← Halftime Report
Halftime Report
Navigating High AI Anxiety 2/24/26
00:44:12
Scott Wapner and the Investment Committee debate the high anxiety around AI and how you should trade it. Josh Brown details his Heavy Assets, Low Obsolescence or "HALO" trade that he says will be resistant to AI volatility. Plus, the desk share their favorite consumer discretionary names. And later, Josh Brown spotlights Utilities in his "Best Stocks in the Market." Investment Committee Disclosures
Loading summary
Transcript125 lines
- [00:00]
A
A rich life isn't a straight line to a destination on the horizon. Sometimes it takes an unexpected turn with detours, new possibilities, and even another passenger. Or three. And with 100 years of navigating ups and downs, you can count on Edward Jones to help guide you through it all. Because life is a winding path made rich by the people you walk it with. Let's find your rich together. Edward Jones Member SIPC not every sale happens at the register. Before AT&T business Wireless, checking out customers on our mobile POS systems took too long. Basically a staring contest where everyone loses. It's crazy what people will say during an awkward silence. Now transactions are done before the silence takes hold. That means I can focus on the task at hand and make an extra sale or two. Sometimes I do miss the bonding time. Sometimes.
- [00:55]
B
AT&T business Wireless connecting changes everything. 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, thank you very much. Welcome to the Halftime Report. I'm Scott Wapner. Front and center this hour. High anxiety. It has kept the markets on edge lately. We discuss and debate all of it with the investment committee. Joining me for the hour today, Joe Terranova, Jim Laventhal and Josh Brown. We are getting a nice bounce back today. There you see it. Not quite 1% for the NASDAQ but nonetheless a pretty good looking day. Joe, we've had some really wild moves in this market lately based on the anxiety that we're talking about. I mean, IBM has its worst day in 25 years yesterday. You have like a different catalyst every day. Now you have this Citrini paper, right. Which causes all sorts of anxiety. This hypothetical look at how the disruption caused by AI could play out in the years ahead. The FTSE today says of that quote, the Citrini fuss is further evidence that we are in an expensive market that is looking for an excuse to fall for reasons that are probably wider than just AI. How about that notion?
- [02:21]
C
I mean, that's an interesting interpretation of what's gone on so far, year to date. But I think the main motivation has been this disruption that we're talking about. Perceived. Well, right, perceived.
- [02:34]
B
And by the way, we're projected, speculated upon. I think that's the whole point of this. Yeah. And commentary.
- [02:40]
C
And it's interesting because we're higher today and I thought the anthropic livestream this morning attempted to give a little comfort to the marketplace that there's not going to be complete disruption. But look, coming into the year, you had all the reasons to say to yourself, we're going to recalibrate positioning away from the areas of the market where you've seen that strong outperformance and it's the asset light businesses. So the move on a valuation perspective into areas of the market like energy, like materials, like industrials, that was warranted. But I just think collectively overall this year the market's spinning all over the place. And Scott, when the market looks really good, you want to fade it. And when the market looks like it's breaking down and looks awful, you want to buy it.
- [03:24]
B
Look at that, the approach, look at that year to date out of the S and P. What part? In part that that shows a resilient market, but it also shows, Jimmy, these continued V shaped bounces. Right? I mean, that's right. Right in front of your face.
- [03:38]
D
Right in front of your face.
- [03:39]
B
Every bit of anxiety that has happened within this market has been bought. The question is, are we at the precipice of something different? Do we in fact, as the FTSE suggests today, do we have an expensive market that is looking for any excuse at this point to fall? And you can blame a newsletter from a news release from a company that was making karaoke machines and then you can blame a research report that most people hadn't heard of before. And we see all this sort of upset the likes of which you just don't see every day like an IBM having its worst day in 25 years. Some see that and say that's insane.
- [04:19]
D
I did think the IBM move was pretty pronounced. I thought the Citrini article was fear mongering. I'll come back to that in a second Scott, because I really actually want to go to what you're bringing up with regards to the FTSE and this being seemingly an expensive market, poised to fall. You know, if I look at the RSP, Joe, it's having a great year. It's up 5% year to date. We're two months into the year. If I look the small caps, if I look at IWM Russell 2000, it's up 6% two months into the year. If I look at international stocks, IFA, you know, up about 8% year to date. There is a part of the market that is having a really tough time. It is technology, it is the Mag 7, it is the triple cues. And the problem is is that's been so important for so many investors that it has many people feeling like we're in a bear market, but we're just not in a bear market. So when I hear things like the FTSE article talking about this is an expensive market, you know, that's poised to fall, I think it flies in the face of the average stock, which is actually doing well and anybody who has a diversified portfolio is doing well. As for fears that I brought up in yesterday's. Well, there are always fears. There are always fears, Scott. I mean, I'm not going to hit the table again, but how many years have you and I've been doing this? Scott? Joe, Josh, you know, we've had fears in recent years. Ten months ago, the store shelves were going to be bare. For four years ago we were on the precipice, theoretically of nuclear war. These were live conversations we were having. And I look at the article yesterday. Interesting, read it. I didn't come away walking away thinking that this is anything other than creative destruction. Jobs will be destroyed, jobs will be created. Scott, we're here on the New York Stock Exchange. This used to have 5,000 people on the floor. Now there's 300. I mean, creative destruction happens all the time. Yes, I do need a drink of water. That article actually got me hot. Okay, got me hot.
- [06:06]
C
And here comes Nvidia earnings tomorrow.
- [06:08]
B
Okay, so you know, Josh, it has been a steady stream of stocks getting hit on any AI related headline is a great timeline that we can show you. We were just cycling through it, but we'll put it up again just to make the point even firmer that, you know, day headline segment ticker decline. That's basically what you're talking about. You have Google launching Project Genie January 30th. Okay, then you know, you got these software stocks go down legal tech, right? Anthropic Claude mechanism stock ticker decline. It's making a lot of people nervous, you know, that, that they fear that something bigger might be coming, that the market's just not supposed to react this way.
- [07:02]
E
I think most of the shares of these companies don't change hands on these negative 8% days. And I think people look at this and they say, oh my God. But they don't realize the majority of investors are not doing anything. It's, it's very hypersensitive. People who are easily triggered by substack and they, you know, read a science fiction post, very well written by the way. I loved it. And they extrapolate that out and they say, oh my God, 10 of the worst case scenarios are all going to take place at the same time and create this inescapable feedback loop of, of negatives. It's, it's actually very similar to 2011. People were writing these all the time. They worked at Soc Gen, they worked at investment banks. They weren't writing for Substack. But it was the same, it was the same shtick. It was like here's one negative thing that's about to happen because of European debt crisis which is then going to trigger this and then trigger this, then trigger this. It's double dip recession, it's global, it's worse. In 2008. Yeah, bad things ended up happening in the European debt crisis but like the entire world didn't fall apart and there are always offsets. So I think it's very rational to take the Citrini piece at face value. It's a thought exercise. It's a very healthy one actually. If you take it to like I need to change my whole portfolio around. You're not a good investor. So that's not one two. I gave you the playbook three weeks ago. I've been saying it every single appearance the stock. Why do I do best stocks? The market. Let's start there. I'm not just buying them all. It tells me what, what investors are actually doing and where the accumulation is. That is the point of even tracking what are the best stocks in the market in the first place. And this became apparent very early this year. Investors had spent 15 years worshiping at the altar of the asset light economy, mostly software, professional services and data businesses. And that whole paradigm flipped and now they want heavy assets and companies with low obsolescence risk. Here are my top 10 this year from the best.
- [09:14]
B
Hold on real quick, hang on real quick before, before you do that because I don't want to blow by what has now become something that's in the zeitgeist of sorts. Your so called halo stocks which are being mentioned in newspapers now and in research reports from different Wall street firms. Halo standing for what you just said. Heavy assets, low obsolescence. So called stocks that are at least deemed to have some level of AI immunity. You guys have many in front of you. You were going to name some now. Go ahead. I just wanted to make sure that our viewers understand the context by which we are even talking about this.
- [09:56]
E
Yeah, so this is the trade I told, I basically told you guys. I think this is going to be the dominant theme of 2026. It doesn't mean only buy these. Don't look for opportunities. It doesn't mean they're all going to go up Every day. I'm just telling you these are the stocks that people are running to every time Anthropic announces something that terrifies them and competing with an asset light business. So these are all on my list and I think more than half of these we've done segments on. They all look unbelievable. Texas Pacific Land Corp. This is West Texas Oil and gas royalties. There's nothing you could do to prompt an LLM that's going to change what's happening with this company. Corning glw. It's a data center build out play physical fiber optics and glass screens. Southern Copper, Baker Hughes. We did a whole thing on Deere. I did the other day. Schlumberger. I did Iron Mountain. We talked about last week. IRM, FedEx. We did a whole segment on Hershey. I didn't get to this one. Hsy, obviously undisruptible by LLMs. Colgate Palm Olive Seal. I'm not saying they're cheap. I'm not saying they're undiscovered. I'm not saying there are quote unquote better companies than Adobe or Disney. I'm telling you that these are the stocks that are being accumulated by people who are looking at their portfolio and they're like 70% asset light air are software businesses and they're saying, oh my God, I better buy something else, I better diversify. These are the stocks that are the beneficiaries of that. And there are so many more. We did Ventas, which is senior living. I mean I could go on and on and on. The reason they're the best stocks in the market is because they're the stocks that people have the highest conviction in and are buying. And I want to throw in Apple. Apple is Halo. It's 2.5 billion devices around the world, physical devices. And all of these LLMs are going to end up being plug ins and features in the iOS app store. Apple's going to get paid on all of the usage of these things. Apple is halo. Yesterday this stock was green in a sea of red for tech. Today it's up two and a half percent. Was up as much as three and a half earlier this morning. So it's not a tech versus non tech. It's more, it's more nuanced than that.
- [12:17]
B
No, I know. Look, Jefferies is talking about it today with a list. Names like Airbnb and Carvana and Doordash and Disney and Roku and Spotify. Jimmy and Joe both have lists as well. Let's just get them out there. Let's try and give people constructive ways to think about the inverse effect of AI ones that have some level of this halo effect, if you want to call it that, which Josh has done. And as I said, others are picking it up and going with it. Joe, you got Baker Hughes and some others on the list.
- [12:52]
C
Tell us Baker Hughes, Merck, Vulcan Materials, Bunge, which is actually a consumer staple name. Think about Generac, FedEx, Welltower. Josh already mentioned FedEx. Josh mentioned Corning. That's the name that I own personally. So conceptually, I agree with what Josh is identifying here. I'll let Jimmy go and then I want to come back. I've got an important question to ask Josh about how we think about allocating Jimmy.
- [13:20]
D
Well, I mean, one of the things I'll say about these types of stocks is they're very easy to understand. So if I point out a crh, this is an aggregate manufacturer, if you think about, you're driving down the road and you see one of those little depots with a silo, and it's got, you know, concrete or cement or gravel in it. Dump trucks fill up there and they go to. Where do they go? They go to building sites for data centers or housing developments. Anywhere you're making a road, that's where CRH is going. It's so easy to understand. Or energy. We've talked about this a lot, and we're obviously consuming a lot of it and a lot more of it in every form as these data centers come on. So, you know, fossil fuels are not going away. Exxon Mobil, Transocean. I think, though the easiest one to explain is travel and experience. Right. You cannot replace getting on an airplane and going to a Wynn Resort or Disneyland. You cannot replace that. Sure, you could go get Metaverse glasses and put those on and try, but it's not the same thing. When I'm on the airplane, I sometimes play the blackjack game on the back of the seat. It's nothing like being in a casino and actually playing blackjack. And that's not going to go away. That's not going to be made obsolescent.
- [14:26]
B
The broader point, though, it's not so much whether it's Citrini or Houdini or whoever puts out whatever paper. It's the reaction which has people nervous in the way that these stocks are reacting the way they are, because it's just not supposed to happen that way. You're not supposed to have a hypothetical research piece come out and IBM have its worst day in. In more than two decades. It Reminds me of, of how Jamie Dimon was speaking at the Investor Update yesterday where he talked about just the mere fact that asset prices are high in his perspective and what could happen if the economic cycle turns.
- [15:12]
D
Listen, there will be a cycle one day. I don't know when there's going to be a cycle. I don't know what confluence events will cause that cycle. My anxiety is high over it. I'm not assuaged by the fact that asset prices are high. In fact, I think that as the
- [15:28]
A
risk,
- [15:30]
B
that kind of speaks to it. Right. You're in an environment already where some say asset prices are high. A lot of things have run up a lot because of the AI trade itself. And now the air is coming out. No one knows truly if there's a bigger air pocket where it needs to be filled. If these stocks continue to be upset in the, in the manner which, which they have been, who knows what tomorrow brings or the next day or the next iteration of whatever anthropic has up its sleeve and any of these other LLMs or what have you.
- [16:04]
C
So that brings me to an important point in all of this because for the last several years we have been saying technology is the new economy. And are we at a moment where there's a paradigm shift about how you think about asset allocation in particular thematically to equity sectors? And the question I was going to ask Josh, I did a call with financial adviser this morning who said to me, I understand what Josh is saying as it relates to, to halo stocks, but in fact, is that more of a trade, a cyclical moment, or are we at a secular moment, Scott, where, Josh, you believe that you need to, as an ria, begin to allocate a little bit away from those technology, those asset lights, those heart of the economy names, more towards what Josh, which Scott Rather is speaking about a better valuation opportunity that exists in your halo theme?
- [17:01]
E
Yeah, I think it's happening already. You know, this is what I would say about financial advisors in general and the wealth management industry. We are the component of the United States investment business that did not throw in the towel on emerging markets in Europe and Japan. We own these stocks. Like they don't own them necessarily in hedge fund land. Maybe now they do because rest of the world versus US went up 30% last year. But like, we tend to have portfolios that look different from the s and P500. One of the main reasons is we don't sell ourselves to clients as we're going to race the S and P for you. So we are normally Diversified and when you have these sort of cyclical secular shifts into a new investing regiment, we have been adding and we have been rebalancing systematically for years so that we have the representation in other industry groups outside of tech and in other markets outside of the S&P 500. We own small caps like you can look at 13 filings for the top 20 RIAs using an LLM and in 5 minutes you'll understand we already are doing this. But then there is a trading component to this too, Joe. And I want everybody to think about energy right now. And Obviously I own ExxonMobil, I own Devon, so I'm in this trade. But like this was an amazing opportunity at the end of last year. Nobody saw any reason to own oil or energy equities. Oil prices were like at high 50s, low 60s and we've had an explosion in gains in these stocks. Texas Pacific which I Talked about up 75% year to date. Baker Hughes 41, Schlumberger 37. Oxy is up 26. XOM is up 24% this year. It's a rerating. Oil prices didn't do anything. Here are the trailing twelve trailing PE ratios versus one year ago. Today Exxon is 22 times earnings. It was 14 a year ago. Chevron is 28, it was 16. That's a double. Devon is 10, it was 8. Oxy is 32 times trailing twelve months earnings. It was 20 a year ago. Fang which is Diamondback 12 versus 10. Energy is getting rerated because it's a place to go. They will have some earnings growth this year. It's not going to look anything like what those multiples are saying but people are now looking for more exposure to things that can't get better disrupted overnight by anthropic. And they're finding sectors that have been left in the dust and finding whole markets like em that have been left in the dust for year after year after year. And this is what good portfolio management looks like.
- [19:48]
B
I want to focus on what has been the epicenter of all of this anxiety. It's been software and for good reason because you have some really big tests coming right in front of us. Workday earnings after the bell tonight, Salesforce and Snowflake tomorrow. There's no ownership in those direct names. Joe recently sold Workday in the latest rebalance. However, I think you can make the argument that no matter what software stocks you own, if you own any of them, you're watching all of these very closely because it could have a broad impact on not only the Space itself, but the market at large, right? Jim, this is like I don't care what I own. I, I need to watch and see what these companies report and even more importantly than that, what the price action is on the other side of the reports. Because sometimes there's been a discrepancy between good report and good action after the numbers have hit.
- [20:42]
D
Yeah, and that happens. We know that. But first things first, we need to see good reports here because look, it's not just been February, it's not just been 2026. Software has been in a decline for about 18 months now and it's been pretty brutal. What hasn't happened in that time frame is you have not yet seen degradation in software earnings. So when you just said, Scott, hey, are we on the edge of our seat? You bet. Workday Salesforce tomorrow. You bet. Because we want to see if the degradation in earnings from AI cannibalization finally shows up. Or is this another quarter in which despite the greatest of fears, these companies put up good results with decent guidance going forward. Now, if that happens again, I cannot guarantee nor can anyone that the stocks will respond positively, but it will be at least one more quarter. By the way, I suspect that these are going to be decent reports because I don't know of anybody, any enterprise level company that has gone out and ripped out their tech stack to replace it with claw. They just haven't seen that yet. So I think the reports are going to be good, but I don't think it's going to be enough to allay concerns that next quarter will be bad or 2027 will be bad. Ultimately these companies are going to have to continue to perform and they're going to have to buy back shares, which companies have been doing and they're buying back shares on the cheap.
- [22:03]
B
Let's go to Mackenzie seagallas as a news alert for us. Hey Mac.
- [22:07]
A
Hey Scott. The shares of marketing automation firm Klaviyo, surging up almost 8% after announcing an expansion of its strategic partnership with Google. Klaviyo, which helps companies store user data and build profiles to target them with marketing via and text messages, will work with Google to help brands deliver autonomous AI driven experiences. So it sounds like Google will let advertisers plug Klaviyo's customer data into its ad tools, enabling more precise audience building and automated AI driven campaigns. They've already teamed up with Google on Google Ads its AI tool called Nano Banana. But this does is really expands that collaboration into AI powered agents, including everything from product discovery to final Purchase. I will say this is a much needed boost all for the stock. It was down around 46% year to date going into this boost. Thanks. Back to you.
- [22:58]
B
All right, good stuff Mac. Thanks. It's mackenzie Seagal. So we talk about being on the edge of our seat for software. We're going to be on the edge of our seats obviously for Nvidia when it reports tomorrow the stock's actually been running into the number. If you take, I don't know, give me a week guys please so we can, we can see. So it's found something over the most recent period of time. So it's up near 5% into the print. So interesting today DA Davidson declares that Nvidia is not a bellwether anymore. Not the markets picked other AI winners they say including Google, Broadcom, memory chips and optical companies will be paying attention to every word that Jensen Huang obviously has to say. And what's also interesting I think is that you know Jimmy, we, we used to say if hyperscalers cut spending that that could be a bad sign for the whole market. It's like well what do you mean there, there we've already priced in the stocks for this continued ramp. Now some are suggesting that's exactly what you need. You need some of these hyperscalers to dial it back and stop throwing out these massive numbers to, to take some of the anxiety out of it. That's what Wolf says today. We believe a delay or cut to capital spending would be a very positive, positive catalyst. Goldman's Tony Pascarello says while I have little worry about the balance sheets or the earnings power of the Mag 7 the market narrative has changed. The simplicity of the hyperscalers funding immense capex so easily from operating cash flow has changed. Given questions around capex intensity it's also hard for me to see the kind of upside convexity that we grew accustomed to in prior years. In the end it will be a show me story. With the onus on companies to attach revenue growth to spend, things have changed. Things have changed.
- [24:44]
D
So this market, the last thing that you said, attach revenue growth to spend. If you listen to the luminaries of the space, that's what's happening. And I speak, I refer to Jensen Huang, I refer to Brad Gerstner, I refer to Andrew Jassy. These are the people who are saying that every, every increment of compute that comes online is monetizable, that they are supply constrained right now. So that is why the spending should continue to occur for the time being. The time being. This year 2026. I think when you look past that, and maybe that's what those analysts are referring to, when you get into 2027, maybe further into 2028, then you start to worry about do we have too much capacity, do we have too many large language models? And then the comparisons may, and I'm talking one to two years from now, maybe be apartment when we go to the fiber optic, the dark optic of the late 1990s or the railroad networks of the 19th century, yes, there was overbuilding. There is likely to be overbuilding in AI, but it is not right now.
- [25:45]
B
The, the, the companies continue to invest. I mean, look at AMD right today, popping on the deal with Metta Maddie agreeing to buy 6 gigawatts of AI compute from AMD, $100 billion. So you own this stock. AMD is having a really, really nice day. Gets almost an afterthought perspective when people talk about Nvidia and Broadcom and some of the others. But Lisa Su does this deal and
- [26:08]
C
the stock pops 9% and it should, and you know, the warrants were struck at A$600 share price for AMD. That gives 10% towards matter. But I think what's important here in this relationship is the ability for Metta to actually have that custom design relationship, which is kind of different than what they have existing now with Nvidia. And then they're not going to step away matter from on their own trying to design chips. I think all of this collectively really speaks. And by the way, Nvidia absolutely remains a bellwether. But on the Nvidia earnings call tomorrow night, you want to hear the confidence that they're not losing market share. As we hear, Scott, about all these relationships related to chips, as we hear about Alphabet and Broadcom with the Tensor processing units, as we hear from inference chips being developed, we want to have the confidence that Nvidia still has it, especially when we continue to see the rollout of these types of deals as we see with AMD and Meta.
- [27:10]
B
All right, so we're going to take a quick break. We'll come back. We'll focus on the best performing group today, one of the worst performing groups thus far this year. You can thank Home Depot in part for what's happening today in the discretionary space. Got a lot of talk about that coming up. Dow's good for 408. Nice bounce back. We're back right after this.
- [27:33]
D
How can you grow your business from
- [27:34]
C
idea to industry leader?
- [27:36]
D
Bring your vision to life with smart
- [27:38]
C
business buying tools and technology from Amazon Business.
- [27:41]
B
From fast free shipping to in depth
- [27:44]
C
buying insights and automated purchase approvals, we
- [27:47]
B
deliver everything you need to achieve your goals.
- [27:49]
A
It's not easy to stand out from the crowd.
- [27:51]
B
Simplify how you stock up to get ahead.
- [27:54]
C
Go to amazonbusiness.com for support. Before we had AT&T business Wireless coverage, our delivery GPS wasn't the most reliable.
- [28:02]
B
Once our driver had to do a
- [28:04]
E
14 point turn to get back on route.
- [28:06]
C
A 14 point turn and influencer even livestream the whole thing.
- [28:11]
B
Not good for business. Now with AT&T business wireless routes are
- [28:15]
C
updating on the fly and deliveries are on time. And the influencer did get us 53 new followers though.
- [28:21]
B
AT&T business Wireless connecting changes everything.
- [28:27]
A
What do the steam engine, electricity and AI have in common? They don't just change how we work, they transform entire economies. Where the Internet Lives is an award winning podcast from Google about the unseen world of data centers. This season we're going inside the AI revolution. From farmers using AI to analyze soil data to researchers discovering new medicines, a new era of AI innovation is here. Listen to where the Internet lives. Wherever you get your podcasts.
- [29:09]
B
Discretionary has been a really interesting space. It's been getting trounced by Staples so far this year. It looks pretty good today. Just consumer confidence beat. So that's one thing. But that was after Home depot showed unexpected Q4 comps growth and that stock was up a bunch. Lowe's up. A lot of the homebuilders up today. Cruises, casinos, part of it. Jimmy plays into the halo idea. Carvana, which Joe owns, has been on the list. I read earlier when was on the list. I read earlier today too.
- [29:45]
D
Yeah, you know, I wonder in some of the lackluster response concerning discretionary stocks if it's just simply they got a little too expensive. Not a lot too expensive, but a little too expensive. I don't see anything wrong with just to use one of the names you brought up, Scott Winning. I think operationally they're doing just fine, but it has pulled back from around 130 to 110. I think it just got a little too far ahead of its skis. Delta Airlines? Another one. I mean look, we all travel. Have the planes been empty? No, they've been packed. Airports have been packed. Did it maybe get a little bit ahead of its skis? Have there been some concerns about oil prices rising? To me, what I'm saying is this is a lot of noise. The long term trends are we've got low unemployment, we've got wage gains We've got people going out and doing things. Maybe they're not doing as much as they used to, but they're still going out and traveling and getting experience.
- [30:34]
B
Joe. I mean, it's been really stark. The outperformance staples up 15% year to date versus discretionary, down two and a half now. Maybe, you know, after you had a terrible confidence number I think last month, so you get a nice bounce. Maybe this is now a trade that gives you something after being pretty disappointed.
- [30:54]
C
I'm not sure that it does. I'm, I'm a little bit not as optimistic as Jimmy is on the consumer.
- [31:00]
B
A lot of names here. DoorDash I do TJX, Burlington Delta, live Nation, Alta Pulte, Royal Caribbean.
- [31:06]
C
A lot of those names are seeing a breakdown in the momentum. Expedia can easily be disrupted by AI seeing a breakdown. Dash Carvana, Las Vegas Sands, Jimmy. So I apologize on that one. Mercado libre, eBay. Some of the names we own right now, they are not working in consumer discretionary. Understand? For consumer staples, it has been about Wal Mart and Costco having really, really good numbers. That's 21% of the staples sector overall. For consumer discretionary names that are working for us, it's about Darden restaurants, it's about Yum China Williams, Sonoma and Ulta Beauty. And I think in each one of those instances it speaks towards that Haley halo, rather investment thesis.
- [31:47]
B
Just what about. Yeah, yeah, go ahead.
- [31:49]
E
Yeah, Any, any time you put that XLY ETF on screen as being representative of consumer discretionary, you need to slap a gigantic Josh Brown sized asterisk on the chart. This is 42%, Amazon and Tesla. Okay, so we got that.
- [32:06]
B
All right. No, of course.
- [32:10]
E
Equal weighted though. Equal weighted though. And your point, Scott, remains the same. And importantly, Staples versus the squash is like it's almost typically. If you could normalize the size of Amazon and Tesla, it's almost typically a referendum on like how confident people are about the leisure activities and retail shopping of the consumer. And right now, not great. So I think like you could pick out winners like tjx, sure, no problem. But for every one of those, I'll give you five stocks that look abysmal from the same index. And it's not to say I think you want to go out and buy Coke and Pepsi and Walmart and Costco just because they're staples, because those stocks have all like doubled and are very expensive. Expensive. But I do think that investors are drawing a distinction between what are we not worried about versus what are we worried about.
- [33:08]
B
Right?
- [33:08]
C
Yeah.
- [33:08]
B
You've been highlighting Coca Cola and Pepsi as well. Let's, let's take a break. Actually, let's get a news update. I'm sorry. Courtney Reagan has that for us.
- [33:16]
D
Hey, Court.
- [33:17]
A
Hi, Scott. Russian foreign intelligence claimed Today on the 4th anniversary of the war with Ukraine that Britain and France are plotting to give Ukraine a nuclear weapon. Moscow said today without evidence the weapon would help Kyiv secure more favorable terms to end the war. Ukraine called the claim an absurd lie. France and the UK Also denied it. Comedian Russell Brand entered a not guilty plea today in a London court on two new counts of rape and sexual assault. He was already facing similar charges involving four women between 1999 and 2005. He also pleaded not guilty to those charges last year and is not due to stand trial in June. A hearing will be held next month to determine if new charges will be joined to that case. And France's foreign minister says U.S. ambassador Charles Kushner will be cut off from French officials after he ignored a summons from the French government yesterday. He was called for a meeting over the Trump administration's comments claiming violent radical leftism is on the rise in the country following the death of a far right activist last week. Scott, back over to you.
- [34:18]
B
All right, Court, thank you. That is Courtney Reagan, of course. All right, up next, best stocks in the market. The spotlight is on stocks in the sector coming off a fresh record close. We'll give you the names next.
- [34:36]
A
Not every sale happens at the register before AT&T business Wireless. Checking out customers on our mobile POS systems took too long. Basically a staring contest where everyone loses. It's crazy what people will say during an awkward silence. Now transactions are done before the silence takes hold. That means I can focus on the task at hand and make an extra sail or two. Sometimes I do miss the bonding time. Sometimes.
- [35:01]
B
AT&T business Wireless Connecting changes everything.
- [35:07]
A
I need to start off the new year right by getting the most for my money.
- [35:11]
B
I just opened a GoToBank account and
- [35:13]
A
it's paying off out the gate. I want to save money on filing my taxes.
- [35:17]
B
Look no further than GoToBank. You'll get 20% off TurboTax when filing your 2025 taxes.
- [35:23]
A
That sounds like a great way to start the year.
- [35:25]
B
Open your GoToBank account today and get started.
- [35:27]
A
Learn more at GoToBank.com tax Green bank member FDIC. You've never been one to settle. Stand down or stand still. You're a lifelong learner, energized by excellence. There's a fire inside you you can't ignore. You've got competition to outrun, momentum to build on, and your own high standards to meet. Stop now. Not a chance. At Capella University, we help you catch what you're chasing because you've always had the drive. Now go earn the degree. Capella University. What can't you do? Visit Capella Edu to learn more.
- [36:19]
B
Best stocks in the market according to Josh Brown today. As we said, highlighting names in a group that it's done pretty well. Right, Josh?
- [36:30]
E
Yes. Well, look, this has been, this has been a trade that's been absolutely on fire. And I've talked about a lot of them before and we just wanted to write these up because a lot of them have spent some time consolidating and are now starting to break out to new. A new range, let's call it Next era, is really the one I want to focus on though. We're looking for 8% CAGR on earnings per share through at least 2032. Remember that half of this business is a regulated utility, Florida Power and Light. The other half is one of the most exciting renewable energy businesses in the country. 88 to 90 was the breakout area. Now that it's broken out, that's probably where support will be. If the move is legitimate, it should not lose that level. If you're trading, that's your pivot point. That's where you say, okay, my entry was wrong. I'll let it set back up. RSI is 66, which we can't show you on this chart. That is a measure of momentum over the last 14 days. 66 is confirming strength without being what they call overbought. A lot of people use that term qualitatively. There's a technical definition of overbought and we're not there yet. I like 80 for longer term investors, like give yourself a little bit longer of a leash. Below that, the 200 day is set.78. A break below that 78 to 80 area would change the conversation. This would no longer be a best stock in the market so long as it stays above. I think the rally continues. This Duke Energy, First Energy, which is fe. These are stocks I've been talking about in this segment for six months. They all look great.
- [38:08]
B
Jimmy, you got PG&E.
- [38:10]
D
It's been, it's been helpful. You know, I'm really glad to hear what you, Josh, is saying because I personally have not been paying that much attention to utilities even though I have this one name. It's small in the portfolio, but God Bless it. It's doing well. And I think you have to respect, as Josh is saying, when a sector like this does well, you need to make sure you have some exposure to
- [38:29]
B
pay more attention to it. Jimmy, why is it so boring?
- [38:31]
D
It's fundamentally so boring. It just is.
- [38:33]
C
Just
- [38:36]
D
brings you.
- [38:37]
B
Adobe brings you more excitement. You can't help but look, look at it all the time.
- [38:40]
D
All right, that's a. That's a. All right. Am I boring you Belt? No, you're exciting me, Josh. That's the point. You're making it exciting for a sector regulated utilities, Duke Energy. I mean otherwise I'm just like, all right, they're putting in a rate increase request and they are going to get it and it's going to grow 7%. But something like Pacific Gas and Electric still cheap, growing nicely. Got knocked down last year on these California fires which it had no hand in. And it's got more room to run
- [39:06]
C
if you want a investment off of the California wildfires. Look at EAX Edison International. We own it in the etf. It's had a remarkable move since earnings last week. I wouldn't chase it here. Wait for a pullback to the 50 day. And then also servicing the utilities. There you go with your Qantas Services ticker symbol P. More exciting. R more.
- [39:28]
B
Let's look at Quantum Services because the price is target. There it is. 560. Goldman today goes to 685. So from 495.
- [39:38]
C
Yeah. That's a reaction in other investment banks have raised price targets since this company reported earnings within the last week. The 12 month price target is only 59860 cent. 66% of the analyst community have a buy rating. So I actually think there's more room on that price target closer to what Goldman's doing here.
- [39:59]
B
All right. Are we still boring you?
- [40:00]
D
No, I'm excited. Josh got me excited. I mean Edison, that's. There's some risk there. I got to tell you, they, they may have some culpability in that loss.
- [40:08]
B
It came in hot over the Citrini note. Now you're excited about utilities. Thanks to best stocks in the market. You know, it's amazing the things that happen on this program.
- [40:16]
D
This might be a four bottle of water day.
- [40:18]
B
Wow. While you're on number three, there's a lot going on.
- [40:21]
D
Score got.
- [40:22]
B
Okay.
- [40:22]
D
It's a volatile market. I got to stay cool.
- [40:25]
B
All right, let's do a call to the day next one firm talking about 20% upside for a stock in this year's best performing sector. Jimmy owns it. Maybe he's excited about that. Maybe he's bored. I don't know. Next.
- [40:39]
D
I'm excited, Scott.
- [40:56]
B
Talk about some stocks on the move and some calls. But let's start with Expediters International. They did report a drop in profit. Revenue down. Stock down almost 9%. They do authorize a $3 billion share buyback. Joe, you own this one?
- [41:11]
C
Unfortunately, we do. It was a name that we purchased at the end of October. You have challenges here as it relates to ocean floor Freight. The problem here is they are an ocean freight broker so they can be disrupted. They're in the services business. I can ultimately organize that freight, that global freight, ultimately better than they can.
- [41:34]
B
Why did you buy it? Why'd you buy.
- [41:35]
C
Well, it had really good momentum, strong balance sheet. The bigger decline actually happened on February 12th. February 12th the stock was down 16%. And that was off a report that there was an algorithm that was being introduced to the logistics business.
- [41:50]
B
See, this is what we're talking about, targeting the karaoke machine.
- [41:54]
C
People look at this, they see logistics and they say to themselves, okay, logistics, we're thinking about something that is asset heavy, cannot be disrupted. No, they're a broker. They're not involved in the actual freight themselves. And that's why you saw the big.
- [42:08]
B
You know what song you were singing that day on that report? Well, was Cry me a River. Right. Stock down. That was. That was a day.
- [42:15]
D
It was funny.
- [42:16]
B
That was the day ExxonMobil. We talked about it earlier as Joe, I think it was Josh who was talking about energy price Target today to 183from156@ Wells valuation in a flow state. Josh is what they say.
- [42:32]
E
Yeah, yeah. So I talked about the rerating in the A block. I won't repeat it, but this company is getting a higher multiple earnings because investors have decided this is exactly the type of blue chip stock that they want. I don't want to say hide out in, but it's just been left in the dust for too long. And even technically you can see this consolidation period. Well, it's tough to see on this chart, but if you pull it back like five years, stock has done nothing. So we are waking up here in the oil sector and if the oil sector is going to work, Exxon's going to work.
- [43:04]
B
Okay. A well tower Target there to 240 from 210 to 209. Fractional loser today, overweight reiterated at KeyBank. You own that one?
- [43:15]
C
Absolutely agree with that. This is the name we entered in July of 24. So we have a significant lead here. We purchased it at 111. This is a REIT that focuses on senior housing and that has very strong tailwind is behind it.
- [43:28]
B
All right, Hershey, we talked about that earlier too as being one of these halo names target to 195 from 165 at Mizuho. They still think it's neutral though.
- [43:38]
C
Yes. Listen, the valuation is, is the headwind here currently somewhere around 52 times earnings. But they're delivering in terms of the revenue growth. It fits the collective narrative surrounding consumer staples, whether it's Coca Cola, Pepsi, Hershey, Walmart, Walmart, Costco. That's been the theme year to date.
- [43:56]
B
All right, we'll bounce for a couple. We'll come back. Santoli on the other side with his midday work. All right, we're back. Senior markets COMMENTATOR Overtime co anchor Mike Said Tolle at the desk. Nice to see you in person again.
- [44:24]
C
Good to be here.
- [44:25]
B
So what do you, what do you think about this? It's like from karaoke machines to research papers to whatever is the next catalyst.
- [44:33]
C
Lower these little storm cells that obviously are roving around the market. I think it's doing a few things. Obviously it's making everybody kind of question the thesis being a little bit skittish and selfish. First. There's definitely been this structural sense that, and you see this from some of the sell side work is that hedge funds have decided that software can be almost a structural short. Doesn't mean they're going to be right. Doesn't mean the stocks only go down. It doesn't mean that they can't rally from here or anything else but that there's a long term negative thesis to play now against that. What's interesting is today is a day where it looked like it could have gotten ugly in the morning. The bank's weakness right out of the gate I thought was sending up some, some, you know, warning flares. It immediately found its footing. So within this range, I think you have to be a little bit agnostic about really where we're headed. I think the positives for today is that we're narrowing out again. This is a NASDAQ 100 rally. This is not a equal weight and and unloved sectors leading the market higher rally. So I think that's, that's okay bull case from here, I think is that you've kind of de risked positioning and made it more neutralized because people have been so confused and chopped up in some of these disruption.
- [45:46]
B
There's an interesting social post from Bill Gross who says the Elite 8, 9 or 10 are being cut quickly. Oracle, Microsoft, IBM. Maybe it's not a single elimination game, but it feels like it. I'm staying away. Be satisfied with single digit returns. Verizon, AT&T, Western, Midstream, Vanguard, All World U.S. i think that, I think that
- [46:09]
C
generally fits Bill's orientation in general. I mean, buy, buy stocks that look like bonds might be the way to go. But look, what's really fascinating is in video has done almost nothing for six months and yet is now outperformed all the rest of them. And so it's in an interesting position going into the numbers. I don't think it defines the next move for the overall market, but, you know, I think that kind of attitude is why the stocks have gotten cheaper.
- [46:33]
B
All right, we thank you and we'll see you. Coming up later on closing belts, Mike Santoli. We'll do finals after this. I've got a big closing bell, three o' clock Eastern. Hope you'll join me. Mark Lasri will be with me. So will Rick Reeder. That's going to be fun. Ankur Crawford, Alex Cantowitz, Liz Thomas. So join me then, please. Josh Brown, final trade. What do you got?
- [46:58]
E
We did Martin Marietta as a best stock the other day. Let me know when they announced Claude Cement. I don't think it's coming, guys. I think it's be okay.
- [47:07]
B
All right.
- [47:08]
D
Former Jim Microsoft bought more yesterday.
- [47:11]
B
All right. Yes, you did.
- [47:12]
C
Joey T. KLA Corp. You still need semis.
- [47:15]
B
All right, guys, I'll see you a couple of hours. Three o', clock, the exchanges. Now, you've been listening to CNBC, CNBC's halftime report, the podcast you can always catch us live weekdays at 12 Eastern only on CNBC.
- [47:31]
A
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 Halftime Report participants consider reliable, but neither CNBC nor its affiliates and or subsidiaries warrant its completeness or accuracy, and it should not be relied upon as such. To view the full Halftime Report disclaimer, please visit cnbc.com halftimereportdisclaimer@vrbo. We understand that even the best of plans sometimes need a little support. So we plan for the plot twists. Every booking is automatically backed by our Verbo Care guarantee, giving you confidence from the very start. Whenever you need help, it's ready before your stay, through the moments in between and after your trip. Because a great trip starts with peace of mind and maybe a good playlist, but we've got the peace of mind part covered.