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Halftime Report
Riding the Record Rally 7/21/25
00:43:04
Courtney Reagan and the Investment Committee debate whether investors should continue riding the record rally or take profits. Plus, the desk discuss the latest Calls of the Day. And later, the Committee share their latest portfolio moves.
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- [00:00]
Courtney Reagan
A rich life isn't a straight line.
- [00:03]
Scott Wapner
To a destination on the horizon. Sometimes it takes an unexpected turn with detours, new possibilities, and even another passenger or three. And with 100 years of navigating ups and downs, you can count on Edward Jones to help guide you through it all. Because life is a winding path made.
- [00:24]
Courtney Reagan
Rich by the people you walk it with.
- [00:26]
Scott Wapner
Let's find your rich together.
- [00:28]
Courtney Reagan
Edward Jones Member SIPC did you know over 75% of small businesses don't have enough cash on hand to cover unexpected business disasters? You need Relay, an all in one banking and money management platform that will change the way you think about money. With Relay, you can open up to 20 accounts to separate your cash for things like income, payroll or operating expenses. All you need is a few minutes to sign up@relayfi.com podcast that's R E L-A-Y-F I.com podcast Relay is a financial technology company and is not a bank. Bank services provided By Threadbank Member FDIC.
- [01:01]
Joe Terranova
I'm Scott Wapner and you're listening to CNBC's Halftime Report.
- [01:05]
Courtney Reagan
The podcast the most profitable hour of the trading day.
- [01:09]
Joe Terranova
We record this live weekdays at 12 Eastern.
- [01:12]
Sarat Sethi
Listen in.
- [01:15]
Scott Wapner
Welcome to the Halftime Report. I am Courtney Reagan and today we're Scott Woepner. Front and center this hour riding the record rally. Stocks touching fresh all time highs as we gear up for another very busy week of earnings. Our investment committee is standing by with their playbooks. Joining me for the hour, Joe Terranova, Amy Raskin, Gin, Steve Weiss and Sarat Sethi. Let's take a quick check on the markets. We are higher here across the board. Some fresh records this morning. Russell 2000 also higher to the tune of three quarters of a percent. That's actually leading the way with the Dow higher by a half a percent. Nasdaq Composite is up by 6.10 of a percent and S&P 500 trading above 6330. It has been quite a run since obviously the April lows that we talk about so much as sort of this, this touchstone. But Surat, it doesn't feel so. I mean when I look at the numbers and then I think about the psychology of the market and investors, how do you square those two? It seems like there are so many outside influences that could be pressuring this earnings.
- [02:17]
Sarat Sethi
And I think you're absolutely right because it's not like we're in this feel good. There's an all clear. Right. Because we still have the tariff overhang.
- [02:25]
Scott Wapner
Yep.
- [02:26]
Sarat Sethi
We still have a couple of wars Going on internationally. We also look forward to see how is the deficit deficit going to be, what's going to happen at the Fed. So the market's climbing this wall of uncertainty, but at the same time what we're getting is stronger earnings. And I think that's what's going to be keep on driving the markets. Financials had a really good quarter. They had really good things to say about the future. That was good. The underlying demand for software and chips has been good. So you're seeing money go there. You still have sectors of the economy that aren't performing well. I mean, look at health care, you know, look at some of the REITs, the utilities, etc. So I think you've got the defensive parts of the markets that haven't really partaken. And maybe that's kind an area that people will start either hiding out or kind of being careful. But it's also got to the point where some of these stocks have run so fast and so quickly that you're projecting the earnings growth to be a lot potentially better than we could be having.
- [03:21]
Scott Wapner
Yeah, I mean, Steve Weiss, Morgan Stanley's Mike Wilson, who we obviously follow very closely on the show, he's got a call out and he says, look, while there should be some consolidation during the third quarter, we actually think dips are meant to be bought. So he's putting his chips in. Is that smart?
- [03:35]
Steve Weiss
Well, I don't think that's anything that's brilliant. I mean, you know, look at how many dips we've had in the market marketing all time high. So dips are always meant to be bought. It depends. It depends on your personal constitution. Like are you willing to ride through the peaks and valleys and there are many more peaks than there are valleys. So. But I think what he's talking about and what others are talking about has been it's so long since there's been a meaningful correction, meaning close to 10% for a sustainable period of time. Because since, oh wait, they've all been V shaped recoveries, that includes what happened in April with tariffs. But there is a disconnect between what we read in the headlines that grab our attention and what's happening with companies and, and with the markets. Markets are actually okay. So at any point in time, no matter the market, no matter the conditions supporting the market, you're suspect to a, or you're subject to a potential, you know, decline of 5 to 10%. So yes, they should be bought, but depends where you buy it. So not all stocks are created equal except in the equal weight for all intents and purposes, some have better fundamentals, some have more wind in their sails and more tailwinds than others. So I think you stay with the winners. Even if they get to overvaluation levels, as I believe we have with Metta and with Microsoft and with Nvidia, those valuations should be fairly sustainable. And if they're not, if they do take a hit, it's a moment in time. So you just have to be aware. But it's not worth selling. What are your core bottoms up positions? Because you believe that there's a correction imminent, it's best to sit in your hands and maybe if you're convinced of a correction, sit in your hands with cash and deploy at that point, you.
- [05:33]
Scott Wapner
Know, Amy, August is right around the corner.
- [05:36]
Courtney Reagan
What is it?
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Scott Wapner
July 21st. Right. So it's nine days away. August used to be kind of quiet, but We've got this August 1st deadline that's hanging out here. That obviously something to pay attention to. And then Goldman Sachs, Tony Pascarello talking about the summer liquidity conditions taking hold. Maybe that means risk reward are shifting. How do you think about the month of August? This including impending deadline, even though we are going to get earnings reports, hear about the company's fundamentals in the meantime.
- [06:03]
Courtney Reagan
What I think has been so interesting is fundamentals have been good. Companies have been beating as said financials. Listen, all those calls, very optimistic. Stocks didn't do anything. Stocks actually traded down a little bit. So I actually do think there's a lot of good news baked into earnings and into earnings seasons. I mean even Netflix as well, like good numbers or maybe missed a little bit. The stock didn't sold off. You're seeing that with a lot of sort of good results. Novartis, you know, Brayton Report stock sold off a little bit. It had run up into the quarter. So I think, I do think we're going to be in this little bit of a digestion period that there is a lot of good news baked into some of these stocks already that we have had this extraordinary run from the April lows. We are going to get into the quiet summer months. And so you're seeing a lot of volatility, a lot of trading, but relatively lower volumes I would expect. And then you get September, which is usually not a great month. So I would think that you're going to go into a little bit of a consolidation period right now. Maybe a little bit of weakness. I wouldn't be surprised. But it will be really interesting to see. I do think you're going to get a lot of good, good results for the second quarter off lowered numbers because at this time last quarter, the companies were able to bring down their numbers a lot. We were in the throes of the tariff tantrum.
- [07:21]
Scott Wapner
Sure.
- [07:21]
Courtney Reagan
And so you did get lower numbers. But it's interesting to me that you're not getting great reactions even from low out numbers like Goldman had.
- [07:29]
Scott Wapner
We started talking about August and then you brought it to September, which made me think about the Fed meeting. And we haven't even talked about what's going on between the President and Jerome Powell. Obviously, I know that's a committee that makes these interest rate decisions. It's not just one person. We saw maybe a small market reaction to the idea that Jerome Powell would be taken out of his job by the President. If that happens, do we need a position for it?
- [07:54]
Joe Terranova
Well, I think the effect of that would be felt in the long end of the curve and also for the US Dollar. But I don't see that's a major issue. First of all, I don't think it's going to happen. I don't think it's going to happen. I don't think it has to happen. I've said on air, I believe that President Trump can just sit back and wait because I think the echo data will come his way to where the Federal Reserve actually begins to lower rates once again. So, look, the market is constantly climbing the wall of worry. As everyone has already identified, this is a remarkably resilient market. But the most important thing about this market is it's a V shaped recovery. And a V shaped recovery is very difficult for human beings to emotionally engage in because it moves so fast. And you're always skeptical. You're always skeptical when it's moving that fast. So if you don't believe me, just go back and think about history. Think about in 2018, in the fall, when you had that very sharp sell off and then the V shaped recovery on the other side. What did we do in 2019? We basically gradually walked the stairs higher and higher. The same can be said during the pandemic. V shaped recovery, you walk the staircase higher and higher. 2022, it was a more prolonged sell off. So you had more time to process what was actually unfolding. This was fast. This was quick. People incorrectly moved to the sidelines in certain instances, more for institutions than the retail community. And the skepticism is going to remain. And it's probably one of the reasons why we've got the resiliency. We're overcoming the Wall of worry. And now the next thing in front of you is the technology earnings because they're going to start on Wednesday with IBM, Tesla and Alphabet. And the technology earnings could be a catalyst in either direction for sure.
- [09:37]
Sarat Sethi
Go ahead to, to Amy's point, what's going to be really interesting to see the tech stocks have run so much. Even if they beat, we'll see what.
- [09:46]
Courtney Reagan
The stock.
- [09:48]
Scott Wapner
Actually says. The NASDAQ 100 has now gone 60 trading days without closing below its 20 day moving average. The second longest streak in history back to 1985 and the longest was ended in early 1999. So if we're talking about history, that makes me nervous.
- [10:02]
Courtney Reagan
Should have a shape recovery too. Before like in 2000 you had this V shaped back and then you had the correction from the March low. You didn't quite get to the high again, which we did this time. But that was sort of the beginning of the end. Certainly after that.
- [10:17]
Joe Terranova
I think the question is what do you do? What do you watch for as the indicator? What's your indicator to tell you is the market rolling over And I think there's no industry that better reflects the recovery that we have experienced than the semiconductor industry. Remember if you think about where the semiconductor industry was coming into 2025, the semiconductor industry had kind of lost some of the bullish sentiment, some of the bullish positioning and went towards software. People said okay, you're making the pivot now. You have this remarkable comeback and you have companies. I know we could talk about Nvidia, but how about Broadcom? Broadcom is 1.4, nearly $1.4 trillion in its market cap marching to an all time high. You're seeing that type of bullish momentum expand beyond there into the semi equipment names. Lam Research. I think today touched a new 52 week high. KLA Corp. Near a new all time high. It goes beyond that. I've talked on the show over the last several weeks about the momentum in amd. The momentum was building remarkably strong. The stock, Courtney, it's up 100% from its April 8th intraday low. We're going to hear from Texas Instruments on Wednesday. Texan is near an all time high as well. So I think the SMH is absolutely your tell here as we move forward. Look at their earnings, see the reaction. I think that's the ultimate indicator of the ability for the market to continue to climb the stairs higher and higher. Or to your point, if we're going to get this correction.
- [11:46]
Courtney Reagan
Well, look, my question is what, what are the CAPEX numbers from the hyperscalers going to be. That's what's going to drive everything.
- [11:53]
Joe Terranova
It should be strong.
- [11:54]
Courtney Reagan
Well the question is they've been raising by 10, 20% each quarter are we going to get that again? And if we do what the reaction that's to going going to power the semis higher if that's right. But then my question is what do investors in those companies react? How do they react to that increase in capex as you're ready starting to hear people say, you know, the free cash flow numbers are coming down, this spending is actually starting to impact the free cash flow numbers of even these huge free cash flow earnings. So I think that's going to be something really important to watch is are the Capex numbers going to be raised again?
- [12:29]
Steve Weiss
But, but we try to answer that.
- [12:32]
Courtney Reagan
Marshall. I love, I'd love to know.
- [12:34]
Steve Weiss
I mean it used to be look, you know, but this long time working together and it used to be that in front of a major capex cycles that you stayed in the sidelines and particularly when product changeovers with software companies.
- [12:49]
Courtney Reagan
You know or tech companies, you get out any.
- [12:51]
Steve Weiss
Exactly.
- [12:52]
Courtney Reagan
Spending. Yeah. Cycle has been sold, not bought. This is very different and those were.
- [12:57]
Steve Weiss
Good moves because it would take a while, you'd lose business because you know who's buying a product now, when in the future. I think it's a little different with these companies because air is moving so fast that the big question six months ago, even three months ago, are they going to make money in their capex and when are they going to make money? And do I want to stay there? Right, right.
- [13:20]
Courtney Reagan
But at some point point they will. Well, you have to earn a return on this.
- [13:23]
Steve Weiss
I think they could but I think goes back to what's driving the market. What's driving the market are not people like, like the four of us here who've been in the business for decades. Right. It's people that are investors A lot of retail, they're buying index funds that drives up the components. So it's completely different market and staying on the sidelines and asking those questions and you did see pressure on, on Metta and Microsoft a few quarters ago because wow, they're spending too much money. I think that at this point that's old news. I'm not saying whether it's right or wrong, but it's old news. And right now people are convinced because of AI being the fastest adoption of any technology in history that the payback could be quicker and that they want to be there because they believe in the growth that will come from the capex and are unwilling to time it because guess what, they're also missing out on the moves of the stock. So until the stocks start saying, hey, no mas on that.
- [14:21]
Courtney Reagan
Right.
- [14:21]
Steve Weiss
I think it's going to keep going like it is.
- [14:23]
Sarat Sethi
The tell will also be, is when the hyperscalers say we're cutting back but our earnings are going to grow because that's when the return of investment is coming out. And I think if you get the momentum going and Joe to your world, if the software stocks start picking up because they're actually investing, you know, some of these workday sales forces haven't done anything right because they're all, they're the ones that people are not giving the benefit of the, you know, they're saying, hey, you need to prove it. So if that handoff happens or they all work together, you could see another leg in this bull market.
- [14:53]
Joe Terranova
If you're a bear, what you want to see happen is that the capex is there. You give the confidence that the capex will remain there and then the reaction, the reaction symbol some form of exhausting stocks. If you're, if you're a bear, that's what you want.
- [15:08]
Courtney Reagan
Well, that's what you then. And that's some point though. You have to get a return on the money. It might not be this quarter, might not be next quarter. I completely agree with you that what the market is saying. But at some point somebody's going to look at these companies. I mean, and it happened as you said with Metta and the Metaverse and you're spending too much. At some point some investors had it for what's, what's the return. You're spending hundreds of billions of dollars. Your revenue is X.
- [15:32]
Steve Weiss
You're right. But the meantime they're hiding that with their other business. Exactly. So and companies like Salesforce, etc. I mean the market assumes their business models are in jeopardy from AI Right. So they're spending to stay alive versus Metta is spending to grow. But it is troubling. You take a look at Netflix and all these analysts who had to get out in front of the earnings and raise their raising and raise the price target. That did nobody any favors.
- [16:02]
Courtney Reagan
Right.
- [16:02]
Steve Weiss
Because it was a great quarter and a great guide.
- [16:05]
Courtney Reagan
Right.
- [16:06]
Steve Weiss
So then you make up stories, well, why wasn't this way?
- [16:08]
Courtney Reagan
Right.
- [16:08]
Steve Weiss
So people start seeing ghosts and they sell it.
- [16:11]
Courtney Reagan
Well, I think that's happening in a lot of company companies right now.
- [16:14]
Steve Weiss
But even if you told me that it's going to miss this quarter. Yeah, Right. What am I going to do about it? Well, I think I'm going to do nothing about it because I'm not going to pay taxes.
- [16:22]
Joe Terranova
I agree with you, but I don't know that fundamentally you can anticipate that the spending is, is going to go away because we've had improvement in a lot of conditions.
- [16:29]
Steve Weiss
No assumption.
- [16:30]
Courtney Reagan
It doesn't have to go away. The question is, but for, for to meet these semiconductor estimates, it has to keep going.
- [16:35]
Joe Terranova
That's, that's the reaction. But I think you have to go in and say to yourself, okay, look, conditions on the ground fundamentally for semis have gotten better. Right. There's been an improvement in the tariff environment, which was the concern coming into.
- [16:46]
Sarat Sethi
Which is the big overhang.
- [16:47]
Joe Terranova
That was the overhang, that was the.
- [16:48]
Sarat Sethi
Governor on these stocks. Your demand externally, externally US was going to get reduced.
- [16:54]
Joe Terranova
Then you have the president, his administration in the Middle east announcing various deals. So you have to anticipate you're going to get some strong funds.
- [17:02]
Steve Weiss
And that's where the complacency of the market comes in. Because yes, some of the issues with semiconductors relying tariffs has gone away, as we know. It doesn't mean it won't come back this afternoon or tomorrow. But you take a look. But the worst of it's done and the markets can place back. Take a look at Taiwan Semi. That stock bottomed about 1:5,160 in April. It's hitting a new high virtually every day now. Phenomenal quarter. And they're arguably in one of the most tenuous situations being in Taiwan. Their principal operations with China getting ready to invade Taiwan. Supposedly at some point in next year.
- [17:41]
Scott Wapner
We're going to move on to Mag 7 real quick. But, but I want to talk, Amy, about your trimming asmr.
- [17:46]
Courtney Reagan
So yes, we did, we did trim ASML going into the quarter. I should have trimmed more. The stock had a very bad reaction. They pulled 20, 26 guidance just saying uncertainty and they don't know. And again, it was, the stock had run a lot, as did all the other semis since April. And we just thought it got a little ahead of itself. And so I did a lot of trims before the quarter. That one worked out, others didn't. So we can get to that later.
- [18:12]
Scott Wapner
That's the way this goes.
- [18:14]
Courtney Reagan
Right.
- [18:14]
Scott Wapner
I want to talk about Alphabet because that's, that's what's going to kick off earnings for the MAG7. That's on Wednesday. And you sort of brought that up. You were talking about Google. What do you think we need to be paying attention to here. And obviously, I mean look at this stock.
- [18:26]
Sarat Sethi
I mean again it's what is their free cash flow growth of the capex but also YouTube.
- [18:32]
Scott Wapner
I think the YouTube seems underappreciated for what it's doing.
- [18:35]
Sarat Sethi
And if you look at the incremental growth of YouTube compared to all the other peers, it is growing faster and faster. Also because YouTube's got user created content.
- [18:44]
Courtney Reagan
Yes, right.
- [18:45]
Sarat Sethi
So a lot of their cost of goods sold. You saw what happened with you know, CBS cutting back some of their shows. YouTube's got user growth plus cost of content lowering and then the other businesses and I think of the Mag 7, you know, in our view Google's one of the cheaper ones that has a pretty good growth rate, great cash flow and if you see some type of moderation of any type of capex cutback or growth, that stock is really good, could reflect it.
- [19:14]
Joe Terranova
I think it is the cheapest and the question would be why is it.
- [19:17]
Sarat Sethi
The cheapest because of the growth rate and the CapEx.
- [19:20]
Joe Terranova
Well, that's the question. Search and does get search.
- [19:23]
Courtney Reagan
Get cannibalized search.
- [19:24]
Scott Wapner
Right. And Amy, you know on this too.
- [19:27]
Courtney Reagan
No, I haven't trimmed it. I agree. YouTube is a great asset. Waymo is a great asset. I think search is going to be around for a long time, although I do think we have an add to it and we're kind of underweight because I do think it's going to trade off. What is search? What is what's going on with search? And the numbers are probably. It's search is vulnerable to. I do.
- [19:46]
Scott Wapner
Do you think that you're getting way more for free? Is that part of the valuation?
- [19:49]
Courtney Reagan
Right now you're free. I mean compared to Tesla's valuation, you know, I think Waymo is undervalued but it's very hard to put some of the parts together accurately. I think Waymo is a great business for them and it has long term growth potential as does YouTube. But I think for the near term it's going to trade on search and it is vulnerable. Ironically, Google will do better if AI slows down because that's the franchise that's going to get cannibalized the most. Oh, that's happening. If you don't think that then then that's your view on Google.
- [20:21]
Scott Wapner
Let's move from Waymo Google right to Tesla then Tesla also. So reporting on Wednesday. Gosh, there's so much you could say here. I mean Tesla's IT exec has no traditional car sales Experience. He's running sales. This is according to Reuters. You've got Elon Musk saying, I'm sleeping.
- [20:34]
Joe Terranova
Seven days a week.
- [20:36]
Scott Wapner
Seven days a week I'm sleeping in the office again. I guess if you're a Tesla shareholder, you like that.
- [20:41]
Joe Terranova
I mean, if you're a Tesla shareholder.
- [20:43]
Scott Wapner
You'D like that maybe, but family.
- [20:45]
Joe Terranova
But ultimately the fund, the fundamentals have to represent that revenue is going to see its trough. And the decline in revenue has been the challenge for this company. Now listen, it has had a nice recovery over the last several weeks from when we opened up on that Monday morning and it was trading down around 292 up to 328. I think that's technical in its nature more than anything else. But I think we want to hear on this earnings conference call that exactly what you said, Elon Musk, seven days a week focused on Tesla, ignoring the nonsense in Washington D.C. this is his priority. And okay, how are we going to revive the growth to get it back to what investors knew it to be 18, 24 months ago?
- [21:29]
Steve Weiss
Yeah, see the thing with Tesla is you never can convince a permeable on it that it's overvalued. That Musk doesn't care about corporate governance. That Musk is, you know, doing too much. Remember the conversation about Jack Dorsey with only two companies. And you'll never convince a skeptic like me that I should own this stock and the only stops me from shorting it is the cult that follows it. But you can't justify a capital intensive company that's getting late into its big market. Robotics. You know, that's, that's a pretty competitive market at this point. Sure, it can be a business for them. The losses will be there in Robo taxis. Waymo owns that business now. Lots of room there. But they're pretty far behind and, but they don't care. You know, they still look at Musk as, as a God who knows all, does all. Guy's a genius, but he's a great CEO. We've seen not so much, right. But it keeps going. And I'm not worried about people leaving there. You know, some entry last week, Jim Chano's kept a whole spreadsheet of everybody left. It's legion, we all know it. One of our companies, we've got three former CEOs for a former C3 senior. People that were at Tesla, they're everywhere. So. So either you love it or you don't. It's really even not worth talking about in my view, because it defies fundamentals, fundamentals don't care. Now it's still a trillion dollar company so of course might be in the conversation but I think everybody spends way too much time on.
- [23:05]
Joe Terranova
I think the bar is pretty low going into earnings which is interesting. I can't remember a quarter where the expectation was this some generally that's the.
- [23:12]
Steve Weiss
Case when your sales are down 40% globally.
- [23:16]
Sarat Sethi
And I think with Tesla people are looking past the cars, they're looking to the robots, they're looking to the self driving cars and that's kind of giving a halo effect to a lot of the other parts and their competitors as well. Right. It's like you know, you put a coffee shop in somewhere and you know the Starbucks puts a coffee shop and the other coffee shops do well. So it's, yeah, it's, it's tough to.
- [23:36]
Steve Weiss
Your point to value a dream and.
- [23:38]
Sarat Sethi
To go against Tesla as a long investor or short investor. It's very hard to do.
- [23:43]
Scott Wapner
Yeah, absolutely. For a number of reasons. Well, I want to talk about Apple because we've got some wide ownership here. Obviously that's next week but it was reiterated overweight today with the 235 price target at Morgan Stanley. We've got Joe, Amy Surrott, you all own this. Amy, what do you make of Apple going into this print?
- [24:00]
Courtney Reagan
I'm not sure honestly. I like we, we've owned Apple forever. Again we're not overweight the stock by any. We're actually underweight. I actually think this one has gotten probably unfairly hit on not being in AI yet and I think their sales were going to be just fine. But I also don't see, see what sparks a new cycle, a new iPhone cycle. I just don't see that happening. So I think this is going to be fairly humdrum.
- [24:26]
Scott Wapner
What do you make of services and what you should expect there? If AI isn't there yet, what else can they do?
- [24:30]
Sarat Sethi
Well I think that's an advantage. Apple AI is not there. Right. I mean all the people spending money and I'm not getting a return on investment. You know they're kind of, you don't.
- [24:38]
Scott Wapner
Need to be first, you just got to.
- [24:39]
Sarat Sethi
And that's always Apple.
- [24:40]
Steve Weiss
Right.
- [24:41]
Sarat Sethi
They're never first. Maybe the foldable phone comes in but their service revenue keeps on going, their cash flow keeps on increasing. We seeing they buy back shares, it's just the growth. Where is the organic growth, where is the top line growth? What's the next new thing? And the overhang is still there of tariffs and the Dow also the Google and the doj. So you've got some of that. It's not a cheap stock in that sense. So they are, you know, one of the short term catalysts, but it's also, it's hard to sell. Why do you get out of it? You know, if you've got a big position in terms of cost basis is low or maybe something comes down the.
- [25:17]
Steve Weiss
Pipeline, you know, overhang is a strange word in my view to use for this stock because I've got a stock selling at a multiple of a company that actually grows, whereas they haven't had growth for years, aiming for growth. So I think it's not been an overhang. I think it's actually the market's been very generous with the valuation here and their lack of innovation, which I've been highlighting for a decade, including when the guys with the ponytails used to fall at it. You know that now it's finally coming home to roost, right?
- [25:50]
Scott Wapner
Joe, you own this in the joti. I'll give you the last word.
- [25:52]
Joe Terranova
They pay you to wait. And that's the reasoning behind being a long term investor in the company. The ecosystem is undamaged. Through all of these challenges that they have and delivering and the software strategy, the AI strategy, hardware, they seem to innovate it ultimately at some point I'm not going to dismiss the premise that the revenue growth isn't there. It's not, it's not there like it's not there at Tesla. But they know how to keep the shareholder in their seat and more importantly, they know how to keep the user of their products in their seat as well. The retention on the ecosystem is unrivaled. I think anywhere in the corporate environment that's true.
- [26:34]
Scott Wapner
Who's, who's given up these.
- [26:35]
Courtney Reagan
Right.
- [26:35]
Scott Wapner
You just add more and more and more. Well, coming up next, our top calls of the day. Halftime. We'll be back in about two minutes.
- [26:44]
Courtney Reagan
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- [27:45]
Joe Terranova
If you could hear love, what would it sound like?
- [27:55]
Steve Weiss
Son, can we talk about your drinking?
- [28:00]
Sarat Sethi
Yeah Dad, I think we should.
- [28:03]
Joe Terranova
Helping those closest to you think about their excessive drinking. Maybe that's what love sounds like. More@rethinkthedrink.com An OHA initiative Did you know.
- [28:15]
Courtney Reagan
Over 75% of small businesses don't have enough cash on hand to cover unexpected business disasters? You need Relay, an all in one banking and money management platform that will change the way you think about money. With Relay you can open up to 20 accounts to separate your cash for things like income, payroll or operating expenses. All you need is a few minutes to sign up at relay fi.com podcast that's R E L A Y F I.com/podcast. Relay is a financial technology company and is not a bank. Bank services provided by Threadbank member FDIC.
- [28:44]
Scott Wapner
Let'S get to our calls of the day. We're going to start with Uber since we were sort of in that space before talking Waymo Tesla. Let's talk about Uber. Obviously a number of business lines there, but the target was raised to 115 bucks from 95 and reiterated overweight. At Morgan Stanley they see the path forward for ride sharing and the eats booking growth. Joe, I'm going to start with you. You own this one.
- [29:03]
Joe Terranova
I believe they report on August6. It's going to be an important report to understand if the strength of the balance sheet continues. And that's what I've been focused on. This company several years ago made a remarkable turn in their financial conditions. Free cash flow generation went positive. It's accelerated from there and it's allowed them to do the things that they need to do in terms of diversifying the business model. Not all about mobility, going to other areas like delivery, obviously including AI in the story and ultimately having partnerships like they do in Atlanta with Waymo. So the company has technically very strong momentum. It continues to hug all the major supportive, technical, moving, average lines. It looks like it wants to to make that run Ultimately at 100, I'm not so sure it's going to do it ahead of earnings. But post earnings if you hear what you need to hear. I do think above 100 is a price target that would be not so much the ceiling but will ultimately become the floor. You could be talking about support at that level.
- [30:01]
Scott Wapner
Yeah, I mean it was right. It's above 90 right now. Can it get to 115 in the short run?
- [30:05]
Sarat Sethi
Look, I think Joe is spot on. Cash flow was what this company needed. They produce that, they got growth in there, they simplified their businesses, they got out of a lot of the other businesses. Now the question is growth and can they grow. What I like about this stock also, it's not just domestic, it's international. So they have that flavor as well. And I think again I'm going to go back to the halo effect that Tesla does when they, when they do their own self driving cars and the taxis. If Uber gets a piece of this business that adds to that as well because they're also the brand that people know.
- [30:38]
Scott Wapner
Right.
- [30:38]
Sarat Sethi
So if you're going to go and you're going to go to be a loyal Uber subscriber and they've done very well with that too I think. But again this is a growth stock. This is now a momentum stock. It used to be a dev value stock in the 20s and 30s when nobody wanted to touch it, etc. And now it's got the momentum behind it. So it has to show execution, self driving.
- [30:57]
Scott Wapner
I'm just not on board. I mean I just don't get it. Freaks me out. But anyway, let's move on to QSO. This initially initiated outperform with a $33 target RBC. I mean Joe, they are, I'm sorry, the Joe's Weiss though of this one had. I had a lot of good things to say here at RBC Building Products Distribution they really like this and the healthy capital structure, attractive currency, cost of capital. What do you think?
- [31:21]
Steve Weiss
Well, first of all, if you look at a chart, you'll see the stock is down 80% year to date. So ignore the chart. That's before Brad Jacobs got involved. When Brad Jacobs got involved he priced the pipe at $9.14. So that's really where the stock for this generation of the stock should be judged. Look, Brad started founded United Rentals. If you owned it from when he found. Now that's a ridiculous return. Your capital, right. Over 100 times. GXO Logistics having some tough times now, but that's been Doing quite well. That was spun out of XPO Logistics. So the value create there and rxo. So, so look he's, he's definitely a wealth creator, sizable wealth creator in addition to the private company companies that he had and the waste management company that he started which he sold for a major amount, major gain as well. So this is a consolidation vehicle. His playbook is same here has been with all those other companies. Find industries that are grossly inefficient that have lagged in putting technology into their operations and then consolidate those that are lagging and let the synergy take you higher. And that's what's happening. So I bought Beacon Roofing, tried to buy another large company but stayed very disciplined in price. If you've met Brad, he's, he's. When I go to have lunch at his office, they order lunch for me and he brings a Tupperware container with lunch from home. So he's, he's frugal but spends where you'll get a great return. And that's what QXO is going to be. So this is going to be a company, it's going to have 10 billion in sales over the next decade or so. So it's a permanent compounder. So you just want to stay with.
- [33:19]
Scott Wapner
I need your help keeping track of all those acronyms of the XO, XOs.
- [33:23]
Steve Weiss
Hugs and they're all listed.
- [33:24]
Sarat Sethi
So we don't own this one. But, but you know, we own xpo, RXO and gxo. We're big Brad Jacobs fans. We just haven't gotten into this one yet just because we don't really know exactly where it's going. But we've owned his stocks for a long time and if you've been a long term investor with him now, the stocks do get volatile as we know.
- [33:44]
Scott Wapner
But make some money.
- [33:45]
Sarat Sethi
But he has created so much value for shareholders over time.
- [33:50]
Scott Wapner
Very interesting one. We got to move on and get the headlines now with Savannah now. Hi Silvana. Hey Courtney.
- [33:55]
Courtney Reagan
Good afternoon. Both the government and lawyers for Kilmar Abrego Garcia are asking a judge for.
- [34:00]
Scott Wapner
A 30 day pause if he's ordered.
- [34:02]
Courtney Reagan
Released from custody while pending trial. Abrielle Garcia was mistakenly deported to El Salvador and is now being held in a Nashville jail charged with human smuggling. If he is released by a judge, the government has vowed to transfer him to DHS custody and begin deportation proceedings. President Trump in a truth social post threatened to block the Washington commanders from building a new stadium in D.C. if the team doesn't change back to the original Redskins name.
- [34:31]
Scott Wapner
The Commanders made the change in 2020.
- [34:33]
Courtney Reagan
After decades of criticism that the original name was a racial slur. Supporters argue it honors Native American achievements. And Subway has named its first new CEO since private equity firm Roark Capital bought the chain for almost $10 billion last year. Former Burger King executive Jonathan Fitzgerald Patrick will take the helm. With a mandate to improve US Sales and help expand globally, Subway has experienced a multi year sales decline here in.
- [35:03]
Scott Wapner
The U.S. courtney, I'll send it back to you, Savannah. Thank you very much. Well, coming up next are Dominic Chu standing by with today's ETF Edge. Halftime is back after this.
- [35:14]
Courtney Reagan
Did you know over 75% of small businesses don't have enough cash on hand to cover unexpected business disasters? You need Relay, an all in one banking and money management platform that will change the way you think about money. With Relay, you can open up to 20 accounts to separate your cash for things like income, payroll or operating expenses. All you need is a few minutes to sign up@relayfi.com podcast that's R E L-A-Y-F I.com podcast Relay is a financial technology company and is not a bank. Bank services provided by Threadbank member FDIC.
- [35:44]
Steve Weiss
Hershey's Milk Chocolate with Whole Almonds makes.
- [35:46]
Joe Terranova
For a wholly amazing, wholly delicious experience that's well known. Holy Hershey's, everyone.
- [35:52]
Steve Weiss
To get to experience the satisfying surprise.
- [35:54]
Joe Terranova
Of a whole almond tucked inside creamy Hershey's Chocolate.
- [35:58]
Sarat Sethi
So don't wait your whole life to.
- [35:59]
Steve Weiss
Try Hershey's Milk Chocolate with Whole almonds.
- [36:02]
Joe Terranova
And if you've already had it, then chances are you're already a lifelong fan.
- [36:06]
Steve Weiss
Of this confectionary delight.
- [36:08]
Courtney Reagan
Find Hershey's Milk Chocolate with Whole Almonds wherever candy is sold.
- [36:15]
Scott Wapner
We're back on Halftime now to Dominic Shu with today's ETF Edge. Dom, take it away.
- [36:19]
Courtney Reagan
All right, so Courtney, as we begin, as we begin the third quarter of this year, we're asking can the best performing funds of the second quarter be your best bets going forward? Joining me now are Morningstar's two top winners for the second quarter in terms of funds. Eli Horton, senior Portfolio Manager at tcw. Also Brett Whitten, Chief futurist at Ark Investment Management. Both of them are have their hands in two of the best performing funds. Let's start with you Eli, about what exactly is going on with your particular funds and why they are gaining so much more attention. It seems as though there's voracious appetite amongst investors for anything future tech related. Well, thanks for having Me Don, it's.
- [37:00]
Joe Terranova
It'S great to be here with you today.
- [37:02]
Courtney Reagan
So, tcw Transform systems powered, we call it. That's the ticker pwrd. It's a thesis that the energy transformation is, is probably the largest economic challenge of our generation is driving significant systems change. The world is investing two and a half trillion dollars of capital to get us to a renewable system. It's going to take decades and the whole system is just ripe for investment opportunities. Now just, this is about the powered infrastructure, right, of the next generation in technology. 100% that is, that is a component of the energy transformation. There's, there's many ways to invest in this, whether it's transportation, power and grid. And I think right now the world is awakening to the fact that electricity demand has gone from flat demand in the US to structurally growing, from rebuilding the grid, from remanufacturing. And now we've got a compute demand really pouring gasoline on this fire. And so we're seeing an incredible amount of demand for power businesses, for grid components, electrification. We're seeing some really interesting opportunities there. All right, and Brett, an interesting part about this conversation as well is about just how much that next generation of technology is still garnering so, so much more in terms of investor interest in funds as well. ARK invest with a couple of top performing funds. Do you see that kind of a tech focus on futurism continuing for investor demand? Yeah, absolutely.
- [38:21]
Joe Terranova
I mean, AI is accelerating every technology.
- [38:23]
Courtney Reagan
That we focus on, whether it be genomics, robotics, AI software directly on and autonomous mobility.
- [38:33]
Joe Terranova
And investors are beginning to realize that there are real business platforms to be built on the back of these technologies. And these technologies are hitting the ground today.
- [38:45]
Courtney Reagan
We're beginning to experience them in our.
- [38:47]
Joe Terranova
Lives and it's driving both great business and market performance.
- [38:51]
Courtney Reagan
And Brett, one more quick point before we let you go here. How much is fintech a big theme that we will be looking at in the coming months and years?
- [39:00]
Joe Terranova
Well, absolutely. Stablecoins are, are, are leading the charge in terms of driving digital assets into.
- [39:09]
Courtney Reagan
The traditional financial ecosystem.
- [39:11]
Joe Terranova
It's clear that companies have pivoted from.
- [39:14]
Courtney Reagan
Resisting crypto assets and all that they.
- [39:17]
Joe Terranova
Promise to embracing them. And I expect you'll see a lot more both adoption and uptake over the coming quarters and years.
- [39:26]
Courtney Reagan
All right, our thanks to both Eli and Brett. We're going to continue this entire conversation ETF edge.cnbc.com in just a little while. And as a bonus, Eli and Brett will also be joined by David man, head of Capital markets at Franklin Templeton so a very robust tribunal in terms of ETF edge Courtney today. I'll send things back over to you guys.
- [39:47]
Scott Wapner
What a trio. Dom, thank you very much. Well, coming up here on the halftime report, three more committee stocks are on the move, including today's top Dow performer. We'll be right back to talk about it. Let's get to one more move from Amy. You were talking about trimming earlier asml but you also trim Goldman Sachs.
- [40:04]
Courtney Reagan
I did. We trimmed a little bit before the quarter. It was a great quarter. It just had been up about 40% in three months. And so the position side was size was getting big and we thought that some of the good news was already baked into the quarter going into the quarter just because it had run so much. So excellent quarter. Raised the dividend good. Particularly M and A banking business. We really like the company still. We still own it but we just took a little off the table and I think we're kind of justified. The stock didn't really move much after earnings.
- [40:34]
Scott Wapner
I want to stick with you for a second here and talk about Verizon shares higher boosting the annual profit forecast and demand for premium plans. And you on this one.
- [40:42]
Courtney Reagan
Yeah, we like Verizon. It has not performed as well after the April after the April low but it's been solid performer year to date. Really good dividend, six and a half percent dividend. They raised their free cash flow and EBITDA estimates for the year. We like this one a lot actually less than 9 times earnings, very low expectations. And we think the whole wireless industry has gotten a lot more stable as T mobile gains share they're less incentivized to price down aggressively. So some of the deflation in the wireless services industry that prevailed for a really long time time has lessened up. And so we think that just is a better makes the whole industry actually positioned better.
- [41:21]
Scott Wapner
Oh, that's interesting from a competitive standpoint. Sarat getting a report that activists elevate boosting stake in their data center REIT Equinix. You you own this one feels like data centers. I mean how can you go wrong?
- [41:34]
Sarat Sethi
It's also Equinix is a little bit different from the from like a digital realty because what they focus on is colocation latency which is really getting access to really fast trading and as the demand for more of that increases they increase their capex and the stock went down. We were talking about companies that increase capex that goes up. This one went down. It's also a REIT structure. So when rates are Higher people move money away. Potentially rate cuts come down. But their growth, their organic growth is really good in Equinix. And we like this stock. They have a good dividend. They've increased, increasing their dividends as well. So I think longer term, the stock's been down about 12% year to date. So we've owned this for many years. We kind of buy it when it dips. And for us, this is a good time to kind of go long again, especially if clients are exposure to it.
- [42:19]
Scott Wapner
Good education on that name, Joe Berkshire underperforming after we found out that Buffett was leaving. I mean, my goodness, I guess he can't stay forever, but we got pretty close. You own this one in the Jyoti?
- [42:30]
Joe Terranova
Yeah, we do own it there. Look, there's several reasons behind it. It's not a direct reflection where everyone's saying, okay, let's sell the stock because Warren Buffett is stepping down, Greg Abel is going to be in charge. You have to look at the holdings and see what's going on there. I know they're building positioning in Domino's Pizza, which maybe hasn't worked out particularly well. And then obviously he has significant holdings in Japan. Japan is relative underperformer when you're looking at the global equity market. So I think there's more, more underneath the surface. He does have some positions, obviously, that are working well, bank of America, but others like in the energy industry, Occidental, Chevron, not working as much.
- [43:06]
Scott Wapner
Very interesting. Well, up next, Mike Santoli joins us for his midday word. We're back right after this. We're back on halftime. Senior markets commentator Mike Santoli joins us with his midday word. Mike, we're moving higher, kind of holding steady, but not afraid of the the talk about the tariffs in EU at least maybe not right now, for sure.
- [43:26]
Joe Terranova
Court, in fact, market seeming like it's.
- [43:28]
Steve Weiss
Not afraid of much of anything. If at minimum, big picture, you say, look, we got up to this vicinity.
- [43:34]
Joe Terranova
In the index in the s and.
- [43:35]
Steve Weiss
P500 over two weeks ago. We closed just below 6300 right before 4th of July.
- [43:41]
Joe Terranova
And that has not brought out any aggressive selling. So there's basically a level of comfort with the market at this level. Why? Well, because the cyclical parts of the.
- [43:50]
Steve Weiss
Market are holding up better.
- [43:51]
Joe Terranova
That's a reassuring message about the economy.
- [43:54]
Steve Weiss
Yields are tame.
- [43:55]
Joe Terranova
The dollar has backed off.
- [43:57]
Courtney Reagan
It's bounced a little bit, but it's.
- [43:58]
Joe Terranova
Still sort of showing you we have loose financial conditions. Credit markets are fine. So it suggests anyway that the, the whole Atmospheric. The background weather for the market is comfortable. I think the question is what from here are you starting to see a lot of the speculative stuff run in the last hour or so?
- [44:15]
Steve Weiss
You saw the small caps fade a little bit. I wonder if that's a little bit.
- [44:18]
Joe Terranova
Of, you know, running out of gas on that front.
- [44:20]
Steve Weiss
But nothing that would give I think investors a tremendous amount of concern even if we do pull back a little.
- [44:26]
Joe Terranova
Bit as a lot of folks are.
- [44:28]
Steve Weiss
Starting to suggest as we get into August.
- [44:30]
Scott Wapner
Yeah, very much so. I mean what do we need to pay attention to with August? We were talking earlier on the conversation years ago. August was kind of a sleepy month. Not anymore. We've got this August 1st deadlines and just so many crosscurrents right now. Course we're going to hear from a lot of the big, the big players, especially in the tech world coming up. So that may position us for a very different August too.
- [44:47]
Joe Terranova
It has and you know there's a reputation that's built in let's say the last 15 years or so of August.
- [44:52]
Steve Weiss
Of being a little bit of a stormy month.
- [44:54]
Joe Terranova
In fact, even in very strong years.
- [44:56]
Courtney Reagan
When the market is up quite a.
- [44:57]
Joe Terranova
Bit into July or through July, August.
- [45:00]
Steve Weiss
Has sometimes been a little bit of a step back month. So look, everybody knows this stuff.
- [45:04]
Joe Terranova
I guess it's all, it's all there in the record at.
- [45:07]
Steve Weiss
So I wonder if that kind of dulls the power of knowing that there may be some, be some, some seasonal.
- [45:12]
Joe Terranova
Hiccups here but you have to be aware at least of the patterns of the last several years.
- [45:18]
Scott Wapner
Very interesting stuff. You always keep us honest with the big market action. Mike Santoli, thanks so much. Stick around because final trades are coming right up. We're back with final trades.
- [45:29]
Sarat Sethi
You get to kick us off Morgan Stanley. Great earnings stock didn't do much. It's digesting. I think the future for Morgan Stanley, especially if you have M and A growth coming is going to be really good.
- [45:40]
Steve Weiss
Weiss Netflix. That was my final trade on Friday. It's my final trade today. Unfairly penalized for the quarter and I still think it's good.
- [45:49]
Sarat Sethi
And tomorrow, the day after.
- [45:51]
Steve Weiss
Not, not today though. Not today.
- [45:54]
Courtney Reagan
Cognacs. This is an unloved stock. It hasn't worked for a long time. But if we're going to have a capex manufacturing cycle in the US it's going to work.
- [46:01]
Joe Terranova
And Joe, big decline in equity down 8%. Sell half the position, put it 48.
- [46:06]
Scott Wapner
Stop on the remainder for good ideas for very different ones. That does it for Halftime.
- [46:12]
Courtney Reagan
You've been listening to CNBC's Halftime Report, the podcast.
- [46:16]
Sarat Sethi
You can always catch us live weekdays.
- [46:19]
Courtney Reagan
At 12 Eastern only on CNBC.
- [46:24]
Scott Wapner
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.
- [47:04]
Courtney Reagan
Did you know over 75% of small businesses don't have enough cash on hand to cover unexpected business disasters? You need Relay, an all in one banking and money management platform that will change the way you think about money. With Relay, you can open up to 20 accounts to separate your cash for things like income, payroll or operating expenses. All you need is a few minutes to sign up@relayfi.com podcast that's R E L-A-Y-F I.com podcast. Relay is a financial technology company and is not a bank. Bank services provided by Threadbank member FDIC.