Halftime Report: Rising Rates and Falling Stocks (January 13, 2025)

Overview

In the January 13, 2025 episode of CNBC’s Halftime Report, host Scott Wapner and a panel of top investors delve into the current financial landscape marked by rising interest rates and declining stock markets. The discussion explores the implications of these trends, investor behaviors, market dynamics, and potential opportunities amidst volatility. This comprehensive summary captures the key points, insights, and conclusions drawn during the live weekday broadcast.

1. Market Overview

The episode opens with Scott Wapner highlighting the current market pressures, noting a notable decline in major indices:

• S&P 500 and particularly the Nasdaq are under pressure, with the Nasdaq down 1.5%.
• The 10-year Treasury yield has risen to 4.8%, the highest since November 2023.
• Bitcoin is trading below $90,000, while oil prices are on the rise, with the energy sector leading gains.

Scott Wapner [01:00]:
"Front and center this hour, rising rates and falling stocks and whether the bullish backdrop has now changed."

2. Rising Interest Rates and Stock Market Impact

The primary discussion revolves around the surge in interest rates and its detrimental effect on stock markets. Scott Wapner references a Bloomberg report indicating significant net selling of equities by institutional investors, attributing this trend to shifts in the Federal Reserve's rate cut trajectory.

Scott Wapner [01:00]:
"Goldman has seen a big change in equity positioning from institutional investors... mainly because of the change in the Fed's rate cut path."

3. Perspectives from Panelists

a. Anastasia Amoroso on Tax-Driven Selling

Anastasia Amoroso emphasizes the role of tax strategies in the recent sell-off, highlighting that private clients are instructing advisors to realize gains to offset tax liabilities.

Anastasia Amoroso [02:27]:
"It's not about necessarily just the rates. There's a massive wealth management driven move happening here that is 100% related to private clients telling their advisor, don't you dare drop a tax bill on me."

She underscores the shift from tech to energy stocks, noting:

• 86% of S&P 500 energy names are above their 20-day moving average.
• This indicates a rebalance rather than a fundamental market shift.

Anastasia Amoroso [04:31]:
"It's not a rate panic. The Dow is green. Guys, focus."

b. Stephen Weiss on Rate Changes and AI Momentum

Stephen Weiss discusses the dual impact of rising rates and the persistent momentum in sectors like artificial intelligence (AI).

Stephen Weiss [05:20]:
"When you have a 10 year rising by 100 basis points... it's going to derail... but what's also happening is... momentum was clearly on the side of artificial intelligence."

He points to upcoming earnings reports as potential stabilizers for the market.

c. Jim Cramer on Market Volatility and Positioning

Jim Cramer describes the current environment as highly volatile, comparing it to previous turbulent periods.

Jim Cramer [07:23]:
"We have seen since probably 2022... the increase in open interest continues to show that speculators are adding to their short positioning in the treasury market."

He anticipates a potential unwind in Treasury positions, which could lead to a resurgence in tech stocks.

d. Carl Quintanilla on Market Mechanics and Tariffs

Carl Quintanilla links the bond market movements to the broader economic policies, particularly tariffs, and their inflationary effects.

Carl Quintanilla [07:02]:
"It's bond spiking because tariffs are reality... it's hugely inflationary."

He expresses caution regarding speculative positions and the potential for further rate hikes.

4. Earnings and Sector Performance

The panel discusses the upcoming earnings season, with expectations that financial sectors will deliver robust results. Anastasia Amoroso and Stephen Weiss highlight that despite rate hikes, the underlying economic growth remains strong, supporting continued stock performance.

Anastasia Amoroso [06:05]:
"We're managing billions and billions of dollars and these are the conversations that my CFPs are having with their clients."

Stephen Weiss [12:21]:
"You're probably at a 5% pullback today... In the AI theme, for example, you can find things that are trading to your point, Scott, on Nvidia, 10 or 12% down."

5. Investment Opportunities and Strategy

a. Rob Sechin on Stock Buys

Rob Sechin, joining the panel, outlines his investment strategies amidst the current market turmoil. He emphasizes buying undervalued stocks with strong fundamentals, such as Amazon, NRG, and Qualcomm.

Rob Sechin [29:02]:
"Amazon trades at 31 and change times earnings, but it's cheap relative to its history... earnings be revised upwards by about 8% over the last three months."

He also discusses trimming positions in outperforming stocks like Cadence Design, reallocating to higher-growth opportunities.

b. Josh Brown on Best Stocks

Josh Brown updates the panel on his best stock picks, focusing on energy and airline sectors that have shown resilience. He advocates for strategic buying during volatility to capitalize on potential rebounds.

6. News and Updates

a. Purdue Pharma Settlement

Scott Wapner reports on Purdue Pharma’s increased financial contribution to opioid lawsuit settlements, rising from $6 billion to $6.5 billion.

Scott Wapner [33:04]:
"Thousands of lawsuits allege the company fueled a deadly addiction crisis through deceptive marketing of OxyContin."

b. Student Debt Forgiveness

The administration is forgiving student debt for 150,000 borrowers, including those from defrauded schools, individuals with permanent disabilities, and public service workers.

c. Terror Graham Collective Designation

An online extremist group, the Terror Graham Collective, has been designated a terrorist organization, freezing its U.S. assets and prohibiting American engagement.

7. Cryptocurrency Segment

The panel addresses the state of Bitcoin, currently dipping around $92,000. Bob Pisani and Samara Cohen discuss the success and future of Bitcoin ETFs, emphasizing long-term adoption despite short-term volatility.

J, Chief Investment Officer [35:48]:
"Bitcoin is a long term asset that you look for in your portfolios... it had a great run at the end of the year and it's a volatile asset."

8. Final Trades and Closing Remarks

The episode concludes with panelists sharing their final investment moves:

• Carl Quintanilla discusses reducing exposure to government contractors due to competitive pressures.
• Anastasia Amoroso highlights opportunities in publicly traded BDCs with high yields.
• Jim Cramer mentions adding to positions in tech stocks while cautiously managing portfolios.

Carl Quintanilla [45:49]:
"I bought Leidos here. I think the worst is behind it... it's cheap stock right here."

Anastasia Amoroso [46:16]:
"I'm long on Amazon; lots of upward earnings revisions."

Stephen Weiss reinforces the optimism for emerging investment opportunities once the current rate volatility stabilizes.

Notable Quotes

• Anastasia Amoroso [02:27]:
  "It’s tax. Listen to me now, I know this. It’s tax."

• Stephen Weiss [07:02]:
  "It's like a perfect early year storm of sorts."

• Jim Cramer [38:28]:
  "If yields continue to rise, those positions are not going to be good. I am looking to add because I truly believe we are near the top in treasury yields."

• Anastasia Amoroso [08:50]:
  "Look at your intraday chart... it’s not a rate panic. The Dow is green."

Conclusion

The January 13, 2025 episode of Halftime Report underscores a pivotal moment in the financial markets, characterized by rising interest rates and a subsequent decline in stock valuations. The panelists provide nuanced insights into the factors driving these trends, including tax-driven selling, shifting investor strategies, and underlying economic strengths. Despite short-term challenges, opportunities for strategic investments, particularly in energy and resilient tech sectors, are highlighted. The discussion also touches on significant financial news, including major settlements and regulatory changes impacting the market landscape.

Investors are encouraged to navigate the current volatility with informed strategies, focusing on fundamentals and long-term growth prospects. As the market continues to evolve, the insights from leading investors on Halftime Report offer valuable guidance for capitalizing on emerging opportunities amidst uncertainty.