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Halftime Report
Return of the Tariff Threat? 10/13/25
00:47:20
Frank Holland and the Investment Committee debate the market swings over the last few days and how you should navigate the uncertainty. Plus we hit the latest Calls of the Day. And later, the desk share their latest portfolio moves. Investment Committee Disclosures
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What does it mean to live a rich life? It means brave first leaps, tearful goodbyes.
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And everything in between.
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With over 100 years experience navigating the ups and downs of the market and of life, your Edward Jones financial advisor will be there to help you move ahead with confidence. Because with all you've done to find your rich, we'll do all we can to help you keep enjoying it. Edward Jones, Member, SIPC Our state has changed a lot in the last 140 years. We know because Multicare has been here guided by a single making our communities healthier. That comes from making courageous decisions, partnering with local communities to grow programs and services, and expanding healthcare access to those who need it most. Together, we're building a healthier future. Learn more@mycare.org.
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I'm Scott Wapner and you're.
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Listening to CNBC's Halftime Report, the podcast the most profitable hour of the trading day. We record this live weekdays at 12 Eastern.
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Listen in.
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D
Thank you, Sarah. Mike, welcome to the Halftime Report. I am Frank Holland in for Scott Wapner front and center at this hour. The big bounce fall calling Friday sell off. We're going to tell you how the committee is playing. Joining me for the hour, we have Joe Terranova, Jenny Harrington, Steve Weiss and Jim Laventhal. First, quick check on the markets right now you see green all across the board again after the big sell off on Friday, Each one of the indices regaining about 75% or so what they lost on Friday. Right now we're seeing the S and p up about one and a half percent, the NASDAQ doing better than 2%. And with that, Joe, I got to come back to you. So we're seeing the markets make up a lot of the ground that they lost on Friday. Is there something to take away from the sell off on Friday and the rebound that we're seeing right now?
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E
Of course, you as an investor or a speculator, you always try and find the message within the market, in particular when volatility spikes and you see the type of price action we saw, I think for the remainder of 2025. As I have said, I think the secular bull market trend remains in place. I think there'll be a little bit of a chase performance. I think that probably accelerates, intensifies on the other side of earnings. I do think the other side of that is you can't dismiss and ig ignore what we witnessed on Friday. And I think it's a stark reminder to you as the investor to understand what your leverage exposure is to me, that is the primary word that comes to mind thinking about the elevated volatility of Friday. And also understand if, in fact, we are to see in the coming months, 2026, the type of environment where the market needs to source liquidity, is it sourcing liquidity from the places where you have the most leverage exposure? And if that in fact is the case, then in the moment today, you need to reshape the portfolio to reduce some of that leverage exposure. I think that really is the message, because a lot of the challenges that are in front of us right now, whether it's a deterioration in the labor market or some of the rhetoric that's going to continue, we know surrounding tariffs, or maybe it's some of the things we're seeing in the debt market with Tricolor, our first brands, 2026, and the calendar moving forward, those don't get wiped away. Those challenges are still going to be with us. And I think what's different about 26 and 25 is in 26, you don't have the strong, bullish momentum in place that well entrenched underneath the market catalyst that you do now. So I think this is really a glimpse into 26 more than anything else in the near term. I still think we'll be okay moving forward to the end of the year.
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B
All right.
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D
One thing I know, I certainly know on Friday, the market doesn't like tariffs on Chinese imports above, like 30% or so. The idea of 130%, something the market certainly doesn't like. Jenny, are we learning something from the bounce today and the fact that we're seeing tech moving higher again? We're seeing pretty much everything moving higher, in all fairness, including the small caps. Is there something we can read into today's market action?
- [04:12]
B
I think so. And I think when you say, is there something we're learning? I think I'd rephrase that to Jenny. Isn't there something that we should have learned four months ago? Like, why are we learning it again now? So I think the reminder from Friday to today is to some degree, tune out the noise. But at the same time, we need to be very aware that with valuations where they are, there's fragility out there. So something as, okay, this can be controversial, but something as benign as a Trump tweet on or a Trump announcement on Friday saying, we're going to 100% tariffs on China, which we all should have known, like, we all should know, okay, he's probably going to back away from that. Trump doesn't want to See the market drop 3% on that. But why are we so surprised? Why are we taking that as real? Why are we letting the market go down 3%? And so I think the lesson, Frank, is that at 23 times earnings and huge concentration in a handful of stocks with earnings a lot higher than that, there is not that much room for error.
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D
There is for perfection, is what you're saying.
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B
Price to perfection. And whether it's not going to be that. I don't think it's going to be an announcement like that, but it could be something different, like who knows what it's going to be. But it's just a reminder. This thing, this thing is not super strong at the base, I don't think.
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D
All right, so you're not taking a lot of the tariff talk very seriously. By the way, Ed Yardeni also putting out a note today saying if neither side were to blink, the US And Chinese economies would lead the global economy into a deep recession, if not a depression. But he expects both sides to blink relatively soon. Steve Weiss, what soon does soon have to happen before President Xi and President Trump meet, and what does that mean for the markets? We don't see a quote, unquote, blink before that?
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F
Well, I can't answer what soon, but I can tell you that the market assumes soon is already coming past, given the bounce back from Friday. So, look, the market, what was surprising was the reaction Friday. And I think that wasn't the reaction as much to the China, another tantrum on tariffs with China from the president. I think that was the reaction to the sensitivity to where the market is, all the bubble talk, not just in AI, but in the market, and the fact that trading without the support of valuation and fundamentals, it's trading on momentum. So that was momentum killer. So, look, I do think it'll work out because this must have scared the president, right? And on the weekend that he's doing something good with the, you know, with freeing the hostages and, and trying to create peace in the Middle East. This sort of took the headlines what it shouldn't have. So, so I think all that's an issue. And, and frankly, to me, it just points out that this market is in a, I don't want to say perilous position, but it is in a tentative position where, to Jay's point, we never really know what the catalyst is taken down. And for me, the intermediate term still seems to be positive because the market's willing to forget and forgive overnight these reactions. So I remain pretty much fully invested in the market and I still think the AI, the permanent compounders will win out. But I am troubled by stocks that I own like Caterpillar having the move that it's had, you know, since I bought it. So, so there are definitely cautious signs here, but I don't know if there's anything to do with it. Nobody should be willing to or few would be willing to sell their positions and pay taxes. Right? Even capital gains tax this level. And then FOMO just continues to drive it.
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D
All right, Jimmy, coming over to you. S and p up about one and a half percent. Nasdaq up about 2%. Is this just forgive and forget? Let's not worry about that. The President in all fairness made some comments he posted on True Social. We also heard from Chinese officials saying they don't want to fight, they're ready to fight, but actually don't want to fight. And there's also a lot of thought that this may just be posturing ahead of that meeting between Xi and Trump. The idea of restricting rare earths and also some of the tech export restrictions, specifically on Nvidia chips. They made a lot of headlines next week. So is this simply forgive or forget or did we get some reasons maybe for the markets to rally the way they are right now?
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G
Well, I think what you're seeing here is negotiations as it comes to trade and tariffs and you know what they that will be resolved one way or the other in the coming weeks. So will the shutdown. It will be resolved one way or the other in the coming weeks. And I can't tell you exactly when. But I will tell you what troubles me and what I think troubled the market far more on Friday than the actual tariff announcement from the president is what Joe was alluding to. Joe, you started this off talking about leverage and I agree. I think there are some serious concerns in terms of leverage. I say serious. We can resolve these, but we need to keep our eye on them. Tricolor and First Brands, clearly there were some poor underwriting standards by Jefferies, by first third and with this point Bonita Fund, which apparently had 25% of its investments in First Brands receivables, that's poor risk control. Now these are things that if they're one offs, fine, no big deal. But you know what? In May of 2007, that's what or June of 2007, that's what people said about Bear Stearns with the mortgage backed hedge funds. I'm not saying it's a direct comparable. History doesn't repeat itself. It does rhyme. What I am saying is let's start paying attention to credit spreads. They've been incredibly tight, they've been incredibly benign. And Jenny, to your comment, your rhetorical question about, I think you phrased it this way, why are we selling off so much 3% on Friday? I think it had. Look, the tariff announcement was the match, the kindling, the fuel was what was going on in crypto. Not talking about Bitcoin, not talking about Etherium, I'm talking about all of that coins, many of which got absolutely wiped out. There are reports that 1.6 million accounts got liquidated by automatic delevering algorithms at trading platforms. That's, you know, leverage is what could upset this. That's what traditionally does upset a bull market. So let's keep an eye on the leverage ratios.
- [10:01]
E
I think, Jimmy, spot on. It's a story for 2026. But I just want to come at this from the perspective of is there anything that you should be doing based on the price action Friday and based on the price action today in your portfolio? I think from the element of, okay, the market has recovered. Well, yeah, it's recovered. We only have three new 52 week highs today in the S&P, Martin Marietta, CVS and Sancoura. I think the last two days though has really illuminated what is going on in the precious metals market. And I think a lot of people that don't have precious metals experience, exposure is saying, okay, look at silver, which is going back towards the Hunt brothers high at 1980. Look at gold, which was strong on Friday, strong again today at 4100. They're looking at that and saying, okay, maybe it's time to increase my exposure to the precious metals. I think that's the one portfolio message that stands out over the last few days. And I'll tell you, Bitcoin, it wasn't the diversifier that I was told it was going to be. In a highly volatile environment, there are.
- [11:01]
G
Structure, there are structural issues there. I can theoretically get my arms around why it would be a hedge against fiat currency. But until you resolve these structural issues on the trading platforms about these perpetual futures and how they unwind not just the losers, but the winning trades as well in order to maintain liquidity on the platform, which has the effect of totally upsetting anybody who's got a balanced book in terms of crypto, those things need to be resolved before we can talk about this being a head.
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E
But that's the negative effect of 247 trading.
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G
And I'm with you, bro.
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Those that want 247 understand you're not going to see the liquidity in the early hours on a Saturday morning. Like ultimately you're going to see in the early hours on a Tuesday morning.
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Let's talk about, let's talk about what Joe asked, which is what do you do? How do you, you know, what do you do in this environment where we're all saying there's something brewing? There was something a little uncomfortable out there. One of the things that really bothers me is, is in times like early April, we start on this desk getting the question, should you be repositioning your portfolio? Should you have more bonds because the market's down? No. The time to start asking that question is right now when you just got that reminder that there is fragility out there. Whether it's leverage, whether it's response to the tweet, whether the tariff, whether it's response to Bitcoin, whatever is out there. There is something out there. So you want to think now while the market's to going still almost at its all time high, you want to think about how you want to reposition now and what I like doing because it's super hard to say, hey, just sell your Nvidia, trim your Microsoft, trim your Apple. Now look, if it's in your ira, if it's in your IRA and you don't have a huge capital gain, think about taking a little bit off and think about maybe repositioning into fixed income, into areas that haven't done as well, into a more diversified portfolio. But the time to have that conversation preemptively is today.
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D
Today's the time to have it. And Jimmy, you're mentioning leverage issues with liquidity. We saw liquidity people liquidate the crypto positions looking to get some money to cover some of their losses. So what's the answer for an equity investor right now you're shaking your head and smirking.
- [13:02]
G
Well, there's, there's one always true answer which is invest in high quality companies. If the market goes down, it's the highest quality. The biggest companies in any industry that are not only going to survive through a downturn, but thrive on the other side. But perhaps more pertinent to the discussion we're having is that we've got bank earnings coming up tomorrow, tomorrow and on Wednesday. And they are important because the banks have been a little heavy the past few weeks. The publicly traded business development corporations have been more than a little heavy. The alts managers, the private credit companies have been kind of heavy as well. So we need to see some indications, some commentary from the likes of Jane Frazier, Jamie Dimon, etc. That the corporate balance sheets and retail balance sheets are just fine. It couldn't come at a better time.
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F
Well, I think you have to disassociate the banks from BDCs and private credit credit firms because they're completely different dynamics there. What we're looking for from the banks and what we'll get from the banks are of course, you know, loan loss reserves are the increase but those are more from regular way businesses and regular way consumers and then absolutely deal flow. Now the fact they've been in pressure for two weeks after being in a leader position or more, you know, after being in a leader position for two years and hardly cost it, pressure is insignificant and just doesn't matter. However, the others do have some issues and we've saw that, we've seen that recently with First Brands and and a subprime lender. However, I just don't think it's enough at this point to derail the market spreads just really haven't wide widened enough or at all to say there's lots of risk there.
- [14:43]
D
But I want to ask you a question to go back to Jimmy's point. We are going to hear from the bank. So if the banks start to get nervous or they signal they're going to get nervous, doesn't that hit sentiment? If you look back at 2008, I was actually speaking to John Sinek from Metric Capital who worked at UBS during the financial crisis. He said really the issue here is sentiment and confidence. And if you have a levered fund and the banks want their money back, that can create a run on confidence more.
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G
I don't think that's where we are. Hang on. He asked me so I'm going to answer it. And Steve, your point is well made that there's far more to banks right now than just credit quality. There's a lot to say about dealmaking, IPOs, etc. But the point that I'm driving at is that this is a point in time where we want more information. Yes, credit spreads have been very tight and they have started to pick up a little bit. My point is these are things to keep an eye on. So I will be paying close attention to what the commentary is about credit worthiness. And remember, we're at a time where we're at a lack of macroeconomic indication. Yes, there are some private market substitutes but still this is a time where I as an investor want information and the bank reports couldn't come at a better time. I'm not crying fire in a crowded theater. It's not what I'm doing. I'm simply saying this is a time to pay attention to.
- [15:48]
D
You're saying if we hear some, some positively questionable sentiment from the banks that could raise even deeper questions about credit. Yes, well, but it's the other side of the argument you were making. They can make us more confident or they could actually reduce confidence. Some of their comments.
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F
Frank, your question, no offense, is entirely misplaced. One of the banks ever know what if the banks ever come out. When does Jamie Dimon ever come out and say I'm worried about, you know, in a way that shows worry as opposed to an observation consumers slowing down. This now, it's just not the tea leaves.
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D
Every comment the money center banks make, in all fairness wise to you and your comment, I'm not saying it's misplaced, but don't we read the tea leaves and as you just mentioned, bank earnings or as Jimmy mentioned, I should say very important, going to be very closely watched about strength of the economy, strength of the consumer and also credit after this first brands issue. In fact, we saw the Jefferies CEO issue a letter just to try to reassure people.
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F
Well, he should have because they're, they're just right directed right. Their first brands. They have exposure. Of course, he's got to. The stock went into a freefall because of their exposure there. But my point is we'll hear what we hear from the banks all the time. People there, whether it's Moynihan or Moynihan or Solomon or Jamie Dimon or pick anybody that come out. They're highly confident in their business models. They're highly confident in their risk management. They may take shots, subdued shots at other areas of the credit industry. But I think it's going to be. But they're not going to because they're building big businesses in private credit matter.
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E
From the perspective of positioning though. Think of it this way. Steve, I like what you said when you talk about the financials. First of all, to Jimmy's point on quality, here's the challenge. Jenny, you know this quality hasn't worked in 2025. And guess what? Today quality, quality, quality is not working as well. No, it's not personal to your portfolio. Quality is not bouncing back today. Momentum is bouncing back today. If you look at the quality factor year, everyone says on quality, the quality.
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F
Factors underperforming those titles of misnomers. But.
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E
No, no but. But that's just the reality of the statistics. That doesn't mean glimpse into the future. Jimmy's not correct. You pivot towards quality because of the environment. But think about positioning and financials because I really believe this quarter is a reckoning moment for financials. I'll tell you why. Bdc, I'm sorry, I wouldn't touch him right now. Wouldn't touch.
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F
Would you ever touch them though?
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G
Probably.
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E
Maybe in an 09 environment, maybe in a March of 2020 environment. Private equity. Private equity is not trading well. We talked about this the other day on the show for whatever the reasons are you want to cite for the publicly traded private equity companies. They're not trading well. All right, but now let's go to the money center banks. Steve's right. The money center banks. The biggest question is going to be what are you going to do with the excess capital?
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F
Exactly.
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E
Are you going to increase your buyback? Because there's going to be significant increased capital. So the market already knows. Market knows that there's a really feel good story tomorrow. We get JP Morgan, we get Goldman Sachs. The market knows there's a feel good story. But say to yourself, okay, what's the reaction to that? Because everyone who's long, myself included, most people along JP Morgan, most people along Goldman Sachs, they're not carrying it at an underweight focus on what the reaction is going to be. Are you going to hear good news and then have a bad price reaction to that? That's the reckoning moment. That's where you begin to get troubled. Or can you have what you've had in prior quarters which is good news and follow through good price action?
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B
All right, can I wait, can I say one more thing on this? Because it's really important. So as we're thinking about the banks and the bdc, which we never talk about, BDC is here. And I think it's important as we go through this quarter. This is going to be incredibly insightful. And I think to some degree what we hear from the banks in the coming week is not going to going to be that telling because the banks and who they're lending to, those are the creme de la creme. And we all know out there that there is a huge bifurcation in the top end of the consumer and that they're still healthy and in the lower end of the consumer and that we're starting to see cracks. Lower end of the consumer. Auto loan bankruptcies are like the highest they've been in nine years. These numbers at the lower end are really starting to show up. And I think if we listen carefully, it doesn't matter so much what the big banks say, but what is going to matter is what the BD BDC say, because they're who they lend to, is a much broader, bigger swath of America, is much more reflective of the overall economy and the overall environment out there. So I think if you want to know what's really going on, you listen to Aries, you listen to golf, you listen to 6th Street. I don't. The one thing that I'd say is I don't think all BDCs are created equal. So we own two in our portfolio that I'm very comfortable investing in.
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D
And which names are those?
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B
Those are Sixth Street Lending and Hercules Technology. The rest, Joe, I'm completely on board with. And Barron's had a big article this weekend, basically saying like, hey, look at these BDC, a whole bunch of them, I think there's like 10 on their list, are trading at a discount to Navy. I was emailing with a client this morning. I said it misses a nuance. And this is the nuance that just because something. Just because the BDC is under Navy, like, that's actually not a great buy signal. It's not a great metric for valuation. So you don't really want to listen to that. But what we all want to listen to as armchair economists, we want to Listen what the BDCs are saying about the credit of their underlying portfolios. That's going to be more interesting than what J.P. morgan said.
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G
Frank, I don't mind being early to say this, but all I'm saying is watch out. Just pay attention. Because a lot of things that have propped up this market just showed some cracks and not good ones. We're talking about crypto, Joe. How many times have you and I before the show talked about zero time to expiration options and how that's propping up a certain name? The answer is a lot. Okay, there is. And Steve, how many times, I think. I don't think I'm misquoting you. How many times have you and I talked about a gambler's mentality in this market, in fact, over many years that that's a chicken that's going to come home to roost at some point in time? I'm more in agreement with you than disagreement, Joe, that this does get through into 2026, that it's a 2026 problem. But the simple truth of the matter is I'm an old man. I've been through a few things. Not that I remember Bear Stearns. I remember the fact that the banks topped out in May of 2007. And you know, I just, I don't like the decline we've seen in some of these banks. You know, Citigroup's off about 8% from a recent high just as an example. And I hope it's nothing. I hope, I hope that tomorrow and Wednesday everybody saying look, Leventhal was worried about nothing. Believe me, that's what I hope.
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E
Look at, still watching, look at the last quarter though, the performance of the various equity indices and know that a lot of these money center banks are going to deliver historic equity related revenue.
- [22:19]
B
But, but it's reflective, you know, it's passed, it's on. What's happened?
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E
Is it passed?
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B
I think it is.
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F
Okay.
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B
I mean that's what earnings could have.
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E
Said that prior quarter.
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B
Okay, fine. But that's what earnings always are. I think right now we're at a time with a lot of inflection and a lot of distortion and disruption coming. So it's harder and it's particularly harder when you're lending to and reflecting the highest and the highest and the best.
- [22:39]
D
Broad consensus financials earnings very important for this market, for the rally more broadly. One quick technical point. Seen this from BTIG coming out saying S&P 500 very close to its 50 day moving average for the first time in about 6 months. Big deal. Little Bill Joe Terranova.
- [22:54]
E
No, I don't. Look, the 200 day moving average is where a lot of the quantitative funds, the non discretionary capital tends to react and you see the algorithms kick in. I'm not so sure to 50 day that you're going to see, you know, much, much price reaction. I would say it creates a healthier environment for the remainder of 2025 that you actually do test the 50 day moving average and create some skepticism as it relates to sentiment, positioning.
- [23:22]
D
All right, we're going to leave it there. S and P right now up just about one and a half percent. Coming up here on halftime, our calls of the day including a big upgrade for one gold miner that's already up more than 100% this year. Joe. Teasing that name. We're gonna debate it coming up next. More halftime right after this. The heaviest metal credit card of all time, rumored to be one of only 18 in existence. Plated with the very same tungsten that.
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F
Forged the international space Station.
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D
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F
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- [25:22]
D
And welcome back to Hamilton Time. Let's get to some of our calls of the day. We're going to start off with Goldman upgrading Newmont Mining to a buy. Joe, you own this one?
- [25:29]
E
I do. And you know, we spoke earlier in the show about right now the attractiveness of precious metals, silver returning back towards levels that we last saw when the Hunt brothers tried to corner the market in 1980. You could cite whatever reason you believe central bank policy moving rates lower, central banks actually buying gold, the, the ability to act as a diversifier and portfolio. But clearly when you look at silver, when you look at gold and now when you look at platinum and palladium, these four metals are primary in the commodity space. We're seeing a tremendous amount of capital inflow there and they are representing a diversification element for a portfolio.
- [26:10]
D
Yeah. Looking at gold right now moving more than 3% higher. You mentioned platinum and palladium, both of those are up just about 5,5% right now as well. With that, let's get to the headlines with our Kate Rogers.
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F
Kate.
- [26:22]
D
Oh, sorry. Not just yet. Continue the conversation that we're having about commodities. Jimmy, going to come over to you. You made a face when he was talking about just the gold right now. Well, look, we're seeing there.
- [26:34]
G
Gold's had a heck of a rally. It is certainly at least in part based on concerns about the decline in the dollar. The decline, the concerns about inflation, whether they're tariff related or otherwise. That's understandable. But it does feel like we're entering the melt up phase, pun intended, in the gold rally where it's where the fundamentals are baked in this is more the FOMO going on, the momentum going on. It may be spilling over as well, Joe, into silver. You know, there are reasons, and I just listed them, to perhaps own gold, but I don't think this is the time in which, which you want to dive in, given what phase I think we're in.
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D
All right, I'm jumped the gun there a bit. We've got some more calls. AstraZeneca reaching a deal with the Trump administration to lower drug prices. Jim, you own AstraZeneca as well?
- [27:17]
G
Well, AstraZeneca is one of the companies that have played along in terms of the president's policies. They've announced a number of deals to invest in factories here in the US Certainly Pfizer has set the standard of how you basically kiss the ring finger and move forward, and AstraZeneca is doing the same thing. Even regardless of that, it's a very attractively priced company with a broad array of portfolio pipeline in all sorts of therapeutic areas, good dividend yield. So regardless of whether they're playing the game or not, it's an attractive company.
- [27:50]
D
All right, want to go on to PayPal, actually downgraded to sell by Goldman Sachs. Show to you on this one.
- [27:55]
F
Yeah.
- [27:56]
E
So this has been disappointing. For full disclosure, we entered the ETF PayPal at the end of July. 6876, I think is the entry price. So it's literally a break even. There's challenges here. Look, the bulls will say the potential for a larger buyback is there. The ability to monetize Venmo potentially is there maybe a deal similar to what they did in 2013 with Braintree for 800 million, which got them Venmo. But in reality, reality, the price performance has not been there. They have not been able to really ignite the revenue growth. We'll see what we do with the position at the end of the month.
- [28:31]
D
All right, when it goes the gaming space. We had our contestant brew over Macau last week. Casinos however, getting hit hard today. Jeffrey says Macau gross gaming revenue through the golden week was actually below expectations. Jim, coming over to you. You own win.
- [28:43]
G
I do own win. I trimmed it at 126. It's currently at 115. I would like to add it back. So I'm enjoying this little dip here. However, look, I think this is a direct beneficiary or victim of the tariff wars picking up again with regards to China. I think it's that simple. If you're looking at when as a long term investment and I do still hold A position. You're thinking about the year ahead. You're thinking about the Al Marjan Resort to open up in early 2027 in Dubai. You're thinking about Las Vegas recovering on a strong economy. The sell off recently, I did think it was overpriced. That's why I trimmed it. And I really think this is just tariff related.
- [29:20]
D
All right, we'll go to Medtech very quickly. Something that could be impacted if tariffs are increased. We got BTIG upgrading Zimmer Biomet holdings raising the price target from 118 up to 122. Also a buy rating thing. The shares have given up some gains that they saw last quarter. Yet it's XFX composition is the easiest of the year coupled with new product cycles and a strong July. I want to come over to this one. Jenny, you also own this one, Zimmer Biomet Holdings.
- [29:46]
B
Yeah. And couple all that with 11 times earnings and 8% free cash flow yield and decent little kind of like mid to high single digit earnings growth ahead. What they do is they do hips and knees. It has been a complete bummer for pretty much 10 years. But at some point they have really great products and everything's got a price and 11 times with that much free cash flow generation says to us this is probably a good place to be. When we were talking about, you know, being nervous about the market before, nervous about valuations, this is kind of a nice place to hide out.
- [30:14]
F
You know, I think one, one thing the market loses sight of and as we do in companies like this with peer cheap is that health care, we always talk about it being broken. Well, it's more broken than it's ever been. And as a result hospitals aren't making money and some practices are significantly strict constrained as well. So when you take a situation like Memorial Sloan Kettering where they lose 150 million in funding and you go through Harvard, you go through all the others and the hospitals, you know, the funding of New Jersey. I don't think there's a hospital in New Jersey making money. Big hospital systems. So naturally, like any other buyer of products, their appetite is going to wane for new products, more expensive, expensive products. So unless they can show that they're more productive and they're cheaper than what they currently have, the roadblocks that have been put up are going to be somewhat insurmountable. It used to be that doctors, the head surgeons dictated what equipment, what devices were bought by the hospitals. They're out of the loop now. It's the administrators and the Administrators are told to focus on the bottom line. So I think that's going to be sort of like, you know, barrier to these stocks doing well.
- [31:28]
D
Still a strong day for Zimmer Biomet Holdings. Those shares up about one and a half percent. All right, now we're going to get to the headlines with our Kate Rogers. Kate, your ears must have been burning. Just calling for you just a bit early. Good afternoon.
- [31:39]
C
Hey, Frank. Good afternoon. Israel's defense minister said today Hamas's announcement that it would only hand over the bodies of four Israeli hostages today is, quote, a failure to meet commitments. The first phase of the cease fire agreement with Israel and Hamas. Hamas requires all 48 hostages be turned over within 72 hours. 20 living hostages have been returned while the bodies of 28 deceased hostages have yet to be released. Israel's defense minister said failure to carry.
- [32:05]
A
Out the deal's terms would be responded to accordingly.
- [32:09]
C
California Governor Gavin Newsom signed a law today requiring tobacco style warning labels for social media. They will now have to show users under 18 a warning, declaring that social media can have a profound risk of harm to the mental health and well being of children and adolescents. And Amazon announced today it plans to hire 250,000 people for the holiday season, the same number as the last two years. The hiring spree comes as forecasts show us shoppers may spend more cautiously this holiday season. Last week Adobe analytics said it expects online sales to grow at a slower pace. Frank, back over to you.
- [32:44]
D
All right, Kate, thank you very much. Our Kate Rogers with the news update. All right, coming up next, hedging your bets. How to protect your portfolio during spikes of volatility using ETFs. We have all that coming up in your ETF edge.
- [32:58]
E
It's cybersecurity awareness month and Lifelock is.
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C
Here with tips to help protect your identity.
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E
Use strong passwords, set up multi factor authentication and report phishing scams.
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C
And for comprehensive identity protection, Lifelock is your best choice.
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E
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- [34:09]
D
And we're back on halftime now to Dom Chu with today's ETF Edge.
- [34:12]
C
All right, so, so Frank, as you've been discussing for the show, broad market volatility is giving way again to the larger valuations being discussed in the market. So that's now crossing over into Main street chatter as well. How exactly should ETF investors short these gains or manage risk? So joining me now is John Barello, the senior portfolio manager over at Invesco. Big question, John, at this point is with markets at these record highs, volatility creeping back in. Is now the time to more actively risk manager portfolios or, or should you just let things ride?
- [34:46]
H
Well, timing is always really difficult, right? We saw Friday being a bit of a wake up call in terms of, you know, a reminder that stocks do go down and people need to think about managing risk. You know, right now American households are more invested in equities than they ever have been. And so, you know, that's great. A lot of people have been participating in the market growth, of course, but it also means that Americans have never been more vulnerable to a market sell off. And so when we think about, you know, managing risk in a portfolio, now does not seem like the time to be all gas, no break. There are ways that you can reduce risk in your portfolio to diversify, but also option based strategies have increasingly been a tool that investors are turning to to reduce risk in their portfolios.
- [35:33]
C
And John, as a portfolio manager, you mentioned some of these strategies. What exactly are you doing for the funds that you manage right now in terms of either the diversification aspects of or the option strategies? How exactly are you treating this market from a PM standpoint?
- [35:48]
H
Yeah, my team and I manage Invesco's Income Advantage suite. So that's QQA based on the NASDAQ 100, RSPA based on the S&P 500 equal weight index, and then EFAA based on MSCI, EFA. And these are option based income strategies that have two basic objectives. So they allow you to stay invested in these core broad markets, but to do so with the addition of monthly income that's not interest rate sensitive and with less risk. So a smoother ride allows people to really stay invested in the stock markets. Now this space of option based income has been growing very rapidly. And so when we think about the challenge faced with investors when they're looking at these outcomes of staying invested in stocks, doing with less risk and with income is that with all the new, new product launches it can become difficult to understand what's really under the hood with some of these strategies. And so I think it's really important that people don't paint this space with a broad brush. They look for institutional quality managers that are trying to manage risk and balance those outcomes of income, of income participation and defense, and do it in a thoughtful way.
- [37:01]
C
All right. Well, this is a conversation that's going to take much longer than we have time for here on the Halftime report. But thank you very much for that. We are actually going to continue this conversation in longer form format over@etfedge.cnbc.com John is going to be joined by Steve Schofstall, the director of ETF Product Management over at Sprott Asset Management, a specialist in commodities. So we have a wide ranging conversation about income, ETFs, option strategies and commodities. Frank, I'll send things back over to you guys.
- [37:29]
D
Dom, very timely. We're just talking about commodities right here at post nine. Dom Chew with today's ETF as Dom, thank you very much. Still ahead here on Halftime, Broadcom's big bounce having its best day since April after a deal with who else? Open AI, what it means for the semis at large and Big Tech's big spending spree. More halftime coming up after this.
- [38:01]
F
And.
- [38:01]
D
We'Ll get to halftime. Let's hit our chart of the day. It's Broadcom surging after announcing a partnership with OpenAI. Joe, you own Broadcom shares up over 10%.
- [38:09]
E
It's been one of the better performers for us in the etf. Look, this is the competitive nature of what we see going on right now with the semiconductor industry. We saw it with Lisa sue, amd, everyone trying to kind of compete with the positioning that Nvidia has, which appears to be front center. The question on this, and this is a question for all of us to kind of curate over the coming months, is there's a lot of capital that is going to be needed here by Open AI. Not specific details exactly how this is going to be ultimately funded, but it is somewhat perplexing to me that we are becoming more and more reliant on this one private company's ability to keep spending, building out, building out the technology infrastructure.
- [38:57]
D
You know, to your point piece in the journal saying OpenAI's revenues this year about 13 billion. It's going to take hundreds of billions of dollars to really pay for all these different deals. So they would have to have a massive escalation in revenue just to pay for all these different deals. But even, you know, Broadcom deal all the other deals out there. Jenny, I know you had a thought about this as well.
- [39:13]
B
I have two thoughts when we, when we talk about it, I think we're at over $1 trillion of deals or partnerships signed right now. And when I think about the fact that Nvidia alone has a four and a half trillion dollar market cap, I think next year they're expected just revenues, not earnings. Revenues of 300 billion. So how on earth is open I really going to get that trillion dollars? Like barring putting a printing press in the basement. It seems kind of silly to think that those numbers here and now today for the market cap creation that they've generated is a little ridiculous. Wait, wait, I got one more thing. So, so when I heard the Broadcom deal this morning, I kind of laughed and it reminded me of, remember that Oprah episode where it was like you get a car and you get a car and you get a car. I feel like we're in this stage where it's like you get a partnership, you get a partnership. Everyone's getting a partnership. Like who's next? It's getting crazy.
- [40:03]
F
You know, this is more like Shark Tank semis. Yeah. And you know where we're at, Shark Tank, the vast preponderance of the deals never get consummated.
- [40:13]
B
Yeah.
- [40:14]
F
So they're just, hey, you know, why not cost me anything? Sure, I'll be an investor.
- [40:19]
D
But is that a risk for the market? Is that one of the risks that Jimmy was talking about? It's a moment we need to pay attention to.
- [40:24]
F
So it is. So is it a risk for the market? I don't think the market's reasonably spending on that. I think you've got the real buyers with real business models and balance sheets like Metta, like Microsoft and Google and others that, that are actually doing something. This is, you know, doing deals and could support the deals here you can't. So it's, it's circular financing. And I'm not sure we got to.
- [40:49]
D
Leave the conversation there. I think it's hard to tell Broadcom investors that right now shares up about 10 and a half percent. All right, coming up next, we got Mike Santoli joining us with his midday word. And don't miss the CNBC Invest in America forum on Wednesday. Sarah Eisenhower State first of its kind gathering of investors, policymakers and industry leaders for a series of critical conversations on American industrial policy. Scan the QR code or visit cnbc events.com forward/invest to learn more. More halftime coming up right after this. And we are back on halftime. Senior markets commentator Mike Santoli joining us with his midday word.
- [41:27]
F
Mike?
- [41:28]
E
Yeah, Frank, so we get the reflex by the dip. It was only a one day downside move, close to 3% from all time highs. I think the question from here forward is whether the end of this incredibly orderly period of kind of ratcheting gains higher exposed any broader fragilities in the market. Was it just going to be one day of de risking where everything went down and we had like a mini crypto flash crash and that going to be it. We wipe away at some of the froth and and that was the dip. Everybody wants to buy ahead of earnings and ahead of the fourth quarter strong seasonals or do we have to prepare for a little more give and take? I don't think today really gives you a verdict on all of that. It's sort of impressive, not necessarily persuasive that it was a one day wonder. Banks tend not to trade as a group all that well off of even good earnings. So we'll see if that follows through this the rest of this week. So obviously not major trend change, but I do wonder if it was, you know, the end of a period of unusually subdued volatility on Friday.
- [42:28]
D
All right, Mike Santoli with his midday word. Mike, thank you very much. We now want to turn over to our Dom Chu with a market flash.
- [42:33]
C
Tom, we're watching shares of Keurig Dr. Pepper right now. This is on an FTSE story citing sources familiar that the activist investment firm Starboard Value has built up a stake in Keurig Dr. Pepper. This is in the wake of the deal that Keurig Dr. Pepper has in place to acquire JD Pete's and move some pieces around to kind of consolidate certain operations. The deal had been very poorly received by Wall Street. The stock of KDP has been down since the merger has been announced. No indication right now on the size and scope of the Starboard share. Again, this is a, this is a source report from the Financial Times. We have reached out to both Starboard Value for comment as well as Keurig Dr. Pepper. We will bring in more details as we know more. But you can see there the intraday chart, we're up about two and a half percent. Those FD headlines were what drove the spike up. Frank, I'll send things back over to.
- [43:24]
D
You, our Dom Chu. The very Latest on Keurig Dr. Pepper. Dom, thank you very much. All right. Coming up next, power play. Jenny's making a move in one utility stock, it's up nearly 17% over the last month. We got the name and the trade when the half returns. Stay with us. And we are back on halftime. We've got a new move for the committee today and this time it is Jenny Harrington. Jenny, tell us about Nextera Energy. Why are you selling this utility?
- [44:01]
B
Yeah, so it's no negative on Nextera as a company overall. What happened was I owned the Nextera Convertible Preferred R which matured about a month and change ago and then I took the shares. Shares are up 17% actually after today, about 18% in the last month. It's down to a 2.7% yield. So the yield alone makes it no longer make sense for our equity income strategy that has that 5% average dividend yield or better mandate. But in addition it trades at 23 times earnings. It's got decent earnings growth at like 6, 7, 8%. But when I worry about this market, when I tell you guys now is the time to rebalance, not when things are crapping out on us. I don't love 23 times. That's a market multiple for utility. And like yes, we've got the data center and the power demand, the insatiable demand for AI data centers behind us, but that's a long build and that goes to our point about the trillion dollars of open air contracts. It's going to take a long time. I don't know that 23 times is the right multiple for this stock. And I wanted to put that money in my pocket. I've got a couple of new buys that I'm working on with much higher yields. So I'd rather repurpose it as portfolio.
- [45:01]
E
Management Constellation, Vertif Vistra.
- [45:03]
B
They don't have high enough yields for me, Joe. I wish they did.
- [45:05]
D
All right, Jimmy Harrison, always looking for the yield. Next hour energy obviously moving higher. Right now we want to turn to some breaking headlines from Philadelphia Fed President Anna Paulson when it gets our Steve Liesman with those headlines from Nade down in Philadelphia. Steve.
- [45:19]
I
Hey, Frank. Thanks. Yeah. This is Anna Paulson's first economic speech. So make a bit of big bigger deal of it than usual. She says policy should move towards a more neutral mutual stance. So she's marking herself as a dove out of the box here. She says following the path of the Fed forecast, which is for two more cuts this year, she says that's the appropriate policy for this year. Momentum in the labor market, she says to the downside, she's worried about that Fed needs to balance the risk of the employment mandate and the price stability mandate. Tariffs, she says, will increase the price level but won't leave a lasting imprint on inflation. That's the important part there. And then says the Fed should look through tariff effects on prices more and more. We're hearing Fed officials say just that the Fed still needs to be cautious. We're hearing that word cautious a lot. So the question is for next year what that means. But for this year for her it means two more rate cuts. At least that's her implication of what she's saying. Frank, back to you.
- [46:15]
D
Steve, I want to talk to you about this cautiousness that Anna Paulson is talking about right now. Does she mention anything about the fact that we're not going to get CPI and PPI as expected? We are expecting to get it later this month. Is that an issue for this Fed as it decides on cuts?
- [46:30]
I
I don't think so, Frank, because of the way that they're looking at tariffs, at least not for the near term here. It's a great question. They have a good sense of the employment market from the private sector data initially and they have a good sense that they're going to get some increase in tariffs. I think the key thing they might be missing is, and she does mention this a little bit, is whether what we're seeing in tariffs is finding a home in terms of higher inflation in other areas. That's the thing that would cause concern at the Fed.
- [46:58]
D
All right. Our Steve Liesman live in Philadelphia. Steve, thank you very much for that latest from Philadelphia Fed President Anna Paulson. I want to turn to all of you. Joe, starting off with you. The fact that we're seeing a very dovish Philadelphia Fed president seemingly that the idea that we're not going to get CPI and PPI is extreme, expected, not so much of a big deal, is that a great sign for the market or is this again a market that you previously said doesn't really need these rate cuts and it isn't that meaningful?
- [47:21]
E
I don't think the market needs the rate cuts. I think if there's a wobble within the market of the labor market, the Fed comes to the rescue. I think the biggest challenge for an investor is if in fact you see earnings falter and contract. There's no real response for that.
- [47:36]
F
Just ask clarifying question. Are you saying the market doesn't need the rate cuts or the economy doesn't need the rate cuts?
- [47:41]
E
It doesn't need the rate cuts. Really.
- [47:42]
F
So you think if the Fed came out and said we're not cutting going forward the market would hold this level.
- [47:48]
E
I think the market would would wobble to a certain extent, but I think as long as earnings are strong, I think it would recover.
- [47:53]
G
I think the easiest thing we can all probably agree on is that this month we will get a 25 basis point rate cut. What happens after that depends on too many factors that we just don't know right now. Trade wars shut down at the cetera.
- [48:05]
D
A number of factors. There again, Anna Paulson striking a dovish tone with our Steve Liesman. Want to alert you guys about something coming up tomorrow. We've got a big halftime report coming your way to the tomorrow. Scott Wapner is live from the CIS Alternatives Conference out in Beverly Hills. It's got a big slate of guests lined up across halftime report and closing bell. You want to be sure you watch full coverage. It starts tomorrow at noon Eastern right here on taptime. Again, Scott's coming back, big lineup up. You're going to see it all tomorrow not only on halftime but also on closing bell. And with that, we want to get to our final trades. Jim Lenthal, might as well start with you, your first up.
- [48:38]
G
Well, look, if I'm a little nervous, just a little nervous, I'm going to go with something that's kind of on the safe side. AbbVie. Now this has been an aggressive name this year, up about 30%, still has a good dividend yield, attractive valuation. So regardless of whether I need to be nervous, this is a good pick.
- [48:53]
D
All right, Steve Weiss, Amazon.
- [48:55]
F
Look, it's up a little today in the bounce back, but this has really been somewhat of laggard. Not that it hasn't done well. Of course it has. But it's lag the other AI plays and they're going to extraordinarily well with us. More data, more compute power, more cloud.
- [49:10]
D
Jenny Harrington, you actually mentioned this company earlier.
- [49:12]
B
I did.
- [49:12]
D
Sixth street, especially. Lennon. Give us the thesis why this is a good buy right now.
- [49:15]
B
So there's been a weird phenomenon in the last couple of weeks where you see the private equity stocks like KKR and Carlyle really trade down down, but the private lenders trade down way more. That relationship should be reversed. This is a very high quality private credit lender, nine and a half percent yield. I largely agree with Joe that I don't want to touch them, but I'm very comfortable with this particular company and it's been dragged down more than it should.
- [49:37]
D
Yeah, those shares up about two and a half percent. Joe Terranova, you get the last word.
- [49:40]
E
Two years ago, Josh Brown and I were having a dinner on Long island with a huge fan of the show and a New York sports legend. We discussed the stock Data Dog. I certainly hope he purchased it because it's going to break out further to new highs.
- [49:52]
D
All right, that's going to do it for halftime. We got the exchange starting right now. You've been listening to CNBC's Halftime Report, the podcast. You can always catch us live weekdays.
- [50:03]
E
At 12 Eastern only on CNBC.
- [50:08]
A
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.comhalftimereportdisclaimer.
- [50:48]
B
What made you confident that you could do something that hadn't been done before? I have no fear of failure.
- [50:54]
A
Trailblazing women, Changing the game One of.
- [50:57]
B
My favorite pieces of advice Think about what your boss's boss needs.
- [51:01]
A
Leadership can look in many, many different forms. It really does come down to just trusting yourself.
- [51:06]
B
Life is short and you just gotta.
- [51:07]
A
Think big to accomplish big things. Julia Boorstin hosts CNBC Changemakers and Power Players New episodes every Tuesday. Wherever you get your podcasts.