Halftime Report: Nvidia Roars Back (Released December 18, 2024)

Hosted by CNBC’s Scott Wapner, the "Halftime Report" delves into the latest market movements, investment strategies, and economic insights with contributions from top investors Joe Terranova, Shannon Sokotia, Bill Baruch, and Steve Weiss. The December 18, 2024 episode primarily focuses on Nvidia’s impressive market resurgence, upcoming Federal Reserve decisions, momentum trading, and emerging market opportunities, particularly in India.

1. Nvidia's Stock Performance and Portfolio Strategy

A. Current Performance and Technical Levels

The episode opens with a detailed analysis of Nvidia's stock, which is "pacing for its best day in a month" following a notable rebound. Scott Wapner highlights that Nvidia, along with other major stocks like Disney, UNH, Caterpillar (CAT), and 3M, is instrumental in lifting the Dow from its longest losing streak since the 1970s.

B. Portfolio Management Decisions

Joe Terranova explains his strategy regarding Nvidia:

"It's really portfolio management here. It triggered that sell and ultimately with the move in Broadcom that we've had, we own more chips than we did say a week ago." (02:16)

He emphasizes that trimming Nvidia’s position by approximately 20% was not due to a lack of confidence but rather a strategic move to maintain portfolio flexibility. Nvidia remains a 5% position in their concentrated portfolio, where no more than 10 names are held.

C. Future Outlook for Nvidia

Terranova remains optimistic about Nvidia's prospects, stating:

"I still want this thing to go higher and I think it can." (02:50)

D. Competition and Chip Market Dynamics

Bill Baruch discusses the competitive landscape, noting that major tech players like Microsoft and Meta are increasingly developing their own chips, leveraging fabs like Taiwan Semiconductor. However, he believes Nvidia maintains a significant edge due to its software ecosystem:

"Let’s also not forget the software to run these GPUs is really the moat that Nvidia also has." (07:30)

2. Federal Reserve Decision and Market Implications

A. Expectations for the Fed's Decision

The looming Federal Reserve decision is a focal point, with discussions on whether the Fed will adopt a more dovish stance or continue with a hawkish approach. Shannon Sokotia provides insight into market expectations:

"If they come out more dovish, that actually could really be a catalyst as we move into January for some of this broadening out to accelerate." (15:54)

B. Impact on Market Breadth and Sectors

Scott Wapner observes the current market breadth, noting that sectors like energy, utilities, and materials are down, which contrasts with the broader bullish themes:

"Sector performance is over one month. Energy down 10, utilities down four and a half..." (17:08)

C. Potential Outcomes and Investor Sentiment

The panel debates the possible outcomes of the Fed's decision. While some anticipate a hawkish pause, others, like Steve Weiss, argue that fewer rate cuts could still support the market if economic indicators remain strong:

"Less Fed accommodation is absolutely fine as long as the economy reassures us that it's in good shape." (16:08)

3. Momentum Trades and Bitcoin Discussion

A. Bitcoin's Performance and Trading Strategy

Bitcoin's volatility is addressed, with Bill Baruch describing it as "the safest trade that I see on the board now." He cites speculative momentum and potential regulatory support as key drivers:

"The momentum will continue into next year with Paul Akers coming on as SEC chair and with the President who we know has some self personality." (12:22)

Joe Terranova adds his bullish stance:

"As long as we hold out above there, the momentum in my mind is very strong. And then that's bitcoin futures right around 100,000." (13:59)

B. Expert Opinions on Cryptocurrencies

The experts express mixed views on Bitcoin, balancing its speculative nature with its potential for momentum-driven gains. Baruch remains confident in its upward trajectory due to favorable regulatory developments and presidential support.

4. Investment Committee's Report Cards

Scott Wapner introduces the segment where committee members grade their investment picks. Highlights include:

A. Best Performers:

• Interactive Brokers (Jyoti ETF):
  Steve Weiss praises its diversification and product offerings:

  "It offers you everything you need." (37:56)

• Arista Networks:
  Recognized for its cloud networking success and alignment with the AI trend:

  "Revenues growing near 20% over the coming quarters." (38:01)

• Oracle and Wabtech:
  Both have shown significant gains, with Wabtech up 56% due to its technology-based locomotives and freight solutions.

B. Worst Performers:

• Dr Horton and Amgen:
  These stocks faced challenges due to underwhelming earnings and sector slippage.

  "This space in health care has slipped." (41:34)

• Vertiv, Taiwan Semiconductor, and GXO:
  Issues ranged from growth concerns to competitive pressures, leading to substantial declines.

5. Emerging Markets: Focus on India ETF

A significant portion of the episode is dedicated to the robust performance and potential of India's emerging market, with Steve Weiss and Joe Terranova discussing its growth drivers.

A. India's Growth Story

Kevin Carter, founder and CIO of E M CUC Global, explains why India is an attractive investment:

"India is the biggest population, it's the youngest population, the fastest growing, and that's driving consumption." (34:05)

B. Digital Infrastructure and Technology Focus

The panel highlights India's advanced digital infrastructure, such as the "India stack," which facilitates rapid digital transactions and identification:

"800 million people have opened their first bank account in a matter of minutes just with their fingers and looking into a camera." (35:08)

C. E-commerce as a Growth Sector

Focusing on e-commerce, which has been the fastest-growing sector in emerging markets, the discussion draws parallels with China's Alibaba and Tencent:

"We're going to see the same thing in India." (36:17)

6. Headlines and Other News

A. First Severe Case of Bird Flu in the US

Joe Terranova reports the CDC has confirmed the first severe case of bird flu in the US, linking it to exposure to backyard flocks. The patient is hospitalized in Louisiana. (31:05)

B. Herschel Walker as Ambassador to the Bahamas

President-Elect Donald Trump has nominated former football player Herschel Walker as the US ambassador to the Bahamas, pending Senate confirmation. (31:05)

C. Ten Commandments Tablet Sold at Sotheby's

A 1,500-year-old marble tablet inscribed with the Ten Commandments was sold for over $5 million at Sotheby's, significantly exceeding its presale estimate. (31:05)

7. Final Trades and Closing Thoughts

As the episode wraps up, the panel discusses final trade ideas and anticipates upcoming earnings reports that could influence market movements.

A. Tesla's Momentum

Joe Terranova advocates for buying pullbacks in Tesla, which has nearly doubled this year:

"We've owned. This is really one of our top second half of the year plays and really leaning into it." (25:15)

B. Regional Banks and Regulatory Relief

Steve Weiss highlights Citizens Financial as a strong performer among regional banks, expecting significant regulatory relief in 2025 to drive growth:

"The other tailwind that's being presented for 2025 is that credit conditions are going to continue to improve." (28:54)

C. Exxon Mobil and Cheniere LNG

Bill Baruch points to Cheniere LNG for its regulatory tailwinds and bullish demand structure, recommending it as a favorable energy play. (46:28)

D. Fed Day Anticipation

The panel anticipates Fed Chair Jerome Powell’s news conference, expecting his insights to provide further direction for the markets:

"We are going to be listening to Fed Chair Powell during his news conference..." (46:45)

Conclusion

The December 18, 2024 episode of "Halftime Report" provides an in-depth analysis of Nvidia's remarkable stock recovery, strategic portfolio adjustments, and the broader market implications of upcoming Federal Reserve decisions. The discussion underscores the importance of momentum trading, the promising outlook for emerging markets like India, and the nuanced performance of various sectors and stocks within the investment committee's portfolio. Listeners gain valuable insights into navigating a complex market landscape, balancing speculative opportunities with strategic management.

Notable Quotes:

• Joe Terranova (02:16): "It's really portfolio management here. It triggered that sell and ultimately with the move in Broadcom that we've had, we own more chips than we did say a week ago."
• Bill Baruch (07:30): "Let’s also not forget the software to run these GPUs is really the moat that Nvidia also has."
• Shannon Sokotia (15:54): "If they come out more dovish, that actually could really be a catalyst as we move into January for some of this broadening out to accelerate."
• Steve Weiss (37:56): "It offers you everything you need."

For those interested in the latest market trends and investment strategies, the "Halftime Report" provides comprehensive coverage and expert analysis to inform and guide investment decisions.