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Navigating the Market as Crude Oil tops $90 per barrel 3/6/26
00:43:30
Scott Wapner and the Investment Committee debate what $90 Oil means to the market and how you should navigate it. Plus, the desk shares their latest portfolio moves. And later, Josh Brown spotlights Target in his "Best Stocks in the Market." Investment Committee Disclosures
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- [00:00]
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- [00:31]
Scott Wapner
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Commercial Announcer
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- [00:50]
Scott Wapner
solution that scales with you. Find out how the most successful home service contractors are growing today. Visit servicetitan.com to learn more. That's ServiceTitan. 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 of Scott Wapner. Front and center this hour, sinking stocks, a huge jobs miss, another spike in oil and it has caused some selling in the market yet again. We discuss a debate with the investment committee. Joining me for the hour today, Shannon to Jim Labenthal, Stephen Weiss and Josh Brown. We will take you to the markets. We were weak obviously across the board off the worst levels. But nonetheless you do have almost 1% or more declines for everything you know, clearly. But the Nasdaq, which is about 3/4 of 1%. I mentioned what's really Steve driving the action today, the jobs missed the oil, gas prices are up. Qatar warning that the the war could shut down production from the region, drive oil to 150A barrel B of A says only persistent oil spikes really matter. The Vix at 28 earlier today. What's on your mind as we wrap up? What's been a pretty turbulent and down week.
- [02:12]
Jim Lebenthal
Yep.
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Stephen Weiss
So look, so this is a daily occurrence. We start out on the lows, the overnight futures really at the bottom. And then we get buyers, bargain hunters coming in, more short covering and I don't see that changing anytime soon except for the fact that I have to believe the president is looking at this as he does. He pays attention to the market, pays tension, the polls and saying maybe we got to get out of here sooner now, oil and jobs are an issue because even if they, when they shut in the oil, meaning production, because the silos, the tanks are filled, it takes a while to start it up, so you could see an extended inflationary bump. So the question then becomes, does the Fed look through it? And I don't know about that, except for the fact that the job numbers were so bad they're going to have to look through it. But again, that's one month. We're basically zero over the last two months. So what I believe is this market's a lot different. I was thinking about 1970s when you had the oil shock. At the same time you had low presidential approval ratings and you had inflation. So we've got three of those elements in place. What's different now, though, is that the market's different, the investors in the market are different, and they look at these as opportunities. And I agree.
- [03:26]
Scott Wapner
I mean, the situation is obviously a little different. We don't, we don't have an oil embargo. You don't have it to that extreme. The President's approval ratings may be low, but you're not in the. What at that period of time Jimmy Carter himself described as this malaise over the country, the economy is still in pretty good shape.
- [03:45]
Stephen Weiss
And I'm not suggesting that. I think that these are buying opportunities. The only question is which buying opportunity to take advantage of. If you did it two days ago, you say, well, I could have bought cheaper today, if you did it yesterday, so I could have bought cheaper day. So I think at some point people sit in their hands and say, hey, you know what, let me wait for a bottom.
- [04:02]
Scott Wapner
I mean, to play that one even step further, you know, it's not like we necessarily have even a. We don't have a crisis of confidence to play. Again, off of what the President back then was suggesting, the economy's pretty good. I mean, I know the jobs number was lousy, but there's a lot of noise within it.
- [04:20]
Stephen Weiss
Storms.
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Scott Wapner
Wait a little bit strikes. Let's wait a little bit before we determine that all of a sudden this great economic picture that we thought we were painting is all of a sudden, you know, watercolors, and it's running off the page.
- [04:32]
Shannon Sant
And I think that the transitory nature of what we typically see from an oil shock such as this, if you think about core versus headline inflation, we know that the Fed is generally looking for pass through, through to services. And we'd have to have a very sustained period of time where oil prices are up near this level for us to see that eventual transmission. The challenge is if you go back over the course of the last several Fed meetings and you read through the minutes, there already was some expectation that perhaps the Fed was a little bit more concerned about inflation than they were telegraphing in those press conferences. So I don't think it's just the oil price move here. I think it's the combination of oil price movement plus a weak jobs report, which in another environment, even taking away what's happening with oil, I think that you would see perhaps a rally because that would be an incentive for the Fed to act sooner. But again, just looking at the last few months, there's a lot of folks on the FOMC who are a bit more concerned about inflation that where they're coming out with in the press conferences. And so I think those are culminating and compounding to this movement in the long end of the curve, which is what I think we're seeing indicated in the equity markets. This concern, concern about an unanchored 10 year. I think that's a real challenge.
- [05:40]
Scott Wapner
The Fed was already on hold coming into this upcoming meeting by all accounts. So it's not like these events have all of a sudden forced a 180. Right. So you know the market's going to sit back, it's had a rough week. It's going to watch oil probably more than anything else. Hard to make big bets over the weekend. Just don't know what's going to develop. When you're at a time of conflict, how do you see it?
- [06:02]
Jim Lebenthal
Well, start with where Steve was, that this has been a market that on an almost daily basis has rallied into the close. Unfortunately, I would be surprised if that happens today for the reasons you just mentioned. Scott. We're going into the weekend, we're going into three days, the markets are closed and anything can happen now. Anything can happen on the positive side as well. But in what's going on right now, the market is, I think, likely to look at the final hours of trading and say maybe it's time to take a little risk off, or at least not time to dive in just yet. The good news is I do think this market pivots around one particular piece of news that we're waiting for, which is tankers flowing through, running through the Straits of Hormuz. I can't tell you when that's going to happen. I can't tell you how that's going to happen. Do you think.
- [06:41]
Scott Wapner
Do you agree with. So you've got cutter talking about 150 a barrel. Okay. That obviously gets the market's temperature up. Whether that's likely or not, who knows? Yeah, and we can't judge that. It's not even worth opining on it. But when bank of America says only persistent oil spikes really matter, can we say we agree with that?
- [06:58]
Jim Lebenthal
We can definitely say we agree with that. And that's why everything we're talking about today is a temporary factor. I'm not sitting here and saying that long term investors should start selling their stocks. There's no indication that we're going into a recession.
- [07:09]
Scott Wapner
I mean, look at WTI now, right up 11% today. We are on the brink of 90. Now we're, we're, we're there.
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Stephen Weiss
If I owned crude right now, fire oil trader, I'd be selling a third to a half my position today. Because any moment you wake up and say, okay, you know, we're pulling back
- [07:25]
Shannon Sant
and the same thing on Treasuries, you could, you could, you should perhaps be extending duration in this environment because there is going to be a response.
- [07:31]
Scott Wapner
So, Josh, what's on your mind? As you've heard everybody on the panel here give their, their views and you look at the markets in the manner in which you always do.
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Josh Brown
Yeah, I think I'm with Weiss on the oil price spike. Not really. It doesn't appear that the stock market has bought into that. And I'm just judging by the prices of the equities themselves. They are not acting as though this is a new oil price regime because if they were, you'd see a lot more green in this area, the market. You're just really not seeing it. This is the highest oils traded since September of 2023. And it's the biggest weekly jump since 2022. But that's what it is right now. It's a weekly jump. It's not more than that. It certainly could be. But I have 20 energy stocks on my list of best stocks in the market. And the median return for these names is 26% on a year to date basis. Year to date. It's an astounding return. These stocks are not following through on what we're seeing happen with WTI crude at the moment. But when you think about stocks like Texas Pacific Land, which is up 83% year to date, a lot of traders in that name. Valero up 40%, Baker Hughes up 33%. These stocks have been going up for a long time and today they're barely doing anything. And for me, that's a powerful signal that tells me big institutional money is not buying in on $150 crude. I would also just point out big picture, it is a Friday and we are whether Congress has declared it or not or not at war. You have servicemen and women at risk, the assets in the region. It's very unpredictable obviously and it's a live fire zone. So seeing a risk off move on a Friday, knowing that we have this gap coming up of two days where anything can happen, it actually seems very orderly to me. It makes a lot of sense.
- [09:30]
Scott Wapner
Yeah. Yeah. So far for sure. And we'll see how this final day of this week progresses. There's a lot of stuff on the radar. Jefferies today noting the three day momentum unwind that was Tuesday to Thursday, the fourth worst three day stretch in the last two and a half years for MTM. If you look, it's down almost 4% over the past three days. There are some pretty popular names within this orbit. Okay, Wal Mart down 3 1/2 percent. Some of the banks like JPM and Goldman Sachs, JNJ and Micron and GE Aerospace and Cat Lam Research leads the list to the downside, down 10 and a half percent. Shan, what do we make of that slide in momentum? I guess it's not surprising when you have the moment of war impacting sentiment on the street.
- [10:18]
Shannon Sant
Well, I think that's where you're, you mentioned confidence earlier, Scott. This is where we're seeing a little bit of a decay in confidence is in these momentum names. But I think it's important too. There's a couple of idiosyncratic or stock specific stories that are working here in terms of bringing a couple of these stocks down on this list. But I think overarchingly you're looking at an environment where we're now into kind of day six. There is the potential that investors want to, to add a little bit more defense and that defense is likely to come into some of the areas where you haven't seen momentum, where you potentially are seeing a bit of that value tilt, if you will.
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Scott Wapner
You mean defensive names in the market?
- [10:53]
Shannon Sant
Yeah, I think that you are, you could.
- [10:54]
Scott Wapner
This has been a really tough week for that trade. Look at it. Pull up a week of like staples, pull up health care. Since I mentioned J and J being on the list, it's been a nowhere to hide other than maybe a couple of mega cap stocks. You can, you know, feel a little bit better.
- [11:10]
Shannon Sant
So that's why I was, I was just going to clarify. Not typical defensives, but I think some of the stocks that have chosen that have been stores of Value during previous periods of weakness in the stock market in momentum are seeing a bit of a bit. And I wouldn't be surprised necessarily to see some of the mega cap tech stocks, some of the stronger discretionary names, actually start to get a bit as we go into next week, Scott, because I do feel like this is an opportunity to perhaps increase the quality of the portfolio. And some of these momentum names are just gotten too far ahead of themselves in this environment.
- [11:42]
Scott Wapner
I feel like Weiss. The most important stocks right now are the banks. I mentioned the unwind in momentum from the Goldman down 5% or JPM, which has been troubled. But I just can't imagine a scenario in which the banks keep going down and people feel better about where this market is.
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Mike Santoli
Yeah.
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Stephen Weiss
And what you're really doing damage to is to the, is the ip, IPO and banking case that was made for the banks. And so nobody's doing an ipo, you know, right now until you get stability in the market.
- [12:15]
Scott Wapner
Well, there's one. Then we'll talk about that.
- [12:18]
Stephen Weiss
There'll be one here and there, but basically. And then you've got private credit, which is also hitting the banks. So a lot of headwinds. Look, I think Goldman is, you know, that's the one I own, pretty well positioned. I believe JPMorgan is always well positioned. The question is now how long you have to wait for the M and A trade and the IPO trade.
- [12:39]
Scott Wapner
Well, I mean, it's beyond that.
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Jim Lebenthal
It's, it's.
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Scott Wapner
Jimmy, it's assessing where we think the economy's going exactly. With exactly supersedes the IPO activity.
- [12:49]
Stephen Weiss
Those are indications.
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Scott Wapner
Deal making.
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Jim Lebenthal
Well, look, I mean, we just got the Atlanta Fed GDP update today. It's now down to 2.1%. We have been talking about a growth scare in the economy for quite some time. And in the last quarter, fourth quarter, we were talking about it from the perspective of a government shutdown, which was temporary. We knew that was going to end. Now, we've got some signals here that the cushions that are built into the economy, strong economic growth, good labor market, they're kind of getting a little wobbly here. And definitely that's impacting the financial sector, which is dependent and expecting a strong, robust economy going forward. I do want to make clear I'm not giving up on the idea of a robust, strong economy. I think there's reasons to expect it, whether it's profit growth, whether it's low weekly initial jobless claims. There's a lot of reasons to think that this economy is still going to power through. But I go back to where I was just a minute ago. You do. As temporary as the oil spike is, the longer it lasts, the more damage it will do to things like profit margins. That's where people in corporate seats get a little worried about, hey, are profits going to come down? Do we need to start laying people off? So solve the oil problem.
- [13:51]
Stephen Weiss
You know, I think any time you invest, you say, what's my base case? And then where is it more likely to go wrong? To the downside or to the upside? So with the economy base case, everybody saying, we said it here, economy is doing pretty well. So where is it likely to go wrong? To me, to Jimmy's point that he was looting to, it's more likely to go wrong to the downside.
- [14:13]
Mike Santoli
So.
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Stephen Weiss
And that's my concern, not doing anything about it, but that's my concern.
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Scott Wapner
You know, the private credit side, you guys were Talking about that BlackRock, we should look at that and we should discuss, especially since we were just talking about the financials. They've limited redemptions at a private credit fund. So it's the worst day and Since April for BlackRock, you can see it. That's. That's the lows of the day, down more than 6%. You own. You own the stock.
- [14:38]
Jim Lebenthal
Yeah. We should expect this type of news to continue. And I, you know, I think we've alluded to that over the last couple of weeks that there have been some good news, like Blackstone allowing some of its redemptions to be above the 5% gate. But there's no question that investors are now thinking, hey, I want to take my money out now while I can. So we should expect the next few quarters that there are redemption requests in exchange, cess of the limits. Generally, they're 5% per quarter limits. Now, there is a playbook for this. It's not a pleasant playbook, but it works out all right. And that's Blackstone with its beret from about three years ago, and it took about 2, 3 quarters to work its way through. Beret is on stable footing right now, generating good returns. There's nothing, by the way, in this news that speaks to corporate credit. It just speaks to what we were talking about, that investors are likely to pull money out and the gates will be put up.
- [15:30]
Scott Wapner
The other note I wanted to hit. Josh, I'll start with you on that. Is from bank of America's Michael Hartnett, who always is really thoughtful in how he assesses what's happened in a week inside the markets, in which he says his top observation today is the week has shown the fragility of investor conviction in value and small cap and international stocks. Stocks versus US growth. He's calling that a mini exodus. The things to watch next, he points out recent leadership, the eem, the semiconductor index, the banks as we just talked about and the idea that a further breakdown and then you start talking about canaries in the coal mine for broader market pain. And it really matches what Jonathan Krinsky told us just the other day on closing bell. You cannot lose the semis. This market has already gone through the turbulence of the software trade which may be getting a little bit of a bounce. Who knows if it's sustainable, but you cannot lose the semis which are on pace now for the worst week since November.
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Josh Brown
Okay, I don't, I don't think Prince is wrong that we want the semis to be strong. And I agree with Hartnett that a lot of things, people just started buying because they were going up and then you hit some headline risk and all of a sudden you see, all right, the accumulation beneath the surface is not as strong as we want it. And the third thing I would say on the bearish side, like nobody should be celebrating a rally that's led by the utilities, but that's, you know, where we are. Okay, fine, I take all of that, but I think days like today and most of what we saw this week is counter trend. The IGV is now up 8% from the Citrini disaster. So that was that. The bottom, I'm not so sure. I think we're seeing a rally in a lot of these software stocks and I'm happy because I did some bottom fishing in my software names. But I think it's counter trend. And I think a lot of the sell offs that you're seeing today are also counter trend. And the bigger trend is not what today's tape looks like. Software strong and all these other areas being weak, I think it's the reverse. So I'm willing to take the other side of that and I'm willing to say, okay, every once in a while in a bull market for the S&P493, you're going to see these kinds of pullbacks. But the level of participation that we've seen this year and the level of dispersion and the level of people being willing to look at stocks they haven't looked at in five or 10 years, I still think that that's the prevailing trend. And so by the bet, one way or the other, I would not take that yet we're in a new environment now. You want to be long software, short semis. I really don't think so. Don't. I would just say don't get gassed by these sort of counter trend bull and bear markets that are not the right real story.
- [18:28]
Scott Wapner
Yeah, well that's a big story right there. The chips down 4% as we were just talking about and the idea of, according to Krinsky, that it's these are just too big to fail. They matter too much, especially to where we are from. You know, an AI perspective. These stocks are now among the largest in the market. I obviously don't have to tell you that Nvidia ranks at that degree, but there's Broadcom and some of these other names as well. A lot of the memory stocks which have gone, you know, crazy to the
- [18:59]
Jim Lebenthal
market needed to have a little air let out of them. I think we can admit that if we look at the chart of Micron, it needed to come down a little bit. It might have just been looking for an excuse. But I'm glad you went here, Scott, because you know, I talked a minute about a minute ago about cushions in the economy. And despite all the terrible news we've had this week, I don't think, you know, Microsoft or Alphabet are going to interrupt their plans to keep building out data centers. I don't think Open Air, which has just raised whatever it is $100 billion, is now going to say, oh, I'm going to stop. And these things are to a certain extent insulated from what's going on in the Middle East. The reason I say to a certain extent is yes, there will be some inflationary pressures, but as we've all said, those inflationary pressures should be temporary. So this is a major cushion to the economy right now. The capital expenditures on data centers, it's impossible to believe that like on Monday they're going to start pulling.
- [19:48]
Stephen Weiss
I'm not sure the inflationary pressures, all of them are temporary. With oil I believe they are. But with tariffs, the estimates are they go through the end of the year with the new tariffs. So that's not temporary.
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Jim Lebenthal
Yeah, but I mean you would agree it's a one time adjustment, right? I mean, I agree, I agree with that.
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Scott Wapner
The reason the chips, I'm sorry, would be under pressure the way they are. Not like a direct result of anything other than looking for an excuse.
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Jim Lebenthal
Exactly.
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Stephen Weiss
Take some profit to be hit because
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Scott Wapner
the stocks had gone up so much. It's not like the war is going to impact ships or, or other Things that are necessarily happening. Certainly some of the commentary out of the administration regarding, you know, sales of, of compute overseas doesn't help.
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Jim Lebenthal
Right.
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Scott Wapner
But these stocks, some would suggest, were ripe for going lower. They just needed the tipping point.
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Stephen Weiss
What epitomizes your point is if you take a look at ftai, if you take a look at Bloom Energy, those stocks were up significantly and they're getting hit, getting hit all week. But relative to where they were, they're still up so much over the last year. But the question then is, are people going to be more, you know, anchored in valuation for a period of time because they're overvalued?
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Scott Wapner
I think part of the point here too is that the market will be just fine. Yeah, you can, you can quote unquote, lose the semis for a minute.
- [21:14]
Stephen Weiss
Yeah.
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Scott Wapner
So to speak. If you have software, show some life to counteract that. You can't have both unravel at the same period of time. By the way, software versus semis. Let's show it again. Oh, good. Thank you guys. The widest eight day move ever in that spread. Right. It had looked the opposite for at least the last year. I feel like when we've been talking about it. Yeah, Josh, go ahead real quick. Yep.
- [21:40]
Josh Brown
They, they, they said we couldn't lose the hyperscalers. We needed the Mag 7. Those stocks topped in October. I know it feels like, oh, it was just the fall. That's six months ago. Those stocks top six months ago. Think about how much money has been made in all of these other areas. Think about how many large caps are stock up 5 or 10% year to date already. We lost those stocks. It's, it's honestly not the way the modern market works. These rotations are powerful.
- [22:10]
Stephen Weiss
I agree. Remember the conversation before that. You can't lose Apple. Apple's the engine in the market.
- [22:15]
Scott Wapner
But I mean, come on, the semis are a huge group. You can't lose the semis at the same time you're losing software. I mean, I think the market, the impact of that, where the money goes.
- [22:24]
Shannon Sant
But isn't this, isn't, this isn't what's happening in the Middle East? Like for many investors who are looking at fundamentally some things that have been perhaps oversold in this environment, wouldn't you look at software? Because again to your point, Judge, you're making a completely accurate point. The opportunities for software obsolescence is now in the background of this narrative. And so if I'm looking at companies I've wanted to own for a while and I was Waiting for perhaps that, perhaps that point it was which I feel comfortable buying into them. Some of these software companies are hitting that point now and they're away from the Middle East.
- [22:55]
Stephen Weiss
Do we feel better about every day?
- [22:56]
Scott Wapner
Okay, Microsoft, do we, do we feel better about software? I know it's had a nice little move. You're going to have tests next week. Oracle's next week. Adobe next week, Next week. We've had the best week for the IGV since April of 25. So you've got that Cyber's had a big week.
- [23:11]
Jim Lebenthal
So here's the answer to your, here's the answer to your multifaceted question. We have already seen that earnings reports have not helped these stocks very much. I mean, maybe, maybe a little bit, maybe we can say that workdays earnings, Salesforce earnings last week maybe triggered this rally. But there are still substantial questions out there. The one things that I'm looking for in these reports from like an Adobe is what are they doing with their cash? In Adobe's case I want them buying back shares. In Oracle's case, I want lucid plans on how they are raising funds to fund all of these data center builds out. But these are the questions that need to be answered. And unfortunately, unfortunately, as much as I believe in those two names, I think it's going to take many months before the bottom is really called what you may. I'm almost done. What you may be seeing here this week and last week is just short covering. I mean, you know, it got to a point where the short said, hey, we beat these things into the ground enough, let's take our profit.
- [24:03]
Scott Wapner
Yeah, I don't feel like there's a lot of conviction.
- [24:05]
Stephen Weiss
Agree.
- [24:06]
Scott Wapner
And so I sat on it.
- [24:07]
Stephen Weiss
I think it's what happening for people that have to be in the market, that benchmark against the market. They say, okay, where can I go hide in an area that's been decimated already, where my downside is minimal. You're not going to hide an fta, right?
- [24:21]
Scott Wapner
When they go low, you go high, right?
- [24:23]
Stephen Weiss
Yeah, exactly, exactly. So you go hide software. So at best, at best it's a tradable low. But from a long term standpoint, I don't see them coming. Back to the.
- [24:34]
Scott Wapner
Let's get one more thought on a group of stocks before we take our first break. It's airlines, not surprisingly, worst week since April of 25 for a variety of reasons, not the least of which jet fuel prices are surging. Okay, that doesn't reverse itself right away. Now you have the Exposure to Delta. But if you look on the week, there's the Jets ETF, which reflects the broad space. But Delta is down six and a half. American and United down 10% each. Southwest down 11%. JetBlue down 17 and a half this week alone.
- [25:08]
Jim Lebenthal
Yeah, and they are responding as they should to the news that's out there. Here's my experience with Delta is emblematic of the airlines. I've been in it probably about three years now and every time there is a scare, it goes down as it should. What sort of scare? I mean they're always different. But remember Doge and we're going to have, you know, no federal, federal travel or you know, remember we had the yen carry unwind and then the SAHM rule and unemployment was going to spike higher. All of these things happen. The stocks respond to the downside and then when this clears, which I do think it's a question of when, not if the Middle east will clear, the stocks resume their height. And the key thing here is that the US economy has to stay out of recession. Nobody's calling for a recession and I'm not.
- [25:47]
Scott Wapner
And why are you buying more? Delta down 10% on the week if you're so bullish on this space?
- [25:51]
Jim Lebenthal
You know what, that's a good point. Really good question. And the answer is, goes back to where I started. I have new money coming in all the time, right? As a firm, we're always getting new money. And am I trying to be a hero today on a Friday with a shooting war in the Middle east and the streets of Hormuz closed, or am I going to wait until Monday and see what three days worth of new cycles goes through? I am emblematic of the markets in that response. I don't need to be a hero today and step into this. I don't know what's going to happen over the weekend if I end up that over the weekend the Straits of Hormuza opens, oil comes down, these stocks rally 5%. I'll have plenty of time. But I'm not being a hero today.
- [26:26]
Stephen Weiss
A trade here, I'm not in it. But the most of the freight that goes around the world is carried on commercial planes. And with the commercial planes not flying through the Middle east, etcetera, you know who benefits? FedEx. So FedEx's volumes go up dramatically during this period of time. So I imagine next quarter they report is going to show a nice bump in earnings.
- [26:48]
Scott Wapner
Been a rough week for FedEx and UPS, obviously.
- [26:51]
Stephen Weiss
Economic concerns, I believe.
- [26:53]
Scott Wapner
All right, let's do this. Let's, let's take a break. We do have a new committee move that Steve Weiss is going to tell you about and many, many other stocks to discuss. We'll do that. Josh Brown's best stocks in the market coming up as well.
- [27:11]
Josh Brown
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- [27:41]
Scott Wapner
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- [28:05]
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- [28:30]
Scott Wapner
Learn more@chase.com Sapphire Reserve cards issued by JP Morgan, Chase bank and a member FDIC subject to credit approval. All right, we're back. Chinese tech names have been lower lately as well. Alibaba is down 8.5% this week, Mr. Weiss, you bought more. Now, why are you doing that?
- [28:47]
Stephen Weiss
I did. I got into Alibaba somewhere in the 150s and it looked good for a while, but then it's gotten smoked, as you point out this week. And the reason why I did it is it's cheap. Keep in mind Chinese companies are on a March fiscal year and once we roll this year, you're looking at a PE of about 18 times. That's very cheap. On an EBITDA multiple, it's 10 times. So to me, those are good stories. And they were. They've got some of the same tailwinds as we see here with the hyperscalers, which are cloud, which are AI, etc. And you're seeing narrowing, narrowing losses in, in E commerce. So I think it's, it's, you know, I think the fundamentals are very much intact and the reason that I bought it, except I'm getting a lot cheaper. So this is one where I do go value hunting.
- [29:34]
Scott Wapner
Would you own any of the other names?
- [29:36]
Stephen Weiss
I don't really look at the other names. I'm not big on China overall. The sort of. I like the idiosyncratic risks here. I just haven't done the work on them. But Bob is not moving and leaving the others behind for sure. It's a question of which of those you want to play.
- [29:50]
Scott Wapner
Okay, Josh, let's get to you on some calls. Shake shack initiated by today.125 is the target at DA Davidson. What do we think?
- [30:01]
Josh Brown
Yeah, look, I think that this is a story of boutique sort of, I don't want to call it luxury, but sort of a very high end version of what it is. Finally getting the credit on the sell side for the fact that they have brought in new leadership that is very focused on scaling this. So they have the unit economics now, they have the marketing down pat, they have the efficiencies. So now it's like how many of these can we really build? And they continue to ratchet up what they think the long term target will be globally. And that's why I continue to stay invested because I think they're going to nail it.
- [30:38]
Scott Wapner
All right, so there's that and what's been a pretty tough week by the way for the restaurant names if you guys want to throw some up. Darden, Brinker, Texas Roadhouse, Chipotle, all sharply lower. I probably could have added more to the list. What do you make of that move?
- [30:52]
Shannon Sant
Concerns about oil prices, transmission to gas prices. I mean you talk about a non discretionary part of someone's basket. You don't have as much money to go out to eat if you're spending, you know, a lot higher on your gas.
- [31:03]
Scott Wapner
If we think that that is a temporary move in oil and gas, you
- [31:07]
Shannon Sant
buy these, I think you could see an opportunity to buy these. I mean I think, you know, the job report today didn't help that, Scott. But I think, you know, from a, from an overarching perspective these are probably, these are down on oil, not down on, on a weak jobs twice.
- [31:20]
Scott Wapner
How about Netflix? Upgraded today at CFR 115 is the target on that name. The target by the way, gets cut from 149 to 125. At BFA. But they still reiterate the buy on that stocks had a lot of new life. Let's say that since the whole Warner Brothers bidding war ended.
- [31:38]
Stephen Weiss
Yeah, I mean even with that price cut you're still up 25% from here if you get it. Look, this is one of the, one of the sectors I was talking about before like Microsoft, it's been through the wall of war already. It's, it's taken the wounds and still living. And I think that the upside is much greater now because I believe you got a weakened competitor. So the best thing they could have done is not buy Warner.
- [32:02]
Scott Wapner
So another call. Jefferies, Josh put CBRE and Leidos on its AI winners currently in the discount Bin Laden economist. And they say that shares of CBRE were pressured on concerns that I could disintermediate brokerage and advisory functions. We've talked so much about the different groups that were impacted. They say it's an overreaction. You bought the stock recently?
- [32:26]
Josh Brown
Yeah, look, I think, I think a lot of stocks got thrown into this basket where people rightfully are concerned because their data provide their data providers that gatekeepers to other people's data. They have an information asymmetry which is how they make their money, etc. But in commercial real estate, relationships are a really big part of who gets what business. And then there's this whole service side like a company like Joan Blaine LaSalle, CBRE. A lot of what these companies are doing are helping corporations optimize real estate portfolios that span the country or span the globe. It doesn't just come down to which software product can run the fastest calculation on a new lease. And so I think that's why a lot of these stocks got thrown out. But I also think that's why it doesn't really make any sense. And ultimately you will see these names trade higher.
- [33:19]
Scott Wapner
All right, let's get the headlines now with Julia Boorstin. Hi Julia.
- [33:23]
Julia Boorstin
Hi Scott. President Trump and Defense Secretary Pete Hegseth are scheduled to participate in in a meeting with defense contractors today, according to Ms. Now a White House official said the meeting will take place at 2:30 in the Oval Office. And companies expected to attend include Lockheed, Martin, Northrop, Grumman, RTX, Boeing, Honeywell and L3Harris. Press Secretary Caroline Levitt told Ms. Now that the meeting was scheduled weeks ago and the President will call on the companies to build American made weapons more quickly as the Iran war continues. Microsoft is currently experiencing an outage affecting some users in North America. According to the company's service status page. Impacted services include the Microsoft 365 Admin Center, SharePoint and Microsoft Teams. The company says it is working to isolate a root cause and develop a remediation plan. And the backer of China's Luckin Coffee has agreed to acquire Blue Bottle Coffee from Nestle for less than $400 million, according to Chinese media report. That's nearly half of the 700 million dollar asking price. Back over to you.
- [34:30]
Scott Wapner
All right, Julia, thank you. That's Julia Boorstin. Coming up, Josh Brown's best stocks in the market list. A stock he claims he hasn't looked at in half a decade. A stock you probably will be surprised that landed on this list list. We'll do it next.
- [34:49]
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- [35:14]
Scott Wapner
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Stephen Weiss
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Scott Wapner
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Stephen Weiss
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Julia Boorstin
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Scott Wapner
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Julia Boorstin
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Scott Wapner
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Josh Brown
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- [35:50]
Shannon Sant
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- [36:22]
Mike Santoli
All right.
- [36:22]
Scott Wapner
Best stocks in the market according to Josh Brown and Nami claims he hasn't looked at in half a decade. Tell us what it is.
- [36:30]
Josh Brown
Yeah, it's. It's Target and I didn't want to do this one but I think like my, my. So Sean Russo, who I, who I do the column with for CNBC Pro on my research team, he's like, we got to do Target. I'm like, no we don't, we don't have to do anything. I'm not doing that. You work for me. But like that's the whole point of the best stocks in the market list. It gives you an alert to what buyers and sellers are doing before the narrative on a stock changes. So Wal Mart has beaten, beaten the tar out of Target over the last three years. Wal Mart up 41%. Target is annualizing at negative 7% a year over the last five years. 26 versus 4 over the last 10 years, 22 versus 7. These stocks ostensibly do the same thing, but they don't even belong in the same stadium. What's important about price action is the street has decided things are changing here, at least so far. And that's why it's on our radar and that's why I listen to Sean. And the more you dig into this you realize there's something powerful happening with this turnaround. So I think it's very straightforward here from a risk management standpoint. So if you don't trust it the way I don't it, you've got a very clean breakout at $108. That was resistance. Now it should be support. If I'm a Trader I'm risking 12 points here. The all time high on the stock is 175. So if this trend continues you got a lot of room overhead for investors. I think 99, $100 a share. Pretty obvious level of support. Also happens to be the 200 day. It's nice when those things line up but in the meanwhile you've got this golden cross. Short term momentum is not overbought. We're in an RSI high 50s, low 60s, very healthy. And look at it today, barely down with most of that value stock cohort reversing. So I think it's important that we look at prices as a, as a signal of strength here.
- [38:34]
Scott Wapner
It's been such a disappointer. I mean look at it. Can we pull it maybe a three year guys or three or five. And check it out, year 10 it's
- [38:42]
Josh Brown
been disappointing on, I mean you can
- [38:44]
Scott Wapner
only, yeah, you can almost pull like any period of time over longer than a couple of years or a few years and you'll see the decline. There's a five year which shows down 30% but there is Newfound momentum. People are betting on the turnaround. They have the new CEO. We heard from him this week. The stock's up 30% in a few months.
- [39:05]
Josh Brown
Yeah, and you know what, there's more than meets the eye here. Similar to Wal Mart. Wal Mart invested very heavily in technology. And that's been the key to why that stock has been such a home run. Obviously also it's on the best stocks to market list. Target's got an ad business that started in 2019. It's called roundel. I guess that's like an allusion to the bull's eye logo, but it's thousands of corporate customers that they are delivering first party insights to. For a media agency business effectively, but at scale, it's a billions of dollars. And you know, it's just like another area where you say to yourself, like, all right, we get it, it's the stores. What else could this company be? And that's what they're trying to push on with this turnaround. And if it works, these technicals will continue to stay lined up and I think you can define your risk very cleanly here.
- [39:57]
Scott Wapner
All right, we'll take a quick break and we'll talk about another hot topic. I think retail investors getting more access to private companies. There was an IPO here at the New York Stock Exchange that is making it easier to do just that. We discuss next. Robinhood Ventures fund going public here at the New York Stock Exchange today, giving retail investors access to private markets, down 16% at this very moment. At the same time, Universal Music Group putting its listing on planned, listing on hold, citing current market uncertainty raises a lot of questions obviously of what the war could do to the IPO pipeline. Our dear Jerbosa following that money for us with some very big names and some very big plans.
- [40:46]
Deirdre Jerbosa
Hey, Scott. So being at the Morgan Stanley TMT conference here in San Francisco this week, it was the perfect place to actually get a read of the IPO pipeline. You and I, we spoke to some of their top bankers and, and the message that I took away was that despite the geopolitics drama at the labs, demand will be there for the right companies. Dave Chan, who runs global technology investment banking there, he told me yesterday that given the TAM the opportunity and what he calls the scarcity value of what they've built, demand will absolutely be there. He said the mood actually got more cautiously optimistic over the week as they saw the leaps that AI is making in real time. So here are some of the anticipated notable names in the pipeline. Obviously the blockbuster ones like anthropic OpenAI Space X. They fit that profile that Dave Chen laid out. But take a company like DataBricks. I ask CEO Ali Gottzi all the time when he's going to take the plunge, go public and he never seems like he's in a hurry despite putting out, you know, some pretty good financials. So that is what makes the Robinhood move today so interesting. This is a closed end fund giving retail investors access to the likes of databricks stripe revolut for 25 bucks a share. No accreditation required. The thesis here is real public companies in the US they have gone from 7,000 to 4,000 companies are just simply saying private for longer. I talk to founders here all the time and an IPO just is not the milestone that it used to be. They all say they'd rather build in private. That now is finally starting to change with Open Air and Anthropic moving towards listings. But, but Robinhood here is basically saying to retail you don't have to wait for these IPOs. We'll give you something you can buy.
- [42:30]
Scott Wapner
Yeah. I mean the access to capital is broader than it's ever been. So they may suggest that while going public isn't all that it was cracked up to be in in the past. But they can say that because they can get access to capital in so many other ways, right?
- [42:45]
Deirdre Jerbosa
Absolutely. I mean the landscape for money. A lot of these companies say that they can just go out and raise like an open air that can raise 00 billion in the private markets. But that's happening for anthropic and databricks as well. You've got sovereign wealth funds coming into the mix, crossover funds. So there's just a huge amount of capital and they don't have to be sort of, they don't have to do the whole quarterly hamster wheel thing which is really how a lot of the founders I talk to think about it.
- [43:12]
Scott Wapner
Appreciate that. Thank you. Dear Jerbosa. Josh quick to you. Why shouldn't retail have more access to these stocks? I mean these, these companies before they become publicly traded.
- [43:23]
Josh Brown
Look there are funds from Fidelity and T Rowe and other gigantic firms that have private stocks in their mutual funds. Is very old. They've been doing it for 12 or 13 years. Is a company called equities and that allows you to build a portfolio on its platform comprised of, of private shares in these companies. They just got bought out two months ago by Morgan Stanley. So it's not like that new of a concept. Anybody that's desperate to be in a pre IPO startup. There's been a way to do it. I think what this will do is it'll give us a referendum as the publicly traded ticker to see just how much demand there really is at any given time for that startup ecosystem to two words of caution though. One, some of these things raise money and then the next round is a down round and some of them go to zero. These are venture backed startups. They don't all have a happy ending. They're not all Facebook. The second thing is the liquidity thing. So if you're not thrilled in a market downturn because your financial advisor put you into private credit, you ain't going to be thrilled sitting in Silicon Valley based software companies that you can't access your money from. Iron either.
- [44:33]
Scott Wapner
Yeah, no good points. Santoli on the other side with his midday work, the chart of the day. No doubt about that. It is WTI, which is now above $92 a barrel, up 13.6%, almost 13.7. Mike Santoli, our senior markets commentator, overtime co anchor, is at the desk. Are we wrong? I mean that's what matters more than anything else.
- [44:56]
Mike Santoli
It is what matters. The S and P is about half a percent off the lows for the day. So you have crude at the highs. S and P trying to make, you know, this sort of retest of Tuesday's low count a little bit. I don't know how much faith you have in this ability to try to, to disengage from every tick in the crude price for as much as it seems like in this sort of headline hazard environment it would be very emotional and the market has gotten caught up in it. It's really not, it's been mechanical. I think the market has been less like hopefully rational or rationally hopeful that this 92 crude is a fleeting thing and we're not going to worry about it breaking higher.
- [45:31]
Scott Wapner
If it isn't, you got bigger problems.
- [45:33]
Mike Santoli
Also the memory of yesterday of this sort of whatever leaked headline that the administration is going to look for ways to whatever Shell futures and get oil price. The point is they're signaling discomfort with what's happening on crude. I don't know if that's enough. It's interesting how we the highs of the day have been at the -1% level for S and P. So again I say mechanical because it has been sell the stuff that's won by the stuff that's been beaten up and we'll wait and see if we get any kind of a clarity on the fundamental side.
- [46:02]
Scott Wapner
Lousy jobs number gave everybody something else to chew on.
- [46:05]
Mike Santoli
It didn't really help, especially when you already consider you got, you know, yields up, oil up and everything else you'd like to see jobs come through. There's a lot of, as people have been saying, a lot of ways you can slice it and say it's not really a game over type number. But yeah, I don't think it helped. Although bonds are a little more bid than they were this morning.
- [46:22]
Scott Wapner
All right, I'll see you in a couple hours. On closing belts. Michael Santoli Finals are next. Josh
- [46:33]
Josh Brown
Service Tight end Weiss Leidos Alphabet
- [46:36]
Scott Wapner
Regional banks All right, see at three. You've been listening to CNBC's Halftime Report, the podcast you can always catch us live weekdays at 12 Eastern only on CNBC.
- [46:53]
Edward Jones Narrator
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 with the Venmo Debit card.
- [47:29]
Josh Brown
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