset, not a growth scare. That's the message that he's coming out with and I would have to agree. This bull market has absorbed everything that has been thrown at it and it's like Cameron came out yesterday with this note, called it a weebles market. You remember the old Hasbro toys, they wobble but they don't, they don't fall down. I couldn't agree more. And it stood on the back of powerful earnings revisions and really impressive breadth as Josh outlined have been more than able to shake off this noise. Now when you think about what's next is can the, the areas of the market that haven't participated year to date, the mag Sevens and, and later in the year the, the, the chips can they take us to new highs? And I, and I believe they can. And so we're optimistic on what we think is going to happen from an earnings standpoint. I do believe though that some of the great earnings that Joe talked about have to be investigated a little bit because some of them were one off write ups in Google, in Amazon, great numbers at the core, but still one off which makes next times comps look tougher. And so ultimately I think the market will absorb that and say okay, we get it, it was a tough comp next quarter. So I think we're in for a good run here.
- [06:24]
A
You could say that's one of the, the healthiest signs I think you could find in a bull market. Not only the broadening story which we obviously saw in July, but market's ability to reset itself, itself to shake off some of the excess. You know, now it could feel a little wobbly at times within that move. Right. The fastest and largest unwind in the momentum category ever. Like if I said in July the Sox was down 21%, SanDisk was down 46, KLA was down 39, Marvell was down 37, Lam was down 32 and Applied was down 30 and Micron was down 29. You'd say, wow. And some did try to say well maybe we're topping in the air trade. In fact, what this gentleman at Citadel securities is saying, no, no, nothing changed structurally about where we are. The story isn't different at all. We've just reset it in a more healthy way. You agree?
- [07:23]
F
I completely agree. And just to be a little bit more specific, when the markets and particularly the semiconductors were going down throughout most of July, there was as you said, Scott, this concern that maybe the whole whole trade was at a top. Maybe the market was anticipating peak earnings, peak build out of AI. And I think that we have not only disproved that by seeing the markets rally, but we've actually given a very cogent explanation for what happened in July. And it was not Peak earnings or peak build out. It was as you've already mentioned Scott, the delevering, whoever mentioned it in that note, it's very specific. We saw this two weeks ago with the Cosby and the Korean markets. 1.2 million accounts got margin called then situational awareness. And I want to be clear, I'm not dancing on anybody's graves. I'm not engaging in schadenfreude. I am saying that very infrequently does the market explain itself as crystal clearly as it did with those events explaining what happened in July. With those events behind us now you look at what Joe, Rob and Josh have already said about the earnings growth which is what the market should focus on. It's extraordinary. It shows no sign of easing. And one other positive from last week, week that I don't think we've mentioned so far is nobody in the Capex buildout is blinking. Nobody. I mean these, at best I think Microsoft kept its Capex plans constant but everybody else is raising them. I mean this is not anytime soon.
- [08:45]
D
You got, you got, you got 20% of the SMH are back at 20 day highs. That is the highest reading since the end of June. You have, you have 100% of SMH names are green today. And when you think about where that's come from, you know it was an artificial sort of like momentum washout, slash deleveraging. Because about when I look at like the distance below the 52 week highs for the semis at their worst we were like at a 25% drawdown for the overall group and now we're less than 15% below those. All the highs on, on the entire index and yeah we could look at each individual story and pick apart this one's guidance, that one's chip design, blah blah. The message of the market here is exactly what Jim is talking about. You just had people going absolutely crazy with 2x single stock ETFs in the semi space. The Koreans lost their minds. And then you had a couple of hedge funds that were riding this thing like it would never have a down day. Once you clear that out you could focus once again on the actual results these companies are delivering. And they probably didn't belong 25% from their highs based on that fundamental outlook.
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A
So SK Hynix speaking of Korea and chips and momentum, bunch of bullish initiations today. 240 at Stifel outperform at Blair. We're going for four straight up days on the SMH. Marvell is surging along with many of the Other optical receiver names on a report of a potential China import ban around data center receivers. So look at that stock right there. You have that Corning is up big as well. We haven't even talked about Palantir and Caterpillar and all that, which we'll get to in a minute. But this is where the action is right now. AMD is going to report earnings in overtime.
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E
Yeah.
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C
So it's Marvell, it's Corning, it's kla, it's LAM Research. And I think the way that you have to think about this as you move through the course of the year, the market has proved itself already that it is not looking for the exit. It is just really internally going from room to room. It's redistributing and therefore you focus on positioning. You say to yourself, where are we in terms of positioning? At the end of June, Micron's earnings, SK Hynix, IPO Space X. Very clear that the appetite was full related to those memory, semiconductor and AI oriented names. The market did a wonderful thing. It redistributed to other areas and that allows you the opportunity to rebuild positioning like we're seeing now in these AI oriented names, the memory names in the semis. I also think what happened during that period is the market cheapened and if you're going to make that argument that the valuation is approaching the five year high, the forward multiple for the S and P at 23.3. Guess what just happened over the last four? 19.8 went to 19.8. So it actually cheapened up. So this is the rebuilding of positioning. And Scott, I think this is the theme throughout the remainder of the year. Just continue rotation.
- [11:58]
F
Can I just point out really quickly, of course we're talking about the semis today. They're up hugely. But if they weren't up hugely we would probably talking about the financials, the industrials which are having mammoth days on their own. You know we look at Citi, JP Morgan, these stocks are up 3%. Look at Caterpillar. So the broadening that we've touched on continues to occur even as the heart of this rally is reaffirmed in the chips.
- [12:21]
C
Some of those, some of those names are mentioning. Sorry, some of those names are mentioning like JP Morgan, bank of America making 52 week highs, believe it or not, those are momentum names. So they are coming back with the momentum.
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They are. Citi by the way reiterated overweight 164 Morgan Stanley. If, if, if we're talking about the financials and they did have a Pretty good July in. In what was a, you know, a definite broadening story. Let's go, Palantir. Boy, I. I wish. I know you wish. I shouldn't say I wish. I don't wish anything. But you probably wish that you didn't have to bounce these things from your ETF the way you did Pat Palantir and Caterpillar, they are two of the undoubted stock stories of the day.
- [13:02]
C
Well, you always want to capture a 27% intraday return in an equity name. But when I pull the lens back and I look at the work that the ETF has done in terms of allocating towards Palantir, we got in front of this momentum move. We purchased the stock at $16 in January of 24. We wrote it up to 123, I think, where expectations were coming into this quarter and the ability for Palantir to exceed those expectations, 93% revenue growth versus 80% revenue growth. I think this is a classic example what I'm speaking towards, the ability to rebuild positioning where deleveraging has actually unfolded. So it's an example of the market or an individual equity in terms of positioning, getting caught on the wrong foot. And I think that's clearly what happens. And again, I mentioned this is to you yesterday, Jimmy, the multiple has cheapened dramatically. It was 247 on October 31st at its trough several weeks ago. You're talking about mid-60s Deutsche upgrades.
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A
Palantir to a buy from hold. How do you guys think about a stock that you don't own that, you know, hasn't obviously had a good run at all? Still well off of its, its highs. But does this feel like a potential, using that word reset again that, you know, Scott Rubner was talking about a reset?
- [14:20]
E
Palantir was a major momentum stock. I do own it in my personal account. So while we don't own it for clients, it was just too expensive from a price to sales basis. I think prior to Space X coming public, it was the most expensive price to sales company in the index. And I think it was the momentum darling for a long time. There was an unwanted wine there. Now we're getting back to fundamentals. Alex Carp came on and basically said, we have absolutely smashed numbers. Right? I mean, it's hard not to be enthusiastic with their, with what they're seeing on the sales side. And I think for viewers, the one thing that I would tell you is these reratings when you still have strong fundamental underpinnings to the story. We sold Apple, which was relatively Held up well and got way overweight for us in bought SK Hynix two weeks ago on the show on the 50% rerating. There's going to be opportunities with volatility. This one could have been because the unwind of the hedge fund. I think you know that there was a lot that underlie that more than
- [15:24]
A
meets the clearing event in and of itself.
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Right.
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I think the market's been up every day since 100%.
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That is Palantir. Palantir closed. 220. Palantir closed. I want people understand this. That conniption that Alex Karp threw on Squawk Box the other day. Yeah, it was good theater and it was fun for the memes and the lulls. But that resonates in the Fortune 500 where Palantir is sort of dominating on the AI front. That message where. Wait a minute, you guys are seriously going to hand over the business alpha of what you do to Anthropic and just trust that they're not going to launch competing products. People are heeding that. They closed 220 deals worth at least $1 million, 98 deals that were 5 million or more and 73 deals that were $10 million or more. Customer count is now over a thousand. And these are gigantic US customers predominantly, but all over the world the commercial customers are 653. This is a business that is proving every day the fallacy of SaaS apocalypse and this idea that everyone's just going to say all right, you know what, I'll let Anthropic do everything. It's not going to happen that way. And Palantir is waking up all of the other software stocks which we can get into because people are looking at that and saying, oh wait a minute, maybe we don't have 200 companies that are definitely going bankrupt after all.
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Well, I mean they did have overall revenues up 93%. So that is I think a little bit of evidence as to where their business is is trending.
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C
Let me give you a little quick roadmap on what potentially happens here with Palantir. Obviously it is not a momentum stock. It peaked in November of last year. So that's something that's actually beneficial to to those that are stepping into the stock today. Why do I say that? Because if you're looking at a 12 month forward period for momentum, you get very quickly to the month of November and you begin to roll off those high prices. By January and February you're at 120. So momentum funds will come back very quickly once Again into this name over the next several months.
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A
So speaking of resets, should we talk about Microsoft?
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We should.
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That rally continues. Stocks up 7% this week. It's up huge over the month. A lot of that was obviously in, in one day's time on the backside of their earnings report. But how about this rally?
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F
I think this is representative of a market in which not only many sectors are participating but many different styles of investing are working. So, you know, a Palantir is obviously, Scott, not going to appeal to me based on that Ford multiple which was up on the screen 100 times, just not going to be my style. However, as a more garpy value kind of investor, looking at Microsoft over the past few months has been a place to put pounds. And if I look at that chart on the screen right now, that's kind of similar to what we saw with Palantir. Obviously not identical, but kind of similar. Meaning that the opportunities have been there. Whether you're a value guy, whether you're, you're a hyper growth guy, whether you're, you're a momentum guy. The opportunities are there. You don't have to just throw the chips in, change your style of investing and say, I'm all in on Palantir and I think Microsoft at 24 times earnings. I'm looking at facts that I'm not sure what's up.
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Yes, 24.8.
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I mean, how wrong are you going to be with Microsoft? I hope that's not famous last words, but 24 times. I will take this. And bearing in mind that yes, they are no longer an asset light company, of course they're building out these data centers. We talked about this yesterday. If you believe in the AI trade, well then what Microsoft is doing, investing is the right thing.
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E
Can I expand on that? Also the worst performing mega cap stock in June and one thing that Andy Jassy did better than anybody else. Right. Which is a clearly articulated message on how they're accelerating growth, increasing profitability. And they showed hints of capital.
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Amazon.
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I meant, I meant Amazon. Yeah, yeah. Hints of capital discipline, which to me was a great story.
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Well, that's why the stock closed above 3 trillion in market cap for the very first time on Monday. Let's go. Space X. Okay. Because they're going to report. Report after the bell. You got the lock up later this week. The stock up is up almost 10% ahead of that. The Dean of Valuation, Aswath Demotorin NYU closing bell with me yesterday says it's closer to a buy now than a sell. There's what the stock has done since the ipo. It hasn't been pretty. So you got earnings, you got lockups. Lockups have been the story more than the, you know, I don't know, trying to game out earnings. It's all, it's all been about the lockup.
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E
I don't know if we have full price discovery yet as it relates to the lockup. So I think, you know, 20 to 30% is coming off now, more is coming off later. That said, the four metrics that get my attention are Starlink connectivity and margins. Number one, CapEx guidance, number two, number three, free cash flow and number four, monetization timeline on the AI. Those are the four things that they're going to message about. We'll see how those come out. They could be a huge driver given what we're seeing today on clear messaging. However, you still don't have the complete price discovery yet.
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Outperform RBC 225, outperform Bernstein 239, buy Deutsche 255. You do have a. Susquehanna goes neutral in 170. I think they're in the, I don't know. Too hard to sort of figure this one out for the, for the long term yet.
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C
Look, I'll embrace risk just, just as much as the next person, but to have a remarkably strong degree of conviction on where you believe this is going. When options is pricing in a 15% move and we have this extended period of lockup for sale, I just don't see how you get that conviction. You could have the conviction and the belief that long term, down the road this is going to be a multitrillion dollar company because Elon's done it before. Great. I'll grant you that. But I think this is a classic example of I really have no idea what the right price for this stock is. Where we are at this moment.
- [21:34]
F
And yes, when I agree with you and this is a stock I'd love to own, I don't think I'm going to get enough information tomorrow to pull the trigger. But I do want to push back on one thing that we've been talking about a lot. Not just you, Joe, but the lockups expiring. There's an offsetting positive for force there which is the increased float will eventually show up in increased weightings in the indices. So there will be passive buying that at least partially offsets those lock.
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A
One of the issues I think that it's a, it's a stair step lockup expiration as well. So it's not just you know, all, all coming at once. And you have to bear that in mind as, as an investor that there are going to be repeated expirations coming up where you're likely to get a lot more supply coming on the market. Give me a last comment on this before I move somewhere else. Josh.
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D
I think they're going to rip the stock higher. You only have three and a half percent of all the shares outstanding trading. Elon owns almost half of it. That stock's not moving. So I think, I think they know how to put on a show. We have no idea what they could be talking about. They could jump from connectivity to, to space to time travel, maybe shape shifting. You have no idea what he's capable of saying. And I'm going to tell you I think the move is sell the rip. So I do think they're going to engineer a pop. They are very good at playing this game but I can't, I don't think they could sustain it because we're going from three and a half percent to 12% potentially trading within two days of the earnings report. So I'm not worried about the next eight stair steps. I'm worried about this one. I think there's an opportunity to play this long. I just don't think I want to stay on day three.
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A
That's the trickiest part too. Earnings two days before, you know, lockup. And that just makes the whole thought process I think a little more difficult. So a couple of interesting notes today regarding the broadening that we have seen. Soc Gen says we prefer the S and P equal weight. S&P 500 going to 8,000. Bank of America talks about more signs of a broadening. You did have the equal weight at a record high today. I sort of use that as a way to get to a new buy from Josh Brown. It just speaks to optimism outside of the biggest stocks within the market whether it's in tech or comm services all around the trade from chips and elsewhere. It it's Marriott which is a new buy. Tell me why
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D
this is a name that's been on the best stocks of the market list for most this year. I bought the Dip. It's in a 14% pullback from its high but still fairly comfortably in its longer term uptrend. I do have a stop in place. This is a trade I looked at the reason the stock fell after earnings and what they basically said was the Middle east, which, you know, whatever. So it's not a huge part of their business. It was enough for them to shave a penny or two off of off of the quarter. But the reality is they raised guidance for the full year on both earnings and revenue and I don't think we'll be talking about the Middle east if and when this stock can regain its, its old highs. So I waited for my opportunity and I think we're in it.
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A
You used to have this.
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C
I did. While back we had this. I agree with Josh in the midst of a pullback really on a geopolitical shock more than anything else. Very strong global economy. This is a best in breed brand when you think about lodging and he's buying it technically at a really supportive place.
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A
Nike downgraded to. I should hit that to Nike downgraded to underweight from neutral JP Morgan. That's from Matt Boss is going to be with me by the way on on closing bell. So that's a notable call. So I guess we'll take a break. Coming up, our calls of the day. Two downgrades for two committee retail names. We'll debate it when we come back. We'll go for 935 on the Dow record highs for stocks. Show me Walmart please. Because the stock got downgraded today to perform from outperform at Oppenheimer we now see a less compelling outperformance case shorter term driven by three primary top line pharmacy headwinds in the US business the peakish valuation could be more susceptible to a rerating and street forecasts already modeling well ahead of longer term guidance leaving less room for upside. You want to take this call on today? It's not often that you get a Walmart downgrade.
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E
I do.
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So we got one today.
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C
So both Walmart and Costco were two names in the consumer staple sector that we spoke about at length over the last several years. Very strong momentum consumer staple names. And the valuation did get extreme in both of these names. Very difficult for consumer staples to maintain that extreme valuation. In particular as yields begin to rise. Costco is no longer a momentum name. We sold out of that in April at 10:14. Personally I bought it again recently. I should listen to my rules and not listen to myself because the rules were right. I am wrong. Wal Mart continues its pullback. I am concerned about Wal Mart as it approaches earnings in several weeks. And lastly I also think that the rotation back into Target is actually been detrimental to Walmart and Costco because there has been a lot of capital that has resided in Walmart and Costco the last several years and moved away from Target. It's now going back into Target.
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A
Oh, okay. Interesting eBay got a downgrade today to market perform from outperform citizens JMP securities well we expect ebay's core marketplace to continue to execute well in support of investors with its sustainability given the multiple tailwinds with a for collectibles with a growing headwind to profitability to Support DEPOP DEEPOP eBay is $1.4 billion acquisition. We now believe the risk rewards balance.
- [27:39]
E
Rob so, so listen McDonald's today reports lower end of the case struggling in the, in the consumer. That's why you're seeing that people challenge Walmart, people challenge. But this is a company that has focused well on the high end consumer and done really a great job at focusing on marginally higher priced items. They also are an asset light business so I do not going to think they're going to have any trouble taking in an acquisition. In addition they have incredibly friendly management team towards shareholders. 7% share share buybacks on a consistent basis. I think this is a very well run company as evidenced by it's the best performer in the consumer discretionary sector year to date.
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A
QXO overweight Morgan Stanley resumes coverage. Josh, 35 bucks is the target. More than a double from here. What do you think?
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D
This is like one of the most hated stocks in the market and I like that setup. This is a guy who has in multiple industries industries consolidated and built gigantic companies. This is the newest project. I have a very small position here but I am actively looking to add to it.
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A
Okay, Cummins, they had earnings they, they beat and raise, right? Take a look at the stock. Maybe their net sales rose. They did raise their revenue growth outlook. What's wrong with why the stock price is doing that?
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C
The gross margins light 26.1% versus the expectations of 27.1%. I also think you have to think about positioning here again. This is a momentum name that has worked really well in the industrial sector and it's now vulnerable to not exceeding lofty expectations, post earnings and a little bit of a deleveraging process. I think that's what's in front of us right now for Cummins.
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A
What about oneok? They did a beaten race. You own that, right? You just added that in the rebound. Talked about that.
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C
We added that. There's two names to think about. It's One Oak and it's equity. When you think about natural gas production and transmission you could see year to date one oak is up 17% so it has had relative outperformance to the price of natural gas. Very strong momentum. This earnings report I thought was good enough. I'm surprised by the reaction. Maybe it is the energy sector in totality that's pulling down the name.
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A
Yeah, I was, I would say, I would say. Would it be doing that to sort of everything today, given what's happening? It would.
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C
But this was a decent enough earnings report for a stock that has proven itself in what has been a difficult environment surrounding the natural gas commodity itself. I would stay with one Oak. I would certainly stay with equity. I think those are the two winners. Very strong balance sheets as well.
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A
Choppy chart, obviously year to date still up better than 17%. What do you think of the Williams deal? Buying momentum. Momentum midstream. Five and a half billion dollars. You just added Williams also.
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C
The street likes it. Again, guilty until proven innocent. Sometimes when we put on some of these energy names, Williams is a name that, you know, look, I don't think of it in particular as, as going to be one of our hyper momentum names, but it's in the energy universe that's seeing number one, the strong quality characteristics and then number two, a really strong performance. Year to date up 20%. So don't believe Jimmy, Jimmy wants to comment on this.
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F
I, you know, you went through all these names. You left out Cheniere, which is mine, which you added to. And I know you like it and I think you should like it because one of the.
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A
What he should like, what he shouldn't like.
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F
Well, you know, give me a little, give me a little artistic license here, if you will. Look, the long term outcome of the Middle east is that we're going to be sourcing natural gas from the US to go to Asia and Europe. And Cheniere is the export terminal that will produce that liquefied natural gas.
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A
All right, let's do best stocks in the market according to Josh Brown today. I love this light shines on two biotechs. Tell us which ones.
- [31:32]
D
Yeah, so we publish, we published this yesterday and we wanted to do something that had nothing to do with data centers and GPUs and just take a break from that whole AI cap ex world that we've been living in for so long. And we want to talk about stocks that are working away from that. And inside is the first one we'll talk about. Not only is this name on the best stocks in the market list, it's also in a more selective list. It's in my Porterhouse portfolio. And it's not hard to understand why when they reported earnings last week, revenue came in at 1.767 billion. Adjusted earnings of 309. The estimate for earnings was $2.12. They absolutely crushed Madison Management raised full year net sales guidance as well. And basically this is a company that was thought of as a one drug company that now has a pipeline with nine or ten drugs in different stages of trials all of which look like they could be huge winners for the company and that's why you're seeing the guidance increase. So I think this one's pretty simple. Traders can watch that 109 area. That's where the 50 day sets. I would treat it as an alert not an automatic sell. If I'm a little bit longer term I'd look at the 200 day around 101 below $100. The uptrend is over and you probably want to be trading something else above. I think you need to be long. This name Biogen is the other. This is a company that just be top end bottom bottom line expectations. They have no GPU judge, no LEMs. This is believe it or not a company in the health care space and yet able to put up massive numbers. Earnings came in 18% above consensus. Forward guidance is going higher as well. This is one of the granddaddies of publicly traded biotech stocks. It is knocked on to 18 multiple times, has not broken through. I think we're to going going to make another attempt at 218. A clean close above that level this stock is in a bona fide breakout. Traders can use 190 as support. Investors can anchor to the 200 day at 183. Again look at these trends above those levels. I think you'd rather be long than out. And both of these names I think continue to work based on not only the portfolios of drugs and the catalysts but just the fact that these stocks are under accumulation once again. Away from tech, away from hyperscalers but putting up big numbers and bringing in new shareholders.
- [34:02]
A
You have Insight?
- [34:03]
C
Yes, but we purchased Insight in October at $93 recognizing the Building Momentum Quality Company $24 billion market cap. The thing that I really appreciate about the recent performance and the earnings report is I don't think the analyst community has embraced the stock. Only 44% of the analyst community have a buy rating on it with a 12 month price target of 128. That's a great setup for me. I like that people are looking in the other direction not realizing what Josh is identifying and what the ETF purchased in October.
- [34:35]
A
Barron's talking about biotech today. They say more biotech M and A is coming. Whether the AstraZeneca Bristol deal happens or not. Which was much talked about obviously yesterday and speculated upon based on some reporting. So you own AstraZeneca? As we also note that health care was the best performing sector the past three months. Wolf suggests that a consolidation was inevitable. Was this a pause that resets and then reignites?
- [35:06]
F
I've let to think so because I've got a lot of pharmaceutical and biotech exposure and I actually, I think the AstraZeneca deal would be good. I'm clearly in the minority in that opinion given how the stock reacted yesterday. But I think you buy a stock in Bristol Myers that's exceptionally cheap, good dividend yield and there actually is a pipeline. Granted it's going to take a few years to develop, but there is a good pipeline out there, particularly in cardiovascular, which complements things that AstraZeneca has going, particularly oncology. I think it's, I think it's a great tie up.
- [35:38]
A
Robbie, you have Amgen and Gilead. They both report after the bell today.
- [35:41]
E
Yeah, and I mean these companies have dominant franchises in various things. I think the exciting thing about Amgen is that they're entering the GLP1 space and there could be some upside there. They want to have the best pipelines in the business. They're not expensive. Pay a 3% disc dividend yield. Gilead is kind of an ignored company. I mean it's up 8% year to date, but it trades at 16 times, has one of the best oncology franchises out there and obviously BIK Darby is the, the main HIV treatment that's out there.
- [36:14]
A
So what about Lilly for tomorrow before the bell? What you have to. Yes, one of the larger market cap
- [36:20]
E
names within the healthcare certainly cheapen quite a bit since its peak pricing was trading upwards of 50 times down in the low 30s. Now we expect, you know, north of 30% revenue growth, 50% growth in their obesity platform which is dominant. And so, you know, I think they're going to get approval on some of their further drugs soon, which could lead to a catalyzer to even further upside in that, in that franchise.
- [36:48]
A
There's a lot going on in this space today. Give me Merck, guys, please. They lifted their sales forecast. There's no direct ownership on the desk. But the CEO is going to be on Mad Money with Jim tonight to talk about the quarter. Stocks up one and a third percent again. I, I said they lifted their, their sales forecast on the strength of newer drugs. You'll hear from the CEO this evening with Jim. Pfizer was a beat. Vertex Raised their annual forecast. You want to take Vertex?
- [37:13]
C
Vertex, we just purchased. We now have an 11.7% weighting to health care. Health care rather continuing to increase Eli Lilly. That's a must own trillion dollar basically biotech company. It's the anchor of ownership in health care and really dominant over Novo Nordisk and gaining significant market share. Also added Quest Diagnostics and Humana. Two other names to think about along with existing positions like Rob Mexico mentioned already. We already own Amgen.
- [37:43]
A
Okay, we do have a developing story around Amazon. Dom Chu has that for us. What is this news about, Dom?
- [37:50]
B
All right, earlier this morning, Scott gang, we brought you a news alert regarding a lawsuit, an antitrust lawsuit being brought by the New Jersey Attorney General Jennifer Davenport for a filing made in US District Court in New Jersey alleging that Amazon uses again their dominant power to unlawfully maintain power over their delivery service partner or DSP drivers. We now have a response from Amazon with regard to the case being brought by the New Jersey Attorney General. This is attributable to Steve Kelly and a spokesperson for Amazon. And Steve goes to say, quote, this complaint is not grounded in fact. The Attorney General's characterization of the DSP program and the claims about working conditions are just wrong. The truth is DSPs are independent business owners who make their own decisions about hiring, fleet management and capacity planning. And they choose whether to work with other companies besides Amazon. Had the Attorney General bothered to look at the facts, they would have also seen that the vast majority of routes are finished on time or early, built on real world data accounting for stop complexity, traffic and geography. DSPs manage their driver's workday and route execution. And DSP employees are free to choose their employer and associate with who they want. Full stop. He goes on to say, despite our cooperation, the Attorney General's office did not raise the central claims in this complaint with us before filing suit. They chose a press conference over a conversation or real effort to understand the truth. But we're confident the facts will speak for themselves in court. So a fairly forceful, I guess response to the NGAG's suit against them against specifically Scott, their delivery service partner network. We'll bring in more as we know more. But again, Amazon shares are weaker on the day compared to the rest of the market. I'll send things back over to you guys.
- [39:39]
A
Yeah, Dom, thanks. And I mean really, let's be honest, the stock is not that weakness that you see in the stock is. Seems unrelated to this story altogether. It was already lower given a little bit back after, after, you know, eclipsing 3 trillion in market cap for the very first time ever. So a stock that was already down gets a little bit of news around it. But these types of stories tend to have very little impact, I think, on the overall trajectory of a share price.
- [40:05]
F
Absolutely agree. I think the thing that really generates price movement in Amazon is what's going on in the trade. And I'm looking at, Rob, because you said it earlier, Andy Jassy, when they reported earnings last week, gave critical commentary that when they build a data center, it takes less than three years to recoup that investment. And from there on, it's all gravy. Those are, those are really good numbers. That's what's important to the stock.
- [40:26]
A
Josh, how about this market? You know, I'm looking at where we're, we're close to 1,000 points on the Dow. The Nasdaq's up better than 2%, momentum's back. There's the Palantir story, there's the Caterpillar story. There's an overall, I think, resiliency story to this bull market story in general that anything that has really stepped in the way of this market from time to time. And if you want to back it up, guys, the, you know, if you want to back up the S and P, for example, for gosh, at least a year, I mean, you go a couple of years if you want, or whatever. The idea that V shaped recoveries have become the most common sign of this particular bull market. You can go all the way back until Liberation Day when things felt lousy and the market recovered. And then you can pick the next big moment and things felt lousy and the market recovered. And we have been in a, you know, rinse and repeat sort of mode, Josh, throughout this bull market. That will be one of the, the underlying characteristics of this moment.
- [41:32]
D
I think the thing that's changed amongst the investor class in the last five years is that it's gotten significantly younger. It's not because older people aren't investing. It's because their sons and their, and daughters and grandsons and granddaughters have increasingly become a more important part of the participation in equities. That's because they have jobs. They're in for one case, they have disposable income, they have stock options from companies they've worked for. And we have a lot of these people in that demographic as clients. And the fundamental differences when the market is volatile, if they call us at all, the call is like, I want to get more money in. That is the, and I'm sure Rob could confirm that. And, and Labenthal, like that is the mentality of the investor class.
- [42:21]
E
It's always like
- [42:24]
D
something about response. Yes. So when Trump does something on Truth Social, we're going to hit him hard. We're going to drop bombs. So the oil price spikes or there's like quote unquote uncertainty about Kevin Wash or whatever, the bottom half of the age distribution of our clients, they're like sending emails, yo, I have another $40,000. How, how quickly can I get that into the market? They don't care about Leonardo, Ashton Brenner. None of these things phase them. They're not thinking about that. What they, because all they know know for five years is, oh, I get it when my dad gets nervous and I buy, I'm up 10 days later. They know how it works. And that's, and that's a mentality shift. And it was not that way for the first 20 years of my career. It's a very new phenomenon, but it's fascinating to watch.
- [43:19]
A
This market's taken on a lot over, over that span of this current, you know, leg of this bull market. As I said from like Liberation Day, you know, you have the largest tariffs to hit an economy in like 80 years. Okay, the market hated it, but it figured out a way to deal with it. The war, escalating oil prices, market hates it. Right. What's it, Is this the thing that's going to end up this pretty good economic and earnings story? Is it going to hurt market margins to a degree that your input costs are rising so much you're not going to be able to figure it out? We have the ability, these incredible companies in this country to deal with a lot of stuff and that's representative on that chart as much as anything else.
- [44:05]
C
It is. And I think going back to Liberation Day, the market has never once turned away from the premise that we have innovation that we have not seen in this country since the Industrial Revolution. This is a technological revolution. And you know, you mentioned Caterpillar's earnings before and why are Caterpillar's earnings so important to that technology story? Because it validates the very premise that the spending is still there. The power equipment, the generate, the need to generate the power, the spending is actually continuing. And you saw it in Caterpillar's earnings and there was an effect, there was a derivative trade off of all of it. It went to the semis, it went to Qanta Services, it went to ge, Vernova, it went to Vertiv, it went all the right places that Validates the understanding that for the last two years everything has been about the technological innovation that we're being introduced to and that the world's wealthiest corporations. Corporations continue to spend on and candidly Scott, I don't think they care about the price of oil.
- [45:10]
F
And Joe, Joe, the spending is growing. I mean the top four hyperscalers are roughly 750 billion in capex this year going to 1.2 trillion next year. That's more than 50%. And as I said earlier, there's no signs of any of these companies blinking, pulling back on their planes.
- [45:25]
E
We do, we do a morning meeting and I asked the question this morning what is going to stop this Pavlovian buy? The dip mentality that we have today that Josh just talked about usually as Lou and Louis Bacon talks about all the time, you get a bolt that knocks you into a different atmosphere and changes you off this bull market trajectory. We've seen a number of things that could have been those bolts. I think one of the differences this time is that we've been able to desensitize to them because they've been highly anticipated and they've stayed on the, the front burner for a very long time. And so markets desensitized to bad news and that's why they, they climb walls of worry. What my team thinks, and I'm not so sure I agree just to be honest with you, is that the change in the rate of change as it relates to earnings, meaning earnings are so high we're seeing peak earnings that you might start to see it roll over and that is the catalyzer. I still think they're good enough that you know we've had a valuation reset the that we're going to be fine with that. So I think it's going to be something totally unexpected in this deal. It's usually a deleveraging event a, a ugly event around the just had it. Yeah, I know but it was, it wasn't long term cap.
- [46:36]
A
No, no. I mean but, but it was a significant enough clearing event in the epicenter of the market that was having questions
- [46:43]
E
asked about just so happened to happen at a very elegant time where there was a handoff to the other 497
- [46:52]
C
happening also in time.
- [46:53]
F
Also it's not affecting the financial sector. Right. I mean that's really where bull markets end is when Citigroup pops up and says oh we've got this huge trading loss or the London Whale for JP Morgan. There's no indication of that. Knock on wood. There's no indication of major holes being blown up anywhere in any of the major financial.
- [47:11]
A
I've got another move I want to get to that we didn't get to yesterday. But it's a notable name. Many of you may, may own it. It's Disney, which Jim owns, but you sold in the most recent rebalance. And you know, the momentum feels like it's been lost. And this is what happens when that happens. Reports tomorrow. Right. What do you think about this name? And then I'll get Jim's take too because there's the chart which sort of is. Is the decider.
- [47:44]
C
Yeah. So if you think about Disney and you want to use the word momentum, it rarely associates itself and it's. There's only been two and experience, two experiences in the five plus years for the existence of the ETF that we've allocated towards Disney basically scratched the first time and took a small loss here. The momentum appears and then it evaporates very quickly. And I've made this comment over the last month, the momentum has appeared for one single reason.
- [48:13]
E
Activism.
- [48:14]
C
It's been activism that's driven the momentum higher. So I'll turn to Jimmy. I don't really see the fundamental catalyst. I don't know where the growth is in the Disney story. I was told it was going to be in streaming and then I was told it was ESPN and there's been so many different places and I just think it's an overall identity crisis that they suffer through.
- [48:35]
F
So complete honesty here, folks. This is what a value trap looks like and I'm in it. Okay? I'm not shying away from it. I'm really unhappy. I'm really tired of it. Let's see what the earnings are tomorrow. I can't make another comment about how cheap it is. That has no relevance to where the stock price is going. I see a lot of positives, whether it's the theme parks, the cruises may, maybe the studios can get going. I do think Joe streaming is a positive. However, none of what I've just said matters for the share price and I am getting tired of it. And in a year where there's a lot of gains and I could harvest the loss here to offset some of those gains. I am seriously thinking about that. But to be clear, right now I'm holding it into earnings.
- [49:15]
A
You've been so bullish on this story
- [49:18]
F
and eventually I got in the face so many.
- [49:22]
A
Hey man.
- [49:23]
F
I mean my face is we can
- [49:25]
A
have, we can bring a couch in here and have a 50 minute session if you need one, we'll charge you a low rate friends and family discount. Cuz, I mean, I could throw a few other things. I could throw a few other things into the conversation too.
- [49:39]
E
You don't need your therapist doing that, though.
- [49:42]
A
I want to do something. I want to do something serious, though. I do, I do want. I want to do something serious. Because I mentioned it you yesterday.
- [49:48]
F
Yeah.
- [49:50]
A
And I think I mentioned it around the fact that you had sold half of your Apple position as the stock had run way up. And I think you told me, if I recall, you did it before earnings.
- [50:00]
F
I did. And Kevin will tell you I timestamped it.
- [50:03]
A
No, no, no, I'm not, I'm not doubting that in any way. I'm using that as the example of what I wanted to do. For people who are thinking about when to take some chips off winning trades and when to bail off losing ones, you do have the ability to hang around in some stocks where the charts would make you question your sanity at times. Yeah, like right now or others. I'm not saying this is like an overriding characteristic of the way you invest in trade. However. However the I'm willing to stick with it because I think the market is
- [50:44]
F
wrong mentality eventually evolves to I am wrong. Okay. And that's the, that's the moment of truth that we are facing right now. And I said this yesterday, Joe and I had a very good conversation about this, that whatever your model of trading is, you're not going to bet, you're not going to bat a thousand percent. And that's true for everyone. And it's clearly true for me. You're right, Scott. I do have patience. I have a lot of patience. I think it is the biggest virtue in investing. The problem is there's such a thin line between patience and stubbornness. And right now I'm teetering on that line. I can see that I've been too stubborn with Disney. I am going to see what happens with this earnings report, but I'm clearly telegraphing that I am tired. I don't always get it right and clearly I'm wrong on this, but I'm going to see what, what happens tomorrow.
- [51:31]
A
Okay. I'm just gonna say this because I think people feel this. Nothing to me is more powerful or important on this program than when one of you all falls on the sword and said and says, I got it wrong. Now, I'm not. You haven't made a move in this yet. But those moments to me matter more than I got it wrong.
- [51:56]
D
Right.
- [51:56]
A
When it's easy. And a tape like we just showed you and we can put the S and P chart back up that shows you this resilient and you know, just carrying on. Bull market. It's easy to say I was right many, many times in not the year to date. The bigger picture that we had up there, I was right a lot of times in a bull market because a lot of people are right. Because if the, if the market's just trending up, more people are going to be right than wrong 80% of the time if you've been, if you've been bullish. So those moments are the ones that I love.
- [52:27]
F
Look, I feel terrible about this. It's part of a portfolio. I'm not covering it up with that. It is important that we run portfolios because you don't always get it right. But clearly I'm wrong on this. I think, I think I said that before you said what you said, Scott. And I do think, Listen, I don't think I totally agree with you. We have to admit when we are wrong and I have been wrong on this.
- [52:49]
E
There is something there though that's a little more important, which is momentum has been the most powerful factor in markets. And when a stock, albeit cheap, albeit having all the catalyzers that Jim might be hoping for, when you're in a market of that kind, it's just not going to get paid attention to until there's some catalyzer that comes along and changes it.
- [53:08]
A
We, we have Uber, by the way, which is reporting tomorrow before the Belk. I know that many of the tech names are out of the way, but it's still an important earnings season that's yet to be finished. Oliver Renick has options action on that name from the CBO Global markets in Chicago because we do have some ownership on the desk. What are the options saying about what may happen here?
- [53:30]
D
Hey, Scott. Perhaps no surprise, traders are giving Uber the benefit of the doubt today. Despite the stock falling after six of its past seven earnings reports. Flows lean bullish despite puts commanding higher premiums, which is more a function of the stock's 11 month bear market than short term demand for downside. In fact, today we see more than twice as many calls bought versus put 7700 versus about 3500 when I came down here. Bulls are crowding the 75 and 80 strike calls expiring Friday. Right now the options are pricing in a 6% swing after earnings. So those call buyers today arguably think that pricing actually looks cheap. For those looking further out, the biggest single Call buyer of the day was someone who spent over $200,000 buying a couple hundred of the 75 strike calls expiring in June next year. Scott, that's a trade that needs uber to climb 20%.
- [54:23]
A
Okay, Oliver, thank you. That's Oliver Renick at CBO in Chicago. Josh, what are your own expectations considering that you own the name?
- [54:31]
D
Yeah. This stock falls 15% every time they report earnings. It doesn't matter what they say, it doesn't matter what the numbers are, it doesn't matter what the guidance is, because the market does not believe in their strategy. And they haven't made enough progress to demonstrate that they have a strategy that's going to be durable enough. So you're going to have Cyber Taxi from Tesla, you're going to have Waymo in every city, all over the country. Uber's answer to that is they're going to partner with every maker of every autonomous vehicle, and they're going to have different fleets all over the world and they've demonstrated their ability to sign contracts, they've demonstrated their ability to put out press releases. But until those cars are all over the road and available on the app and people understand the economics and that actually Uber is going to be more productive, profitable in the era of autonomous versus paying human drivers, until they can actually demonstrate it, it doesn't matter what they say on their earnings report, it's not going to help. That's why it's 16 times forward P E. It'll be 16 times forward P E probably for the next two or three quarters because we're just not there yet. So if you're long, which I am, and I've been for a long time. Settle in.
- [55:44]
A
All right, well, we'll see that Dow s and P P 500 hit record highs. Just to keep telling you what's on the screen there, another earnings bit just quickly. Arista Networks is after the bell today. What are your expectations for that?
- [55:58]
C
I think based off of what we've seen so far from companies like Cisco, you're going to see continued strength in communications equipment related to the AI buildout. It's represented in the strong recovery of 5% for this company today. And it's part of what we're seeing where Caterpillar kind of validated the spending story.
- [56:18]
A
Devon is today as well. Robbie, you have that?
- [56:21]
E
Yes, we do. You know, listen, I continue to expect the profitability of these companies is going to be really, really high related to what's happening.
- [56:29]
A
Eog, Suncor, Win is today. So all those are within our orbit. Josh, give me a final trade if you would.
- [56:37]
D
I'm still long apple. Despite the fact the stock fell after earnings. I don't care. Still think it's going to outperform going into year end.
- [56:45]
E
Robert Helmed Aerospace. Little known industrial company that dominates the turbine market.
- [56:53]
A
Farmer Jim Alphabet.
- [56:55]
F
You know, it had a bad week a couple of weeks ago after earnings and it's snapped right back and I think it's going higher with the rest of the market. What do you think?
- [57:02]
A
I was just looking to see how many water.
- [57:04]
F
Yeah, this was a three water day.
- [57:05]
A
I mean.
- [57:06]
F
I mean the Disney thing was a
- [57:07]
E
little anxiety was high.
- [57:09]
A
What do you mean? You handled it great.
- [57:10]
F
Thank you. But it's not. It's not a pleasant. It's not a pleasant event. Thank you. Thank you.
- [57:15]
A
You did crush a Celsius before the
- [57:17]
F
show, so that might help.
- [57:19]
A
What do you got?
- [57:19]
C
JB Hunt just added to the east.
- [57:21]
A
All right, all right. So we're at record highs. We'll see how we finish. We'll take you through it right to the final bell. You've been listening to CNBC's Halftime Report, the podcast you can only always catch us live, weekdays at 12 Eastern only on CNBC. All opinions expressed by the halftime report participants are solely their opinions and do not reflect the opinions of CNBC or its parent company or affiliates and may have been previously disseminated by them on television, radio, Internet or another medium. You should not treat any opinion expressed on this podcast as a specific inducement to make a particular investment or follow a particular strategy, but only as an expression of opinion. Such opinions are based upon information the half time report participants consider reliable, but neither CNBC nor its affiliates and or subsidiaries warrant its completeness or accuracy and it should not be relied upon as such. To view the full halftime report disclaimer, please visit cnbc.com halftime reportdisclaimer.com.