Halftime Report: "Stick with What’s Working for 2025?" (December 16, 2024)
Hosted by Scott Wapner, CNBC
Introduction
In the December 16, 2024 episode of CNBC's Halftime Report, host Scott Wapner engages with top investors Joe Terranova, Amy Raskin, Carrie Firestone, and Jim Laventhal to dissect the current market landscape. The discussion centers around whether the late-year investment strategies will sustain their momentum into the new year and beyond, particularly looking towards 2025.
Market Overview
Scott opens the discussion by highlighting the contrasting performances across major indices. While the S&P 500 and Nasdaq display robust green trends, the Dow struggles to break a seven-day losing streak. This divergence sets the stage for analyzing the sustainability of current market leaders.
Cryptocurrency Surge and Investment Strategies
Bitcoin’s Rally:
Joe Terranova points out Bitcoin reaching new all-time highs, citing a surge to approximately $105,000-$106,000—a 53% increase since the election—making crypto-related stocks like Coinbase, MicroStrategy, Riot, and Robinhood particularly attractive investments.
Investment Committee Insights:
Jim Laventhal describes Bitcoin’s performance as a “classic chaser performance” driven by momentum rather than fundamental value [(02:11)]. He emphasizes the distinction between Bitcoin as an intangible store of value versus traditional assets like gold.
Risks and Recommendations:
Carrie Firestone advises caution, noting the high leverage in Bitcoin trading. She warns, "If Bitcoin starts to go down quickly, who knows?" [(04:20)]. Amy Raskin echoes the sentiment, advocating for investments with rational underpinnings, like Alphabet and Amazon, over speculative assets.
Notable Quotes:
- Jim Laventhal [(02:57)]: “The easiest way to play it is through the strategy.”
- Carrie Firestone [(04:06)]: “We are concerned about a potential squeeze if institutions call in loans.”
Mega Cap Stocks (MAG7) and Market Concentration
Dominance of MAG7:
The panel discusses the exceptional performance of mega-cap stocks, collectively referred to as MAG7 (Apple, Google, Meta, Amazon, Tesla, Nvidia, and Microsoft). With 76% of S&P 500 gains attributed to MAG7 [(12:16)], their continued dominance is a focal point.
Nvidia’s Correction:
Despite overall strengths, Nvidia enters correction territory, down 10% from its November peak. This divergence raises questions about the sustainability of MAG7's unified performance.
Broadcom’s Resurgence:
Broadcom’s stock surges another record high post-earnings, with Goldman Sachs raising its price target from $190 to $240 [(27:05)]. The company is praised for its ASIC strategy aligned with AI advancements.
Notable Quotes:
- Amy Raskin [(08:15)]: “I feel quite comfortable in video.”
- Jim Laventhal [(15:48)]: “It was up over 100%. It pulled back. We trimmed it a little bit.”
Political Factors and Sector Performance
Upcoming GOP Sweep:
With President-elect Donald Trump set to inaugurate shortly, the panel examines historical sector performances during Republican control. Historically, sectors like real estate and utilities have fared well under GOP leadership [(Dom Chu, 25:07)].
Historical Comparisons:
Referencing data since 1991, Dom Chu outlines that Republican sweeps generally see real estate and utilities as top performers, while Democrat-controlled periods favor energy and real estate [(25:07)].
Notable Quotes:
- Amy Raskin [(19:21)]: “Capital goes to where it’s treated best. And generally, that has been America.”
- Scott Wapner [(17:35)]: “40% of the S&P earnings comes from outside the U.S.”
Specific Stock Discussions and Trades
IonQ’s Performance:
Amy Raskin highlights IonQ’s impressive year, discussing its quantum computing advancements and long-term potential. Despite trimming the position, the stock remains a strong performer [(21:00)].
Zoom’s Pivot to AI:
Jim Laventhal explains Zoom’s strategic shift towards AI, moving beyond its pandemic-era growth. The company is recognized for its reasonable valuation and long-term investment potential [(24:50)].
Nike’s Struggles:
The panel addresses Nike’s underwhelming performance, down over 25% year-to-date. Scott Wapner expresses reservations about re-investing until there’s clear strategic redirection [(44:12)].
Notable Quotes:
- Joe Terranova [(27:07)]: “I have to make sure our viewers have all the facts.”
- Jim Laventhal [(44:50)]: “Why would I buy Nike back after what Foot Locker reported?”
Sector Performance and Expectations
Top Performing Sectors:
Communication services, technology, and consumer discretionary sectors have posted double-digit gains in 2024, outpacing other sectors [(Dom Chu, 25:07)].
Underperforming Sectors:
Energy, materials, and healthcare lag, each growing by just around 3%, amidst broader market gains of 27% for the S&P 500 [(Dom Chu, 25:07)].
Impact of GOP Sweep:
Drawing from historical data, Dom Chu suggests that a Republican sweep could benefit real estate and utilities, potentially influencing investment decisions leading into 2025.
Notable Quotes:
- Dom Chu [(25:07)]: “When the Republicans sweep Washington, the best performing sector overall is real estate.”
- Amy Raskin [(40:28)]: “Having said that, I'd like to wait for the fourth quarter earnings report before deciding whether to get back into the stock or not.”
Earnings and Future Outlook
Fed Rate Decisions:
The panel anticipates the Federal Reserve’s rate cut decision, expected to be more gradual than previously thought. This anticipation affects market optimism and investment strategies [(19:26)].
Earnings Expectations:
With significant flows into the U.S. stock market, the panel remains optimistic. However, there is caution regarding meeting high expectations, especially with a momentum-driven market [(10:34)].
Notable Quotes:
- Scott Wapner [(20:05)]: “We're really optimistic.”
- Amy Raskin [(08:53)]: “We talk about this a lot, know who you are, know what you're doing in the markets.”
Closing Remarks and Final Thoughts
As the episode draws to a close, the panel reflects on their strategies and the importance of sector momentum. They emphasize patience, especially in underperforming sectors like healthcare, and underscore the need to align investments with long-term growth narratives.
Key Takeaways:
- Momentum Continues: The current market momentum, driven by mega-cap stocks and favorable sector performance, is likely to persist into early 2025.
- Cautious Optimism in Crypto: While Bitcoin’s surge presents opportunities, investors should be wary of leverage and regulatory risks.
- Sector Rotation Anticipated: With upcoming political shifts, sector performance may realign based on historical precedents associated with Republican control.
- Strategic Stock Picks: Focus remains on companies with strong growth trajectories and strategic pivots, such as Broadcom’s AI-focused initiatives and Zoom’s AI integration.
Notable Quotes:
- Scott Wapner [(10:37)]: “This is one of the biggest momentum markets we've ever had.”
- Kerry Firestone [(37:28)]: “That's a testament to the non-discretionary approach that we take with the ETF and the strategy.”
Conclusion
The December 16th episode of Halftime Report provides a comprehensive analysis of the current market dynamics, emphasizing the sustained momentum of mega-cap stocks and the strategic opportunities within burgeoning sectors. As the market braces for political shifts and upcoming economic decisions, the panel advocates for informed, patient investment strategies aligned with long-term growth prospects.
Notable Mentions:
- Sanctions and Global Politics: Discussion on U.S. sanctions against North Korea and Russia, and Israeli Prime Minister Netanyahu’s corruption trial.
- Netflix’s Growth: With a 90% stock increase this year, Netflix's expansion into live events and advertising is seen as key growth drivers [(36:22)].
- Sector Nomics: Insights into sector performance based on historical political control patterns, provided by Dom Chu [(25:07)].
Final Quote:
- Scott Wapner [(48:07)]: “We record this live weekdays at 12 Eastern.”
This summary captures the essence of the December 16, 2024, episode of Halftime Report, providing key insights and takeaways for investors navigating the dynamic market landscape.