← Halftime Report
Halftime Report
Positioning Your Portfolio for 2026 12/31/25
00:43:23
Frank Holland and the Investment Committee debate the key themes of 2026 and how to position your portfolio for the new year. Plus, the desk give you their top stock picks for 2026. And later, the Committee debate the latest Calls of the Day.I nvestment Committee Disclosures
Loading summary
Transcript145 lines
- [00:01]
Frank Holland
Introducing Fidelity Trader plus, the next generation.
- [00:04]
Joe Terranova
Of advanced trading from Fidelity.
- [00:06]
Jim Leventhal
Customize your tools and charts and access them seamlessly across desktop, web and mobile.
- [00:11]
Frank Holland
For faster trades anywhere you go, try the all new Fidelity Trader Plus. Learn more about our most powerful trading platform yet@fidelity.com TraderPlus.
- [00:23]
Jim Leventhal
Investing involves risk, including risk of loss.
- [00:25]
Frank Holland
Fidelity Brokerage Services, llc Member NYSE SIPC.
- [00:30]
Leslie Picker
What made you confident that you could do something that hadn't been done before? I have no fear of failure.
- [00:37]
Julia Boorstin
Trailblazing women, changing the game One of.
- [00:39]
Courtney Reagan
My favorite pieces of advice, think about what your boss's boss needs.
- [00:44]
Leslie Picker
Leadership can look in many, many different forms. It really does come down to just trusting yourself. Life is short and you just gotta think big to accomplish big things.
- [00:53]
Julia Boorstin
Julia Boorstin hosts CNBC Changemakers and Power Players. New episodes every Tuesday, wherever you get your podcasts.
- [01:01]
Frank Holland
I'm Scott Wapner and you're listening to.
- [01:03]
Joe Terranova
CNBC's Halftime Report, the podcast the most.
- [01:06]
Frank Holland
Profitable hour of the trading day.
- [01:09]
Joe Terranova
We record this live weekdays at 12 Eastern. Listen in.
- [01:15]
Frank Holland
Welcome to the Halftime Report. I'm Frank Holland in for Scott Wapner front and center at this hour. The final trading day of 2025 with stocks looking to lock in their third year of double digit gains. But is the recent price action a worrying sign for the bulls? We'll debate that and much more with the investment committee right here at the desk. We got Joe Tar Nova, Steve Weiss and Jim Leventhal. Before we get this started, a very quick check of the markets. You can see right across the board. The Dow's down more than 120 points, the S and pulling back a quarter of a percent. Similar story for the Nasdaq, the Russell down just about a third of 1%. I think. Really, Joe, that's where we got to start. I mean, the recent price action. We're on pace for four straight days of being in the red on the S and P going into the new year. How meaning for these days, how meaningful, the last two weeks, two holiday shortened weeks, or should we look at a longer period of time? Like I'm looking at the month to date, believe it or not, comm services in the red, it's actually pulled back over the last month about 3/4 of 1%. Even though it's the best performing sector this year. What should we be looking at when it comes to a trend going into the new year?
- [02:11]
Joe Terranova
I think you have to look at the quarter and its totality because a lot has happened in this quarter to raise the awareness of the investor to say to themselves, okay, valuation matters, portfolio allocation matters, my risk matters. So I think in this quarter there's been a very clear pivot, a pivot away from. From what was the leadership in 2025. Momentum names, high beta names, more towards a defensive positioning. And I don't think that defensive positioning means that it's preparing for a significant market decline. I just think it's preparing for. It gets a lot harder. We saw in the quarter the reemergence of health care once again, offense and defense. We saw in the quarter working off some of this extreme bullishness as it relates to position and sentiment in AI in the air, adjacent name. So I think if your awareness is not elevated at the end of the quarter by what has gone on here, I think that's a foolish mistake. I think you have to carry into 2026. The awareness would be very judicious in terms of where you're actually allocating, because I think it's a little bit of a different environment from where we started. 25.
- [03:29]
Frank Holland
All right, Steve Wise, coming over to you. What are you using your awareness on? What are you looking at going into the new year? Are you looking at some of the weakness in recent days? The fact that we're not going to. It looks like we're not going to get that Santa Claus rally for the first time three years in a row. Are you looking at something else? I mean, what are you paying attention to? Look, I mean, the.
- [03:47]
Steve Weiss
What we've typically seen like Santa Claus rallies, etc. Everybody's wise to that game. So everybody continues to position earlier and earlier as a result. It just doesn't happen. What I take from the last few days of trading is absolutely nothing. Zero. There's no volume.
- [04:02]
Joe Terranova
It's meaningless.
- [04:04]
Steve Weiss
There's no information coming out. You inquire periods and all that. So it means nothing now as you go into early January. I always have concerns going to early January because retail investors in particular, but also some institutions that do have consequences, consequences to their portfolio management wait until then so they can delay the tax bill, particularly retail, for another year, forgetting about estimated tax. So that's a concern. Initially, I think the dialogue, the narrative about AI, is it overvalued, Is it undervalued or is it a bubble? Not. That's going to continue for. For quite some time. However, I believe that those stocks, not all, but the ones that make money and primarily the public market ones, not the private market, are actually in pretty decent shape with some. And I'm talking about the mega cap. I Don't think the valuations there are excessive. And if you take a look at the numbers, if you take a look their business models and you take a look that they will be the biggest beneficiaries of AI, then I think they're in good shape. And this low we've had in performance there will once again move to the upside. So. So I'm pretty sanguine again about next year, if I had to guess about next year. And I guess part of that's my job in terms of positioning. I'm optimistic about next year because rates are coming down, will, will lap the tariffs, even though we only saw the impact tariffs in the last quarter. So, and we'll be come with some will become somewhat more immune to the craziness that's going on in Washington, which will still be deadlocked for the next three years unless we get something done, you know, in midterms.
- [05:41]
Frank Holland
Okay, Jim, coming over to you. Are we sure we're going to get more rate cuts? I mean, the Fed minutes seem to put that in some question. The Fed even more divided than we thought it was. That quarter point cut a lot closer than we probably thought it was then. Today we got somebody like, like Mark Zandi coming on and saying he sees three cuts coming up this year. So it seems like the sentiment around the Fed is varied. And then there's been people on this desk who've said we don't even need those rate cuts. Where do you stand when it comes.
- [06:03]
Jim Leventhal
I seriously hope we don't get three rate cuts. I mean, if we get three rate cuts is because things are not going well. Look, we're going into the new year with whatever the markets are doing. And I will admit it has a sour feeling to it. Steve's probably right that this has no meaning in as light a trading week as this has been. But whatever January may bring in the markets, we're likely to have a good year in the markets because the economy is quite strong. You know, whether it's the 4.3% reading for the third quarter GDP or the 3% that's predicted right now or, you know, signs that the labor market is okay. Look at initial weekly jobless claims and continuing claims for that matter today there are reasons to think that the economy is going to have a few very good year next year and with that, the markets as well. As far as the Fed goes, look, who knows? It's not just that they need to be data dependent, it's that there are very strong political winds blowing and we don't know who the new Fed chair is going to be. Even more importantly than that, we don't know if the Supreme Court is going to allow President Trump to fire Lisa Cook. And if that is allowed, I think we can feel pretty assured that he will fire other people unless they kowtow to his desire for more rate cuts. But at the end of the day, just speaking as an economist, this is not an economy that needs rate cuts. And I think we should hold those rate cuts in abeyance until that time that we actually need them, which I don't think is in the coming year.
- [07:25]
Joe Terranova
Jimmy just took himself out of contention for Fed chair. There's no way wants that job.
- [07:30]
Jim Leventhal
I mean, really wants that.
- [07:32]
Steve Weiss
I would take it the two guys.
- [07:33]
Frank Holland
Named Kevin, I believe. But with that question, Joe, coming back over to you, I think you guys made some really good points. The fact that Santa Claus rally may not be happening because people just position earlier. They know the trend, they know the historics. And also what you were saying is that people moved away from the year to date winners in this last month of the year. So with that, where do you position going into the new year? For example, Jefferies raised its its rating on materials and discretionary from underweight up to market weight. I'm looking at the charts right here. Materials up two and a half percent in December, discretionary up over 1%. Is that the wave that you want to ride into 2026?
- [08:06]
Joe Terranova
It's interesting because as Steve was speaking, I heard him say he's optimistic about 26. And I think the three of us colle conservatively, you could define our position as being optimistic about 26. But I think speaking for Steve, he probably wants to add a word to that, which would be cautiously, always cautiously. And I think we all are very cautiously optimistic going into 26 because it does get harder. It just does. You're not going to have the tailwind of not just the Federal Reserve's monetary support, but global monetary support. I don't think you see the type of policy action you saw universally in a globally coordinated effort in 2025. It gets a little bit harder because you don't have the benefit of earnings growth being as strong as it was in the prior four quarters. Now the expectation is that you're going to get double digit earnings growth. So you already have a very high bar that you have to exceed as it relates to that earnings growth. So I think when you look at the 2016, you say yourself, okay, where do you want to be? I think early in the year, the Market is going to reveal exactly what the roadmap for 26 is going to be. And I would be surprised if it's much different than what we saw in the fourth quarter. So I would be very surprised if we make a return in 26 to what we saw in the first nine months of 26, where it was a momentum market, where it was high beta.
- [09:33]
Steve Weiss
Joe.
- [09:33]
Joe Terranova
25, where it was a momentum or a high beta market. I just don't see that.
- [09:37]
Frank Holland
Can I ask you a specific question, though? I mentioned materials and discretionary on purpose. You have two big winners in that space. Carvana and Newmont. Is there a change here that would make you want to get out of these that you see? I mean, obviously Newmont's very closely tied to the gold trade. Carvana, the ability of consumers to spend. I mean, are these two names that you're saying, hey, they had a great year last year. I want to get out of these and move into some. Up to something else.
- [10:00]
Joe Terranova
I think, I think again, I use that word, cautious. I think these are two great examples of why you have to be cautious. They've been really strong so far. I mentioned on, on Monday because of the elevated volatility we're seeing in the precious metals market, the increase in margins that I rang the register on the gld. That doesn't mean that my bias towards the precious metals has changed. I think precious metals over the next couple of years, you want to maintain a bullish bias, but I don't like the type of elevated volatility. I don't like the price action we saw on Sunday where it basically goes parabolic. And Carvana is another example of a stock that is growing into. It's maturing into what the expectation was for this company to be. But you can't ignore the fact that it has had a rapid acceleration. Acceleration. It is a company that from the perspective of valuation is a little bit rich. And I think you just have to temper your expectations. I think it's temper your expectation on basically most of these high beta plays, momentum plays, that really works well in 20.
- [11:04]
Steve Weiss
It's so interesting, Frank, and which I find amusing to some extent. I'm not saying that's the case here, but when you go from a New Year from December 31, 2025 to January 1, 2026 with first trading day, the. The narrative sometimes begins like it's a fresh start. Well, guess what? It's not. All that's changed is the calendar. Right. The same themes are at play. The same, the same headwinds. The same tailwinds, everything still there. So it's not a wholesale. Let me get rid of all my position, let me rethink of everything. It is a time of reflection, that period between. But there's. And people are reflecting fresh because people smarter than us are laying on a beach somewhere or skiing the slopes. But other than that everything's still in place. So there's no reason for me to change what I believe.
- [11:54]
Frank Holland
What happened Other change hasn't the sentiment change is that what we're talking about.
- [11:59]
Steve Weiss
Doesn'T change when the. When the opening bell rings on the first day of trading in the new year.
- [12:04]
Frank Holland
But it's changed gradually the last few weeks.
- [12:06]
Steve Weiss
But the calculation has nothing to do with it. The calendar has nothing to do with it. That's the trend that's been going on.
- [12:12]
Frank Holland
So in all fairness, these last two weeks we had lower volume has been two holiday shortened weeks. The sentiment has changed. If the volume goes back to normal on the first trading day, January 2nd, potentially you're wrong.
- [12:23]
Steve Weiss
Sentiment is not driven volume.
- [12:25]
Frank Holland
No changes are driven by the sentiments change. But then the volume comes back. Doesn't that mean something's changed in the markets?
- [12:30]
Steve Weiss
What does it mean? I'll ask you, what does it mean?
- [12:33]
Frank Holland
It means that people are going to pick different winners. We're looking at health care having a great Q4.
- [12:36]
Steve Weiss
The health care. Health care. Right. It's added but has nothing to do with January or 2026.
- [12:43]
Joe Terranova
But stretch the calendar back further and you would have to acknowledge there has been a change in the fourth quarter in the personality of the market.
- [12:52]
Steve Weiss
But the change would. My point is that you're tethering these moves to the calendar to what day of the week it is, what month it is. My point is yes, there are some seasonal aspects in the market, but those aren't informing what's happening with the market. That's a sideshow. Whatever day, the week it is, it's a sideshow. Whatever month is a sideshow. What are the fundamentals? What is monetary policy? What are we doing in Washington, if anything, what's happening overseas? Those are always at play. They don't all of a sudden reset for January 1st. That'd be ridiculous.
- [13:25]
Frank Holland
I don't think we're that far apart what we're all saying and I think your point is that people use this time to reflect. When you look back the last couple of weeks. Oh man. Silence.
- [13:32]
Jim Leventhal
Change.
- [13:32]
Frank Holland
Maybe I need to reposition.
- [13:34]
Steve Weiss
Couldn't investors reflect every single day on their portfolio on themes that they have. Is this still Valid. Now I'm exaggerating a little bit every single day, but I'm not far off.
- [13:45]
Jim Leventhal
I'm with Steve on this. I mean, I think, look, so then.
- [13:47]
Frank Holland
Wait, Jim, for you said if you're with Steve, you have two big winners of materials as well. You got Cleveland Cliffs and you got crh.
- [13:53]
Steve Kobach
Yeah.
- [13:53]
Frank Holland
Both up over 35% year to date. Some things are changing and it's not just the calendar. Some things are changing in the new year. A lot of people think capex spending is going to increase, onshore is going to increase. Does that change your view of a CRH or a Cleveland Cliffs?
- [14:05]
Jim Leventhal
So it makes me more enthusiastic about holding both of them if we're going to be building things as I believe we are. But I mean, I think the point that Steve is making, and maybe I'm paraphrasing you wrong, Steve, you can come in and tell me, but that, you know, sentiment is a short term phenomenon and if you're a long term investor, you're thinking about fundamentals. You're literally thinking about what are we going to build with steel from Cleveland Cliffs and aggregates gravel from crh. The answer is a lot. Whether it's new manufacturing plants, whether it's infrastructure. By the way, we don't talk about this a lot but there's still a lot of money to be spent from the infrastructure bills from three years ago. So there's going to be a lot of building and that's what matters to me. You know Frank, it's the third day in a row we've been on together. So for the third day in a row I'm going to mention this concept of signal to noise ratio. The signal is what a long term investor is going to focus on. And frankly it's the things you were talking about, Steve. It's things like Supreme Court, court decisions, it's earnings, it's the fundamentals of what drives growth, the noise. And by the way, I'm not poo pooing the noise, but the sentiment is noise. Now if you are a short term trader and you feel you have the skill set to trade around that noise, God bless you, Go do it. Not my skill set, I'm going to tell you. I think very few people have that skill set. That's why I'm a long term investor.
- [15:14]
Steve Weiss
You know the. Here's what I'd say just to put a, put a bow on it. Is that what you were thinking about? Your sentiment on AI is the same today. Likely it's changed, sentiment's change, but Mine is the same today as it was six months ago as it will be January 1st. So I'm not changing anything. Is nothing I'm doing impression in preparation of January 1 or January other than I may, I may sell some calls.
- [15:48]
Frank Holland
Against some position while we're talking energy. A lot of mixed sentiment when it comes to energy sector. Jefferies downgrading energy to underweight, saying the forecast for oil and natural gas are hurting the sector. Meanwhile, Evercore says hedge funds are long energy. That brings us to one of our 2026 picks. Joe, is yours in the energy space? Equity. Why are you so bullish on this name going into the new year?
- [16:07]
Joe Terranova
I've been bullish on this name since 2024 and this is not descriptive of some belief that I think energy is going to be an outperforming sector in 2026. I don't think anyone really ultimately knows that. People that are buying energy right now are seeing the underperformance and the cheap valuation and that's what they're attracted to in terms of the fundamental for energy right now. As Jim and Steve correctly point out, if you focus on fundamentals and you look at the energy sector, you realize that consumption relative to supply, there's an extreme dislocation there to the tune of arguably 2 million barrels per day. So what does equity actually give you in your portfolio? It gives you exposure to a name that has very strong, first and foremost momentum, secondarily strong relative outperformance to the industry itself. Natural gas pricing has been on decline, but there is clearly a resiliency for this corporation in that in the face of declining natural gas prices. And where does the resiliency come? It comes from their ability to generate very strong free cash flow. They've made a series of midstream acquisitions that have worked to their favor. And then being in the Appalachian, they have what I would call prime geographic exposure to really where we see a lot of robust, robust data center demand, in particular for Virginia. And ultimately natural gas is going to be a power generation solution for that data center demand. So I love the way this company is positioned. As I've said, I've owned it since the mid-30s in 2024, and it really hasn't even had the benefit of a rise in natural gas prices. And when you look at how this company is hedged out going into 2026, a rise in natural gas prices would really benefit them because they're largely unhedged in that regard.
- [18:01]
Jim Leventhal
I like, I like your call, Joe. I just want to point out you said natural gas pricing is a little lackluster. Depends on your time frame. Of course you go back to two years ago, natural gas was trading under $2. Now it's a little bit under $4. And that's, I think that's basically what the energy sector has been riding on all year. It's certainly not crude oil which is down whatever it is 20% year to date. Natural gas is strong and it's going to be strong for exactly the reasons you pointed out. Steve, I know you're in Caterpillar or at least I think you're in Caterpillar. There's a great Wall Street Journal article I think yesterday about how CAT is basically building its natural gas fired generators as fast as it possibly can to allow data centers that don't have connections to the electrical grid to power themselves.
- [18:41]
Steve Weiss
There's so much going on with alternative energy. But you know, my view on energy, traditional energy is I haven't changed. It's a very, very difficult sector to make money in. It's very situational that you can, if you put up a ten year chart of, of a Chevron or any of those you can see that's basically flat now. It may not include dividends or not. I don't know what they use for charting but, but I don't even know why you waste the time. I'm not saying on EQ T the idiosyncratic stories that do make sense, that do work out but overall, I mean you can make a lot money, a lot more money elsewhere and save a lot of aggravation. Even the chart of equity, you've got to be willing to tolerate that chart. And if you look at relative, look at that volatility. So I just rather, you know, lose money elsewhere and I'd rather well you know, not be aggravated it pulled the.
- [19:31]
Joe Terranova
Chart back over the last two years of EQ tag it's up and you'll see the resiliency I'm speaking towards. Look, Steve's right. Energy investing is difficult also understand I.
- [19:43]
Jim Leventhal
Also a lot of rigged.
- [19:44]
Steve Weiss
Well I think it's rigged not in the crooked sense but that there are some very large players, some players that only do that and they control the markets. Not, I'm not insinuating that there's cricket or anything illegal. I'm just saying it's rigged by those big players and where they want it to go and the leverage they use in the futures contracts. And then you have the Saudis and all the others. So as a tourist there, you know, it's very Tough.
- [20:09]
Joe Terranova
The commodity space is, is very concentrated in terms of the pool of participation. So in fact that ultimately what you're describing could occur. But there are some in the energy sector, some winning names so far, year to date. ExxonMobil I think is close to a 52 week high. So you don't want to completely disregard it. I know when you speak to a lot of financial advisors what they're saying is okay, we're going to extract the energy from our portfolio because it's only 3% roughly of the S and P. We understand President Trump and his administration want lower energy pricing. And guess what? We are going to place in the portfolio utilities as the alternative to energy because we like where utilities are with the air data center.
- [20:53]
Steve Weiss
And just keep to mind one more point. If you overlay that actually chart against the S and P or Nasdaq, you'll see that go way on the bottom. The underperformance is stark.
- [21:05]
Frank Holland
We keep touching on this data center trader. I want to bring up the news today. Nvidia getting an order for about 16 billion from ByteDance. I think that leads us to one of our next picks in the chip space. Steve Weiss going to come over to you TSMC. This $6 billion order from by dance to in video a pretty exciting thing. I think he has to change some of your sentiment when it comes to Nvidia from earlier this year. Nvidia's had some, some certain volatility as well. And I think people have changed their thought. At first there was seem to be in the middle of the year some thought that the chips might be commoditized and the TPU's came out there might be a rise in competitors. Then you see this.
- [21:36]
Steve Weiss
Yeah.
- [21:36]
Frank Holland
So I want to go to your pick though tsmc. How does this news change shape your view of TSMC and that bit it's ratification.
- [21:44]
Steve Weiss
First of all, I do own Nvidia. It's a much smaller position. Taiwan Semi, which is my largest position. Look, Taiwan Semi, they're agnostic. It could be the new Alphabet chip, it could be a Meta chip, it could be an Amazon chip, it could be innovative chip. It's being made at Taiwan Semi, chances are. And Taiwan Semi, it's not just a manufacturer, it's also a design company. The biggest risk of course is a Chinese invasion. But you know, Alibaba's in China and they're still operating and I own that. So I think Taiwan Semi, it's growing cash flow. EBITDA at 20% revenues, 20% operating income at 20% its EBITDA margins, its EBITDA multiple is about 11, 12 times. Think that versus in video. I'll just guess I'm going to put Nvidia 30 times and it's much more predictable earnings and it doesn't have to worry about the competition. So that's why I like the PE is 20 times. So it's a one peg ratio in this market with the value of those assets. It's ridiculous. So that's why it's my largest position.
- [22:50]
Frank Holland
We've got another pick in the chip space. Jimmy coming over to you. Actually, you previewed this yesterday. You were talking about this company yesterday, shifting away from mobile phones.
- [22:58]
Jim Leventhal
Yeah. Well, it's Qualcomm and I do think that it is still too much regarded as just a cell phone chip manufacturer. They have done a great job diversifying first and foremost into automotive, but Internet of things and both of those aspects of their businesses are growing at 20% year over year. Compound annual growth rate. By the way, that's not just a one year. Hey, flash in the pan. That's what they're actually projecting through the end of this decade. Add on top of that the data center chips that they are now going to be putting into the Humane Project in Saudi Arabia and they look like they're going to be a legitimate player within the data center space. So you're getting this stock well diversified at port 14 times earnings, 2.2% dividend yield, basically no net debt on the balance sheet, which means they can do any of a number of things. Some strategic acquisitions if they want, maybe do an accelerated share repurchase. I just see an asymmetric trade here, likely that it goes higher as opposed to going lower from here.
- [23:55]
Frank Holland
All right, while we're talking about the mobile phone business right now, I want to shift over to Apple. It's been an underperformer within the max seven this year, setting the stage for a pivotal 2026 as its AI strategy comes into focus. Our Steve Kobach joins us now with a good look at what's at stake. Steve?
- [24:09]
Steve Kobach
Yeah, Frank, it was an underperformer, but if you look at the chart since August, we're showing year to date right now that's 9%. But since August, after that deal with President Trump to kind of alleviate some of the worst of the tariffs, it's up about 35% or so. So that's one issue that Apple got through this year. It's the issue that's the big one that happened this year and it's going to bleed into next year. We all know back in the spring they failed to launch that upgrade to Siri. They did a huge executive shift around to kind of get everybody in place to actually make it happen. And now they say it's coming next year. Most people think we should expect to see it in March. And while so many people are talking about this thing that it's going to happen and it's going to be a boost to the stock, we need to talk about how that will play out. And the biggest thing is you got to remember that Apple Intelligence is being given away for free. It's part of your phone when you buy a new iPhone. So not only does this product have to be good and amazing, it has to be so good and so amazing that people with an iPhone 15 or lower have to go out there and get a sense of FOMO to buy the new devices in order to use it. There are, of course, some chances that Apple will change its mind, maybe charge a subscription fee or there are even some talks about individual services like the Fitness plus service, adding some AI juice, so to speak into those services in order to drive subscriptions there. But really it comes down to nailing this chat bot with Siri, making sure it's good and then beyond that, using that to move more iPhones. So I'm curious to see how you guys are thinking about that going forward to. Guys.
- [25:45]
Frank Holland
All right, our Steve go back. Back at CNBC headquarters. Happy New Year. Steve, good to see you very much. Joe, come over to you. You're an Apple shareholder. Just your thought about what Steve had to say. And also, I don't know if you're watching, yesterday we actually had Josh on saying Apple's been winning recently by not playing. That's kind of where that reference some of us were talking about by staying away from the Capex race and staying away out of trying to compete. And that's really where they've kind of gotten an advantage over these last couple of months when it comes to the stock. Steve pointing out since Tim Cook was at the White House, stocks up about 34%.
- [26:13]
Joe Terranova
Yeah, well, that's the Apple playbook. So I agree with Josh's remarks there because in fact, what they do is they say sit back, they look at a product that's brought to market, and then they see if they could ultimately perfect it in some regard in a mannerism which doesn't involve significant capex. Steve is right to point out that in August, the meeting between Tim Cook and President Trump, from that moment in the Oval Office, there was A very clear trade that you were able to take advantage with Apple and participate in nearly a 40% decline. And if you observe right now the Max 7, there's a lot of conversation about the Max 7 and the concentration of the Max 7. I don't think you want to move too far away from the Mag 7 and 26. But when looking at the momentum right now it is Alphabet, it is Apple, and to a lesser extent, more recently, you have some strength in Amazon as well. Those appear to be the three names where you have the strongest momentum. I expect a very good year for Apple in 2026. I think we are going to learn more and more how they are ultimately going to benefit and participate in the Apple intelligence and overall artificial intelligence story. I wouldn't be surprised to see them partner at some point with Alphabet, maybe with Gemini 3. But I think 26 sets up nicely for them for us to get what we've been looking for the last couple years, which is full clarity. And then also realize I think you're going to get the return of, of significant growth in China and that's going to benefit Apple as well.
- [27:41]
Frank Holland
Jimmy, a quick question for you. Steve is pointing out that Siri has to be so good it's going to make you want to upgrade your phone. Do you see that set up coming up for 2026?
- [27:50]
Jim Leventhal
I don't. I don't.
- [27:51]
Frank Holland
Apple Intelligence.
- [27:52]
Jim Leventhal
Excuse me.
- [27:52]
Mike Santoli
Yeah, I.
- [27:53]
Jim Leventhal
Look, why do I own this stock? First off? Because it's in the S&P 500 at about a 7% weight. So if you're not going to own it, you're going to say that relative to the S&P 500. And yes, I am a relative manual. Manual manager that you're going to take one heck of a huge bet that Apple is going to underperform. Now, I am taking a bet that it's going to underperform because I only have about a 4% position in it. I kind of wish I didn't own any of it. You know, you were bringing up a second ago the PEG ratio on Taiwan. Semi. I love PEG ratio. That's my favorite metric for any stock. It tells you if you're paying too much. Apple trades right now about 33 times forward earnings. This is a stock that is projected to grow at 8% earnings per share over the next few years. Now, maybe that goes to 12% if they get AI right, maybe. But still, it's just not priced at a level that I want to be even at market weight for it.
- [28:42]
Frank Holland
All right, we got to Leave the conversation there. Coming up here on Halftime Retail's rough year in the playbook for 2026. Our Courtney Reagan breaks it down for us coming up after the break. Plus, Jim is ready with a move in the retail space. Stay with us. Going to have that trade halftime back in just two minutes.
- [28:57]
Leslie Picker
What made you confident that you could do something that hadn't been done before?
- [29:01]
Courtney Reagan
I have no fear of failure.
- [29:03]
Julia Boorstin
Trailblazing women, changing the game.
- [29:05]
Courtney Reagan
One of my favorite pieces of advice, think about what your boss's boss needs.
- [29:10]
Leslie Picker
Leadership can look in many, many different forms. It really does come down to just trusting yourself. Life is short and you just gotta think big to accomplish big things.
- [29:19]
Julia Boorstin
Julia Boorstin hosts CNBC Changemakers and Pat Players new episodes every Tuesday, wherever you get your podcasts.
- [29:27]
Frank Holland
And welcome back to Halftime. Retail's had a pretty rough year despite a relatively resilient consumer. But what could be in store for the space in 2026? Our Courtney Reagan joins us now with the details. Courtney.
- [29:38]
Courtney Reagan
Hey, Frank. Yes, so the retail ETF, the XRT, it gained 8% this year. That is less than half the growth of the S&P 500. But after that massive sell off in concerns about the impact of the April 2 announced tariffs, the damage honestly could have been much worse. You can see it very obviously in the charts. The retail theme for 2025 in my mind was sort of two headed the Resilience of the US Consumer in the face of economic uncertainty and the ability of retailers to pull every mitigation level possible to blunt the consumer impact of tariffs. Now, consumer prudence did drive some of the bigger retail winners, Dollar General 5 below, both gaining 79% in the year. Dollar Tree up 65%, but TJX up 29% and Wal Mart up about 23% at the premium end. Tapestry grew 96% after its deal to acquire Capri was blocked in late 2024. So the year turned out pretty well for Tapestry. After all, department stores, Kohl's and Macy's stealthily gained 45% and 29% respectively, though UBS doesn't think the department stores will stay in the winner's circle with sell ratings for both of those names into 2026. And they can't all be winners. Target, Lululemon shed 28 and 45% respectively, both now getting new leaders. Target on February 1st. Lululemon, TBD, Wal Mart too. It will see CEO Doug McMillan retire and John Furnor take over on February 1st. Jefferies tells investors it thinks the setup is more constructive and challenges from 2025 are improving, at least for some. So Jefferies has Nike as its top picked on its turnaround and suggests shorting on running while UBS puts on running at the top of its buy list along with Ralph Lauren, tjx, Victoria's Secret, American Eagle and pressured Deckers.
- [31:23]
Frank Holland
Frank, our Courtney Reagan. Courtney, you have a happy new Year. Thank you very much.
- [31:26]
Steve Weiss
Frank, you want to come to me on this? I'm clearly the only one that knows fashion and also the only that's one to put anything in their wardrobe new in the last 30 years.
- [31:35]
Frank Holland
I don't know if that's a fact. I think that might be an opinion wise. But I'm going to go to Jim first. He made a recent buy on on holdings in the retail space. But I'm going to keep everything you said in mind. Well, I'm serious. It's right back here. It's always in the back of my mind. I want you to know that. But Jim, I want to come over to you. You bought some on holding.
- [31:52]
Jim Leventhal
Yeah, well, brand matters in retail. And Steve, you are on brand with that comment. Look, I think that the retail consumer has really withstood a lot that has been thrown at him and her. We had the shutdown which freaked people out. We had tariffs which freaked people out. We had the resumption of student loans and yet the consumer still keeps spending. Now that might tempt one to say, hey, you can throw anything at the retail space and make money. That is hardly going to be the case. You have to pick stocks, as Courtney was pointing out with regards to Lululemon and Target. Let's not forget Saks, by the way, is looking like it's about to go bankrupt. So it's not an easy space to be in. You have to pick the winning brands. And on Brands is clearly a winning brand right now. We saw that in the last earnings report. I think we'll continue to see that in the all important holiday season which they will report in about a month and a half. And look, this is a stock and this is a sector that I'm more likely to rent than to own long term. The instant that that I see bad news on ONS brand, I'm going to get out.
- [32:52]
Frank Holland
All right, there we go on shares pulling back about 1 1/2% right now. All right, time now for the headlines with our Leslie Picker. Leslie, happy New Year.
- [33:00]
Leslie Picker
Hey, Frank, good to see you. California extended commercial driver's licenses to March for about 17,000 immigrant truckers at risk of losing work next week. It comes following a federal review that raised questions about how the state handled expiration dates for noncitizen drivers. U.S. transportation Secretary Sean Duffy said California may lose $160 million if it fails to meet a Jan. 5 deadline to revoke the licenses. A new report says that US regulators collected 61% less in fines for money laundering and sanction breaches in 2025. Total fines imposed for dirty money offenses were just under $1.7 billion, according to the Financial Times. It comes as the Trump administration's watchdogs have taken a more business friendly approach and scaled back investigations. And Caesar's Sportsbooks unveiled its most popular bets of 2025. Baseball dominated the list for the most bet teams, led by the LA Dodgers, NY Yankees and Philadelphia Phillies. But the most profitable teams for the betters were the Philadelphia Eagles, the Ohio State Buckeyes, and the New England Patriots. Something tells me that you're happy to see the Eagles listed in there.
- [34:14]
Frank Holland
I would put my money on the Eagles. I'm not a gambling person, Leslie, but I would put everything on the Eagles to go to the Super Bowl. Once again, I don't gamble, though. Our Leslie Picker. Thank you very much, Leslie. You and your family have a great new year. All right. Coming up next year on halftime, Berkshire's next chapter as Warren Buffett finishes his day as CEO. The committee's take right after this break.
- [34:33]
Leslie Picker
What made you confident that you could do something that hadn't been done before?
- [34:37]
Courtney Reagan
I have no fear of failure.
- [34:39]
Julia Boorstin
Trailblazing women, changing the game.
- [34:41]
Courtney Reagan
One of my favorite pieces of advice, think about what your boss's boss needs.
- [34:46]
Leslie Picker
Leadership can look in many, many different forms. It really does come down to just trusting yourself. Life is short and you just gotta think big to accomplish big things.
- [34:55]
Julia Boorstin
Julia Boorstin hosts CNBC Changemaker and Power Players. New episodes every Tuesday, wherever you get your podcasts.
- [35:03]
Frank Holland
All right, welcome back to halftime. We are coming up on the end of an era. Warren Buffett stepping down as the Berkshire Hathaway CEO after today. Jim, going to come over to you. You are a Berkshire shareholder. Your thoughts about this era ending, very important stat to bring up right here. Since Warren Buffett took over as CEO, stocks up 5.5 million percent.
- [35:22]
Jim Leventhal
And what a great investor. What a great human being. And he, you know, his main claim to fame as far as I'm concerned, is using common sense when making deals. Now, having said all that, the ERA comes to an end. We've got to decide what to do next. I don't think that the new Managers as able as Greg Abel is, I'm not trying to make a pun there, and Ted Wexler, I think they'll do a fabulous job. There's no way they can live up to Buffett and Munger. But when I look at the stock, what I see is that you've got a lot of cash with which to maybe make some interesting acquisitions and probably more importantly the operating business. Businesses trade at a mid teens multiple of earnings. And these are real companies. These are railroads and oil companies and lubrication companies and aerospace companies. So I'm willing to own the companies that underlined Berkshire Hathaway at that valuation.
- [36:10]
Joe Terranova
I think you have to give tremendous credit to the work that has been done, done by Warren Buffett in his team so far this year. And I say that because he's setting the team up for the future with flexibility, position flexibility, managerial flexibility. They have over what, $300 billion in cash. They have no concentration risk and they have the optionality. If in fact the market is volatile as we expect next year, if in fact, at some point in the next 12, 24, 36 months, you have a significant market decline, they're in a really good position.
- [36:46]
Steve Weiss
This is slightly better at this point than a true show me stock.
- [36:51]
Frank Holland
Really?
- [36:51]
Steve Weiss
Yeah, I believe so. I mean, you've got legacy businesses, you point out, but you've not only lost Buffett here, Munger, you lost, you know, a couple of years ago. So, so it's most, it's the most significant change you could possibly have with a company where people didn't even know anything about Berkshire other than Warren Buffett. So now you have to work.
- [37:13]
Frank Holland
Can you separate the operations from the stock? The idea of the Buffett premiums off the stock, at least for now, you're looking, since the announcement, it's down about 6%.
- [37:21]
Steve Weiss
Right. So I think, I think it's a real question, what would I rather own? I'd probably rather own a combination of the S and P and Nasdaq.
- [37:28]
Frank Holland
All right, got the conversation there last day as Warren Buffett is the CEO, that shares of Berkshire, they're up just about a quarter of 1%. Coming up next here on Halftime. Mike Santoli joins us with his midday word. We're back right after this. Stay with us. And we are back on halftime, Senior markets commentator Mike Santoli joining us with his midday word. The day after your mystery broker was revealed. It was an exciting moment. I think the big headline is a bull market goes for two more years.
- [37:54]
Mike Santoli
No, no, the headline is it ends within two years. And maybe then we have a dark age. Okay, so the point is not like hey, happy days for two more years. It's, it's much more about in his view of course, which is very much contestable, that the secular bull market, this long running phase we've been in since 2009 or so, is kind of in its ladder throws now. That latter could be within the next couple of years, as he said. And it's mostly a, about the starting point of valuations and also the trailing returns. The market for long periods of time, for centuries has sort of alternated periods of excessive superior returns with subpar ones, at least in real terms. We don't know if this is going to. I don't think there's magic to the 16, 17 year cycle, whatever he's talking about, but I do think that within that context he repeatedly said for next year. He seems sees no real reckoning on the horizon because a lot of the ingredients aren't there in terms of financial conditions tightening in a noticeable way. And of course he does really believe that the transformative powers of the AI revolution are going to create genuine economic benefits, just like every one of these cycles does. But we may have front loaded the investment benefits of a lot of that.
- [39:13]
Frank Holland
So we better enjoy these next two years, possible dark ages at after that. I want to switch gears with you. The last day of the Buffett era. You've gone to so many of these meetings. Your thoughts on this being Warren Buffett's last. The tremendous stock appreciation during his tenure.
- [39:27]
Mike Santoli
5.5 million percent, I mean obviously will never be replicated. I do believe he was shrewd enough to recognize one of the signature insights he had was that that the market systematic underappreciated the enduring power of certain brands. And you should pay a premium for these great things. Beyond that, I think as an assembler of great operating businesses, he's underappreciated. I think he's kind of people skewed toward believing as a portfolio manager he has racked up all those gains. But I also think that the conglomerates, the only conglomerate that's really working anymore and I do think can be improved upon under, under subsequent management. I also think it's appropriate that he hasn't really done much this year actively in terms of putting money to work because he's willing to let these opportunities pass by when they don't meet his standards.
- [40:18]
Joe Terranova
And doesn't that work in terms of setting the future up well for his successors? The 300 plus billion, no concentration. I think we're kind of not really paying enough attention to how well they are set up.
- [40:32]
Mike Santoli
Tremendous amount of optionality is being served up to this new incoming management within the form of the cash. Now there's going to be pressure too. I do wonder if investors are going to be like hey shareholder return. You know there's no dividend on this stock. He doesn't buy back stock unless he thinks the stock looks cheap. Maybe there'll be a little more a change in the, in the, in the corporate finance philosophy behind Berkshire as well.
- [40:55]
Frank Holland
All right, Berkshire is higher today on again Warren Buffett's last day as CEO. Coming up next on Halftime, our top calls of the day and some of the year's top performers. Halftime's back right after this. And we are back on half with our calls today. BTIG maintaining their buy rating on FTAI Aviation. The stocks hitting a record high today. Weiss, this is one of yours.
- [41:15]
Steve Weiss
It is and it was good news again. This is in the energy for data centers and others company has done just a great job over the last year. I got involved long time ago when they were able to secure two and a half billion dollar credit line which of course leverages their leasing capability. So I'm staying there. My Target had been 200 but with the news today I've got to revisit it.
- [41:38]
Frank Holland
All right, year to date up almost 38% we're going to move on Twilio. Its price target raised to 185 its citizens. Joe, you own this one person.
- [41:45]
Joe Terranova
I love it when the market goes up and you get the analyst community the chases price. That's just something that's very value. Yeah a lot of consistent over the last several years. But there is a turnaround here that is unfolding for this software company. You're seeing the margin expansion, you're seeing the double digit revenue growth. I would also pay attention when the calendar turns into 2026 you will see a little bit of a mean reversion between semis and software. See if that actually unfolds. You have the early stages it of it with some names like Twilio, like Adobe, like Salesforce.
- [42:18]
Frank Holland
All right, moving on. Going to the farmer on this one. He doesn't want to do it but he's going to do it for Citi. It's price Target raised to 130 at Piper Sandler. Jim, you own this one. I know you don't like to talk about Citi. You never mention it on the show. It's a, it's a quiet for you.
- [42:31]
Steve Weiss
Never.
- [42:32]
Jim Leventhal
Okay. Okay. Today is sarcasm day. I get it, I get it. But look, it's been a good year for Citi. It's long overdue. And even after being up, I think it's about 70% year to date, this still is a stock that amongst its peers is far and away the cheapest, whether you look at it at an earnings multiple price to tangible book value dividend yield. Now, to be fair, there is a reason why it has been cheaper. Its profitability has been less. However, Jane Fraser and her team have done an excellent job of increasing that profitability steadily over the last three and a half years. That should continue in 2026 and as it does, that discount should continue to discover disappear. So I do agree with the call.
- [43:09]
Joe Terranova
Do you get excited about the PEG ratio for Citi like you do about.
- [43:12]
Steve Weiss
When he's getting excited about everything today?
- [43:15]
Jim Leventhal
Listen, I'm going to. This is a hill I will die on. PEG ratio is the most important metric you can use.
- [43:20]
Steve Weiss
The guy lives on a farm.
- [43:22]
Frank Holland
We got one more call. This one's in the Jew T. Robinhood. Price target actually trimmed at Goldman. It's one of the top 5s and P stocks this year pulling back about a half a percent. But you see the big set of moves year to date, up over 200%.
- [43:34]
Joe Terranova
Company is mature for sure. They've added a lot of intellectual capital, but they can't break away from the correlation that they have with cryptocurrencies and bitcoin. Let's see how that trades in the first quarter.
- [43:45]
Frank Holland
All right, Robinhood, pulling back about a half a percent. Final trades, they're coming up on halftime. Last final trades of 2025. We'll be right back. Welcome back to halftime. We got final trades. Jim, you were up first.
- [43:56]
Jim Leventhal
Adobe, you know, it's had a terrible year, actually a terrible couple of years. But the earnings continue to come in better than expected. And I do think that the stock is starting to respond. The fact that it didn't get crushed in December on tax loss harvesting is evidence of that.
- [44:09]
Frank Holland
Why is she foreshadowed this one?
- [44:10]
Steve Weiss
Yeah. First of all, to my friend Jeff Kaplan. Keep it to yourself. I'm wearing this jacket again. My final trade is Baba. Look, I bought it at the wrong time, but I still think it's a great story. Very undervalued. Do well next year, Joe.
- [44:24]
Joe Terranova
Final trade is Goldman Sachs. I own a witch. All our viewers, health and happiness in 2026.
- [44:29]
Frank Holland
Yeah, absolutely. Number one, happy new year to three of you. It's been a pleasure to be here with you. Guys all year long to the audience. You have a great new year. That's going to do it for us on Halftime.
- [44:38]
Joe Terranova
You've been listening to CNBC's Halftime Report, the podcast.
- [44:42]
Frank Holland
You can always catch us live weekdays.
- [44:45]
Joe Terranova
At 12 Eastern only on CNBC.
- [44:50]
Julia Boorstin
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 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 halftime reportdisclaimer what made.
- [45:25]
Leslie Picker
You confident that you could do something that hadn't been done before?
- [45:28]
Courtney Reagan
I have no fear of failure.
- [45:30]
Julia Boorstin
Trailblazing women, Changing the game One of.
- [45:33]
Courtney Reagan
My favorite pieces of advice Think about what your boss's boss needs.
- [45:38]
Leslie Picker
Leadership can look in many, many different forms. It really does come down to just trusting yourself. Life is short and you just gotta think big to accomplish big things.
- [45:46]
Julia Boorstin
Julia Boorstin hosts CNBC Changemakers and Power Players New episodes every Tuesday. Wherever you get your podcasts.