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Halftime Report
New China Tensions Dragging Stocks Lower 10/10/25
01:01:06
Scott Wapner and the Investment Committee discuss the new tensions between the U.S. and China as President Trump threatens "Massive" retaliatory tariffs against Beijing. Plus, the Committee share their latest portfolio moves. And later, CNBC's Leslie Picker joins us with the latest on the First Brands bankruptcy and what it means for the future of private credit and the markets. Investment Committee Disclosures
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- [01:03]
Scott Wapner
I'm Scott Wapner and you're listening to CNBC's Halftime Report, the podcast the most profitable hour of the trading day. We record this live weekdays at 12 Eastern. Listen in. Carl, thank you very much. Welcome to the Halftime Report. I'm Scott Wapner. Front and center this hour, these new China tensions, dragging stocks at this hour. All this as the bull market gets set to turn three. We discuss and debate with the investment committee today. Join me for the hour. Stephanie Link, Jason Snipe, Kevin Simpson and Rob Seats and we'll go to the market and give you the picture here. 12 noon. Good time to take a check on where we are here at the top of the hour. There's the Nasdaq down about 2%. We did reverse lower by now. You know the headline that the president says the US Is calculating a massive increase of tariffs on China over rare earth. China put those new export controls on them. They escalated the trade fight. So that's where we are. It's Eamon Javers who brought us this headline within the last hour. We're going to go back to him now with breaking news for what he has learned here. Eamon.
- [02:07]
Eamon Javers
Well, Scott, it was a fiery social media post just a short time ago from the President. This responding to the Chinese move to put export controls on rare earth minerals yesterday. That's seen as something of an aggressive move by the Chinese against US Technology supply chains. Here's what the President posted just a short time ago. He said I was to meet President Xi in two weeks at APEC in South Korea. But now there seems to be no reason to do so. He also writes, depending on what China says about the hostile order that they have just put out, I will be forced as the president of the United States of America to financially counter their move. For every element that they have been able to monopolize, we have two he goes on to threaten massive increases in tariffs here and says that the US Administration is considering what its moves might be. So no specific retaliation here yet. Scott, what we've got is a rhetorical firing up of the response from the president threatening a number of actions, including canceling that summit between Trump and Xi Jinping that was expected to happen in South Korea. We don't know if that summit is now canceled or not canceled or what its status might be. We're trying to get that information from the White House right now, but clearly tensions are much higher today than they were yesterday between the United States and China on the trade front. We'll see what specific moves come from this administration today, if they come at all today.
- [03:33]
Scott Wapner
Scott back Eamon, thank you very much. You keep us up to date. Eamon jabbers at the bureau in Washington for certainly enough to make the market a little uneasy and Rob stand up and take notice. It's worth noting as well that prior to today the S and p had gone 33 sessions without a 1% move. We obviously for the moment have that down 1 1/2% and it's largely where you would probably expect to see the weakness within chips and video, Broadcom, Micron, AMD, etc. And some other names that have what you would consider to be exposure to China. What do you think?
- [04:06]
Rob Seats
I think the sharp reaction to this news shows how price for perfection markets have become and how subject to a little bad news they could be. Markets were 22.9 times as of as of yesterday. You've seen surging optimism looking at the AI a high surveys and the markets could potentially move in any risk from tariffs. Let's remember that China tariffs were already at 30% and you know the, the a massive increase would bring rates back up to levels that could be incredibly disruptive. The market is, you know, high betas underperforming today down by 3.7%. Where defensives are outperforming, you're seeing credit underperform. The reality is markets have become solely focused on the good news around AI and you know they're ignoring any potential risks from the shutdown, incremental weakening in the labor market. And so you get a little piece of news that's unsettling and you can see A shock like that.
- [05:08]
Scott Wapner
There's definitely Steph, I think, to Rob's point, been a fair amount of complacency, certainly around the issue of trade and tariffs. We haven't mentioned those two T words in a long time because as Rob said, we've been fixated on AI. We've been thinking about earnings and how good they're going to be and the fact that the Fed's cutting interest rates. But we're, you know, certainly reminded right in our faces today that these issues still exist. An issue with the most, you know, fierce competitor that we have, I think globally on trade.
- [05:40]
Stephanie Link
So we're only down 1.3% on this news. That I think is encouraging. And I think that is because if you step first and foremost, you have to assume that cooler heads will prevail. We have a little bit of time between now and when maybe XI and Trump will meet. So we've got probably two weeks of noise. That's okay. We're looking for opportunities to be buying the noise because of all the things you just said. Better economic growth, decent consumer AI renaissance. Good earnings. Earnings are going to be very good. And the good news is on Tuesday we start to get earnings. So which I think the banks are going to be very strong. And you're looking for opportunities though, so to only be down 1.3% in the face of all of this. I think that's actually encouraging. And it speaks to people wanting to buy the dip. And I think that they will and I think they should.
- [06:30]
Scott Wapner
Well, I mean, it's been a pretty quick reversal. As you're looking on, on the screen right now, it's, it's one and a half percent. I mean, there are significant questions, Jay, about kind of where we are not even out, you know, outside of AI and the bubble question, which is being asked, you know, every five minutes.
- [06:47]
Stephanie Link
Right.
- [06:48]
Scott Wapner
Obviously. Where's the economy going? Bank of America data today shows what really looks to be two economies, to be quite honest. Their data shows lower income consumer spending is growing at 0.6%, higher income growing at four times that. So that's where the economy is being carried by the high end consumer and it's being carried by AI.
- [07:11]
Jason Snipe
No doubt about it. I mean, it's definitely two tapes is fully bifurcated in terms of the high end consumer versus the lower end consumer. Top 10% represent 50% spend. There's no doubt about that. And I think as it relates to what's going on today, this is an absolute buying opportunity from our vantage point. Why? Because GDP is at 3.8%. Yes. We are underway a cutting cycle. We'll see kind of we've heard from Hawker today and some other, some Fed speak this week. I think we will that will be stimulative. The economy, the big beautiful bill will start to run into play over the through the end of this year into next year, which I think will also be stimulative to the economy in the short run and earnings to Steph's point, we will start in earnest next week on Tuesday with financials which we expect 12% earnings growth. So I like a lot of what's going on right now for the market. This is an opportunity for me.
- [08:04]
Scott Wapner
Market was primed anyway for, for some level of pullback. Whether this is the beginning of anything, who knows? Well watch dow's down almost 600 points. I do think it speaks pretty loudly to the complacency that's been in the marketplace about almost anything outside of the positives to AI rate cuts, the economy and whatever else you want to throw into that basket.
- [08:26]
Kevin Simpson
During the entire opening of the show, you're the first person to mention rate cuts. And I feel like that's the thing that's in tandem with the enthusiasm is when you've got a rate cutting cycle, it's like what else could the stock market wish for? So to Stephanie and Jason's point, if there's a pullback today, I think there's opportunity there kind of pivoting to what you say, Rob, if you look at 22 plus forward earnings, which for old people like us, like that's pretty out of control. But it's a handful of names that are buoying the entire markets. So if you lose the enthusiasm, Scott, where if the Fed backs off of the rate cuts even more so than tariff talk, that could be the reset that I would be a little bit nervous about where maybe instead of 22, you go down to 20 and now you're 6, 700 points off the S.
- [09:09]
Scott Wapner
And P. You're talking about a game changer scenario for the markets. Those are sort of dramatic risks that would would be out there and that would have to roll for the market to have a significant problem. I mean we're, you know, even with the pullback, we can look at Nvidia. We're still, we're not that far away for $5 trillion in market cap. Now this bit of upset is obviously front and center for us as we come on the air for you. So we're at 1 189. We need 205. So you know, maybe we get that in earnings, maybe we don't. But that's been one of the stories there. There's, you know, Morgan Stanley positive on that name. AMD's best week since 2016. You've got the corporate Qualcomm news that Mackenzie Segalos was talking about earlier where China opening this antitrust probe there. So there's just a lot of tension bubbling back over the surface as we see today. Rob, you have Qualcomm. Jason does too. I'm just curious, as you think about all this playing out, if you know, the meeting between the president and President Xi wasn't supposed to be for a couple weeks. So if you get, you know, more rhetoric, but between the two sides, or at least from this end, what that might mean for the market as it looks ahead to a potential meeting between the two.
- [10:25]
Rob Seats
You make an important point. What is the breaking of the linkage that we've seen? The linkage between AI Cap ex equity markets, the US Consumer and the US Economy. There's a positive and virtuous feedback loop going on. Air capital spend fuels earnings. Earnings fuel, positive stock performance. Positive stock performance fuels the large, you know, the wealthiest US Consumers that are exposed in the market. And that fuels the economy. So any time you're going to see something that challenged the break, the break in that link, it specifically challenges it in the areas that have done really well. Although Qualcomm has lagged quite a bit because of its existing exposure to China, you're going to have a situation where you get a dramatic pullback, especially in the names that have participated quite a bit. So I don't think this is broken, but these links will become challenged from time to time. And as long as you think this is still in play, and we certainly do through year end, these pullbacks provide opportunities for investors that want to stay long to get in. I will tell you, we've done a lot of hedging for people and it's been painful. Right. And sometimes when you get days like this, you're going to start to get unwinding of those hedges. That I think is a very positive time to do it because they're breaking through to the upside and investors are exposed to losses. The more they, the more they migrate higher. So take advantage in other ways of this volatility that's created by a breaking of that positive feedback loop.
- [11:56]
Stephanie Link
Yeah.
- [11:56]
Scott Wapner
So Dow's down 550. Another considerable story around AI has been the data center build out, which you've gotten a lot of commentary on over the Last seven days or so. Michael Dell saying maybe you'll get to an overbuild at some point. And he said that on this network, but he doesn't see any signs of it. Microsoft of course yesterday said their forecasts show that the data center crunch is going to persist into 2026. That is the big play for you. The build out stocks if you want to look at and just call them the AI buildouts. Those are some of the industrial ish names, some of the utility like names, power producers, etc. That are all playing into this story. Vertiv record high today. Steph, that's you. That Stock is up 156% over six months.
- [12:42]
Stephanie Link
Vertivor Nova, Quanta Services, Eaton. Out of all of them, Eaton is the one that's actually lagged. It's only up 13% year to date.
- [12:51]
Scott Wapner
Well, it's up 39% in six months. Right.
- [12:56]
Stephanie Link
Still though, when you have Vertiva, you know, up 50% year to date. GE Vernova up 86% year to date. Quantum Services up 35% eaten up only 13 is, is. It pales in comparison. I think that's where your opportunity is because I don't think that this story goes away. So I don't own Nvidia, I own Broadcom on the tech side which is. Which has done really well, up 80% in the past year. But these other names are ways to play the same thing theme because they are helping to build out the infrastructure and they're going to. Every single one of those names I mentioned they're booked to Bill is north of 1. The visibility is. The visibility is so strong, the organic growth is accelerating, margins are accelerating to all of these companies. So that's why I say look at the ones that have lagged. Eaton is the one that's lagged. I think it was upgraded to a buy by City earlier this week or Catalyst buy. Yeah, that's the one I think you want to focus on because that's where I think you have the most upside from here.
- [13:50]
Scott Wapner
Your point's well taken. I mean you do really have to look year to date. These charts all look great simply because they're from the Liberation Day disaster in the stock market. And that's what that chart shows you right from April and then when the market rebounded so dramatically and then there more recently has become a greater focus even so on, on AI related names.
- [14:14]
Stephanie Link
And I bought so many of them.
- [14:15]
Scott Wapner
And I was in that period and.
- [14:16]
Stephanie Link
I added to so many of them then I really, you know, I spent a month adding to them because I do think that we are still so undersupplied in terms of power and the grid. We still need to Upgrade the grid. 75% of the grid is over 25 years old. And for all of this to work, you need a grid and the data centers. We have 45% of the data centers in this country, in the world. So we need to build out not only here but around the world. We only have 11,000 data centers, so we ought to get to 30,000. And so that's why I've been so excited about the infrastructure plays in addition to the technology stories as well.
- [14:50]
Scott Wapner
So, Kevin, you bought a company called Emcore. This was I don't know exactly when, but it was since your last appearance. So it's newsworthy at least for us and our viewers to know about. Tell us more.
- [15:01]
Kevin Simpson
So playing right off of Stephanie's theme, we look at Emcore as a pick and shovel for the infrastructure electrification. This is a company we bought about a week ago. We paid 647 for it. We're up a few dollars, but there's still plenty of upside here. And when you look at the numbers underneath the surface, revenues were up to $4.3 billion. So this is a name that we haven't talked about a whole lot on the network. It wasn't on the list, but I think it's something that if you don't own it, absolutely want to take a look at it. And it plays off of this theme not just for the next six months, but potentially for the next six actually.
- [15:35]
Scott Wapner
Well, it's a record high today. Speaking of stocks that have ripped. Right. We, I don't think ever talk about this name in particular. It's up 81% over, over six months. Let's move and talk more specifically about the bull market itself, which this weekend is going to have its third birthday on Sunday. This news today obviously is taking the air out of the, you know, the bouncy house of our, of our birthday party. But nonetheless, we're still going to serve the cake and discuss it. Rob, you know, the, the idea of whether we're still young in this cycle or whether this bull market is starting to look a little aged. How would you weigh on that? UBS says it's three years young and not the least bit tired. You agree?
- [16:24]
Rob Seats
I don't think it appears to be tired. It certainly feels fully valued. But the way we look at markets over a short period of time is based on positioning, valuation and sentiment. Positionings not to extended valuation is extended in sentiments getting, getting a little frothy. And so you know, do I think we can continue to move until year end? Absolutely. From then it becomes what becomes with earnings forecast and can you continue to see rising forecast in the next year? And our bet has been that yes you can. You start to see some of these benefits of spreading out into other parts of the economy. You may get a tailwind from the Fed that allows that broadening out into other areas that have lagged. And so what I would say is is it early? I don't know about that but there's certainly a lot to do in this environment.
- [17:18]
Scott Wapner
Bull markets go three, they usually go longer as we've seen. I think in like 70% of the time it's something like seven out of the last ten. Yeah, Jason, have if you get to three you usually get to four at least.
- [17:32]
Jason Snipe
There's no doubt. And the average bull market is 51 months. Right. We're 36 months in about 87% return on the S and P. The average return for a bull market over a five year time span. Well 51 month time span I should say is 162%. So to your point, there's still more fuel in the tank from our perspective and I think earnings will be a strong catalyst. As I mentioned earlier, the cutting cycle beginning. I think those are, those are the fuel. That's the only fuel that you'll need to go for.
- [18:00]
Scott Wapner
Well, I tell you what, if you look at where you think we're going to go, hsbc Kev says we're going to continue to grind higher and there they say you're going to see a broadening. Can you get a grind higher? Can you get substantially longer into the bull market without it?
- [18:19]
Kevin Simpson
Well I think we're already starting to see the breadth that they're talking about, which is incredibly healthy.
- [18:24]
Scott Wapner
Well, they're looking at like a big, sick, bigger cyclical move in the market. Cyclicals have been questioned a little bit. I mean, you know, I think you're.
- [18:33]
Kevin Simpson
Going to start to have to see where the money's made. So if you look at valuations and you think about the things that are undervalued, it makes sense. Like we, we talk about industrials, maybe you start to look at retail again from a discretionary standpoint. Consumer staples, pharma, none of those have participated. Even energy's lag quite a bit. I'll play off of Jason's comment about the bull markets because first trust does a great bull bear study. It goes Back to World War II and they're talking about 4.2 to 4.3 years on an average bull market. Every bull market is different. And we're not even factoring in, I don't know the pullback that we saw in April. But if history teaches us anything, this isn't the time to jump out of the markets and think that, you know, the getting is good.
- [19:17]
Scott Wapner
When you talk. Hold on one sec. I'm sorry, you can, you can weigh in on this. I mean the. You got to be careful. I think when you talk about, well, industrials, as I was going to say, industrial sector hits a record high yesterday, right. That's like saying, well, the consumer discretionary space is doing great. If Amazon and Tesla are the ones that are carrying the whole load, like, yes, okay, industrials are at a record high. But a lot of that plays into data center. You know, names like Cat was up big yesterday. We'll talk about that in a minute because you got to move related to that. But you know, I'm saying like, you got to be careful when you talk about cyclical stocks and say, well, hey, look at industrials, they're, they're doing great. I mean it's really in a select, much more selective area.
- [20:06]
Stephanie Link
I'll give, I'll give you that. But I would also add in aviation. Can we do that too? Because Boeing is up 20% year to date. GE is up 77% year to date. So there's an aviation cycle happening here too. And I think that's really where there are some. There is still some value, maybe less so on. GE just had such a nice run. But these two companies are going to see such enormous free cash flow improvement and that is exactly what they trade on. Always got a duopoly. GE commands number one position in engines and services. Those that. That duopoly. So you want to have parts exposure as well. But yeah, I'll give it to you that a lot of the industrials that have done well is AI. But if I don't think is going away, I don't think any of us are saying that we're in early innings. You still want to have exposure and that's why I highlighted Eaton because it has lagged. So find some of the laggards. But then you also want to have participation in some of the leaders as well. Vertiv is my absolute favorite name in this space because of Dave Cody, the executive chairman and all at his proven track record at Honeywell in terms of consumer. I'll give you that too on Amazon And Tesla. But I also think even though housing stocks have really rolled over as of late, they're all back down about 14.
- [21:15]
Scott Wapner
Well, we're going to talk about that.
- [21:16]
Stephanie Link
Next, that they're still up 30% from their second quarter lows. And so. And I still think that there's going to be a housing cycle. So I think you're getting an opportunity in some of these housing stocks that have really gotten hit hard in the last couple of days.
- [21:27]
Scott Wapner
Look, look at this week. Dr. Horton.
- [21:30]
Stephanie Link
Yep.
- [21:31]
Scott Wapner
Steph owns up, but you do too, Jason.
- [21:33]
Jason Snipe
Yeah.
- [21:34]
Scott Wapner
KB is down 12% week to date. Pulte's down 12. Toll is another Linkster name down 11. Lennar's down nine. If you look at Lowe's and Home Depot, Lowe's is brutal. Nine straight down days. It's the longest losing streak since 2018. 17 out of the last 18 days for Lowe's have been down. Home Depot not quite as bad. Still not great. Four straight down days. 15 out of the past 18 for that stock. What's going on?
- [22:04]
Jason Snipe
Yeah, no, I mean, so, so for me, Obviously I own Dr. Horton. You know, the stock was up just a couple of weeks ago over 22%.
- [22:13]
Scott Wapner
Right.
- [22:13]
Stephanie Link
So 40% from the June low.
- [22:15]
Jason Snipe
Exactly, exactly. So it has done well this year. It's only up 8.8.5 now, but dollar value of new orders were up 3%. New orders were flat, you know, in the last quarter, but they beat on, on earnings and they beat on revenue. It's a tough operating environment. That's just clear. I just think going forward though, these are the names you want to own. You want to buy the builders, you want to buy the do it yourself names. You know, Lowe's was, is a name I used to be in. We sold it a couple of months ago. But I think this is providing an opportunity to look at these names going into the operating.
- [22:47]
Stephanie Link
Going forward, you're at the trough. 100% was expecting order growth last quarter or even this quarter.
- [22:53]
Jason Snipe
You got it.
- [22:53]
Stephanie Link
Interest rates must go, come down and they have 7.4% was a 30 year fix on January 13th of this year. It's at 6.2% now. You've got to get it into the fives, there's no question about it. But it's going to go there. I think if you believe in, in the housing cycle, you need rates, right?
- [23:10]
Scott Wapner
Yeah, demand, I mean, demand has been sluggish. Dr. Horton cut to 165 from 175kb to 62 from 67. Lennar 125 from 133 and Toll also downgraded as well. That's bank of America doing the cutting of the targets on policy uncertainty and softer fundamentals that that they see. We got off on housing because you went there and I didn't want to let that just hang out there. But I didn't do the Caterpillar move that you had as we were talking about industrials. What did you do?
- [23:41]
Kevin Simpson
Yeah, just real quick playing off some of the hedging comments that you made earlier. Rob, you know we write covered calls when we get some volume volatility. Caterpillar is up 40% year to date. Still one of our best AI adjacent plays plus infrastructure. But we wrote a call that's going to expire next week. It's a 520 annualizing out the option premiums at 8% premium. So when we can do something like that. Scott, in addition to the dividends plus the upside, there was one day this week where Caterpillar was up like $20. So for us it's just a great way to harvest volatility.
- [24:12]
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- [24:42]
Scott Wapner
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- [25:32]
Stephanie Link
Angel Soft. Angel Soft. Soft and strong.
- [25:36]
Scott Wapner
So example pick up a pack today. Angelsoft Soft and strong. Let's hit some other things that are important. Ferrari. Mr. Sechin. Don't act like you're not paying attention. Worst day ever yesterday so their outlook disappointed you've got the stock. I think you're the only one on the on the program who's in that name. There's your week to Date the cliff jump that it did. What do you do with it?
- [26:05]
Rob Seats
So I think we're in a much better place today than we were a week ago. When you asked me about it on the show and I said it is far too pricey to get into right now. I would wait. And I think the reality of it is is there's impact on these businesses related to the tariffs. Now the reality of this issue was related to electric cars and them downgrading from doing 40% electricity it to 20. I actually think that's probably a positive for that company. However, I think you can own this long term. This, this company has software type margins. They are the second most profitable car company in the world to Tesla and they have a very loyal client base and they are exposed incredibly to the high end consumer which is benefiting from everything that we're seeing in these markets.
- [26:54]
Scott Wapner
Doesn't seem to be consumer demand real issue at the, at the high end. I think it was Robert Frank who may have pointed that out yesterday morning when looking at the fact that the stock was down so dramatically.
- [27:06]
Rob Seats
Yeah, yeah, listen, this is stock we think we can continue to own. We pay attention to it because if the markets start to rerate for any reason that we've talked about, I think there is going to be some impact on the company. But right now we feel pretty comfortable continuing to own it.
- [27:23]
Scott Wapner
Let's talk about materials. It remains to be seen where gold goes from here. Let's look at gold if we could too because we did get over 4k this week for the very first time and we elevated beyond it. It did have a pullback yesterday. We're still a little bit below at 39.98. What's interesting if you look at the bank of America flow show report which we always do, if you watch the program, you know, we always highlight it just gives you a good idea about where they see flows going. The flows are slowing. In gold. They had record materials inflow, 2 billion in gold. It was the smallest in three weeks. Now maybe it's all relative. It's. You still have money going there Kev, so it's, it's slowing down a little bit. Materials had a record as I said year to date. Inflows are annualizing at a record 79 billion. The XME, the metals and mining ETF goes a record high 10 straight weeks of gains. What do you think?
- [28:22]
Kevin Simpson
I still think there's tremendous upside here. I mean we went through years where nothing had a pulse within that space. So for us we own Agnico Eagle, we consider it to be the best of breed across the board. They benefit from higher prices, production growth. Believe it or not, Scott, this thing's up 100% percent year to date. I mean, that's, that's the minor. So you're also getting modest dividend. Really nice dividend growth. I don't think the trade's going away. If the flows slow down a little bit, maybe you get a pullback at Igniko. That's a reason to add to the position.
- [28:51]
Scott Wapner
Steph, you recently bought Antofagasta. Is that, Is that how you say it? It's a Chilean mining company.
- [28:56]
Stephanie Link
Yeah, I like copper for electric vacation. We're going to spend $4 trillion between now and 2050 on this theme and EVs and AI and data centers and grid, all that stuff. So it plays into that. And, and Freeport had an accident in one of their biggest mines and it's going to really hit supply. Supply growth as a result is only going to be 1% this year and next year. And I think copper, as a result, it's so tight already that I think the price is going to continue to go higher. And this is a way to play it. They're best in breed. They have way better execution than Freeport McMoRan, which is why I sold Freeport and I bought this.
- [29:29]
Scott Wapner
Where I'm curious for you and your client base, like, where does gold factor into the kinds of conversations that you guys are having now relative to how you would normally discuss it with, with your peeps?
- [29:41]
Rob Seats
It doesn't deviate from the normal. It's a hedge against unexpected inflation or geopolitical events. And you know, you get inflation with currency debasement. And obviously some of the things that happen between the US and Russia have forced other central banks to start buying the asset. I think the one thing, thing that's really interesting right now is you're seeing a retail uptick in ownership of gold. So there's certainly a confidence has been shaken in the dollar a little bit. And I think that's why gold, which is priced in dollar terms, is a benefit.
- [30:12]
Scott Wapner
You feel like it's, it's, it's late, it's speaking of like the bull market at three, whether it's still youthful or not. Do you feel like this move in gold is long in the tooth?
- [30:22]
Rob Seats
I do. In fact, we've been trimming for clients that own gold, kind of resizing the position. This has been a hyperbolic move. I mean, yet you got to pay attention to things like that. Remember, gold has no Yield? There's no yield. It is, it is a store of value asset. It is again a hedging tool. And there are many people that are gold evangelists. I happen to have some clients that are, that are them. And they own gold physically. They own gold maybe in the their backyard. I won't give you their addresses. And you know, they own XAU and the other one. I forget what it is.
- [31:00]
Jason Snipe
Okay.
- [31:01]
Scott Wapner
We should talk about the banks too because earnings season is going to kick off next week. Banks are a little bit weaker today. The overall market. They're just following suit of what's happening there. The KB E three weeks in a row is what we're pacing for negative. It's the longest losing streak since April. It kicks off with jpm, Goldman and Wells and Citi on Tuesday. Steph, you want to, you want to go here first? I mean, you've got Morgan Stanley, you've got B of A, you've got Wells, you've got capital one.
- [31:29]
Stephanie Link
Wells is my biggest position of anything, of anything 7% in my portfolio, especially because of the asset cap lift. They've lost 20% market share in deposits since 2017 because of the asset cap. Now that gets lifted and so, so I think they can grow and they will gain more market share and that stock will re rate, I believe. But overall, I think the bank earnings are going to be very good. You're going to see improvement in net interest income and net interest margins. I think guidance will be better this quarter for next quarter and next year. You also have higher fees. Capital markets, M and A, we've all been talking about that. You have stable credit, which is really very, very important. And the big six companies still have $192 billion of buybacks that they can implement and they will. So I think that's also going to be a theme. One last thing, Scott. Bank of America is having an Analyst Day on the 5th of November. It's the first one in 15 years. So obviously they feel pretty good about their business if that's what they're doing.
- [32:27]
Scott Wapner
Jason Snipe.
- [32:28]
Jason Snipe
Yep. Got Goldman.
- [32:29]
Scott Wapner
You. Yeah, yeah, yeah.
- [32:31]
Jason Snipe
So I mean, I like the investment banks here. I mean, Goldman's revenue a little over close to 15 billion last quarter are up 15% year over year. They're up. The stock is up a lot so far this year. Trading in equities is up 36%. Investment banking up 26. I think the guide will be strong. I think the operating environment as we've been discussing with looser monetary policy will be accretive for the banks going forward and continued steepening of the yield curve. So I like the banks, you know the private, the old managers haven't traded as well. I know we'll talk about that later but continue to like those as well.
- [33:02]
Scott Wapner
Kevin, you've got Goldman and you have jpm. So you're right in the thick of it early next week.
- [33:07]
Kevin Simpson
Yeah, we expect next week to be a precursor for earnings season. J.P. morgan, Goldman Sachs should be beneficiaries. What we've seen mergers, acquisitions, IPOs. One thing Jason about Goldman that we really like is that they've increased their dividend substantially last quarter. So you're getting a $4 dividend on a great stock. I share buybacks should be awesome. Should be an awesome week.
- [33:27]
Scott Wapner
Do we set the tone right bright and early here in earnings season with with good reports from these banks? What do you think?
- [33:33]
Rob Seats
I think we do. I think it depends on the banks but I think you're watching everything that staff said you should be watching. Whether that be net interest, margin, capital markets activity but the read through on the banks is the health of the economy and whether we're seeing some broadening out. I suspect that we're going to see that continue. So I think the banks should be, should be pretty strong and they rerated here. Yeah.
- [33:57]
Scott Wapner
KBW raises price targets. Morgan Stanley is now 176. That's a jump from 160. They reiterate their outperform. JP Morgan goes to 354 from 330. Outperform is the rating there as well. So it's going to get interesting early or really early next week. You feel like will set the tone I think on what to. What to think about earnings in general.
- [34:22]
Stephanie Link
I think we will. I think they're going to have very encouraging things to talk about in terms of the consumer and as I mentioned, credit is a really big, big thing. So I think that they will be positive. Here's the only one glitch. They usually don't trade well when they report earnings. And so you get an opportunity especially again given the fact that they have these enormous buybacks and we have haven't even changed the capital rules yet. Basel 3 endgame is going to come at some point. I thought it would have been by now, but it's going to come and when it comes it's going to free up a lot of capital for not only buybacks and more dividends and that sort of thing, but maybe actual loan growth. That is the thing that I think.
- [35:01]
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- [36:00]
Stephanie Link
Going to be very encouraging. But these companies all spent a lot of time at conferences this past couple of months, so I don't expect big surprises. Maybe on the expense side might be something, might be a little bit elevated for all of them, but I don't expect to be out of control. And on the flip side, again, you have so much in terms of what's going to happen on the revenue growth side. So I think that, yeah, I'm looking forward to it. I think it will be, I think we'll talk about really good things about the economy. So I'm looking forward to it. And if they pull back, I'll buy, I'll buy more.
- [36:28]
Scott Wapner
All right, we'll push to a couple of Kevin moves here. You bought Coupang, you sold Roblox. Tell our viewers about both.
- [36:35]
Kevin Simpson
Yeah, real quickly. The theme that you're going to hear today is I'm bringing a lot of names to the table that we really don't talk about on the show. Coupang is an Asian online retailer. They're expanding into lots of different areas within a super app. Think of it more South Korea predominantly, but expanding into Taiwan. We paid $32 last week. It's $32 today. Really growing margins. And just a neat story, Scott. Roblox was a sale that we got stopped out of. We bought the stock initially in the 50s. We got stopped out at 126. Talk about this a lot with Robinhood in terms of the way they control the young demographic. But in so doing, there's some problems that we're seeing more and more states coming after them as a, as a sort of a ground for bad actors. Meadow went through this in the past. Roblox is doing a great job trying to defend it, but we got stopped out. If it pulls back, you know, we'll certainly keep an eye on.
- [37:26]
Scott Wapner
We've just passed 1230 here on the East Coast. Just to keep everybody up to date, we can show you an intraday chart. There's the Nasdaq, maybe the most dramatic of the pullbacks. But surely if you put the Dow and the S and P up against that, they'd look almost the same. Really, that headline from the President on social media talking about a massive tariff hike on China because of the the export controls that they put in on rare earths. Only escalating the trade battle between the two countries. Is the meeting between President Trump, President Xi still going to happen at APEC in a couple of weeks up in the air, at least according to what the President has had to say on social media. So it's really anybody's guess, but the nervousness and really the first time in a couple of weeks at least that trade has been so top of mind, particularly between the US and China, has filtered into the stock market. And after you've had this big run, that's what it looks like. Again, we're 30 minutes past noon. It's a 2% decline. It's the chips that are dragged today. Nvidia is down a bit. Micron's down a bunch. Broadcom certainly among those and amd. I guess since we're talking about tension, let's hit some stocks that are on the move, like Lockheed. They announced a new buyback. They're looking for 10 straight weeks up, which would come with this week. Rob, you own that stock. They would look at under the share repurchase program, approximately 9.1 billion in total for the future.
- [38:57]
Rob Seats
Yeah, Makes a lot of sense. This is stock we like. It hasn't done particularly well until, until this past little bit. And you know, they continue to work through some production challenges. Their backlog continues to grow. They're on pace for over 30% EPS growth next year. So as we get out into next year, we don't talk a lot about names like this on the show, but I think if you're looking for high quality cyclical exposure, this is one of the stronger names in our view. I could see us increasing the weight.
- [39:28]
Scott Wapner
GE Aerospace, the targets at 305. Think you just, you mentioned it earlier. Goldman Region reiterates a buy on IT staff from 271. That stock's up 77% this year.
- [39:39]
Stephanie Link
That's been a good one. Free cash flow I talked about earlier, I think you're going to go from 8 to 9 billion to 10 billion by 2028. I think they're going to upside surprise, actually. I think they're lowballing the numbers. This 70% of their revenues is services that carries much higher margins. That's what's really the story. But obviously the duopoly that they, that you know, in the aviation industry between Boeing and Airbus doesn't hurt them as well. So I like the story. I'm not adding to it here, but I'm definitely holding onto it.
- [40:06]
Scott Wapner
Okay. From aerospace to outer space. I call it that. Kevin, some moves from you. Your out of this world trades, ASTS, AST, spacemobile. Tell me more, please. $31 billion is the market cap for a stock that I don't think we've ever talked about about.
- [40:26]
Kevin Simpson
I don't think either one of these are stocks that we talk about very often on the show.
- [40:29]
Scott Wapner
Scott, Rocket Lab, we got a lot.
- [40:31]
Kevin Simpson
Of both of these stocks have gotten headlines this week.
- [40:33]
Scott Wapner
So you bought both?
- [40:34]
Kevin Simpson
We bought them both last week and they've made an incredible run. ASTS has the vision of being able to take all of our smartphones and turn them into satellite phones. They started with at&t. It became a really successful testing ground and then this week they ended inked a deal with Verizon. So we're seeing a steam stock here that's a little bit speculative, certainly on a big, big move to the upside, but a name that we think has really, really good potential if they're successful at it.
- [41:01]
Scott Wapner
We have more breaking news from Washington. Let's get back down to Eamon Jabbers. Eamon, what are we learning here?
- [41:06]
Eamon Javers
Scott, we've got a cryptic social media post from the head of the Office of Management and Budget at the White House, Russ Vogt, who has posted on X just a short time ago the RIFs have begun. RIF. RIF stands for reduction in force. Remember the Trump White House was threatening to permanently eliminate federal jobs as part of the overall government shutdown. Not clear how many jobs Russ Vode is talking about here where in the federal government they're being cut if this is the first of a number of waves or what. But this is something that the Trump administration had been using to get leverage over congressional Democrats who generally speaking prefer to keep federal employees employed. Of course, conservatives argue there are too many federal employees who are not doing enough work anyway, so they would be more amenable to cutting the federal workforce in terms of the details of what this post actually means, I just texted a White House official who responded to me. It seems very self explanatory to me. So there you go, Scott. They're saying that the rifts have begun. We don't know how many, where or how much this will continue, but obviously this is a leverage point that the White House has been seeking.
- [42:20]
Scott Wapner
Yeah, I suspect we'll hear more as the hours progress today. Eamon, thanks for the update on that. Eamon Jarvis back in what's become a very busy day around the White House, given the President's social media posts earlier about rare earths and now this news of layoffs as the government shutdown persists. At what point does the market care about the government shutdown, if at all? We didn't even mention that until this reporting from. Amen. And because why would you? The market hasn't seemed to care about it. People care, but the market doesn't care.
- [42:49]
Steve Liesman
Why not?
- [42:50]
Stephanie Link
It'll get resolved every week the government is closed. It's about a tenth of a percent off of gdp. It's manageable and I would say we're coming from a position of strength in terms of growth. 3.8% GDP growth. Maybe it's 3% or whatever, but you can, you can, you can handle it in the near term and it is going to get resolved and we are going to recoup a lot of that revenue. So that's why I think the market is looking through it.
- [43:12]
Jason Snipe
Yeah, and I mean the Last one was what, 2018, right? 35 days and the S&P was up 10%. This story in terms of the shutdowns about health care subsidies, I think to Stephanie's point, I think it will get resolved shortly and then I think we can move forward. And obviously the market's paying attention to earnings and, and the stories of individual companies and I think that's where the focus is.
- [43:33]
Kevin Simpson
The stock market's a math equation. It has no emotions. The people that are suffering by not getting paychecks. I mean.
- [43:39]
Scott Wapner
Well, it has emotions. It does have emotions because what you had an emotional response in the stock market already to the, to the China related stuff. We don't even have that many details on it or any real specifics on how things are going to proceed, whether we will even get the massive ramp in tariffs related to China. So it does have an emotional outburst.
- [44:00]
Kevin Simpson
I would argue that it's not an emotional outburst that that could actually affect earnings where the government shutdown has much less of an effect to actual earnings. So if there's a pivot by retail investors, maybe there's some emotion there, but probably not with the broader markets.
- [44:14]
Rob Seats
And if you, and if you look kind of back through history, markets remember and the reality of it is most government shutdowns, I think maybe all of them don't lead to negative price performance in markets because of what Step said. We end up working through them over some period of time. We saw how markets reacted to major tariff news earlier this year on Liberation Day. That is, that was pretty dramatic. So I think markets have a memory. They're going to react to what has historically been important.
- [44:43]
Scott Wapner
Let's move and talk as well. We mentioned banks are coming up next week and somebody on the desk earlier had had mentioned what some of the private equity and alts managers their stocks have been doing. Bottom line, it's been rough. It's been a very rough month for those two groups. The bankruptcies of First Brands and Tricolor have raised new questions about one area in specific. In the credit space, so called BDC or business development companies are lower on concerns on the health of corporate borrowers. It's why the publicly traded entities tied to those have been especially potentially weaker of late. Leslie Picker has been all over this story, helping educate everybody on exactly what we're talking about and joins us now. It's a little broad to simply just say either private equity or private credit. It's a specialized area within credit. Can you tell us more?
- [45:36]
Leslie Picker
Yeah, that's right, Scott. Just to take a step back, a business development company is a publicly traded vehicle that finances medium sized, often private companies. Shares in BDC trade daily and usually offer retail and other investors pretty high dividend yields. Think of it kind of like a mutual fund for private credit. And as you mentioned, Scott, a host of the biggest BDCs have gotten whipsawed in recent weeks. According to PitchBook, several BDCs had market debt positions in the faltering auto parts company first brands above 90 cents on the dollar as of 6-3-30. These include Goldman Sachs, Private Credit Corporation, Prospect Capital Corporation, Palmer Square Capital. BDC and others each had exposure. In the case of First Brands, 14 BDCs had exposure totaling $229 million, equivalent to just 4.1% of the company's outstanding term loan balance. That's according to ratings agency kbra. The largest individual exposure to First Brands accounted for only 1.2% of that vehicle's total investment value. KBRA found that none of the company's $6 billion in broadly syndicated loans were originated by any private credit, direct lending platforms. So the confusion largely stems from something else that technically falls in the private credit bucket, but isn't the direct lending we typically talk about. It's this off balance sheet obligation, particularly in an opaque and risky corner of supply chain finance, that could amount to about $2 billion in obligations owed to 30 unsecured creditors in this case. But those are mostly trade and financial, commercial finance companies, banks and hedge funds, not private credit funds on the hook there.
- [47:25]
Scott Wapner
Scott, in some of the stories that I've read, you know, some of the participants in this particular area suggest that a lot of these are trading as if you're going to see, you know, a massive number of defaults coming. And they just don't think that that's anywhere close to what we should be talking about. But the, the publicly traded vehicles are acting that way.
- [47:49]
Leslie Picker
Yeah, no, they're trading well below their net asset value, which is an indication that they expect to see a huge uptick in defaults. Now we're really at kind of an interesting inflection point because both Tricolor and First brands, they're in the auto space, so they're in the same sector. So there's this question of whether this is just kind of an idiosyncratic situation in an opaque off balance sheet part of the market, or if it's an indication of more to come. BDCs are also selling off because rates are going lower. And so that could impact the appetite for the yield that these things provide for their investors as well. And so there's a whole host of dynamics at play. It's very clear, though, that a lot of these names and the alternative asset managers are getting punished. One analyst said basically the market is reacting and then they're going to ask questions later, which I think could be part of it. Unless again, in that other camp of, you know, this is the first instance of more to come that's kind of got the market really roiled here.
- [48:45]
Scott Wapner
Yeah, I mean, rate cuts have played a role too, because a lot of these, these loans are floating rate.
- [48:53]
Leslie Picker
Right.
- [48:54]
Scott Wapner
Loans. So that's been one aspect of this. You've seen many either, you know, cut their distributions and their dividends. I just wonder, you know, what the expectations are if we think that more rate cuts are coming.
- [49:08]
Leslie Picker
Yeah, no, it's fascinating, Scott, because yes, rate cuts lower the amount that the individual managers are able to earn from these floating rate loans. But at the same time, if you are worried about credit quality, this could help lower a burden for some of the borrowers, because they are of course subjected to floating rate loans. So their interest servicing and their debt servicing would be lower if interest rates lowered and the market rates followed. So all of these dynamics, they're trying to kind of figure out exactly where we're at. But definitely an interesting space to watch given the confluence of macroeconomic factors as well as some idiosyncratic bankruptcies that are working their way through the court, that are tending to have these ripple effects into broad and often misunderstood corners of finance.
- [49:54]
Scott Wapner
Forgive me if this is a question you don't know the answer to off the top of your head, but how big of a business, for example, for an Aries or a Blue Owl is this type of lending? Yeah, because part of me wants to ask, well, I can understand the publicly traded vehicles that capture this so specifically why they're down, but then why would the, why would the, the parent company or however you want to frame that be down so substantially as well? For example, Blue owl is down 16% in a month. And many of the other names that we're talking about, like aries management's down 20% in a month. Can you help me understand that a little bit better?
- [50:38]
Leslie Picker
Yeah. So Aries, I do know off the top of my head about 67% of their assets under management. They have roughly 500 billion in a, um. Right now, 67% is in what we would call credit writ large. How much of that is in this kind of opaque supply chain financing? I don't know the answer to that, but I do know they have large exposure to direct lending and they have pretty much no exposure to the bankruptcies themselves. In fact, I was talking to some analysts who cover the big alts managers, and they said none of the big managers in their coverage area have any exposure. And in fact, Apollo was actually short first Brands debt. So they're getting punished by this, even though they, you know, I don't think it was a big short position for them by any means, but they certainly were on the right side of that trade and still their shares are down significantly on this. So a lot of it is just this overall concern of whether these bankruptcies are kind of the canary in the coal mine. And there are some issues pertaining to corporate defaults and the health of credit right now and whether that's going to ripple down to some of these other alts managers who have been high flyers, at least in 2024. They've, they've taken, you know, some like, lower this year, but they're still priced at a decent premium. Relative to the universal banks that do the syndicated lending. So I think there's kind of this revaluation trade that's also taking place where the bigger banks are taking shares from the non bank lenders. As you see some of the regulations come off. And then you're also seeing kind of a market cap revaluation where so much of the the benefit has been in the non bank sector. And now people are giving that a rethink and closing that gap where you've seen a premium for the alts managers and the big banks are down here now you're seeing that gap slowly close as people are kind of rethinking those trades less.
- [52:30]
Scott Wapner
Thanks so much for helping us understand this better. Leslie Picker following that for us. I know you have thoughts.
- [52:37]
Rob Seats
I do. Two weeks in a row we're talking about private credit. It I love this issue.
- [52:41]
Scott Wapner
This issue isn't going away. In fact it only seems to be revealing even more about who has had exposure specifically to these bankruptcies to a.
- [52:52]
Rob Seats
Couple of these transactions. So as Leslie said, you're looking for a canary in the coal mine. What's the first place that you can express that view is in the most liquid securities. BDCs are liquid. You sell BDCs whether it's because the rates coming in, whether it's because the defaults, those are reasons when they're cutting distributions, the BDCs are going to go down. When you have credit issues, BDCs are going to go down. The managers of the BDC are the big funds, the Aries, the Blackstones, the Apollos, the Blue House. They might not have any credit issues inside those portfolios, but investors who are trying to express a view in migrate out of those that space, they are going to migrate out of those next. So BDC is them. Then there's the semi liquid funds. The beauty of those is many of those have gates to protect against investors running to the exits for issues that may not even be there in the underlying portfolios. And then the drawdown funds which are more the long duration funds where you don't have to worry about liquidity, they are really not exposed at all. But when you look across the mosaic of the different ways to get exposure to direct lending, you're seeing the biggest impact in the most liquid vehicles first and it's because they're extrapolating that fee damage that all these firms collect into the equities themselves. Where the early part of the year it was all about the democratization in the increase in that fee based exposure. So listen this is going to ebb and flow more than it normally has. It's directly going to hit those things that are most liquid. But I still think these constructs are good for investors of different types to be able to get that exposure. And what I would do is again step back and say, okay, if this has sold off a lot, if it's trading below navigation be what is our confidence in the underlying portfolio and when things recover, can we pick that up? Does that make sense?
- [54:56]
Scott Wapner
Yeah, it does. We're going to be on the front lines a bit next week on this, by the way. All Tuesday I'm going to be live in Beverly Hills at the Case Conference, speaking to some of the biggest players within this entire universe of alternatives. So we'll continue the conversation there and we'll get the insights of some of the very best who make their livings in and around this space. Let's just bring you up to date on what's taken place over the last real hour, I think is when things started hour ish, when things started to really take a turn in the market. You'll see it there late morning ahead of our program, of course, when that social media post from the president hit talking about the possibility of a massive that's his word, not mine tariff hike on China related to the export curbs that China has put in on rare earths. It has thrown into question where we are in the trade war. It has thrown, I think, into some question as to whether President Trump and President Xi will meet at APEC in South Korea, Korea in a couple of weeks. It's made the market nervous for the first time in a while about the issue of trade. It's been most acute in the nasdaq. If we let's just cycle through some chip names, guys. If you were there, two and a half percent or thereabouts for NASDAQ. Nvidia's lower, it's Micron, there's AMD. AMD obviously has had an incredible run over the last five, six, seven trading days. Micron's ugly today. If you look at that there it is down, down near 5%. Some of the other names around, you know, with exposure in China to Tesla's lower. So we'll just keep our eye on that. Just want to give you up to date as we're down 570 or so on the Dow. We did have the shutdown headline that Eamonn brought us where layoffs, according to the head of omb, have begun. What it's not going to to impact apparently is the release of some key inflation data in a couple of weeks. Steve Liesman joins us now with more. So we're going to get CPI no matter where we are with the closure.
- [57:10]
Steve Liesman
Yeah, I might though call it CPI Light. Scott, there's an interesting report out from Morgan Stanley. First, let me update you on the news. They are bringing back some furloughed workers to put together the October cpi. Why? Because it's critical for calculating the cost of living increase for Social Security. However, what Morgan Stanley said in a report this morning, Scott, was that they've already lost one third of the data collection for October. So this is going to be a report. It will be have CPI will have perhaps two thirds of the data in it. But the BLS is already imputing more data than it had previously and this will be even more so. I might want to call this CPI Light something you may want to, you know, take a chill before you trade on it because it could come back and be revised again.
- [57:58]
Scott Wapner
Okay. It's good to note and you know, look, we're learning I think to get around the release of some critical information. Of course, we didn't get the jobs report, but we did have a Carlyle, for example, doing their own proprietary look at the health of the labor market and they suggest, okay, if we did get a release, it would probably have shown some weakness. So we're doing the best we can in the limited area that we have to actually get official reports from bls. Let me ask you another story today, the so called Final Five that the Treasury Secretary has now whittled his field, if you will, of prospective next Fed chairs down to what do we know about the group and what do we think is the next step here?
- [58:46]
Steve Liesman
Of course, Scott, I was thinking of you when I named them the Final Five. So that's exactly, that's exactly the right term here. I think what we know is that three of the five are those mentioned already by the President and that would be Kevin Hassett, Kevin Warsh as well as Chris Waller who I interviewed this morning. We could talk about that in a second. In addition, there's Rick Reeder on the list as well as Michele Bowman. My take, I think Michelle Bowman is really, I think administration likes where she is doing bank and bank deregulation over at the Fed. She's the vice chair of supervision over there. Worth pointing out we got some insight into Treasury Secretary Scott Besson's thinking on this. He wants somebody who knows about banking regulation, knows about the economy, knows about management and knows about the economy as well. As monetary policy. Rick Reeder is one of those people, people who's interviewing apparently very well there. And one of the things about Rick that isn't true of all the others is he's never spent time at the Fed and that could be a plus in the eyes of this administration.
- [59:47]
Scott Wapner
Well, not to mention the fact, I mean I'm not suggesting in any way that the others don't have the level of gravitas and respect that Mr. Reader does in the, in the, in the whole markets. Right. So that may separate him in some people's minds from others in the group. But again I don't say that or even ask you a question to suggest that the others don't. It's just Rick Reeder is a frequent guest obviously of this network and others talking about all things markets because the very big seat that he sits in where he does at blackrock and the amount of money that they, they have under management, they are the world's largest asset manager. We, we should, we should note that also Bowman and Waller, just to refresh our viewers memories because I don't want to assume that everybody just remembers and knows knows everything. They're both Trump appointees. Correct. Just just to keep that on the level here.
- [60:44]
Steve Liesman
Right, Exactly. Exactly right. Bowman was, was brought over to cover with banking regulation or cover be the vice chair of bank supervision. Waller has been been a leading thought leader on the Federal Reserve when it comes to policy. He's had a lot of early calls. He'd made a lot of changes to his outlook that seemed to be the right one at the right time in terms of monetary policy expertise. I would certainly put Waller at the forefront of that group. I don't think anybody is very close to Waller when it comes to monetary policy expertise. Rick has managed a large contingent of people and that's something that I think Besson is interested in. Whether or not there has been, what shall you say, strong executive management at the Federal Reserve. Most of the Fed chairs, you know what they do, Scott, they're most interested in monetary policy and covering that, which is quite a job. And then of course followed by banking regulation. I think there has been perhaps some room for improvement of the executive management of the Federal Reserve. That's something that Bessant certainly thinks. And so somebody who has managed a lot of people that could certainly be helpful. As for Waller this morning, Scott, I thought it was interesting. He did exactly what you said. He looked at all the alternative jobs data and he said look, I get a good picture. Labor Department BLS over here when it comes to jobs and all the other ones I can stack up to kind of replace it. And he sees a soft job market, one that leads him to think the Fed should be cutting further, less concerned about inflation because he thinks that the tariff inflation passes through.
- [62:16]
Scott Wapner
All right. I appreciate you, Steve. Thanks for coming on with us, helping us understand those issues a little bit better. Got about 90 seconds left. That's our senior economics correspondent. We're down about two and a half percent almost exactly. We are there now on, on the nasdaq. Let's get some final thoughts here as we look ahead to how the rest of this day might progress.
- [62:34]
Rob Seats
Rob, listen, I think this is one of those things where if you had a break to this very virtuous cycle, which, which I don't think we've had, that you could see more downside markets. Certainly, Certainly do for a breather, right? Certainly do for a breather. My hope is that that gives you the opportunity for the run into year end. I don't think there was too much pull forward of that run. A lot of people were speculating that it was pulled forward early. I still think it can happen.
- [63:06]
Scott Wapner
Okay, do you want to give, did you have a final trade? I mean, it almost feels like it's not necessary in a day like this, but. What do you got?
- [63:13]
Rob Seats
Gilead?
- [63:14]
Scott Wapner
Okay, health care has woken up. We know that. Biotech, obviously part of that. It's been one of the best trades in the market of late. What do you got?
- [63:21]
Kevin Simpson
I'll give you Rocket Lab, Scott. It's one of the new purchases. We didn't get to it, but they're turning into a real space company. 30% year over year earnings growth, $1 billion backlog. If the neutron rocket works, this is going to be, this company is going to be something.
- [63:33]
Scott Wapner
Jason, Palo Alto.
- [63:35]
Jason Snipe
I think there's an opportunity here on the sell off.
- [63:37]
Scott Wapner
Okay. That stock's been at a record high too, Stephanie.
- [63:40]
Stephanie Link
Like Coinbase, I like the exchanges on crypto.
- [63:43]
Scott Wapner
Okay, so that's your market picture. I'll see you in a couple hours and I'll take you through the end. You've been listening to CNBC's Halftime Report, the podcast. You can always catch us live weekdays at 12 Eastern only on CNBC.
- [64:00]
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