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Shaky or Stabilizing? 8/8/25
00:43:32
Scott Wapner and the Investment Committee debate whether stocks are shaky or stabilizing with the S&P tracking for its best week since early June. Plus, the desk share their latest portfolio moves. And later, we discuss the latest Calls of the Day. Investment Committee Disclosures
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- [00:00]
Edward Jones
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Scott Wapner
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Scott Wapner
I'm Scott Wapner and you're listening to CNBC's Halftime Report, the podcast, the most profitable hour of the trading day. We record this live weekdays at 12 Eastern. Listen in. All right, Carl, thank you very much. We'll of course follow those headlines, bring you any more details as we get them. Welcome to the Halftime Report. I'm Scott Wapner. Front and center this hour, stabilizing or shaky? What is the current state of stocks? With the S and P tracking for its best week since early June, we will ask the committee for their best strategies right now. Joining me for the hour today, Dan Greenhouse, Jim labenthal, Kevin Simpson and Steve Weiss. We will take a look at the markets here across the board. We, as I said, are going to follow those headlines regarding a possible Trump Putin meeting. We are green across the board, as you see. We do begin with that question. Dan, I'm going to give it to you first, Shaky or stabilizing? How does it feel to you right now?
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Dan Greenhouse
Shaky. We talked about this the other day on whatever the 3 o' clock show is. There is it seems to me that beneath the headline, there are some things going on that leave me less optimistic than I had been for some time since the start of July. Let's pick an arbitrary starting date. The rsp, the equal weight ETF is basically flat, if not down a little bit. And the bulk of what's been driving gains has been the AI story, which we know quite well, and its derivatives, that's nuclear data centers, power, etc. Etc. And what we'll call a low quality circumference of stocks, if you will. It's it's stocks that are low quality. It's non Profitable tech. It's, it's short baskets. So this last little leg of the rally is, is to my mind, not as great as the first part. And that leaves me a little worried that maybe we have some, some payback, so to speak.
- [02:52]
Scott Wapner
So, Jimmy, investor action maybe leans towards the shaky side. I bring that to you with bank of America's flow show note today. Showing the biggest inflows to cash since the beginning of, since January. 106.7 billion to cash. And then they say, hey, I thought cash was meant to be piling into risk assets. That's what people said. Watch what people do, not what they say.
- [03:19]
Jim Labenthal
Yeah, and I think, you know, there's been a time in the past we've covered this a lot where the retail money has been doing the opposite of what you should do. But over the last couple of years, retail has shown it really knows what it's doing, frankly. I'm with you, Dan, on this. I think the call is to be shaky, but let's be specific. We're talking shaky over the next month and a half. I think there are too many things going right in the economy. I think we're going to have a Fed that's going to be cutting interest rates and we're going to goose this economy with it. We're going to goose profits. So when we get to the end of the year, things are going to look good. But basically I said this a week ago. We have climbed the wall of worry. There is very little left to concern the markets right now. We've got good earnings. We've got the labor market kind of hanging in there. We've got GDP growth. You know, I can go down this list.
- [04:02]
Scott Wapner
So why shaky then? Why shaky then?
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Jim Labenthal
Because you need the wall of worry. You need something that the market, hey, wait a second. This is being overpriced to the downside right now. Everything good is priced in. If you ask me my opinion now, I've reflected this in my positioning. I've got about 7% cash. And you know, we can have a debate about whether that's too much, too little. I'm not going to go more than that because that's too much market timing. If I'm wrong, if Dan's wrong and this market just rips from here, fine, I'll have 7% that isn't at work. But I'm looking for that 7% over the next few weeks to give me some opportunities with individual stocks to put it to work. And I do think this market will end the year at all time High.
- [04:41]
Scott Wapner
Our markets desk was putting through information today about earnings. Earnings growth rate now on the cusp of surpassing 13.7% seen in Q1. So to your point, earnings have been good. Yes. There's the unknown regarding the fallout from tariffs ultimately on the economy. Or maybe the Fed doesn't play ball on a timely fashion, or at least timely enough for what the market has expected. But the backdrop still feels pretty good.
- [05:08]
Jim Labenthal
It does feel pretty good. I think it feels great, frankly. I mean, the budget bill is passed. This Fed, in my opinion, is crazy. If they don't cut in September for a number of reasons. We get into that later. But this is my point. There is so much good that the market already knows. Now, maybe next week Putin and Trump get together and something good comes from that. I kind of doubt it, but okay, maybe that's not priced in. My point is there is an awful lot good priced in here. There's very little on the downside.
- [05:35]
Scott Wapner
Pressure shaky or stabilizing? How do you feel?
- [05:37]
Kevin Simpson
Shaky 100%. I mean, and I'm using mathematics when I come into the equation. You astutely last week cautioned us and said maybe there'll be a 5% pullback. So I thought that seems somewhat arbitrary. And then I went and did the math and you were totally right. We look at a 30% climb from the April lows and then we start to look at the 200 day moving averages and you say it's reasonable if the market pauses, that we would go back to those averages and that gives you about a 5 to 8% pullback. So I applaud you on the cash position. We've raised some cash. Maybe not market timing wise, but we sold a lot of covered calls into the earnings season. We've collected a bunch of dividends. We sat on a lot of cash at the end of the quarter, put a good bit of that to work in April, and I don't think by any means we're going to get a 20% cascading pull down. But a 5 to 8% pullback, Scott, would be a great buy.
- [06:22]
Scott Wapner
I'm just trying to think of, if you, if you try and counter that, is it really shaky? Weiss in a week in which Apple's up almost 12%, Nvidia is up better than 5%. Many of the chip names beyond that are up. Palantir hitting a new fresh high today. Best week since early February. It's a five day win streak. It's the best S P stock since President Trump took office. That doesn't scream shaky does.
- [06:54]
Steve Weiss
Doesn'T seem shaky to me at all. In fact, if you're, if you think it's shaky because of 5 to 8% correction, possibility. Well, let me give you this news flash. There's always that possibility on any given day, week or month in the market. Obviously on a day or week it'd be kind of nerve wracking, but that's always out there. Markets, they look like they go straight up all the time, but 20% of the time they don't. So then people come out and say, well, shaky, yeah, but that's healthy. I don't understand what that means. I'm not focused on the market, tell you truth. I am focused on those events. I am focused on declining economic growth, despite what you point out, because I believe a lot of that was pulling through in advance of tariffs coming on and I do believe there is some weakness. But, and I am not, you know, so sure the Fed goes in September, I think it makes sense. But look, we got to see what tariffs mean to the market. And given the pressure it's been put on Powell to cut, while he's not, he's not political, that's got to have some influence on it in terms of want to keep the independence. So where I come out is I'm strictly bottoms up stocks and the stocks that I have, which are primarily not completely in the max seven are going to continue to lead and their fundamentals are not shaky at all. If you want to talk about valuation for a second. Yeah. You can make an argument in this type of, you know, interest rate environment that maybe stocks are extended, but they've been extended for a long time. I'm not going to focus on that pinpoint day when that, when that correction valuation happens because I don't think that will occur for a sustainable period.
- [08:39]
Dan Greenhouse
Hey, so Steve, if you, if you argue the market is not shaky and I would counter simply by observing again that the equal weight is flat to down since the start of July and a lot of the heavy lifting has been done by the names that Scott just articulated in video and the like. But so if you argue that the market is not shaky, but at the same time say we haven't yet seen the effects of tariffs and despite the large chunk of the market moving in favor of a rate cut in the September meeting, you're saying that they may not, wouldn't those two items, tariff impact yet to come and a Fed not set to cut in September, contribute to the market being a little shaky right now?
- [09:19]
Steve Weiss
Well, you know, we say shaky, you're looking at. I mean that's depends how you define it. The market show to me, shaky is what's happening today. And what's happening today is that we're seeing normal market activity. The activity we've seen in the past where those where the have have halves are moving up aggressively, where we've seen some broadening. And the points that you focused on that I mentioned are factors that just haven't, you know, swayed the market into consolidation or declining for a meaningful period. But again I'm going to refer to you on the broad market I'm strictly bottoms up. I'm strictly absolute performance. I don't work, I don't invest against a benchmark and claim victory. If the market's down 10%, I'm only down 8. All I care about is my stocks and how they're going to do over the next six months, year, five years, etc.
- [10:17]
Scott Wapner
There are some factors that may lend to the conversation of shaky when you look at what Tom McClelland puts forth today. A declining number of NDX component stocks are above their 100 day moving averages from 84 to 62 in just two weeks. An indication, he says, that liquidity is drying up so that the weaker stocks start suffering while the big caps hog all the money. It speaks to market concentration. Apollo today Nvidia now has the biggest weight in the S&P 500 of any individual stock since the data began in 1981. The largest 10% of U.S. stocks now account for 76% of total U.S. market cap. That's the highest concentration ever. And the top 10 names in the S and P, the ones you all know, account for 40% of the index. If that doesn't scream concentration now that may be. That's just the way it's been and that's just the way it is and that's the way it will be. Does that point to health or not?
- [11:22]
Dan Greenhouse
It depends on your definition of health. But I want to counter with a really important point that I've made previously and I'll ride till I die. Nvidia aside, Apple Aside, Microsoft is LinkedIn. Microsoft is Activision Blizzard, Amazon is Whole Foods. These companies. Microsoft is nuanced. These Companies are not one company. Obviously Nvidia is one company. It's selling chips. But the rest of the MAG7 are like 10 companies, 10 sizable companies, not random companies at the bottom of the Russell 1000 companies that were in the S&P 500, some that were in the S&P 100. So yes, it's fair to observe market concentration, etc. Etc. I don't think there's anything wrong with saying the market is very top heavy.
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Scott Wapner
Is it too concentrated?
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Dan Greenhouse
Too concentrated. But defined how, I mean, I just did.
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Scott Wapner
I just defined how the largest, the largest 10% of U.S. stocks now account for 76% of market cap.
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Dan Greenhouse
It's very top heavy. But if you view Microsoft as one company, then sure, it's very top heavy. If you view Microsoft as, obviously it's got its huge software business, we view it as Microsoft.
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Scott Wapner
I mean, if you want to break down every acquisition that every company has made and judge them all equally based on that, I mean, that's an exercise in futility.
- [12:36]
Dan Greenhouse
But I'm providing some context for the fact that these companies contain other companies which were tens if not hundreds of billions in size. And I think that's a fair observation.
- [12:46]
Jim Labenthal
I do think it's too concentrated. But I think the comment that it's too concentrated is irrelevant because it was too concentrated when the top 10 were 30%. And I can say all I want to about that, but I think I need to give some, and we all need to give tangible action here. If you're a portfolio manager, here's what you do. You don't act as a large cap value manager and just buy value stocks. I mean, I got plenty of them in my portfolio, but I have to have some Apple, I have to have some Microsoft, some Oracle, you know. So what I'm saying is there is a barbell approach. You've heard others on this desk say this, of doing what Steve was talking about, bottoms up approach. Pick the stocks that you think are undervalued by 50%, 40% in the market. But you've got to offset that with what's working in the market today. And point blank it's the mega cap tech stocks that are 40% in the top 10.
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Scott Wapner
The problem is if you want to go the whole barbell thing, you've got like four 45 pound plates on one side of the barbell and you've got a couple of 25s and maybe you threw some little donut five pound plates.
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Jim Labenthal
I hear, I hear you. You listen. You know me. You know me really well.
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Scott Wapner
Our bells are not created equal.
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Jim Labenthal
I hear you. And you know me and my portfolio really well. You also know that I have a business that has actually thrived over decades. So if it were all. Pick your, pick your poisons here, Scott. If it were all Delta Airlines or Wynn Resorts. We'll get to that later, or Cleveland Cliffs, it were all that I wouldn't have a business. But those are the stocks that I honestly believe are going to outcome perform over the next one or two years. I got to have the other things that are working as a portfolio manager in there. Let's be clear. Unless I sound disingenuous, I'm not recommending Palantir. That's not my style. I can't Recommend Something at 200 times forward earnings when it could go to 100 tomorrow in terms of forward earnings be cut in half and still be expensive. So I pick my poisons in the barbell. You're right, it's lopsided. But I've got to find a way.
- [14:42]
Scott Wapner
To do it, Kev. I mean Tony Pescarello Sachs points out. Hang on, Weiss, that's. I don't. He says it is in his note which he puts out the end of every week. I don't think of breath as a high quality lead indicator and I don't worry about market concentration all that much. Maybe we make too much of it because it's so glaring, but it's kept this market setting new records after new records after new records.
- [15:06]
Kevin Simpson
I think we've always had concentration whether it was the nifty50 or the dot com stocks are now with the mag7 or maybe even the Fang before that. But if the conversation was is the market shaky or on sturdy ground by the time it's shaking, we're all sitting here after the fact. What value will be brought to the table. So what I look is over the next few months what's, what's the expectation And I think Dan plays it properly that if you get an air pocket here, it doesn't mean there can't be seasonality at the end of the year. For a rally in November, December into.
- [15:33]
Scott Wapner
The first quarter, you sold covered calls on Microsoft. What is that reflective of? For, for part of this conversation we.
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Kevin Simpson
Practically sold covered calls on everything here in earnings season because I just think the markets are really valued. There's heightened volatility going into it. It doesn't work perfectly in every case. But our Microsoft trade will. It'll expire next week.
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Scott Wapner
Worthless.
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Kevin Simpson
It was all premium that came in. The only one that will work against us that will get called away is matter. We had a 30% call written on Meta. I think the 507 sounds crazy because the stock's close to 580 but I think we brought 30 or $40 into it. I mean that was the one name that got called away. Everything else will expire worthless.
- [16:09]
Scott Wapner
Target today on Microsoft 640 Daiwa they had 515. Let's see another look at Microsoft if we could. Weiss, you own this name. I mean OpenAI launches GPT5 Elon Musk posts yesterday on X quote, OpenAI is going to eat Microsoft alive. And that was in response to Satya Nadella highlighting the launch from Open AI. So a little bit of intrigue there as well.
- [16:36]
Steve Weiss
Yeah. And I look at Microsoft and the notice I got, notices I got of the last few months, they're no longer supporting Windows 10 which means that there's a major upgrade cycle and upgrade Cycle to Windows 11 which most of the world runs on is going to be significant and does get mentioned. And it's not only software software, it's also hardware that's going to drive. But I'm betting on software despite software not being finally held by the market. So I'm not really concerned about that. I'm not concerned about the death of of Google Alphabet either because of pick your search engine. Microsoft's institution. Microsoft is going to do well. It's a market leader will continue to do so. So OpenAI isn't to going going to kill Microsoft. Microsoft is not sitting still because the open air relationship is fractured. So let's give it some credit. So, and I'm not going to pay attention to Musk is a genius. He's a great inventor, he's a great engineer. I'm not going to pay attention to what he says and let it scare me out of the stock when tomorrow he could say Sam Alton's a complete moron and we're going to eat their lunch. So you know, let's just be steady as she goes in terms of Microsoft.
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Scott Wapner
All right, let's so let's look at Apple then because it's been a huge week. It's on pace for the best week since December of 2021 variety of reasons. Obviously Tim Cook was at the White House this week. They make this pledge of a greater investment in the United States. Maybe the tariffs on India aren't going to have as punitive an impact on Apple as they will on some other companies. The target today goes to 260 from 240. That's a buy at Melius Research. It's a reiteration. And Dan Ives, he puts out a note that says Apple needs to do three things. Do the Perplexity acquisition before it's too late, bring in outside talent to the management team and do the Google Gemini partnership. They going to do any of these things?
- [18:35]
Jim Labenthal
They should. They should because Otherwise, there's a little bit of an air pocket in terms of valuation under this company. We can talk about, you know, they buy back shares, they're big part of the indices. We got all that. But this stock is now punching above its weight class in terms of the earnings, the forward earnings multiple versus its growth rate. And if we're going to keep this multiple, you've got to juice the growth rate. And any of those things would do it. Scott? Yes, we've got a pump, we've got a, we've got a jump in the stock this week on the CapEx announcement. But you know, so far that's just expenditures. That doesn't say anything about the return on those investments.
- [19:06]
Scott Wapner
I think it's more about, yes, obviously the investments part of it. But if you, if, if the two men, President Trump and Tim Cook needed some kind of detente here this week, may have provided that that's hard to calculate in terms of the monetary value that is added to a stock. Obviously, if you're not going to have as punitive an impact from tariffs as some others are related to India, that's hard right now to calculate. But that could be what's at work here. So I think it's a little more than just writing a check.
- [19:40]
Jim Labenthal
I do, too, and I completely agree with the Kyron that's on the screen right now. Does Apple need an AI acquisition? Yes. And without it there's a problem. That's what I'm saying simply, isn't it.
- [19:49]
Kevin Simpson
Easier said than done.
- [19:51]
Scott Wapner
Why? I mean, these people have a mountain of cash. Mountain like Everest.
- [19:57]
Dan Greenhouse
Perplexity is a minor blip on the radar compared to their cash pile. But real quick, I just want to go back to something you said. Isn't the knock on Apple, hasn't the knock on Apple for several years been that the multiple is unwarranted given its revenue and earnings growth rates? What's new today compared to say three years ago?
- [20:13]
Scott Wapner
Well, because if you had a multiple that was like low double digits, low ex cash, I mean, you were looking at a stock that was judged to be cheap on almost any metric. Now, if you look at what they're doing, valuation is a far different picture.
- [20:28]
Jim Labenthal
Or maybe I can answer it this way, Dan. I mean, if you look at the recent results longer than this week, they're kind of punk. I mean, I'm looking right now, obviously we know this right year to date, it's down 9.2% one year, up 6.8%. The S&P is up 21. I can do this. You can do this.
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Dan Greenhouse
Of course.
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Jim Labenthal
So I think that again that is reflective of a stock that had run up and needed to digest its multiple. If we're going to stay at this multiple, we need a growth rate. Net income that's just, it's bigger than the high single digit list.
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Dan Greenhouse
The whole street's talking about perplexity. I think just from a consensus standpoint they probably need to do something along those lines. But I would just ADD revenues up $100 billion. Net income is basically doubled over the last couple of years. They are doing something right.
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Scott Wapner
China's getting better.
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Dan Greenhouse
China is getting better. And Tim Cook up at the White House yesterday defusing the most acute near term threat to them which obviously is President Trump's tariffs and other, other trade items. I just, I'm saying I keep hearing years this company is too expensive and yet it keeps doing what it's been.
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Jim Labenthal
Your honor, request permission to cross examine the witness, please go ahead. Okay, I think, look, I'm seeing different numbers. Okay Dan, because net income 3 year annualized is basically flat now 5 years 11.1 years. Okay. Because we're catching that right after Covid boost but really that last until 2022. We haven't done much since then. So the point that I'm driving and.
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Dan Greenhouse
I agree with, I agree with that, the numbers are okay.
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Jim Labenthal
So the net income needs to grow and they're not going to if they're just going to sell more of these. I mean yeah, I need a new one but that's not going to move the net income needle. You got to have this AI capability that's long in coming services just hit.
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Kevin Simpson
An all time high of 27.4 billion without AI but I think we all.
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Steve Weiss
It'S just really declined.
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Jim Labenthal
Look, I'm not saying go out here. I think they will solve this. I think they will solve this. Perplexity to me seems like a very good idea. And what Dan, I've said, yeah, better get it done now because last I saw open air is valued at 500 billion perplexity. These, these numbers are going to go up by the second.
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Scott Wapner
Tim Cook's also a good gift giver because he, he gifted the president the plaque with like 24 karat gold on it which is a cheap segue for me to gold hitting a record high. The Tim Cook knows what he's doing. By the way, the FT today says the gold market was blindsided by the President's plan to impose tariffs on imports of gold bars. So gold hits a record high, you have a move related to gold and.
- [23:01]
Kevin Simpson
Mining very consistent to what we were talking about before. Looking at these names and writing partial covered calls into earnings. We have a 135 call that expires next week on Agnico Eagle Stocks right now around 136, up 73% on the year. It's been an amazing run for us. I hope it doesn't get called away. We'd like to continue to own it, but this is again, a way of hedging something that's continually hitting new highs. Have we known about the plaque or the statue? I'm not sure we would have it in comments.
- [23:27]
Steve Weiss
The call.
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Scott Wapner
Yeah, right. All right. My last item in our A block, international stocks. All right, here we had a good portion of our opening conversation about U.S. market performance and how maybe it's on shaky ground. International equity markets don't appear to be on shaky ground. They are on pace to outperform the broad US benchmark this year for the first time since 2002. MSCI All World ex US up 18.5% year to date. The S&P 500, Steve Weiss is up only 8.5%. Jeffrey Gundlach was with me earlier this week. Continues to like outside the US Likes some Europe, likes India, Mexico and some other places. And by the way, the dollar is on pace for its worst week since June 27th. Heading into today, what's your view?
- [24:20]
Steve Weiss
You know, my view is that I've missed it. I did own India and I sold it. And I'm not unhappy that I sold it, by the way. I think that look, part of Europe moving up as it has is that those countries have been cutting rates largely, number one. Number two, I think if you're a foreign investor, you're, you're just finally sitting on, sitting by and saying what the hell is going on, going on in the US So their confidence is somewhat eroded. So they're, they're bringing back repatriating money back to back to Europe and those that aren't in Europe but outside the US Doing the same thing. Going to Europe. Europe traditionally is a cheaper market but for very good reason because it doesn't really have the technology component. So I don't think that's sustainable over a long period of time. And I'd much rather still be in the US Market.
- [25:12]
Scott Wapner
All right, we will take a break. What is the real state of the US consumer? Couple CEOs, couple of top executives on this network this week said things look pretty good. So how do you explain what's happening in the restaurants and some retail names. Because those numbers have not been good, we'll get to the bottom of it next.
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- [27:23]
Scott Wapner
How's the consumer really doing? Well, we're going to get retail sales next week, so that's going to be a good tell. And then there was Brian Moynihan of Bank of America. He has a front row view, a front row seat to all things consumer. Here's what he said this week on this network. I always say don't listen to what people say they're going to do. Listen to what they do. And what they're doing is still spending money, which bodes well for the even with the tariffs that this thing keeps working through the system. That sounded pretty good. Disney's Hugh Johnson quote. I know there's a lot of concern about the consumer in the US right now. We don't see it. Our consumer is doing very very well. But how do you explain then what's happening with the restaurants and some retail. Under Armour had weak guidance. Croc had its worst day in 14 years this week. Ralph Lauren stock was under serious pressure this week. Worst day since April 10th. The other day Pinterest was down. Restaurant brands down 5% after missing Sweetgreen down sharply cut their outlook. Wendy's cut their guidance. Chipotle comps down 4%. Jack in the Box comps down 7%. Yum. Missed Pizza Hut and KFC reported same store sales declines. Dan Greenhouse has been more positive I think than most on the state and the health of the consumer says what I'd say.
- [28:41]
Dan Greenhouse
Look at a chart of Brinker. That's, that's Chili's Eat is the trade. Eddie Apple, Tommy. Okay, let's look at it. I hope I'm right. Leventhal tells me I'm wrong about some things.
- [28:53]
Scott Wapner
Wow, look at that chart Dan.
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Dan Greenhouse
I mean a longer term chart Bobby.
- [29:00]
Scott Wapner
And longer term chart is not necessarily relevant to this conversation. What is the state of the consumer right now?
- [29:06]
Dan Greenhouse
The consumer is doing fine. There are pockets of weakness that was called out by the casinos. Mgm, Caesars said there was a pocket of weakness. The airlines obviously earlier talked about a problem. The hotels, Marriott etc. We know that government employees employees are traveling a bit less. There's been some waffling on the state of business spending. All of those industries and others have suggested that that appears to be in the rear view window rearview mirror. I apologize. And forward looking indicators, bookings, etc. Convention out in Vegas looks, looks okay. And then you layer on top of that the card companies who I've talked about on this network for forever, Capital One, Visa, MasterCard, etc. Who've also told me that across income spectrums consumer spending is doing pretty well. And again we can talk about Ralph Lauren having problems. Put up a five year chart of Rotha and being down 5 or 10%.
- [29:56]
Scott Wapner
Not a five year charts are irrelevant to this conversation.
- [30:00]
Dan Greenhouse
I'm just saying it's done very well and if it was to correct 8% it would not dent the longer term trend. My point about the cards are they have, they have exposure to not just restaurants but movie theaters and travel, etc. Etc. And they're telling me across Income spectrum. They know more about us than anyone else.
- [30:16]
Scott Wapner
All right, so we're more selective on how we're spending, but we're still spending. I think we're, we're still going towards experiences and travel and entertainment and we're not going to restaurants.
- [30:24]
Jim Labenthal
That's exactly right. I mean, this is an insight. This is just looking at the numbers. People are still doom spending. They want to go on Disney cruises. It's clear from the numbers. They want to travel and that's clear from passenger statistics statistics which I still.
- [30:39]
Scott Wapner
Raised its full year gross bookings forecast.
- [30:41]
Jim Labenthal
But you know what? The numbers on the flip side don't lie either. So they can't afford everything that's going on. I'm not being facetious here. They're having the single cheeseburger at McDonald's instead of the double cheeseburger. I'm not being sarcastic.
- [30:53]
Scott Wapner
Live Nation revenues up 16% in Q2. Summer concert season off to a booming start.
- [30:58]
Dan Greenhouse
Can't keep people out of concerts.
- [31:00]
Scott Wapner
Well, you can keep them out of restaurants. I mean, do you want to just stay away from those names? Times?
- [31:04]
Kevin Simpson
Maybe it's a. Maybe it's a consumer. That's the have and the have nots. Also, there's a tariff situation that's reflected in stocks that may not be reflected in consumer retail sales. Consumer sentiment is one thing. It's how you feel retail sales next week will be telling and I think it'll continue to tell that story of two bifurcated consumers.
- [31:21]
Scott Wapner
Maybe Weiss. This is the most acute. I mean, retail, if you look at it that way, is the most acute place to look for tariff impact. It's either going to have an impact on margins like Ralph warns that it might, or it's going to have an impact on consumer spending because you're going to raise your prices, you're going to pass it off to the consumer who's going to take a look and have a little bit of sticker shock saying, what gives?
- [31:48]
Steve Weiss
Yeah. So here's what's been happening. First of all, there are so many data, data points, inputs on retail consumer spending. Pick the one that fits your narrative. So putting that aside, there was a survey done, I think was in the Journal that talked about how most companies, not just 51% but most companies, overwhelming majority, are absorbing the tariff hit right now. Take that in conjunction with the pull forward which I referenced before buying of consumers because prices are going to go up. You really have no idea where the consumer is. So what I believe is that you got to guess where the puck's going and just use common sense. If prices go up because of tariffs, that means your dollar does not buy as much and you've got to pick and choose what you do buy. We'll see it in autos. When. Because now the inventories, the lots aren't full of free tariff cars.
- [32:47]
Scott Wapner
I don't know it's as easy as that. White because common sense had had people a year ago, that's right. Saying well the consumer is going to fall into the weight of all this, all that stimulus is coming out, they've run out of money and yada yada, yada. We heard all of that and it felt like it was common sense. And here we are and the consumers held up pretty darn well. Common sense didn't really work. At least what we thought was.
- [33:11]
Steve Weiss
You know, I didn't look in the last couple of weeks Bob, but my recollection is that retail stocks have not done as well as technology stocks and other areas of the market like financials. So they just have.
- [33:25]
Scott Wapner
If you're talking about, if you're looking at retail stocks, those have other issues. If you're seeing the consumer more broadly in what is a two thirds consumption based economy, we wouldn't be talking about a market where it is, whether it's shaky or stabilizing or not, it's still not too far off off its record levels. We wouldn't be having that conversation in any way, shape or form if what was called for a year ago, if not further had come to fruition. And it really has not.
- [33:54]
Steve Weiss
Well, I can't speak to a year ago, I'm speaking to right now because the fact pattern changed markedly and Brian Moynihan was looking backwards. He was talking about July. Guess what was happening August 1st tariffs were supposed to hit. Now they got delayed. So I'm just using again common sense. If prices go up, the consumer gets stretched and they've got to pick and choose. Look at veterinarian business. They're down. They've been trending down for a year. So you know you've got any data point you want to use, but the.
- [34:24]
Scott Wapner
Consumer ultimately pretty good this week, wasn't it? Animal health give me a one week.
- [34:31]
Steve Weiss
Every week I get the data on veterinarian visits and every day it's in every week trending down.
- [34:38]
Scott Wapner
Like what's going on?
- [34:39]
Steve Weiss
Weiss no, we just have to have some sizable exposure into veterinarian practices.
- [34:46]
Dan Greenhouse
By the way, the week to date.
- [34:48]
Scott Wapner
Near 20% for people spend on their animals.
- [34:52]
Dan Greenhouse
That is recession proof. That is asteroid proof. I would just add Steve's, Steve's point is fair about there are enough data points out there consumer that anyone can pick whatever data point they want to fit their narrative, so to speak. I just, I look at the totality of the evidence, the reports that come individually, the comments from Brian Moynihan, the card companies, et cetera. And I put them together and I see a consumer that continues to do just fine right now, obviously with the obvious observation that at the bottom end of the income spectrum there's a challenge. STEVE it's also fair to say that coming down the pike are the impacts of tariffs that haven't yet yet been felt. The one pushback I would put there is we don't know how much of that burden is going to fall on the consumer. Companies could absorb some of that. Exporters could absorb some of that. And it may not be as bad as some of the worst case forecasts predict. That's, that's a point.
- [35:38]
Scott Wapner
So let's, let's take a quick news break. Let's go to Silvana now. Hi, Silvana.
- [35:42]
I
Hey, Scott. Good afternoon. The Justice Department is in the early stages of investigating New York Attorney General Letitia James, NBC News reports. Recording the investigation is looking into whether James office violated President Trump's civil rights when she successfully sued him. The U.S. attorney's office has yet to respond, but a spokesperson for James's office said they stand behind their suit against the president. The EPA will stop updating a research database companies use to assess their greenhouse gas emissions after the agency fired the scientists who created it. In an email sent to users of the database, the agency said support would end by September 30th. Last month, the lead scientist on the database was fired after he signed an open letter criticizing the president's policies on scientific research. And Warner Brothers Discovery says HBO Max will aggressively crack down on password sharing starting next month. The company is also looking to close any loopholes allowing users to share passwords by the end of the year. Netflix ended password sharing in 2023 and Disney did the same thing last year.
- [36:52]
Scott Wapner
SCOTT all right, Silvana, thanks. That's the new normal for sure. SILVANA hanau, up next, as one beaten down part of the market finally turned a corner, we will tell you what it is and how the committee is playing it next.
- [37:08]
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- [37:39]
Dan Greenhouse
CNBC Make.
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Kevin Simpson
It Online course How to Build a Standout Personal Brand. Three industry experts will show you how to create and grow your brand step by step.
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Scott Wapner
There's no time like now to start.
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Jim Labenthal
Building your personal brand.
- [37:50]
Kevin Simpson
Register now@cnbcmakeit.com Personal Brand all right, we're back.
- [37:56]
Scott Wapner
How about a quiet gainer this week? Some of the home builders have you noticed one week tripoint up 3% pulte 5% really across the board has us wondering whether this trade's finally woken up. I mean if you think the Fed's going to cut interest rates and the economy is going to hold up at the same time and there aren't going to be a bunch of layoffs, just slowing job growth by the builders.
- [38:20]
Dan Greenhouse
Yeah, listen, they've had a good rally off of low levels. I think clearly this is a rate play. But they do have two issues right now. One is that for the builders in general, they are not cheap price the book, which is how a lot of people look at these things is called one and a half times. You buy builders all the time at one times book so they're called 50% more expensive. And the other is that incentives are still extraordinarily high for all of the builders and they've all said that. So normally incentives are low single digit percentage. Now they're running 8, 9, 10%. And so these guys really need rates to come down. But you have had a big move and justifiably so considering how the outlook for rates is evolving.
- [38:54]
Scott Wapner
Farmer JIM I think on the homestead.
- [38:57]
Jim Labenthal
Yeah, on the homestead. I'm not so sure interest rates are coming down, particularly at the long end, which is what matters for mortgage rates. We talked earlier about, hey, the Fed may be cutting interest rates. That's on the short end. We're going to goose this economy. I said that earlier. We got the budget bill, we got lowering interest rates. We've got business uncertainty coming down. This economy is likely to start picking up and with it, unfortunately I think long term interest rates are going up. So it's just, it has me on the sidelines as far as builders go.
- [39:25]
Scott Wapner
Kev Home Depot speaking of reiterated overweight talk about housing, of course, JP Morgan, they they prefer Home Depot and Wal Mart versus Lowe's, Target and BJ's on better than expected sales and earnings along with some multiple expansion. You own Home Depot?
- [39:42]
Kevin Simpson
Yeah, we owned Wal Mart. We got out of that in December, rotated into TJ Maxx. We've owned Home Depot for a long time. I know we had a conversation about the consumer before, but I think in light of the Home Depot world, high interest rates make things difficult. Big purchases make it difficult. We like the stock, we like what management's doing. They're getting into acquisitions, which I think is a little bit newer for them. And I think that will improve their professional side incredibly over the next year.
- [40:07]
Scott Wapner
All right, we break, we come back, Mike Santoli on the other side with this midday word. Senior markets commentator Mike Santoli here at Post nine for his midday word. Shaky or stabilizing? I think I know which way you're going to lean.
- [40:23]
J
Well, you know, I think, I think at the end of this week you're probably more frustrated if you were bearish and betting that the market was going to buckle and give way and give you a chance to get in a good deal lower just because it's kind of found a way, way to sidestep a lot of what seem like likely excuses to, to back off a little bit more. Now, how much longer can that happen? Is it an unbalanced market that has gotten us here? The equal weights doing not much of anything. But look, a very timely rebound in Apple. The theme gets nothing but reaffirmed and then rate sensitive stuff is managing to catch a bit. I get all of that. What I don't net necessarily know is like just because people tell you it's going to be a heavy hurricane season and you haven't had one in the first month doesn't mean you're out of the woods. And so I think that's going to hang over the market a little while.
- [41:13]
Scott Wapner
There was a lot of commentary as I mentioned today off the very top of the show about the top heavy nature of the market. It really is incredible when you zero in and you realize the value that these stocks have meant to this rally. And in most cases they've meant everything.
- [41:31]
J
And the funny thing is that that fact is exhibit A of a lot of the bears that say, look, this is just a house of cards, right? It's too unbalanced, unstable. It's also often one of the first things that you would say if you're really bullish about this market because like bank of America Strategy Group is constantly saying, yeah, it's a concentrated market, it's an expensive looking market based on history. But look at the quality of the biggest weight yeah.
- [41:55]
Scott Wapner
What's up? Would go back and say that the foundation that makes the foundation arguably stronger, the biggest and the best are holding things up.
- [42:03]
J
Sure. Maybe fundamentally stronger. But also if you took 5 p. E points off of the three biggest and they're still not undervalued at that point, it does a lot of damage to the market. Saw it in 2022. We saw it in February to April. So it can happen.
- [42:18]
Scott Wapner
All right, thank you. I'll see you on closing belt. That's Mike Santoli. We'll take a quick break. Kevin Simpson with another move. We'll tell you what it is next. We're back. We need to talk about Eli Lilly. The stock has gotten crushed. Can we take a look at these shares please under different metrics? You can look at. Not an intraday this week maybe since. Let's go year to date. Maybe. So the target gets cut today to 895 from 1050. At UBS they say the sell off has been overdone. Others suggest that that breakdown below 700 was confirmation that the top was knocked out. May rally back a little bit. But Kevin Simpson, as you own this, this stock, are you thinking about this because it's not been a pretty chart.
- [43:17]
Kevin Simpson
No, I think if they're going to bring down their numbers, they should bring it down further. You know, we talked about this yesterday and how we traded around it. But the disappointment doesn't seem like much. They had 12 or 13% success ratio and weight loss when the market wanted 15. But it really is a substantial difference. So if they get it right down the road, an oral drug will be very, very revolutionary. But so much was built into it. If you miss, you get beaten up.
- [43:41]
Scott Wapner
So you will wait. What do you think?
- [43:44]
Kevin Simpson
I own it. I'm going to hang on to it.
- [43:46]
Scott Wapner
But I'm going to hang on to it.
- [43:46]
Kevin Simpson
Yeah, but I wouldn't be running into it. I wouldn't follow me into this trade.
- [43:49]
Scott Wapner
Yeah, that's I think part of the point that some are suggesting. Let's talk about Elf Beauty upgraded today to buy from hold 121. Deutsche is the one that makes the call for an attractive entry point. They say a compelling 20 plus percent potential upside. You don't believe that.
- [44:06]
Kevin Simpson
I'm not sure I agree with that one either. So we wrote calls against Lowy. Would have been nicer to sell it elf. We did sell. We sold it on Tuesday at 115. This was at a momentum that was really on fire. It started to break down into earnings. So we sold the name at 115, the earnings were disappointing. It's down 10%. If you can get it under 100, it's probably okay. But don't forget they still face intense competition in skin care makeup. There's a tariff situation situation with this company and they don't have the memeification. There's not an online buzz for this company. So I'm not sure I'd be crh.
- [44:37]
Scott Wapner
Target goes up by 4 bucks to 112. RBC likes it. Jimmy, you own it.
- [44:43]
Jim Labenthal
I honestly look it had a good earnings report, not a great earnings report. Had a good earnings report but boy did this stock pop. And I think the reason it did is because it's getting caught up in the homebuilder trade that we were talking about earlier. Now I do still think think it's attractively priced and this is a stock that does or a company that does far more than just home building. It's a lot of industrial building aggregates and materials as well. So with all the reshoring and infrastructure, it's going to benefit. I do still like holding it, but this pop this week, it may have to consolidate this over the coming couple of months.
- [45:12]
Scott Wapner
All right, break and then finals are next. All right, we'll see on the closing bell. Avery Sheffield, Jeff DeGraff, Tom Lee, Courtney Garcia, Ali Flynn Phillips. Track the last hour of trade on this week. Track for a pretty good week. Pretty good day to count. D. What's your final trade?
- [45:37]
Steve Weiss
Taiwan semi look year to date ending July up 36% they just reported today. July year over year up 26%. I know was up 5% yesterday. Should be a 5% every day. Scott.
- [45:52]
Scott Wapner
All right, thank you Weiss for not taking all the time. Kevin Simpson, T.J. max.
- [45:57]
Kevin Simpson
We talked about retailers earlier. Their off price model thrives with the value seeking consumer.
- [46:02]
Jim Labenthal
Wynn Resort sees demand good in the fourth quarter. In 2026, five price targets today alone.
- [46:08]
Dan Greenhouse
The consumer.
- [46:10]
Scott Wapner
Wow, how insightful. We have to see on the closing bell. You've been listening to CNBC's Halftime Report, the podcast. You can always catch us live weekdays at at 12 Eastern only on CNBC.
- [46:28]
Edward Jones
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- [47:08]
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