Reassessing the Rebound 5/9/25

Summary

Halftime Report: Reassessing the Rebound (May 9, 2025)

Hosted by CNBC's Frank Holland, the "Halftime Report" delves into the current state of the stock market, analyzing whether the recent rebound has room to grow or if the gains have reached their peak. Featuring insights from top investors Jim Lebenthal, Brendan Vingelo, Kevin Simpson, and Steve Weiss, this episode provides a comprehensive overview of market dynamics, trade negotiations, sector-specific analyses, and strategic investment moves.

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1. Market Overview

Frank Holland opens the discussion by highlighting the day's modest movements on Wall Street. The Dow is slightly down, while the S&P 500 and Nasdaq inch upward. He emphasizes the importance of understanding whether the recent stock market rally is sustainable or nearing its end.

"Are there more room to run or are the gains fully baked in?" (00:59)

Jim Lebenthal references a Bank of America report suggesting the U.S. stock rebound might be over, despite ongoing trade negotiations with China happening in Switzerland over the weekend.

2. Trade Negotiations and Economic Impact

Steve Weiss acknowledges the significant rebound from April's lows, noting a 16-17% increase in the market. He discusses the necessity for meaningful progress in reducing reciprocal tariffs to sustain this rally, cautioning that without such progress, a recession looms on the horizon.

"If somehow we got down to just the 10% universal tariffs, the markets would be fine with that." (02:04)

Jim Lebenthal echoes the sentiment that while fundamentals like corporate earnings and consumer resilience are strong, prolonged uncertainty from trade negotiations poses risks. He advises leveraging market volatility by taking profits from well-performing positions and maintaining diversification.

3. Sector Analysis: Technology and Consumer Stocks

Technology Sector

Kevin Simpson addresses concerns around Alphabet (Google), highlighting shifts in advertising revenue due to the rise of AI competitors like ChatGPT.

"We're going to see less ad revenue flowing through. They've got lots of other catalysts, lots of other things and businesses under the hood." (15:48)

Jim Lebenthal points out that while tech companies face challenges from emerging AI technologies, Alphabet's diverse business units, including YouTube and Waymo, provide resilience against these disruptions.

Consumer Sector

Jim Lebenthal discusses his investment in Target, viewing it as a turnaround story focused on differentiation and inventory management. He contrasts this with Kevin Simpson, who favors companies like Home Depot and TJ Maxx for their robust performance in various economic conditions.

"Target we really own as a turnaround. So not expecting a full turnaround to happen over the last month. So we're in it, we bought it when it was down and out so we're going to stick with it for now." (35:30)

4. Strategic Investment Moves

Palantir and Valuation Concerns

Kevin Simpson justifies investing in Palantir despite its high forward P/E ratio (191x), citing strong earnings growth and the company's expanding commercial and government contracts.

"This is a situation where we talk about it on the desk all the time. How many times are you using Google versus Chat GPT or one of the other AI companies?" (19:31)

Jim Lebenthal expresses reservations about Palantir's valuation, suggesting a wait-and-see approach for a more favorable entry point.

Gold and Commodities

Kevin Simpson and Jim Lebenthal discuss their positions in gold mining companies like Agnico Eagle and Newmont Mining, influenced by rising gold prices and geopolitical factors. Steve Weiss shares a personal investment perspective, highlighting the strategic value of gold despite his preference for cash-flow-centric investments.

"Agnico Eagle has been one of our best performers. It's got great margins." (44:21)

5. Bitcoin and Cryptocurrency Insights

Scott Wapner comments on the momentum in Bitcoin trading, noting significant ETF inflows and the administration's support for crypto. He positions Bitcoin as a speculative asset within portfolios.

"The key to Bitcoin, if you're not a believer as I am, is positioning it appropriately in the portfolio as speculative asset." (43:08)

6. Defensive Moves and Risk Management

Steve Weiss emphasizes the importance of risk management, sharing his strategy of selling into profitable positions and trimming holdings in volatile stocks like Vertex Pharmaceuticals and Cleveland-Cliffs. He advocates for diversification to mitigate potential downturns.

"That's why you have to have a diversified portfolio overall." (30:16)

7. Final Trades and Closing Remarks

Steve Weiss concludes with personal investment updates, including his positions in Vertex, Palantir, and Microsoft, and extends gratitude to longtime producer Patty Martel.

"I have a lot of faith in management. That's why I'm buying a little bit for myself." (46:13)

Jim Lebenthal adds his perspectives on Wynn Resorts, anticipating potential recovery tied to Western-style economic stimulus in Macau.

"We think that there's a lot more momentum to go." (46:35)

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Key Takeaways

• Trade Negotiations: Progress in reducing reciprocal tariffs between the U.S. and China is crucial to sustaining the current market rebound and avoiding a potential recession.

• Sector Resilience: Technology and consumer sectors show mixed signals; while tech faces AI-driven disruptions, consumer stocks like Target and TJ Maxx demonstrate strong performance through diversification and strategic management.

• Investment Strategies: Emphasis on risk management through selling profitable positions, trimming high-risk investments, and maintaining a diversified portfolio.

• Valuation Concerns: High-valuation stocks like Palantir require careful consideration, balancing growth potential against financial metrics.

• Cryptocurrency and Commodities: Bitcoin remains a speculative asset with notable ETF inflows, while gold mining stocks benefit from rising prices and geopolitical hedges.

• Market Sentiment: Overall risk sentiment has improved since the market lows, but uncertainty around trade deals and economic indicators continues to influence investment decisions.

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This episode of the Halftime Report offers a nuanced analysis of the current market landscape, balancing optimism from recent gains with caution regarding ongoing economic challenges. Investors are encouraged to stay diversified, manage risks proactively, and stay attuned to the evolving trade negotiations that could significantly impact market trajectories.

Transcript

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[Frank Holland]

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. Thank you very much, Carl and Leslie. Welcome to the Halftime Report. I am Frank Holland in for Scott Wapner, front and center this hour reassessing the rebound. Is there more room to run or are the gains fully baked in? Our investment committee is standing by to debate that and much, much more. Joining me for this hour, Jim Lebenthal, Brendan Vingelo, Kevin Simpson and Steve Weiss. But first, let's get a quick check on the markets. You can see bit of a muted day on Wall street today. Taking a look at the action that we're seeing right now. You are seeing the Dow down very fractionally, the S and P and the Nasdaq up very fractionally right now. And I think really that's where we need to begin. Jim, you're right here next to me. Where are you seeing the markets right now? So B of A Hartnett coming out with a note. I'm just going to read the headline I want to get your take on. It says the US Stock rebound is likely over despite the US Taking steps towards trade negotiations. Of course, US Officials and Chinese officials are meeting in Switzerland over the weekend.

[Steve Weiss]

Well, I think we have to start by acknowledging, Frank, that this is one heck of a rebound off of the April lows. I mean, I'm not going to calculate it right this second, but I think we're up 16, 17%. So when we say that the rally might be over for now. I don't think that's too provocative a statement. I think also we have to acknowledge that while there does seem to be a little bit of progress on trade deals, a lot more needs to be done. The financial markets to me are clearly saying that they are willing to look through the damage that has been done over the last six weeks if we can get meaningful progress on reducing those reciprocal tariffs. If somehow we got down to just the 10% universal tariffs, the markets would be fine with that. But we need to see meaningful progress on getting those reciprocal tariffs reduced or even eliminated before the pause is over in early July. If that happens. Let me be clear, we may well still have a recession in the back half of the year. Certainly profit estimates have been coming down and should be coming down. But again, again what the markets are saying to me, whether it's crude oil rallying, whether it's bonds being stable, whether it's the equity markets as I said, up 16, 17%, is that they, the financial markets are willing to look past short term damage as long as we can get this all behind us, get a tax bill going and look into 2026 with a much more clear windshield ahead of us.

[Frank Holland]

So Brenda, same question for you. I mean bank of America saying this rally, it may be coming to an end. Jim saying that's not very provocative. It's been a big run up from the lows. Where do you sit?

[Jim Lebenthal]

Well, I all the way back to where we were before the tariff announced, the reciprocal tariff announcements. So yes, I think we've, we've come a long way and it comes back to fundamentals which we know from corporate earnings in Q1 we're good consumer also seems to be hanging in there. But as we know the longer this uncertainty persists, the more at risk the underlying fundamental picture becomes. And so I think it's a matter of how fast we get through some of these trade negotiations. There's hopefulness about what's going to happen this weekend, but I don't know if we'll really have anything terribly, incredibly meaningful to hang our hats on that the market will like on Monday morning. So I do think it behooves investors to take advantage of some of the volatility which that's what we have been, that's our tact and what we have been doing over the last eight weeks or so. But so I do think if you have a position that's moved up nicely, not probably not a bad moment to take a little bit off the table. But I think also staying really diversified is also very important because if we look at other areas, like outside of the US European stocks, they've been having a tremendous year. So I think having that diversification is a really important piece.

[Frank Holland]

Steve Weiss, coming over to you. Surprised at all. We're not seeing more optimism today. Again, the markets are pretty muted and we're talking a lot about bank of America and their call it the rally's over. Barclays also out with a no, I'm going to read part of it to you. They say bring on the deals. A lot is baked in. But don't fight the Trump mantra. It may still prevail. So long as there's a path towards more deals and less tariffs, we at least can see the path, especially again with US Officials meeting with Chinese officials in Switzerland. Which side do you fall on?

[Scott Wapner]

Well, in the near term, I still think the market's in an okay place. I don't believe we're going to see the big rally we've seen in the past. There's also a question is if the market is developing some sort of immunity to the headlines. The UK Deal was, was really in principle, it's our easiest trading partner. We actually run a surplus there. So that was not an impressive deal. Now, in terms of China, you would naturally expect and you alluded to in this question that why is the market reacting more positively? We're talking about cutting tariffs down to 80% post meeting, assuming it goes well. Well, there's the issue. There's still 80%. There's still the uncertainty. And so right now I think headlines are going to have a limited impact. We will and today wasn't only the China announcement. It was also the announcement of major deals coming in the near term. So I expect to see headlines, I expect to see deals in principle announced, but takes years to negotiate a trade deal. Years. So the devil's in the details. Now, when I say immunity, we've gotten so many headlines that eventually the market says, okay, what's next? I know those headlines are coming. Excuse me. So then you go to the what's underlying this? Now we talk about 10% tariffs. Like, oh, 10% tariffs. We can deal with those but you actually can't because the economy was already slowing prior to Trump. It accelerated when you froze corporate capex and when people got scared, justifiably so. So if you could tell me that the uncertainty of this administration is going to be put to rest with a few headlines of tariff and the economy is going to reverse a trend that was in place before that, I'd say great. But let's not find false comfort in buying ahead of tariffs, both on the corporate side and the consumer side. And let's not find false comfort in headline deals. So the bottom line for me is we're still going towards a recession. It doesn't matter at this point if we get to one or not. If the economy continues to slow and we don't find a reason for CEOs to start deploying again, then we'll be fine. But I don't see that as the base case. See, my base case continues to be near term we're okay. Intermediate term we're not, you know, to.

[Frank Holland]

Your point, Kevin, I want to come over to you. A lot of CEOs are talking about tariffs and concerns. According to our data, Goldman Sachs, excuse me, their data, 89% of S&P 500 companies that have reported they've discussed tariffs on this earnings call. Where are you sitting with all this? And I think it's also important to know all three indices, they just turned negative a short time ago. Fractionally lower but negative a short time ago. Again, going into a weekend with potentially, you know, a framework for a trade deal coming up or something like that. But again, I just want to get your take. Where are you falling rallies over or don't fight the Trump mantra Trouble?

[Kevin Simpson]

Well, I think we've had a tremendous rally to your point. I'm surprised that it's not 100% of CEOs mentioning tariffs because of the uncertainty. But the way we're playing it, Frank, is we're selling into the rips, we're writing calls. I would take profits here. I agree with you, Brenda, that we've seen such a massive run up that the good news isn't an all clear signal. The good news is way better than where we were May 9th feels 100 times better than it did on April 9th, I can tell you that. But I would say that if you're running a portfolio, it's about risk control here. Selling into profits, trimming positions and buying the dips is how I would play it. And I would caution everyone that it could be a situation where over the next couple of weeks, it's a sell the news instead of rallying on the news.

[Frank Holland]

So. Well, to that point, can I ask you a question? Yesterday the president said, you know, buy stocks. Remember when he did it before, before the tariff pause? Big rip when it comes to the markets. Why do you think we didn't see a big reaction this time around? It seemed like Last time around, people were like, hey, kind of caught off guard. But this time around, we saw the pattern. We knew that he says buy, and then potentially some trade deals are coming on. So why aren't we seeing that in the markets? Yesterday really was kind of muted. Or today. Kevin, you first, if you don't mind.

[Kevin Simpson]

There was great value. The last time he said it, we bought stocks. There was not the same value. Yesterday, we did not buy stocks. And I think that the retail investor is probably feeling the same thing that you can, you can have that work one time. But I don't think yesterday was the day to be backing the truck up by any means.

[Steve Weiss]

You know, also, I mean, let's call it like it is. If we get down to 80% tariffs, that doesn't do it. That's, that's disastrous for the economy. That's not going to have Trans Pacific container ships loading up in the port of Shanghai to go to Los Angeles. So, you know, look, he's in this negotiating phase. Maybe 80% comes, becomes something less. Steve, I certainly hear you and respect you when you say 10% is too much. Got it. I'm just, I'm just playing the deck of cards we've been dealt. And I'll tell you, I think at this point, as much as I Wish they were zero, I think 10% is something the world can live with. But 80% is just a complete nonstarter. So as far as why we're not rallying further, I think that's got something to do with it.

[Frank Holland]

You know, just get us on the same page again. President, Wait really quick, Steve, if you don't mind. You know, the president threw out 80%, but he says it's up to Scott Bessant, the Treasury Secretary reports from Bloomberg earlier today that they were looking to get it under 60% for both China and the US so there are some questions too high. A lot of people are saying, like you, it just is.

[Steve Weiss]

I'm not being provocative. I don't mean to interrupt you, but it's a nonsensical number.

[Frank Holland]

But, you know, in all fairness, none of us are trade experts. But, Steve, I want to come over to you for the markets. Does it, does the number actually matter? I mean, as long as a deal is struck, is that going to potentially give investors more confidence or does it have to be below a certain number in your mind? And again, we are not trade experts. I'm not trying to figure out what the right level is.

[Scott Wapner]

Well, just reading to your question before. All Trump has to do is come out and say, buy stocks, and then the market's off. I mean, that's just a ridiculous premise. Every president wants you to buy the market because every president uses some more than others as a barometer of how the public perceives them. I wouldn't listen to Trump saying buy stocks. I mean, this analysis is nonexistent. Just like you meet with John Voight. He complains about Hollywood all of a sudden, an executive order, 100% tariff on films. So I don't even know what that means. He's saying, buy stocks. Now in terms of finality. No, it doesn't mean anything. It may mean something. I don't think it will. If we're at 40% or 25% on tariffs, we sell tariffs. And we still have an issue with the instability of policy. Now think about it this way. If you're a former partner, trusted partner, trading partner of the U.S. and somebody and us has turned that upside down, as we've heard from Ken Griffin, as we've heard from some of the best investors and traders in history, American capitalism and the American brand is taking a hit. So what are you going to do? Let me give you an analogy. When I was running a large division at Lehman Brothers, I had somebody during critical time come to me and say, I'm leaving, hold me up for more money. You know what I did? I paid them more money and then I took note of that and eventually I fired that person. That's what our trading partners are going to do for us. They are not going to forget this. It will not be okay for them if they can buy the goods. And we don't make a lot of goods export in terms of percentage of our economy, but we still do on a dollar amount. If they can find other places to do this, they will do it. Defense in particular. European countries are now going to buy defense products, planes, etcetera, from the manufacturers in Europe, not from us. And you'll see that repeated over and over. So it's not just about the top line. It's about the longer, short term and longer term damage to our economy.

[Frank Holland]

You know, Steve, really quick, I want to jump in.

[Scott Wapner]

Let me just finish.

[Frank Holland]

Okay?

[Scott Wapner]

Let me just finish. I'm not saying that the end goals are good. I'm not saying that we should address. We shouldn't address trade balance. Of course we should. I'm not saying we shouldn't address the incredible bloat in the government. I'm just saying the execution is flawed and may wind up being more damaging than the end result.

[Frank Holland]

All right. Well, number one, to your point, the president met with John Boyd, Mel Gibson, I think Scott Baio was in there too. So if you're going to do some reporting, Weiss, you got to get in there.

[Scott Wapner]

I feel better. I didn't say only with John Boyd. So if you're going to comment on my comments, they should be informed comments.

[Frank Holland]

On a serious note, I want to go back to that bank of America that we've been referencing, the flow show data. They actually say you want to sell the US Going into the trade deals. Another thing they mentioned is some of the biggest selling or outflows when it comes to tech over the last 12 weeks. Brendan, I want to get your take on this. When we're talking about tariffs, there's a pause in a number of areas that seems to have given tech investors a lot of confidence. In your mind as we go into this trade deal, how are you viewing tech?

[Jim Lebenthal]

Well, I don't think tech is immune, certainly. And even if tech itself, if the company itself isn't, isn't directly exposed to tariffs, their customers are exposed to tariffs. So there are definitely exposures exposed. But I do think, you know, tech has come. It was the first to start correcting. Part of that had to do with the large valuation that was in place heading into this year and also just the tremendous amount of capex that's happening and a lot of the hyperscalers and concerns about when, you know, investors are going to see a return on that investment. And now there's this. As we've seen with Google and others, there is a lot of concern about traditional search and how that's going to ultimately play out as more people turn to the chatbots, the groks of the world, the perplexities to form their search for them rather than relying on traditional Google search.

[Frank Holland]

Well, you're mentioning Alphabet. Kevin, I want to come over to you. You actually trim some of your Alphabet holdings. I'm looking at the charts right here. Alphabet shares down about 1 1/2% or so since earnings. What was the motivation for you to.

[Kevin Simpson]

Trim exactly everything Brenda just said? This is a situation where we talk about it on the desk all the time. How many times are you using Google versus Chat GPT or one of the other AI companies? And I think I'm about 80% Google. 15. 15 to 20% ChatGPT mostly. But the real, the reality is that those advertising dollars are going to go somewhere. We're going to see them decline within Google. We're looking at this exactly the way we did. UnitedHealthcare with the DOJ knows we just wanted to get away from an overweight position. Still have a little bit in Google Alphabet. We still have a little bit, unfortunately. UnitedHealthcare error. And then it'll just be a question of how the stock trades, whether we get stopped out of it or not. Lots of reasons to like it, but a big reason and a huge catalyst earlier in the week that we hadn't really put into our thesis.

[Frank Holland]

You know, a lot of people are talking about selling Alphabet right now. I think the metaphor a lot of people use is Eastman Kodak where they could have bought digital cameras, but they didn't. But in all fairness, Alphabet has its quote unquote digital camera. It has Gemini, it has Gen AI capability. So why are you so sure those ad dollars don't stay with Google Search and also go to their gen product?

[Kevin Simpson]

Now you make a great point. It's not Eastman Kodak, but if you were going to divide that 20% in my world up, Gemini is not going to get all 20% of it. So you're going to see less ad revenue flowing through. They've got lots of other catalysts, lots of other things and businesses under the hood. But when you lose the golden egg or the golden goose completely, it's going to affect your margins for sure.

[Steve Weiss]

So I agree with everything you just said. And the question I think for anybody who's long the stock is whether it's priced in or not. And we're not going to know. All right? The stock will either dribble down for the next several weeks or it will start to recover. I think actually a better analogy besides Eastman Kodak is Xerox, another nifty 50 company from 50 years ago. Because Xerox, like Google became a verb. You xeroxed something, you googled something and that changed. And the question for me is whether Google is going to go where Xerox is now, which is not even an afterthought thought. Sorry, xrx. The answer is for exactly the reason you just said, Kevin. I don't think so. I think it will stay relevant. It's not just the other businesses, YouTube or web services or way more or anything like that. It's that there's an incredible amount of intellectual property and talent at the company which I think will allow it to modify its business. It won't retain 100% of the market share. Its moat competition has been decreased. But much like when you look at Meta, however many years ago that mobile was a threat to it and then after that the Apple iOS system change was a threat to it. The company adapted because it had good intellectual property, it had good talent, and I think that's what's going to happen with Alphabet as well.

[Frank Holland]

Jimbolia, you own Alphabet. Brenda, you and Alphabet as well. You were just talking about a bit ago. When we're talking about Alphabet, though, it's kind of a conglomerate. We're not just talking about search and also AI. I mean, there's a lot of different parts of the business, including Waymo. We heard Lyft talk about moving into autonomous driving in their earnings call, and then also YouTube. Big, huge ad business there. What's your view? Are you that worried about disruption when it comes to the search business? And I want to ask you, why can't Alphabet just buy one of their competitors in the air space? I mean, they made a big acquisition earlier this year with $32 billion. I mean, certainly Alphabet has a lot of cash.

[Jim Lebenthal]

They do. And I don't think the company is going to sit still. And Gemini is really highly respected, although I don't think the company has done a good job of really getting it out there and having people use it. So I think there is opportunity. I think the biggest problem, though, is when you look at today, how the company's revenue and profitability is generated, a lot of it is coming from traditional advertising on Google searches. So that's, that's a problem. But I agree that there are lots of other interesting parts of the business. YouTube is fantastic. We think about where those advertising dollars go. YouTube is a great avenue for that. Also, if you look at metas of the world, I do think social media is another place where it's probably going to be pretty sticky in terms of the ad dollars going there. But I still think, and this is really, you know, a problem everywhere is how do you monetize the chatbots of the world, the perplexities of the world, Gemini's of the world. How do we do that in a way that can is really profitable for these companies, or is it not? Does it become a commodity business? So I think that's a big question that the market's grappling with. But when I think we look at multiples, you know, Google's multiple, to Jim's point, has already come down. It's been low for a long time. This has been an overhang. So you could argue maybe some of this is really already priced into Google, but is it priced into some of the other players out there? That's a bigger question.

[Frank Holland]

All right. Speaking of valuation, Kevin, you made Another move. You bought some Palantir and a lot of buzz about this stock. The forward P. I'm looking at it right now 191 times forward earnings. Kind of walk us through the trade here. You bought at 109. So just kind of walk us through your thoughts here. Again, very high valuation stock. One of the questions here, does valuations still matter?

[Kevin Simpson]

Valuations do matter. And this is in our growth strategy. And remember, we can write covered calls against this thing and bring in massive premium. So it's a little bit different for me in this trade strategy to look past some of the, some of the high multiples, but at least it doesn't have this thing. Remember this, Jim, the infinity sign. So it had some earnings. We own this. Last year it got called away. We missed a big part of the run up. When it rolled over, we were not part of that either. But on earnings, we thought they were fantastic. Stocks sold off. We initiated a position. We actually bought more this morning. Stocks down about $2. We like what they're doing in the commercial side. That was up 70% year over year. It's not just reliant upon government contracts, which also were up handsomely in the first quarter, but this is a name that we think it certainly has to grow into that multiple and a little bit more volatile stock than our normal name.

[Frank Holland]

Yeah. By the way, I mean, the commercial and government business are about 5050 now. Used to be kind of a black box. A lot of government contracts. They've certainly expanded. Brenda, does valuation matter? I'm looking at 191 times forward earnings. Does that matter to you? And then also Kevin mentioned the government work over in Europe. A lot more defense spending expected. You would think that Palantir would be a beneficiary of at least some of that.

[Jim Lebenthal]

Absolutely. And no doubt the fundamentals are positive for the company, but our, our concern is the valuation. So it's just too rich for us. We would wait for a more meaningful pullback even when we see that we may become more constructive. But for now, we see lots of other opportunities out there in the market given the volatility that we've had this year wise.

[Frank Holland]

We don't leave you out of this conversation. You, you have any thoughts about Palantir? I mean, either for the commercial business, which is AI software, or for the defense business, which is, you know, it's more well known for. At least for now.

[Scott Wapner]

Yeah, look, I love the company. They are truly cutting edge and leaders in defense space. This company was founded by, you know, co founded by Joe Lonsdale. And obviously he's still somewhat involved and as to wrench connections to the government. And Joe's just a brilliant investor and manager, so I love it. I just can't come to grips with the valuation. Now, your question, valuation matter. I mean, that's, that's an excellent question because that's the heart of it. Look, we see valuation paradigms that can endure for a long period of time. And even if valuation doesn't go up from here, there's a reason for it to. Their growth is so tremendous that you'll see a nice move in the stock. Where valuation really matters is if there's a pimple. So if they get a pimple, then. Then you'll see it burst and that'll burst the valuation. So either that's an opportunity to get in, depending how far it goes, but I wouldn't mind that happening so that I can get into it. I've been watching it for a long time and I actually thought the valuation was. Was high when was $30, so. So I missed it completely. And, you know, good luck to Kevin. I'm sure Kevin's risk managing it appropriately as a percentage of his portfolio, knowing him. And he's great risk manager.

[Frank Holland]

All right, we're good ways away from 30 right now, though. Palantir shares pulling back about two and a half percent. All right, let's hit a few more moves this morning. This afternoon, I should say. I'm used to saying this morning. Kevin, back to you. You're doing a lot today. You're selling some Vertex. I want to ask why. So Vertex, obviously the pharma space, the biotech space, has been under a lot of pressure. But if you talk to any analysts, including the analysts at Jefferies, they say Vertex is the best position to deal with any possible tariffs or changes to regulation.

[Kevin Simpson]

Yeah, long term, I think it's great. And if we can get back into it, we will. We were a little bit concerned about it heading into earnings, so we wrote a covered call, brought in 19 and a half dollars the day before. So on Monday, we wrote this call, 19 and a half dollars. The earnings were a little bit less than expected. The stock sold off. It's down about $43. We bought that call back for $0.50. So we hedged half of the decline, $19 of profit. And we basically got stopped out of the position. Frank, not anything having to do with the name long term, but to Steve's generous compliment before, it's pure risk management.

[Frank Holland]

Weiss, you trimmed a little bit Vertex. What was the motivation for you.

[Scott Wapner]

Well, Frank, just give me a minute here. I'm looking for. See if I missed a call from Kevin telling me about those. So I'm the covered call, so. No, I didn't. Thanks.

[Kevin Simpson]

Everything online, every single we do. You can check it out online every day.

[Scott Wapner]

Okay. Yeah, look, I still part of the position. You know, I struck by the position for other reasons. German X I knew would be a slow ramp. I expected positive commentary on it, but look, the FDA in the first quarter had just about a record low in approval of drugs. They've got a couple of important trials going on and we'll see what happens in that regard. So from a macro standpoint, I was nervous about it. I was not nervous about it from a, you know, really from a fundamental standpoint because I didn't think it got ahead of itself like Lilly and I thought the valuation was very reasonable. So I'm going to hold the rest for now and hope for a bounce and then I'll reassess.

[Frank Holland]

All right. Jim, you actually bought a little bit more of Vertex earlier this week. Brenda, you own it, but we're going to move on to something else that Brenda's doing. Brenda, you're actually buying Qantas Services and you're selling Zaidis. Give us the rational in Qanta Services first.

[Jim Lebenthal]

Yeah, so Qantas Services is a specialty contractor that really is kind of a go to for building out and upgrading the power grid in the United States. We think that is going to be an ongoing trend. No matter what the economy does. We think that's going to be a priority. So we established a position. We use Zoetis as part of the funding of that position. So what is within the animal health space? It's such an interesting business because it's not exposed to Medicare, it's paid out of pocket, but the stock just was not acting as well as we'd like it to. And we just think that when we look at what is the market going to be excited about, what are we excited about in terms of being a priority of spending? Quanta is definitely falling into that category. So we decided to use Zoetis as a.

[Frank Holland]

So Quanta is part of like the AI trade ticker, I believe is by power. So like that's their whole thing. Back to Zoetis, though. Do you think that they're kind of being impacted by the trade war? Because a lot of their business is agricultural animals. Some of those exports are going to decline quite significantly unless we reach a trade deal.

[Jim Lebenthal]

It is, I think, even more importantly for that business again. As I said it for us, the most interesting, interesting part about it was the pet piece of it because so much of it is there's no insurance company to deal with for the most part. Most of it's paid out of pocket in cash. It's a good business, but the market just was not rewarding it the way we would have thought.

[Frank Holland]

Yeah, my dog's pretty expensive. Definitely pay out of cash. All right, coming up here on Halftime, more committee moves. Brenda has another big sell. Plus Jim is ready with a trade update on his stock. It's down 20% this week. We gotta talk about this one. Farmer Jim. Halftime. Back in just two minutes.

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[Frank Holland]

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[Steve Weiss]

Yeah, yeah. Bad results. And by the way, I want to be clear, I'm just buying in my personal account. I'm not buying this for clients. And the reason why is because the stock specifically plan, the company's plan, has not gone according to what I thought would happen. What should have been a growth story has now become a turnaround story. That's not the sort of thing I generally invest for my clients, but I do have a lot of faith in management. They laid out yesterday a very clear explanation of what went wrong, what they're doing to fix it. And I do know this management, and I have a lot of faith in them. That's why I'm buying a little bit for myself. I do believe that this turnaround will work. I also believe it's going to take time. Now, if you're somebody who's listened to me on this over the years, I'm telling you that I'm holding it. It will take some time. But you do have to understand that this is part of a portfolio. I own 25 stocks. This is not the only one. Nor have I ever recommended that it be the only stock in your portfolio. I do think it will be. It will work. But I think this is why you have to have a diversified portfolio overall.

[Frank Holland]

Jim, we love you, man, but just because you say it louder doesn't make the trade any better. I got to be honest with you.

[Steve Weiss]

Well, I'll be honest with you. I mean, I didn't realize I was being loud, but I feel like crap about this. I do. I feel like crap about.

[Frank Holland]

I want to talk to you. Steel, aluminum tariffs, that was that. I guess it was supposed to boost the price of steel in the U.S. obviously, Cleveland was a big steel producer. I'm looking at the chart down about 3 1/2% since those tariffs were first announced. Is that part of the problem? The fact that the steel prices haven't moved higher, or is there something else?

[Steve Weiss]

So steel prices have moved higher, but A lot of the business of Cleveland Cliff is on a contracted business business and so those contracts need to roll off to get the higher prices. At the same time, it's unquestionable that for the last few quarters the automotive business, which is very core to their business, has been moribund. A lot of that has to do with imports which should get switched, should get changed with the tariff regime that we're entering into. So as more domestic production comes up, volumes should increase at then higher prices. There's also a lot of other things. They're idling plants to basically get rid of loss making operations. That hurts, you know, that hurts the CEO. He doesn't want to lay people off. I know him personally, I know that hurts him. But he's got to balance all, all the stakeholders, including not only employees, but shareholders. And he's doing it all right.

[Frank Holland]

Shares down about 2% year to date. I believe they were down about 25%. Moving on, Adobe set to offer a discounted package of products to the government amid scrutiny on software spending. Brenda, you actually recently sold Adobe.

[Jim Lebenthal]

We did. And if we look at the story of this company, you know, it's been relatively undervalued. It's very dominant in its space. But what we've seen is slowing trends and that has just contributed to this narrative about the company losing share and not being competitive in AI. And so when we looked in our portfolio of where can we, where can we take from to add to new ideas that we had in the portfolio like a quanta, this was one that bubbled up to the top. So we decided to reduce exposure. We still think the company is really dominant in its space, but it's just not going to be. It's not rewarded. The company's to prove itself and we don't know how long it's going to take and when, what it's going to take to get there.

[Frank Holland]

Adobe shares up about a quarter of a percent right now. Jim, you own this one. But we got to move on. Time for some headlines now with our Silvana Hanaud back at Englewood Cliffs CNBC headquarters. Hey, Silvana.

[I]

Hey, Frank. Good afternoon. The new head of female told staff today that he will, quote, run right over anyone who resists changes to the agency. According to Reuters, Drew Richardson added that the delegation of authority is suspended and all decisions must now go through him. The comments come just a day after he was appointed to replace acting FEMA chief Cameron Hamilton, who at a congressional hearing said that he didn't support the agency's elimination. The FDA has granted the use of three new natural source color dyes. The agency approved today, two blue dyes and a white dye which expands its use to color cereals and snacks. Last month, HHS Secretary Robert F. Kennedy Jr. And the FDA commissioner announced the agency planned to remove food dyes from the US Food supply. And candy giant Ferrero announced today it's adding peanuts to its Nutella and Dr. Pepper flavor to Tic Tacs. And that's ahead of the annual Sweets and Snacks Expo as it tries to attract more American customers. The European candy company has been expanding in the US during the last decade through acquisitions and introducing its iconic brands to US Customers.

[Jim Lebenthal]

Frank?

[Frank Holland]

Yeah, I don't know if that's good or bad. I'm just trying to figure it out. It doesn't Dr. Pepper. I don't know. I don't even know. I don't like it. You try it. Report back. I'm trying it. Silvana now back at CNBC headquarters. Silvana, thank you. Up next, our call of the day is a price target cut on one of the big retailers ahead of earnings. We're going to tell you where the committee stands on the consumer. That's coming up.

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[Frank Holland]

And welcome back to the Halftime Report. Let's hit our call of the day. It's target JP Morgan cutting its price target to 105 down from 140 ahead of earnings later in the month. Brenda, you own this one. Shares down about three quarters of 1% right now.

[Jim Lebenthal]

Yeah. So Target's a relatively new purchase for us. We added it in late March of this year year but really bought it on the hopes of a turnaround that really is the company is trying to focus on differentiation, having better in stock positions, providing more newness. So early days there, we're not expecting a huge significant move. But I think outside of that when we look at the overall consumer we're seeing a story of relative health with some of the recent earnings that we've had with Disney, Doordash, Lyft, all citing relatives, relative strength of the consumer. So I don't think we can count the consumer out. But Target we really own as a turnaround. So not expecting a full turnaround to happen over the last month. So we're in it, we bought it when it was down and out so we're going to stick with it for now.

[Frank Holland]

You know it's interesting because Walmart has its earnings coming up next week. Bit of a different business. Walmart is much more grocery focused. But are you going to use those earnings as a read on what you're expecting from Target? Like are you, are you looking to hold on to this for this full turnaround or would you possibly, possibly look for a chance to jump ship on this stock if you don't like what you hear from Wal Mart?

[Jim Lebenthal]

We're not like so we tend to be long term holders and have a little bit more patience. Target also has a significant part of its business in grocery. Not as much as Wal Mart but would certainly look to hear what Walmart saying about the overall consumer. But I do think they're different. I think Target caters to a little bit of more of a higher income consumer overall and as long as there's newness and something interesting there, the consumer is likely to come as they just need that, they need that to drive visits and to drive purchases. Wal Mart I think has been a beneficiary of trading down in this higher cost inflationary environment that we've been in. So I think even though they play in the same space, they have a slightly different consumer. So I wouldn't do a one to.

[Frank Holland]

One read through Steve Weiss, your view on the consumer. Also Target again earnings coming up, getting a downgrade today. Pretty significant price. Target cut as well.

[Scott Wapner]

Yeah, look Target, it's been a problem child and had such great hope when Brian Cornell went there, did well initially got rid of Canadian assets. But it just doesn't seem, it just doesn't seem worth the headache of going into when there are other retailers like look, the consumer has to be under pressure. It doesn't take a clairvoyant to figure that out. With rising costs across everything they buy, they're under pressure and with most two thirds of the country living paycheck to paycheck, it's a real issue. So I'm not particularly positive on the consumer. We've even seen the high end consumer of the last couple of quarters cut back not because of affordability but, you know, tired of spending, you know, $4,000 for, for a handbag or things like that. We've seen watches, so it's not a good time all around.

[Frank Holland]

All right, Kevin, you got quite a bit of retail exposure. You got Home Depot. You also have tjx. What's your take on the consumer? You have kind of two different segments of the consumer there.

[Kevin Simpson]

Well, I think the Home Depot play is more of a rates coming down at the end of the year and maybe a five year super slow cycle in terms of the major renovations that we did during COVID TJ Maxx is really a play where you don't have to worry about tariffs. And if the consumer does trade down, it's a very loyal base. I think they do well in a recessionary environment or a thriving economy. Love the name.

[Frank Holland]

All right, Home Depot shares pulling back about a half a percent right now. Got a quick programming note. Our friends over at Fast Money, they're holding a get together on June 5th over at the Nasdaq and grab a front row seat to watch the show live. Daughter a ticket. Scan the QR code on your screen right now or go to cnbc events.com fastmoney all right, coming up next, Mike Santoli joins us with his midday word. We're back right after this break. And we're back on halftime. Senior markets commentator Mike Santoli joining us with his midday word. Hey, Mike.

[J]

Hey, Frank. Yeah, I mean, we're kind of being held in a bit of suspense here right at this crossroads point in the markets hanging around that April 2nd level. Dave, the tariffs were described right there with the S&P 500. Managing to kind of just churn in that area to get clearance one way or the other is to see whether we have further de escalation. I don't know that there's a specific scenario right now precisely priced into the market where it is at these levels in terms of tariff outcome, in terms of net cost down the road. But I do think that incremental progress is pretty important after this weekend with the talks with China. Any gestures toward, hey, we're looking for wins and off ramps as opposed to trying to dig in. It's probably a prerequisite for the market making progress from here. I'll just point out A couple of things. One, risk sentiment in general has firmed up pretty nicely since the lows of a little over a month ago in the markets. You got credit markets saying that things are looking a little bit less frightening on the credit side. You have bitcoin obviously above 100,000. You have non US stock markets doing well and actually having a looking like a V bottom from the lows. The question here is whether The S&P 500 can incrementally make any progress based on what's happening in the here and now in terms of policy.

[Frank Holland]

You know, Mike, you said that's the question. We've had an incredibly strong earnings season. We're going to show it just a second ago, but EPS up 14% year over year. Is there another catalyst besides a really great trade deal? Obviously China would be one of those that can continue to power this market after earnings like this, I think.

[J]

Well, first of all, I think the context next is the catalyst which means you're going to constantly have to monitor whether in fact those earnings are going to be, you know, supported in the second half of this year. The revisions for the majority of companies has been lower, not higher, even though the overall reported beat rate was pretty impressive. So I think those things along with trade progress, we got to keep an eye on, on the budget progress as well. Demand for Treasuries, all that stuff is going to be in the background for a little while. So I think we're just going from macro data point to macro data point to figure out if the hard data, the real economy is holding up as we hope or if in fact it's starting to give way.

[Frank Holland]

Yeah. To your point, we had a 30 year auction this week. Rick Santelli only given it a C when it came to demand. Mike Santoli, midday word. Great to see as always. Thank you. All right, coming up here on Halftime, more on that bitcoin breakout and Gold's record run, how the committee is positioned. Also looking at the markets in the red across the board right now. We'll be right back after this. The Sohn Conference May 14th in New York City. When you buy a ticket, you get direct access to the best ideas from some of the world's most successful investors while helping to fight childhood cancer at the same time. On stage this year, Steve Cohen, David Einhorn, Larry Robbins, soccer star Gerard Piquet and the mentalist O. Spearlman. Find out [e-mail] it's where Wall street unites to fight childhood cancer. And welcome back to Halftime. Bitcoin trading right around $103,000 a coin. Just under that right now. Made a few moves. Weiss, you recently bought the iBit, the Bitcoin ETF.

[Scott Wapner]

Yeah, look, this is a trade and as I mentioned yesterday, I bought it just below 90,000, I think continues. Let's face it, the administration has been very, very vocal in their support of crypto across the board and new SEC commissioner is just as supportive. So I think sellers momentum I think goes. You know, we've seen periods of time and most recently when it traded down from one of five one zero six into the mid-80s. So it's not out of question that will happen again. The key to Bitcoin, if you're not a believer as I am, is positioning it appropriately in the portfolio as speculative asset. So I still don't see the use case, still don't see the business case, but I do see, see that others see value and things that I do not appreciate. So the momentum there I think continues. I think it moves to new eyes.

[Frank Holland]

You know, funny, the IBIT saw the biggest ETF inflows this week according to verify was the top ETF outside of index funds when it came to inflows over $1 billion. All right, we're going to move on to the gold trade. Earlier this week, double lines Jeffrey Gundlock told Scott Wapner gold It could hit 4,000. Kevin, you own Agnico Eagle minds.

[Kevin Simpson]

Agnico Eagle has been one of our best performers. It's got great margins. They cleaned up their balance sheet. They pay a small dividend, but it increases at a very, very rapid clip, which we like. I hope Jeffrey's right. It'd be great if it goes to 4,000 because Agnico has been one of our best trades this year. We rotated out of Freeport to get into it. We wanted more gold and copper. So far it's worked out really well and I think there's more, more momentum to go.

[Frank Holland]

Is there a trade risk in here? A lot of this gold buying has been actually, actually from China's central bank trying to hedge against the dollar and kind of hedge against, you know, American supremacy, if you will, when it comes to the global economy. If we get a trade deal, are you worried that buying is going to slow down also a lot of buying from other central banks?

[Kevin Simpson]

Yeah, I think that's a real threat to the momentum trade on gold, but I don't know that it's going to go back to 2500. I think to your point, maybe it's not going to run to 4,000 but it kind of hovers here in the threes.

[Frank Holland]

All right, Brett, you own Newmont Mining as well?

[Jim Lebenthal]

We do. So Newmont's the world's largest gold miner. We've owned it since late 2023. So we've owned it for a while. Similarly, it's been our one of our best positions over the last year. But I would say, you know, given the move we've seen in gold and just how that translates into EBITDA. So for example, for, for Newmont, EBITDA was up 55% in Q1, really, based on a lot of the gold prices that we've seen. So I think if you're looking for a place to trim, it's probably not a bad spot. But we're certainly happy to have had it in our portfolio.

[Frank Holland]

Jim, you got some bullion up there on the farm. What do you think?

[Steve Weiss]

I can't value gold. I mean, obviously I see what it's doing, but I can't place a value on it. I'm a cash flow and earnings and balance sheet kind of guy. I'll leave the gold to you. Find gold bugs over here to my left.

[Frank Holland]

All right, Newmont up almost 2% right now. All right, stay with us. Final trades. They're coming up on halftime. We'll be right back. And we are back on halftime with final trade. Steve Weiss, you're up first.

[Scott Wapner]

Yeah. Two things. Vertex. My final trade, because I think it will balance, number one. Number two, as a public service announcement, I'd like to perform an intervention for Jim on Cleveland Cliffs. Anybody join me?

[Frank Holland]

Duly noted. Steve Wood Price, Kevin Simpson, over to you.

[Kevin Simpson]

Palantir. Admittedly a high multiple, but very impressive earnings. Revenues up 39% in the first quarter.

[Jim Lebenthal]

Brenda Wynn Resorts. Really fantastic assets. Have seen some weakness in Macao, but think that could certainly change, particularly if China starts to do more Western style stimulus of the consumer.

[Steve Weiss]

Farmer Jim Microsoft. You know all about it. But there's a different message I want to give today. Oftentimes What? When you're watching us, we refer to people behind the scenes. And Patty Martel is one of those people. She's been a producer of the Halftime Report since it began. She's been spectacular. And more than anything, she's been a friend to all of us, especially to me. Patty, thank you. I know you're moving to a new show. I just want to congratulate you and say thank you.

[Frank Holland]

I want to agree with you. I think we all agree. Patty, you are excellent. Best of luck on your new show. That does it for Halftime. The exchange starts right now. You've been listening to CNBC's Halftime Report, the podcast. You can always catch us live, weekdays at 12 Eastern only on CNBC.

[Brendan Vingelo]

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 halftime reportdisclaimer Introducing CNBC.

[Frank Holland]

The new streaming platform from the number one source in business news. Watch live or on demand. Access any market, anytime, anywhere. Start Streaming. Go to cnbc.com stream now.