Post-Fed Portfolio Moves 12/19/24

Summary

Podcast Summary: Halftime Report – Post-Fed Portfolio Moves (12/19/24)

Introduction

On the December 19, 2024, episode of Halftime Report, CNBC's Scott Wapner hosts a comprehensive discussion with top investors—including Josh Brown, Liz Young, Thomas, Steve Weiss, and Jim Labenthal—to analyze the market's reaction following the Federal Reserve's latest policy decisions. The conversation delves into portfolio adjustments, sector-specific movements, and strategic investment insights in the wake of the Fed's announcements.

Market Reaction to Fed Decisions

Scott Wapner opens the discussion by addressing the market's subdued rebound after a significant sell-off post-Fed meeting. Despite being technically "green," the bounce was weak, prompting the host to question whether investors are hesitant to "buy the dip."

• Jim Labenthal emphasizes the opportunity in buying dips, stating, “[00:03:12]... If the worst case scenario is the labor market is too strong for the Fed to be able to deliver on three cuts, ... you have no real problems right now.”

• Josh Brown probes into the confidence of purchasing dips, to which Labenthal responds confidently about being fully invested and vigilant for advantageous setups.

Sector-Specific Discussions

The conversation shifts to specific sectors affected by the Fed's policies and broader economic indicators.

• Liz Young discusses the small-cap sector's resilience, highlighting that “interest rates are coming down on the short end” and asserting, “[00:05:36]... When you have two steps forward, one step back, ... it makes progress.”

• Jim Labenthal concurs but cautions about potential further downside due to overleveraged positions and forced redemptions, although he maintains a positive outlook on strong-performing stocks not being significantly impacted.

Stock-Specific Analyses

The panel delves into individual stocks and industries experiencing notable movements.

1. Health Care Stocks: UnitedHealth and CVS

   • Jim Labenthal points out resilience in health care stocks, noting their modest gains despite broader market turmoil and asserts these are "the hardest names to sell."

2. Technology and Cybersecurity: Micron and CrowdStrike

   • Jim Labenthal critiques Micron's disappointing performance despite marginal earnings beats, attributing declines to poor guidance: “[00:22:43]... guidance was terrible.”
   • Josh Brown highlights cybersecurity stocks like CrowdStrike facing downturns, while Thomas advocates for continued investment in the sector, emphasizing its long-term potential.

3. Mega Caps: Amazon, Alphabet, Apple

   • Josh Brown identifies these as potential buying opportunities due to recent dips, though Thomas remains skeptical, suggesting better entry points might be forthcoming.

4. Housing Sector: Lennar

   • Steve Weiss expresses concern over persistently high mortgage rates affecting housing market activity, warning that slowed construction could signal broader economic impacts: “[00:32:12]... what happens is construction unemployment falls...”

Investment Strategies and Portfolio Adjustments

The panelists discuss strategies to navigate the current market landscape.

• Josh Brown references Jeffrey Gundlach's approach of holding 30% in cash to capitalize on volatility: “[00:07:00]... 30% in cash right now because you're not giving up much yield versus other assets...”

• Steve Weiss underscores the transition into a new phase of the bull market, suggesting that significant growth from traditional sectors may taper, necessitating diversification.

• Liz Young advocates for a data-dependent investment strategy, aligning with the Fed's cautious stance on inflation and interest rates.

Notable Quotes

• Jim Labenthal on buying dips: “[00:02:07]... the sky is falling. Absolutely not.”

• Liz Young on small-cap fundamentals: “[00:05:36]... look at the chart over the last year. It goes up and down and up and down and it makes progress.”

• Josh Brown on portfolio strategy: “[00:07:00]... I would own U.S. stocks.”

• Steve Weiss on market phases: “[00:08:03]... entering perhaps the third year of a bull market...”

Closing Remarks

As the episode winds down, the panel touches on upcoming economic indicators and potential shifts in federal policies. They emphasize the importance of staying informed and adaptable in a fluctuating market environment.

• Jim Labenthal highlights the cyclical nature of tech stocks, using Micron as a cautionary example of sector-specific risks.

• Thomas and Liz Young discuss the implications of political influences on market sectors, particularly health insurance and real estate.

Scott Wapner concludes the episode by reiterating the importance of strategic portfolio management in response to the Fed's moves, encouraging listeners to stay engaged with market developments to optimize their investment decisions.

Conclusion

The December 19, 2024, episode of Halftime Report provides listeners with valuable insights into the post-Fed market landscape. Through in-depth analysis of sector-specific impacts, individual stock performances, and strategic investment approaches, the panel equips investors with the knowledge to navigate potential volatility and identify opportunities in a shifting economic environment.

Notable Resources Mentioned:

• Mint Mobile advertisements at the beginning and end of the episode.
• Capella University promotional segments interspersed throughout the transcript.

Disclaimer: All opinions expressed by the participants are their own and do not necessarily reflect those of CNBC or its affiliates.

Transcript

[Ryan Reynolds]

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[Scott Wapner]

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[Josh Brown]

Before investing, consider the funds, investment objectives, risks, charges and expenses. Visit ssga.com for prospectus containing this and other information. Read it carefully. DIA is subject to risks similar to those of stocks. All ETFs are subject to to risk, including possible loss of principal Alps Distributors, Inc. Distributor. 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 repricing the Fed rethinking your portfolio. We will discuss where this market might go from here with the investment committee. Joining me for the hour today, Josh Brown, Liz Young, Thomas, Steve Weiss, Jim Labenthal. We are green across the board, at least trying to get a bounce back from that deep sell off we had yesterday post Fed. Not a great bounce. I mean, it is what it is. It's green, but I wouldn't call it Josh all that strong. BTIG's Jonathan Krinsky today said can't rule out some further downside, but that felt more like the end of a move than the beginning. Ed Yardeni says can't rule out a correction, but I'd be buying up. It's a buying opportunity. Tom Lee, back up the truck. Bottom line, this is a buy the dip moment. Are we a little skittish to do that today?

[Jim Labenthal]

I love to buy the dip when the dip is happening because people are worried that things are too good. And that's exactly what yesterday was about. Oh, no, we don't need three doses of medicine this year. We only need two. If that's the reason why you're puking up the best stocks you own, I really don't know what to tell you. These are the types of dips you buy. And again, that doesn't mean you can rule out more down. Of course, you can never rule out more downside. This could get worse. You could have people that are just too overlevered to the biggest momentum stocks in the market. They have more to sell. You get people with redemptions. They're forced. They have no choice. Any and all of those things should be in the back of your mind, but in the front of your mind should be people yesterday were taking profits. You got stocks that are up 100% this year, that fell 6% yesterday. And we're going to say like, the sky is falling. Absolutely not. And if the worst case scenario is the labor market is too strong for the Fed to be able to deliver on three cuts, like, if that's what you're most worried about, I would say you have no real problems right now.

[Josh Brown]

What. What are you looking to buy then? If you. If this is a buy the dip moment. You just said you should be buying the dip. Are you.

[Jim Labenthal]

I'm fully invested. There's really nothing that I'm out there saying, I wish I own. I need to own. But as always, I'm watching hundreds of stocks, and at all times, I'm waiting for setups and some of the best names in the market. And I would also take advantage of dips in stocks I already own. That maybe I want to add to hasn't happened yet. Yesterday was not a correction. We're down 3%. It's a big move relative to the rest of this year, when the VIX has been pretty much anchored between 12 and 14. We haven't had a correction this year. Yesterday, wasn't it. Maybe it's the start of one, but we really haven't gotten to the point where you could say materially, the best stocks in the market have been affected. What's really getting hurt are the homebuilders. But those stocks have been selling off since September. What really got hit yesterday was the Russell. But those stocks haven't really performed up until recently. They've been dogs all year. The really, really good stocks have not materially come in to the point where you want to say, that's it. I'm planting my flag right here.

[Josh Brown]

I'LL tell you what, Jimmy, I'm going to you because the Russell, the small cap trade looks specious. I mean, it just does not look great. Josh made the point. But if you want to think the most acute places to see a repricing of the Fed in this market. Bingo.

[Liz Young]

Yeah, well, it's been back and forth all year, I do think. I mean, there's been some progress to the extent that the Russell is up on the year, but obviously well below the s and P500. To me, the fundamentals make sense. Josh, what you were just saying about, hey, the economy's strong, that's what the Fed was saying. That should beget top line growth at small. In the small cap sector, you know, interest rates, at least on the short end, are coming down. And I've said for quite some time the issue with interest rates and small caps is not interest expense. It's the issue that perhaps higher interest rates tip us into a recession. I know of no one who's calling for a recession right now and I'm certainly not in an economic growth environment. You should see top line growth occurring at small businesses. You've seen small business CEO optimism tick up. I know this is one heck of a wait, but I do think it's better to be in it than out. And just I'll summarize by saying when you have two steps forward, one steps back, when you have that one step back, it feels like the bottom's dropping out. But just look at the chart over the last year. It goes up and down and up and down and it makes progress. I think it will.

[Jim Labenthal]

You would agree though that that theme requires lower rates. And now you're probably not getting rates to as low as what we had originally thought. And so from that standpoint, throw the homebuilders into that conversation too. It kind of made sense for people to take profits there.

[Liz Young]

Sure. But I don't agree with the thesis. I mean, I agree with what you said, that it makes sense that profits came out yesterday on the presumption of higher rates. And look at the ten year at four and a half percent, which traditionally over the last year has been a trigger point. However, you know, apropos what I just said, these levels. Just think about it, Josh, and you're old enough and I am, and so is everybody on the desk. Four and a half percent is not an absolute level where the economy turns off. We have said many times that it's the path that you're going through. We got to four and a half percent two years ago. This is a level in interest rates that the market, including small caps, these adjusted.

[Josh Brown]

The thing I think we, we need to, Liz, get our, our collective arms around perhaps as an, as an investor group, is what might be a new phase, or I'm using the words a new phase because those are the words that the Fed chair himself used yesterday when describing what the Fed is doing going forward. They've entered a new phase where they're not necessarily only worried about the labor market at this point. Right. They were worried about inflation, then they were worried about the labor market, then the risk seemed to be more balanced. I think that Powell made the point yesterday that maybe the onus has swung back to worrying about inflation because it's been a little bit stubborn is how he characterized it. So as we think about a new phase for the Fed, do we need to think about a new phase for us as investors? I want you to listen to what Jeffrey Gundlach told me yesterday about the right portfolio which reprices the Fed. Listen, I would actually hold about 30% in cash right now because you're not giving up much yield versus other assets that have volatility and risk. I like that bond portfolio that I described, obviously, because that's how I'm managing my money and my clients money. And I would have half of my money in that at about 30% in cash. Cash waiting for volatility to give you better entry points into riskier assets. And then 20% I would own in. In basically at this point, I would own U.S. stocks. All right, Liz, so do we need to think about a new phase for our, our own portfolios as, as viewers?

[Steve Weiss]

Yes, I think we need to think about a new phase, but not just because of what happened yesterday. It's. We're entering perhaps the third year of a bull market, so the chances of us having another 25 to 27% year are slim. And even if we can kick out, let's say 10 to 15% next year on the S and P, it's probably going to come from some other places. So that is a new phase. To Jim's point, he's right. The economy doesn't shut off at 4 1/2% on the 10 year. But I have been a believer that above 4.5% is when stocks start to get worried about it going up for the wrong reasons.

[Josh Brown]

Right.

[Steve Weiss]

We've gotten to four and a half percent because we've been optimistic about growth. We've felt like everything is pretty stable. You get above four and a half percent and people are nervous about inflation reigniting debt becoming a real problem in the U.S. those remain worries. And we're in this in between time where we don't know what's going to happen yet in 2025. So I do think it's a new phase. What I heard Jerome Powell say yesterday was, okay, first of all, yes, it was a hawkish cut, but that should not have been a surprise to anybody. What I heard him say was, we are still pretty confident that we're on the right track, but you're not getting another cut until we make further progress on inflation. I didn't necessarily hear him say inflation is out of control again, but I think the market interpreted it that way.

[Josh Brown]

His, his using the phrasing like the risk on inflation's to the upside. Yeah, I mean, the balance of their battle feels like it's wobbly again, that they have it in the back of their mind that we need to be really cautious at this point.

[Thomas]

Right.

[Josh Brown]

Because we're not exactly sure what the new administration's policies are going to be and if they further reignite what is already sticky, inflation. I don't really want to debate, you know, inflation or the Fed. I want to debate whether whatever happened yesterday means that we need to rethink the kinds of places we're putting our money in the market.

[Thomas]

Yeah. You know, I'd say yes and no. Look, the yesterday was emotional. Right. And just as I've been saying that we've pulled forward some of the impact of Trump's pro business policies yesterday we pulled forward some of the selling from profits because stocks have moved to Josh's point pretty significantly. People wait until January and they woke up in seeing this bargain, they said, hey, you know, maybe I shouldn't wait because who knows where this goes. So the knee jerk reaction in terms of selling quite a bit. However, I describe today's move in the market, the recovery, which is small relative to what happened as, as actually like your wardrobe muted and uninspiring. So that's troubling to me to not see that, that you're not seeing a bigger bounce.

[Josh Brown]

But here's, but whatever I would say would pale in comparison to what I would say.

[Thomas]

Absolutely.

[Josh Brown]

To the look, which speaks for itself. But please. Okay, I digress. Let's talk about the market.

[Thomas]

Yeah. So here, so here's my point. So I think, and you'd have to be, I think, somewhat ignorant not to consider this, that part of the committee's thinking went into what could happen to inflation next year with Trump's policies. I mean, I Can't think of more inflationary statements than he made with let's get rid of the debt ceiling. I mean think about that. You know, think of how inflationary, no have not having a debt ceiling, no regard to your corporate balance sheet which essentially what the US Is corporate balance sheet. So I do think that informs where you go because you cannot go on cycles. And again I'll get chastised for this by Patty, but I did sell Vong. So Vong was my mid cap sort of Russell movement into that sector. I just don't think, you know that that's going to work so well going forward.

[Josh Brown]

Let me do take issue with Jim.

[Thomas]

I think Jim, Yes I do in that because I do think that, that the Russell was like value. Everybody jumped into value and then value and deformed. You know, up to this point. I think you see the same thing for Russell frankly, because you do need lower rates to make Russell work.

[Liz Young]

Let me, let me say this, and it's not just to argue with you, but let me just say this. Inflation might be a problem next year and I was one of the ones saying right after the election that I might get worried about rate hikes coming this year. I have now, with a couple of months behind us, almost a couple of months behind us, thought about this more fully and I've come to where I think most of us are is you got to wait and see. You got to wait and see what the tariff policies are, what they're used for. Are they used for long term changes in behavior or are they short term bargaining chips? And also, and I really can't state this point strongly enough, there are going to be counter effects. A strong dollar is one of them, which frankly may negate the effect of tariffs. Now Steve, it's not that I'm being totally argumentative with you, but what I am saying is we have to wait and see. And this directly informs the answer to the question you're asking, Scott. Do we have to change our outlook? The answer is I'm sorry, it's maybe, but you have to wait and see. One second, just one second. To the extent that we're worried about inflation, let's be like the Fed and be data dependent, that's fine.

[Thomas]

But in order to outperform in a market, you've got to make bets on where you think the puck's going. If you react to where the puck is, you sell down a thousand points. Like yes.

[Josh Brown]

I mean do you need to, do you need to, Josh, think about like Tesla and Broadcom? I just Use those as examples of stocks that have had, have had sort of asymmetric moves. Right. Tesla, undoubtedly since the election, has been a rocket ship, no pun intended, towards Musk and the other businesses he has. Obviously Broadcom was up like 40% in three days. So those stocks rolled hard yesterday. They tried to get a bounce today and they are now red. There are a lot of stocks that you could look at in the same type of basket of Momo names that had a lot that seemed to be sucking a little bit of wind.

[Jim Labenthal]

Look, I think, and I think everyone on the desk will agree with me, anyone that spent any time around trading or trading floors understands sometimes there's no rhyme or reason and you just sell what you can. It's so easy if you, if you have a huge slug of Broadcom and you need to let something go, it's the easiest stock on earth to sell. It just gave you, to Your point, a 40% return in a couple of days. Yeah, I can sell that. I'd rather sell that. It's. It's an easier sale. You don't have to answer to anyone. You're going to sell down something like CVS that you're 50% in the hole. Probably not if you can help it. Guess what? Here are the top five names in the market yesterday while all hell was breaking loose. UnitedHealth + 3% Congratulations, Jimmy. CVS + 3%. CI + 6%. Another health care nightmare. It's not an accident that those stocks were not for sale. Those are the hardest names to sell. Everybody's got losses. Everybody looks and feels stupid pulling the trigger. So sometimes on a day like yesterday, there's not a linear rhyme and reason that we could say why is Tesla down 6%? Why? It's because those stocks are a layup to get lighter.

[Steve Weiss]

I think there's a little bit of a rhyme or reason though, if you look at just break it down and doesn't have to be by stock, it can even be by broad index. How much of this run has been due to multiple expansion? How much of it is a lot of actual stocks? How much of it is due to earnings growth. So the most fragile part of return is the multiple expansion piece. So then you have to look at the stocks that have pulled so much forward in pure multiple expansion that's going to get sold.

[Thomas]

What's driven the market? That's exactly what's written. The Max 7 is a multiple expansion. Sure, you've seen some better performance, but when you take a look at Broadcom, that's all multiple Expansion on what was.

[Josh Brown]

Not a spectacular, but it's not a mega cap name.

[Thomas]

No, I'm not talking about two separate topics.

[Josh Brown]

I got you.

[Thomas]

But let me say this. There is a rhyme reason for health care move because the Algos all have health care is defensive sector and defensive against what could be declining, by the way.

[Josh Brown]

Great, unhooked up. It is down again today. I mean, it's down 8% since you decided you wanted to buy more. You know, I look at that and I'm like, that's like a. Feels like a pick six to me. Like you're looking at the outside receiver trying to break something deep. And, you know, you laid one right out for the corner who's taking it to the house.

[Liz Young]

Okay, Ms. Winston. Yeah, I'm not, I'm not going to go with the metaphor. I'm going to be literal here. I think when we spoke about this last week and Josh, you were on. One of the things that we talked about is, hey, these guys are going to be brought before Congress and they're going to be lit up and they're going to be lambasted. That may or may not happen. Frankly, Congress has a lot to do, but let's say it does. I got to tell you something. I think this whole story is wrong. We're talking about the 7% denial rate. I'm not going to be an apologist for UnitedHealthcare. It's not my point, but there's 93% of claims that are approved, and a lot of those are lifesaving. Okay? They are. And so when we talk about congressional testimony, this is not going to be tobacco companies found out to be hiding, you know, their marketing strategies to children. It's not going to be the automakers flying in for a bailout on private jets. It's not. It's going to be talking about, you know, preventative medicine, whether it's cancer screening, cardiac care.

[Josh Brown]

So you're. You're fine with the holding this move that you made?

[Liz Young]

I. Well, I am holding it. I mean, when, you know, when we say. When we say fine. I mean, let me not, let me not appear to be casual about the fact that it's down. I'm irritated. But look, I think it's absolutely a travesty that the murder of the CEO has knocked this stock down 20%. And we don't have time to go into how wrong that is. But that is wrong, and it's reflected in the stock price, and that's an opportunity. My opinion.

[Josh Brown]

You may think it's a travesty but the events, the event and the subsequent debate that has emerged about the practices of these companies. Yep. Is not neither trivial nor a travesty. I mean it can't give you some insight there now. And it's just beginning.

[Liz Young]

Yeah. Let me just say this. Insurance just beginning medical insurance is a better option than paying for it yourself. Flat out.

[Josh Brown]

Can I keep eating the merits of, of.

[Liz Young]

Oh, I think we have. I don't think you and I are. I think the world is right now. I think the market, they're not debating.

[Thomas]

The merits of health coverage.

[Josh Brown]

They're debating the practices of companies like this.

[Thomas]

So let me give you say to that.

[Liz Young]

I just disagree. I think this is absolutely a referendum on health insurance because what we're talking about taking the stock down 20% is saying their profits should not be had, these companies should not make profits. That's what we're basically not true.

[Thomas]

Jim. What they're taking a look at is, and here's some inside baseball talk, actual facts rather than speculation. They have revenue cycle management companies that what they do is they collect on behalf of hospitals and patients for claims that were denied. And you know what they have, it's not just putting out collection. They've got teams of doctors on their staff that say to the company you can't get away with this insurance company. When you also take a look, they've taken pain out. So you've got to have pain. So it's a real debate.

[Josh Brown]

We bring it up because the Dow is, is, is in the midst of a historic losing streak. Right.

[Thomas]

Right.

[Josh Brown]

One that you haven't seen since, since the 70s. And this is the biggest Loser over.

[Jim Labenthal]

Price weighted period of price weight becomes more important than it otherwise was.

[Thomas]

And particularly with a different character of the Dow than we had years ago. It's not just old manufacturing, but this.

[Josh Brown]

This is a larger debate that I don't think our viewers disagree in any way. In any way that that's why the Dow is not the place to look. If you really want to know what's happening within the market because it's price weighted and not market cap.

[Jim Labenthal]

You say travesty. This is people deciding to sell the stocks. It's not an act of government that took 20% of the company's market cap. It's people like you who said I'm in this and I changed my mind. I don't want to be. That's like the free will.

[Liz Young]

But it absolutely.

[Thomas]

There will be muted growth because he.

[Liz Young]

Was talking to me. You brought this up actually last week when I added to the shares. You said, hey, this is going to be in the limelight, this is, is going to be in Congress. I believe Josh, I believe Josh that that is exactly why sellers are outweighing buyers in the name.

[Jim Labenthal]

Right? Yeah.

[Josh Brown]

What do I want to do with other, you know, large, larger cap, large names? I mean, Mega Caps for example, good place to look today.

[Thomas]

You want to own them? You want to own the MEG caps.

[Josh Brown]

Dan Ives says that the sell offs a buying opportunity. You, you agree with that?

[Thomas]

I wouldn't call a sell off. I mean people think it's.

[Josh Brown]

No, they were. No, no, but I'm talking about yesterday. I mean Amazon, Alphabet, Apple, they've all been hitting new highs of late, right? You don't get an opportunity that much to see stocks like this down 3, 4, 5%. Amazon was down 4 and a half percent yesterday. That's my point.

[Thomas]

I don't believe it's up. Like, I don't, I don't believe you've got the opportunity yet. You may get the opportunity, but it's exacerbated. When you see a stock like Netflix down 25 points, you say, oh my gosh, down 20, 25 points. That was two and a half percent. It doesn't matter. So this is not a buying opportunity. I think you get a better buying opportunity and that's when you step in.

[Josh Brown]

You still think you'll get a better opportunity to get into these names.

[Thomas]

I think you could, but I'm, look, I'm full of those. They were all big positions, did a lot of trading around yesterday to the upside.

[Josh Brown]

Forget you per se.

[Thomas]

I do think at any point in, in a decline here that you can buy these and they will grow into the multiple. But there is overvaluation. My point is, I think it's a sector, the narrow sector of the Meg Caps be less least impacted by Trump policies pro business or by Fed policies.

[Josh Brown]

Anybody looking at Micron today and saying, you know, I can't say what but what I want to say, but you know, you know my point, as we're sitting here, we watch in video every day, we're like, man, the chips have sucked. It's been a really bad trade. Micron is certainly not going to help sentiment on this. You know, you see this blow up today, down, down 17%. How are you, how are you thinking about that?

[Jim Labenthal]

Look, it was not a bad earnings report. It's crazy what they put the shareholders through. In this name. They, they did 8.71 billion versus 8.7 expected and earnings per share beat by 2 cents. And they absolutely demolished the stocks down another 16%.

[Thomas]

Guidance was terrible.

[Jim Labenthal]

Fine, but I'm terrible. I'm just, I'm just saying one of the interesting things about Micron is that unlike a lot of these companies we call Bellwethers, it actually is and it's a read through to companies like Apple and I do think it has the markets attention. The thing is it's not guaranteed we're going to get two more of these. Micron might be a Micron specific and it doesn't mean that you're going to see two more companies in this space say anything even close to similar about the forward outlook. So I wouldn't like throw myself off a bridge over Micron but I also wouldn't ignore it because if that commentary is repeated again then it's not a coincidence. Then we might have a demand issue on our hands.

[Josh Brown]

How would that. You used to own it, didn't you?

[Thomas]

I did.

[Josh Brown]

I like multiple times.

[Thomas]

Despite what I think is very very good management, not even good management could help a commodity business. So their AI business doing well like everybody else's. But their commodity business goes into phones, it goes into laptops that got crushed. So they took down their guidance meaningfully and that's what really took stock down in my view. Now you can't, in my view you can't get too high in this. Like when they blow out a quarter in guidance the stock will have a monster move up. That's the wrong time to buy it if you were to buy it. Now's more the time to buy it if you believe the consumer electronics business is going to recover.

[Jim Labenthal]

Micron also reminds us not all of tech is a secular growth story. A lot of tech is extremely cyclical and this is like a poster child for the cyclicality that historically we've always had in semis memory in devices. It's like it's like a wake up call for people that thought this was just like a secular trend by 2030 blah blah blah. They don't all work that way.

[Josh Brown]

Speaking of secular growth trends in tech, right cyber CrowdStrike was a big loser yesterday down 7%. Getting a little bit of a lift today but not that much either right? You watching Palo Alto over the last couple. Palo Alto is flat crowd getting a little bit of a judge so easy.

[Jim Labenthal]

Again this is a stock that has just gone on an absolute rampage since August. The last tough day we had in the market was I think August 4th or whatever it was. Whatever that yen thing is, I already forgot about it August 5th, look. Look at the performance in CrowdStrike from the summer through now. Easiest stock in the world if you need to take some profit somewhere where everyone in that name has profits.

[Thomas]

Yeah, that started coming down yesterday. Was down about 3% before Powell even spoke.

[Josh Brown]

But what you seven yesterday.

[Jim Labenthal]

Look at this chart next to Weiss right now. Yeah, I mean if you have to lighten up, that's, that's like in the basket of stocks you sell.

[Thomas]

But for the fact that cyber in my view and talk to lots of people that are involved in will be the best area in defense and in corporate America to invest in for next year. We've held Biden administration has held back our cyber capabilities, not viewing him as defensive, which they are. But he won't even let you know. The CIA, the FBI, the DoD match the negative impact of cyber coming from the big four. So those gloves are off now, as they should be. So you want to vest cyber. The question is what price?

[Josh Brown]

Coming up, we are trading a bunch of committee stocks on the move today. And later.

[Steve Weiss]

Krypto.

[Josh Brown]

Home. Take me home. Well, they say the sequel's never as good as the original, but Josh Brown is wondering if this time will be different. We'll explain coming up.

[Mike Santoli]

Support for this program is provided by Chevron. The anchor offshore platform is utilizing breakthrough technology to enable us to produce oil and natural gas in the US Gulf of Mexico at pressures up to 20,000 psi. A new industry benchmark, Anchor is part of Chevron's plan to produce 300,000 net barrels of oil equivalent per day by 2026 in the US Gulf of Mexico, home to some of our lowest carbon intensity producing operations. That's energy in progress. Visit chevron.com anchor hey, I'm Ryan Reynolds.

[Ryan Reynolds]

Recently I asked Mint Mobile's legal team if big wireless companies are allowed to raise prices due to infl. They said yes. And then when I asked if raising prices technically violates those onerous two year contracts, they said, what the are you talking about? You insane Hollywood. So to recap, we're cutting the price of mint unlimited from $30 a month to just $15 a month. Give it a [e-mail] switch.

[Scott Wapner]

$45 upfront payment equivalent to $15 per month. New customers on first three month plan only taxes and fees, extra Speed slower above 40 gigabytes.

[Mike Santoli]

Details.

[Silvana Henao]

Is it time to reimagine your future? The right business skills may make a difference in your career. At Capella University, we offer a relevant education that's designed to focus on what you need to know. In the business world, we'll teach professional skills to help you pursue your goals like business management, strategic planning and effective communication. And you can apply these skills right away. A different future is closer than you think with Capella University. Learn more at Capella Eduardo.

[Josh Brown]

Got a number of committee stocks on the move today. We will start with vertex pharma. It's 52 week low today on mixed data for its non opioid drug. Jimmy, you own this stock too.

[Liz Young]

This is an important drug. So I'm not going to minimize it, but I do want to put the facts out there. So the phase three trial that they're talking about, the drug met its primary endpoint. The weird thing is the placebo was similar in its efficacy. Now think about and understand what pain medicine trials are about. It's about doctors talking to patients and getting a subjective evaluation of how they feel. You've seen those charts in your doctor's office with the sad face and the happy face and where are you on a scale of 1 to 10? It's very subjective. It's not like, hey, did the tumor shrink in size or how much of this protein is in your blood? This has been known to happen, including with opioid drug trials as well. This is not game over for this drug. There are a number of trials that have already happened and will continue to occur. Many of them have been very positive. But you know, on the margin, this is a piece of bad news. I'm not selling the stock. There are many other shots on gold that this company has, but it is a disappointing piece of news.

[Josh Brown]

Yeah, you just don't want too many own goals. Right? You don't want these own goals.

[Liz Young]

Is that. Go ahead. Is that like.

[Josh Brown]

No, I'm just playing off of what you said.

[Liz Young]

Is that where you like the cornerback runs the wrong direction to nurture the.

[Josh Brown]

No, that wasn't the wrong direction. That was.

[Thomas]

That was dead on.

[Josh Brown]

I was talking about a pick six that you potentially had thrown.

[Liz Young]

I know. I was trying to say something funny.

[Josh Brown]

It wasn't. But that's okay. It's all in the attempt. It's in the attempt.

[Thomas]

He's really got to stay in his lane, which the consumer or health care apparently.

[Josh Brown]

Shake Shack Target 147 from 144. Truist reiterate by. They raise their estimates too.

[Jim Labenthal]

If you, if, if, if you think about, if you think about what's happened with this company, the transformation currently underway. They had an amazing CEO who took the company public. Randy Garudy. He steps down. They Bring in a new CEO who had grown and scaled Papa John's into one of the largest, most successful quick service restaurant businesses in the country. And that process of scaling Shake Shack is now underway. I agree with the call and I think this is the type of stock that really it's not a macro concern story. It's not interest rates. It doesn't really have those drivers. All they have to do is to continue to execute on opening new stores, raising same store sales and the stock should continue to work.

[Josh Brown]

Okay, looks like it's getting a little bit of a lift.

[Jim Labenthal]

Is this a new 52 week high? Ish. I think maybe a new all time high. Raise the roof.

[Josh Brown]

All right, Zoom Video upgraded to a buy there Shaq. Zoom Video upgraded to buy from hold at Jefferies. Target increased to 100 from 85. That's a 22% upside. They see.

[Jim Labenthal]

Yeah, I been in this stock before. I think it's too cheap. I think it's 16 times forward. And the thing about Zoom that not a lot of people have accepted yet is that they are using the video business as a way to lure in enterprise customers for some of their other offerings. We're a customer of Zoom. The telephony solution allows us to compliantly carry on text conversations with our clients, which you can't do with your personal, personal cell phone. And they've, they've unveiled a whole lot of things this year in the AI world and I think that they're starting to get credit for that. The stock is acting better and better. It's a slow grind, higher, but it is moving higher nonetheless.

[Josh Brown]

Liz, what about housing? I mean Lenar is down after its earnings and revenue. Ms. I mean these stocks have been really bad. That's a 52 week low. Anything. Housing is down today. Sherwin's down. We can show that. We can show Depot is down. This is down 6%. This being Lennar, what do we make of this trade? Higher rates. And if you know you have CEOs of real estate companies talking about mortgage rates staying above 6% for the next couple of years like I think it was the compass CEO on the network said, is that a problem?

[Steve Weiss]

It's a problem for the housing market. I mean it's been frozen for a while because of where rates are. Now we've got a tenure that during the show has move to 457. So usually you can think about it as 300 basis points above the 10 year is about where mortgage rates tend to fall. So we're still well above 7% in mortgage rates and that's not going to encourage a lot of transacting. So the existing home sales number is going to stay tight. We've had some pretty bad housing starts data. You've got construction numbers slowing down because of this. The biggest concern that I have about the real estate market is that if there aren't projects being undertaken, if things are being finished and there aren't new ones coming, what happens is construction unemployment falls. Construction unemployment is a leading indicator of the rest of the labor market. If construction unemployment goes up, then the rest of the labor market usually follows six to nine months from then. Sure, we do need to unlock the housing.

[Josh Brown]

I'm sorry. He, you know, and obviously he talked very glowingly, I think I can say about, you know, the economy at large. Right. How remarkable it was doing certainly relative to everywhere else. But he did call out the housing market. I mean. Right. Of all of the things that are good in this economy, that's not it.

[Jim Labenthal]

Right.

[Steve Weiss]

Well, the other thing is shelter is such a lagged component. It's not something that we can really affect on a month to month basis. And obviously if we're worried about inflation in housing, raising rates is just going to keep the market frozen longer. So the effect isn't the same. Same with car insurance, a very lagged component. It moves very slowly. The reaction function is much longer than the rest of inflation. If you strip out both, both of those shelter and car insurance, inflation actually looks fine. And they know that.

[Josh Brown]

Right.

[Steve Weiss]

They're aware of that. The issue is that the reality for the American people is that you still have to pay for car insurance and you still have to pay for shelter. So they're trying to control for all.

[Josh Brown]

You'D like to get the housing market, it sort of moving again. Silvana now has the headlines for us. Hi, Silvana.

[Scott Wapner]

Hey, Scott. Good afternoon to you. Representatives from Germany, Sweden, Finland and Denmark were allowed to board a Chinese flagged cargo ship today that suspected of intentionally cutting two undersea cables in the Baltic Sea. Authorities say they were only allowed to board the ship as observers while Chinese authorities conducted an investigation. The ship has been held in the waters off Denmark for more than a month as diplomats have been negotiating access to it. The Biden administration is working on a plan to allow data centers and power plants to be built on federal lands. Officials tell the Washington Post the White House is concerned the US could fall behind in the race to dominate artificial intelligence and is prepping an executive order for President Biden to sign before he leaves office. And two NASCAR teams, including one owned by Michael Jordan, can compete as chartered teams in the 2025 season after a US district judge granted a preliminary injunction. The ruling allows the teams to sign charter agreements as they continue ahead with their antitrust case against NASCAR and its chairman. NASCAR has yet to respond for comments.

[Josh Brown]

Scott Silvana, thank you. And Savannah Hanau coming up next, Mike Santoli is is here with his MIDDAY word. We're back right after this.

[Mike Santoli]

Support for this program is provided by Chevron. The anchor offshore platform is utilizing breakthrough technology to enable us to produce oil and natural gas in the US Gulf of Mexico at pressures up to 20,000 psi. A new industry benchmark. Anchor is part of Chevron's plan to produce 300,000 net barrels of oil equivalent per day by 2026 in the US Gulf of Mexico, home to some of our lowest carbon intensity producing operations. That's energy in progress. Visit chevron.com anchor@capella university.

[Silvana Henao]

Learning the right skills could make a difference. That's why our business programs teach you relevant skills you can take from the courseroom to the workplace. A different future is closer than you think with Capella University. Learn more at Capella. Eduardo.

[Josh Brown]

All right. Welcome back. Senior markets commentator Mike Santoli is here now with his MIDDAY Word. You're thinking about what you characterize as a sudden tantrum yesterday on the after Powell was finished speaking.

[J]

Yeah, it was sudden. I think it was extreme. Probably because the market at the index level had been lulled into this sense of stability. There was this equilibrium. You had enough stocks going up. We thought we had in hand exactly what was going to come out of the Fed meeting. Obviously pretty decisive hawkish shift below the surface in the committee. I do think that the good news or maybe silver lining is just as you guys have been talking about, so much of the market had a head start on this pullback. Breath was already nasty for a couple of weeks. So therefore maybe you're that much closer to having a little bit of a climactic flow lower. We don't think we have to have anything major here. We're only a few percent off the highs. But there's a challenge here, right? Because if you were to come into this month, you were saying, sure, valuation is stretched, sentiment is getting a little bit too happy, but the seasonals are strong and the trend is solid. The trend is now wobbling a little bit at the index level. You still to have the stronger seasonals, but you have air pockets. So I get why the market is is a little hesitant Here at the 50 day moving average for the S&P1 final point though is good news for the economy is now more than ever necessary and good news for the for the stock market because if the Fed's going to do less, you have to make sure that you feel as if the economy's hanging in there and housing's at the center of it.

[Josh Brown]

We're going to be obsessing again though, over the 10 year 457 as I ask you the question.

[J]

Question, right. That's exactly it. And that reflects this sort of dynamic of is it just because the economy's hanging in there or we're just saying 4% is as low as we're going to get on Fed funds. How much lower do you expect the tends to get? We are at levels where the buyers have come into Treasuries, I would say going into next week. And at the end of the year we'll see if you get major rebalancing flows. That was the story, you know, in a lot of these kind of late quarter sell offs that sometimes that comes to the rescue.

[Josh Brown]

All right, Mike, I'll see you on closing bell. Thank you. Mike Santoli. Coming up. It's a bird, it's a plane. It is the latest stock on Josh Brown's radar. We're going to reveal the name next. All right. Welcome back. The official Superman trailer dropping this morning got Josh's attention. Warner Brothers, right?

[Jim Labenthal]

It reminded me of how bad I am at value investing. I, I got long Warner Brothers this past March and I sold it right before it almost doubled. I forget why I got out of it. Probably it was breaking to new lows and it just got thrown out with the bathwater. But stocks back on my radar. A couple of days ago, David Zaslav announced a corporate restructuring that's going to finally take the quote unquote bad part of the business out of the equation and let investors focus on the growth part of the business. So they're going going to take the linear TV networks like CNN and package them into a spin company. They'll put that spin off out. The people that want to own that because they're maximizing profitability without growth can own that piece. What's remaining is the better part of the business. That's the studios and the streaming business, both of which are not setting the world on fire in growth but have a lot of upside potential. The Superman film will come out. This is James Gunn, the director of the Guardians of the Galaxy franchise for Disney and Marvel. Fantastically successful properties. He is now running the DC Cinematic Universe going forward and I think people are gonna get excited again about the potential for the streaming business and the studio and that that piece of this thing will be worth owning.

[Josh Brown]

Are you, are you saying that you are gonna get excited again for this stock that you're looking at an opportunity to get?

[Jim Labenthal]

Because here's what happened yesterday. The problem with Warner Brothers, they could chop it up into 50 pieces is not going to change. This problem is the debt still have like 40 something billion dollars worth of debt from when it was spun off VT back in 2022. The problem with higher for longer interest rates is that it lessens the company's opportunities to refinance that debt at lower rates. So they whacked the stock yesterday, one of the big losers on the day and took away almost all of that rally from the restructuring news. So now it's back on my radar. I don't often buy single digit stocks but I think if it gets back below 10, I'm probably going to give it another shot. So giving you guys the heads up before I do anything, I think that there is going to be shareholder value unlocked in 2025 with this situation. And I think we're going to start thinking about the company's prospects on the streaming side much differently than we have been up until now.

[Josh Brown]

Okay, you'll keep us up to date on what? Thank you very much. Up next, we're breaking out our report cards again. It is the end of the year. We'll go through the best and the worst of the trades from the committee. Next report card time as we check in on the committee portfolios looking at some of the best and the worst of the picks. Matterport. And in a perfect world, these are stocks that, that all of you have owned all year long, like Matterport, which you have. It's up 82% on the year.

[Jim Labenthal]

Oh, that blue chip. Okay, it's up 82% but I'm down 50%. And the thing with Matterport is that it's got acquired and I'm just waiting for the deal to close. Costar Group is buying it and once that deal closes, I'll sell it. Nobody should think this has been a winner for me. It's one of the worst stocks I've ever owned.

[Josh Brown]

Okay, trade desk up 78%.

[Jim Labenthal]

Well, that is a winner.

[Josh Brown]

Okay. You bought it in August.

[Jim Labenthal]

Yeah.

[Josh Brown]

You raised your stop on December 3rd.

[Jim Labenthal]

Yep.

[Josh Brown]

What do you think now?

[Jim Labenthal]

I think this is one of the. I think this is one of the cleanest growth stories in all of media. Everybody is looking for ways to reach the Netflix Viewer, the Disney plus Viewer, the person who has opted for an ad tier of a streaming service. And what Trade Desk allows advertisers to do is connect directly to the viewer who has the specific attributes that they're looking for. You have this duopoly of Google and Facebook for a very, very long time. And now the Trade Desk is empowering another way to reach people and know exactly who you're reaching and why. And as a result, this is a great growth stock. It's been working. I'm staying long.

[Josh Brown]

Be real quick on this one for me. Pfizer, you bought it January 9th, so presumably, I mean, you basically owned it all year, down 11%. Just didn't do what you thought it was going to do.

[Jim Labenthal]

This is my worst performing stock this year. Totally wrong on it. I mean, I would charitably say I'm early, but early is wrong. If you're sitting in something for a year, the S and p goes up 30% and you're flat to negative, it's not great.

[Josh Brown]

So Jimmy Oracle, up 62%. You have owned this name all year long.

[Liz Young]

Yep, I have. Going back a couple of years. Just an AI story. One that started out the year as unlove or unsung, shall we say. And it got a lot of attention this year.

[Josh Brown]

Wabtech up 50%. You bought it in September.

[Liz Young]

Yeah.

[Josh Brown]

You bought more on December the second. How about that one? I mean, Cleveland Cliffs is obviously on our list. It's just been a dog. It's a new 52 week low again today.

[Liz Young]

I'd actually like to talk on that if I can just. I know we don't have a lot. I don't. I know we don't have a lot of time, but if you actually just.

[Josh Brown]

Do the numbers, if our viewers can bear it.

[Liz Young]

Yeah, no, no, it's a $9 stock. I know if you actually do the analysis of now having acquired Stelco, they're probably going to do about 24, maybe 23 billion in sales next year. Five years ago that was 2 billion. But just go ahead and assign the middle of the cycle multiple ebitda multiple of 15%. Get you to 3 billion in EBITDA. Put a 7%, that's a historical multiple enterprise value to Ebitda gets you to 21 billion in enterprise value back out. The debt of 5 billion 16, $15 billion market cap versus 5 billion today. The only way that doesn't work is if you think we're not going to build things with steel anymore. I think we are.

[Josh Brown]

Is this a Fumble on your own goal line potentially, or a fumble or this is just a fumble on the one yard line of your opponent when you're about to go into score and it gets returned all the way.

[Liz Young]

I actually sincerely appreciate, I like the.

[Josh Brown]

Football analogy because it works for Al Michaels who I know is watching right now. Yeah.

[Liz Young]

And he probably thinks I'm like the Dieter Brock of the team.

[Jim Labenthal]

Dieter Brock, well done.

[Thomas]

Wow.

[Josh Brown]

All right, we'll take a quick break. We want to talk bitcoin next. Well, we like you watching bitcoin almost every day now. Down, down below Weiss 99,000.

[Thomas]

Yeah. Hey, look, if you've invested in bitcoin, volatility is nothing new, particularly a leveraged asset. But this goes to my point. The only utility here is as a trading tool. That's it.

[Josh Brown]

All right, we'll watch it. I mean, it's down 3%. It got hit really hard yesterday on, on the Fed and the spike in rates. We'll take a quick break and we'll do finals on the other side. Hope you join me. Closing bell, 3:00 Eastern. We got Rick Reeder of Blackrock. Today we'll talk about what the Fed said, what they may do, where stocks in the markets in general go from here. Look forward to that. Jimmy Farmer, Jim Farmer.

[Liz Young]

Final trade, Cheniere lng liquefied natural gas. We're going to be exporting it all over the world.

[Josh Brown]

Mr. Weiss.

[Thomas]

QXL. Look, we didn't make it yesterday because there's only up 60 cent for my other one winners. So they're about to make an acquisition. Will be great.

[Josh Brown]

Liz.

[Steve Weiss]

Cybersecurity, long term story still intact. Pullbacks are opportunities.

[Jim Labenthal]

Shake shack. It's not just a stock, it's a lifestyle.

[Josh Brown]

All right, I'll see you on the closing bell. Look forward to that. We take it through the final stretch. You've been listening to CNBC's Halftime Report, the podcast. You can always catch us live weekdays at 12 Eastern only on CNBC.

[Silvana Henao]

All opinions expressed by the Halftime Report participants are solely their opinions and do not reflect the opinions of CNBC, NBCUniversal, their parent company or affiliates, and may have been previously disseminated by them on television, radio, Internet or another medium. You should not treat any opinion expressed on this podcast as a specific inducement to make a particular investment or follow a particular strategy, but only as an expression of an opinion. Such opinions are based upon information the halftime report participants consider reliable. But neither CNBC nor its affiliates and or subsidiaries warrant its completeness or accuracy and it should not be relied upon as such. To view the full Halftime Report disclaimer, please visit cnbc.com halftimereportdisclaimer@ Capella University, learning the right skills could make a difference. That's why our business programs teach you relevant skills you can take from the course room to the workplace. A different future is closer than you think with Capella University. Learn more at Capella. Eduardo.