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Halftime Report
Stick with what’s working for 2025? 12/16/24
00:44:06
With two weeks to go in 2024, the Investment Committee debates the momentum in the tech trade and whether it can keep rallying in the new year. Plus, the next move for semiconductors as Broadcom hits a new record high. And Nike quarterly results – the company has underperformed but could this be an inflection point? Investment Committee Disclosures
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- [00:00]
Scott Wapner
Support for this program is provided by Chevron. The Anchor offshore platform is utilizing breakthrough technology to enable us to produce oil and natural gas in the US Gulf of Mexico at pressures up to 20,000 psi. A new industry benchmark. Anchor is part of Chevron's plan to produce 300,000 net barrels of oil equivalent per day by 2026 in the US Gulf of Mexico, home to some of our lowest carbon intensity producing operations. That's energy in progress. Visit chevron.com anchor what's your boldest, truly ambitious life goal?
- [00:34]
Joe Terranova
Everyone has one and everyone deserves a way to get there. That's why State street offers a wide.
- [00:38]
Scott Wapner
Variety of ETFs to give all investors.
- [00:40]
Joe Terranova
Access to the market and the chance.
- [00:42]
Scott Wapner
To reach their goals.
- [00:43]
Joe Terranova
Like with DIA where you get 30.
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Scott Wapner
US blue chip stocks in a single trade.
- [00:47]
Joe Terranova
Wherever you're heading, getting there starts here with State Street. Before investing, consider the fund's investment objectives, risks, charges and expenses. Visit ssga.com for prospectus containing this and other information. Read it carefully. DIA is subject to risks similar to those of stocks all at are subject to risk, including possible loss of principal Alps Distributors, Inc. Distributor. 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. Carl, thanks so much. Welcome to the Halftime Report. I'm Scott Wagner. Front and center this hour, the home stretch and whether two of the best plays of this late year run will keep working into the new year. We will discuss and debate with the investment committee. Joining me for the hour today, Joe Terranova, Amy Raskin, Carrie Firestone, Jim Laventhal Dow is trying to snap a seven day losing streak. We are looking green well for the S and P and the nasdaq, but we are just flat on the Dow. We'll watch all of that. But of note, as I said, two of the hottest late year trades keep on ticking. Joe Bitcoin new record high today, about 105,000, 106,000. It's up 53% since the election. You own Coinbase, you throw up MicroStrategy, Riot, Robinhood. Almost anything that is crypto related is running. I'm wondering how you know our investing audience should be thinking about this as we head into a new year with one of the hottest trades around.
- [02:11]
Jim Laventhal
I think it's a classic chaser performance. I think it is the most identifiable example of momentum I could remember in my professional career on Wall Street. I am not saying that it doesn't come without fundamental validity to it. I do think there's something to be said about the very premise that we live in an intangible asset economy and that Bitcoin is an intangible store of value versus gold, which is a tangible store of value. So for me, the easiest way to play it is through the strategy. The strategy identified an opportunity where momentum was building in Coinbase on October 31st. It took a position there and obviously we've been rewarded handily for that.
- [02:57]
Joe Terranova
Should we play it, though? I mean, I'm trying to think of what the great takeaway is for, for our audience. You're either in it or you're not. It's binary. Right. If you're not in, you wish you were. Because you look at this go up, carry unabated almost, and you wonder, well, is it too late to get in? Some have said, like Tom Lee, next year you could see 250k that portends that it's not too late. What do you think? I mean, what would you advise people to do as it relates to crypto right now, specifically bitcoin? Because I think everybody has it on their minds.
- [03:31]
Kerry Firestone
Yeah, exactly. So I would tell you that it's very hard for us at our firm to embrace bitcoin right now. We've seen the run, we've watched it, but there's been a run on many different stocks and groups, technology, but particularly those for which this administration seems favorably inclined. If one doesn't want to just buy bitcoin, you can participate with financials. You can own one of the alternative asset companies, Apollo or Blackstone or blackrock. You can own exchanges, you can own cme, you can own Robinhood.
- [04:07]
Joe Terranova
By the way, they're all. I'm sorry to cut you off, but all of those are running today, too. Like if you threw up the exchanges.
- [04:13]
Kerry Firestone
Yeah.
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Joe Terranova
Because if there's going to be more activity on the exchanges because of all this, throw up cme, throw up nasdaq.
- [04:19]
Kerry Firestone
Correct.
- [04:20]
Joe Terranova
Throw up Interactive Brokers, for example. I mean, CME was up early. You can see a little bit of a tail off. But when I looked a while ago, and you can see here after the market opened, it was green for a moment. There's Interactive Brokers, which is Joe. But to your point. Point. You don't have to just play it this way. But why can't I just play it this way?
- [04:36]
Kerry Firestone
Well, you can if you want to believe what I would fear. And this is something that we've talked about a little bit on this desk. There is a lot of leverage that applies to bitcoin. A lot of people borrow, a lot of institutions borrow and that is something we are concerned about right now. What happens if there were at all to be some sort of squeeze and institutions start to call in any of those loans? If bitcoin starts to go down quickly, you know, who knows? And if you're just tied, why would it. Why wouldn't it? Because speculative assets can go up and down, gold can go up and down. There's no reason why bitcoin has to keep going higher.
- [05:15]
Joe Terranova
But if you know, if you know that the coming administration is so intensely behind it and regulations around it are going to become much less onerous, you have a different head of the SEC who's going to embrace it. You have, I've heard like I'm sure.
- [05:32]
Kerry Firestone
It'S in the price of the stock to some extent.
- [05:36]
Joe Terranova
Maybe. Yeah. That's part of the reason why the election swung the way it did certainly at the congressional level was because of bitcoin that those who embraced it were rewarded for doing so. Because it's something that the public wants. This is not like you said this because it's in the stock. Well the, there's obviously there's no. That could be any earnings. Bitcoin's not reporting. But as long as you have this embracing of it, even if it's speculative, trying to think of what would cause that tremendous upset unless the administration, President elect Trump came out because just because.
- [06:09]
Kerry Firestone
Markets can go up and down, market.
- [06:11]
Scott Wapner
Downturn, that's what would cause it. If you needed if people as Kerry said it's a levered trade and if you get markets start going the other way and people need liquidity and people are just get scared of risk assets. That's what's going to make it, you know, pull back. It doesn't mean it's not going to come back up. It's just usually it's not a straight line one way.
- [06:30]
Jim Laventhal
Isn't that an opportunity though for an investor that doesn't have any exposure and doesn't want to use leverage?
- [06:35]
Scott Wapner
It could be possibly where see where it comes down.
- [06:37]
Joe Terranova
You only have coinbase like you're going to rebalance soon. You know, you're going to be looking at the rules are going to tell you you have no choice. But they're going to look at microstrategy and Hood and, and riot. I mean among all those players not to front run anything that you're going to do because you don't even know yet. But that's on the table.
- [06:56]
Jim Laventhal
Oh, without question, the exchanges, the building of momentum in the exchanges has made so many more of them appealing to be included in the strategy. I'll say just personally though, and look, one of the ways I'll get my exposure, full disclosure, is I would probably turn to Skybridge and Anthony Scaramucci. Obviously, we maintain a personal friendship, but I think Anthony understands the business well. But I think personally I probably would say to myself, okay, let's, let's take 1 to 2% exposure with no leverage. I don't understand the concept of you need leverage here in the ownership. If you are retail, if you're an individual investor like we are, if it's going to go up 1 or 2%, exposure is the right way to do it.
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Joe Terranova
And maybe there's like a little bit of meme craze here too. I mean, just these names that are all caught up in the flavor of the moment. Now, this could be a 31 flavors of the moment. It could have a little bit of distance, Jimmy. But let's switch to the other certainly hottest trade as the year winds down. That's mega cap. Nasdaq's up 7% in one month. Now, maybe there's a bit of a correlation between, you know, this level of risk asset, whether it's speculative risk in terms of crypto or just risk assets in the place that you have put money to work, the American investor has with great success. That's mega caps. Is this going to continue to work? Is this a sign of something?
- [08:16]
Amy Raskin
Well, it feels like it's going to continue through the end of the year, Scott. I mean, that's, that's an obvious sort of just the trend. Is your friend Joe, you mentioned performance chasing. There's going to be that going on in the institutional investment management world. So you should expect that this Magic 7 trade is going to continue through year end. And frankly, some of these names do have value to them. Alphabet, which is a big position for me, or Amazon, also a big position. I would look at those valuations and I feel quite comfortable in video. You know, I know we talk about it being at a relatively expensive multiple roughly 35 times forward, but given that growth rate, that that's very much justified. So I actually, I'm much more comfortable in this part of the discussion than I was in the crypto.
- [08:54]
Joe Terranova
That's why I didn't ask you about it, but.
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Amy Raskin
Well, thank you. But can I make a point that I think is relevant here because you asked, starting off the show, like, what do you do with crypto right here And I think part of the answer has to be, we talk about this a lot, know who you are, know what you're doing in the markets. If you are somebody who is trying to get rich in the market, hey, you know what? How much is, is Bitcoin up in two months? 100%. It's a good way to get rich. On the other hand, I can't tell you when it's going to go down and I couldn't tell you that it was going to double. If on the other hand, you are somebody who has earned a lot of money in your lifetime doing hard work and you're looking at that money and you want to invest it safely with a cogent, rational explanation of why you're invested in things. You look at things like the names I just mentioned, Scott, Amazon, Alphabet, Nvidia, and you can rationalize being invested in those investments in a way that you just simply can't.
- [09:44]
Joe Terranova
You can rationalize it if you listen to, to Saylor with Carl and Sarah talking about, you know, buying Manhattan in the 1600s and making the analog from then to now. That that's what he says. And we'll see what happens with, with his positions within Bitcoin. But Amy, you bought more Alphabet to the point we're making now, figuring that this run is, you know, there's more left.
- [10:06]
Scott Wapner
We're underweight the Mag 7. It's hurt. We've made it up in other ways, Japanese banks and other things, but. And cobbling it together. But we've been underweight the Mag 7 and it's hurt us more. Defensive portfolio. I'm reducing the underweight a little bit. Maybe I'm marking the top. But it will be really interesting to see what happens in January because this is a momentum market. It's one of the biggest momentum markets we've ever had. Just if you look at how well momentum is doing versus other factors, it's.
- [10:34]
Joe Terranova
Only well before the last couple of weeks, momentum, like had a big rollover.
- [10:40]
Scott Wapner
Right. But not well. Still, the financials are doing well. Like, if you look at what stocks have, still have momentum, it's still pretty strong and there's a lot of complacency. The volatility is obviously the VIX is low. So we'll see what happens in January. We have a lot of clients are saying, you know, we have a lot of profits after two years of very strong markets. Don't sell our stocks now, wait till 2025. And you know, we don't want to pay the gains this year. So we'll see what happens in January if we do get a rollover. But this is just reducing the underweight.
- [11:10]
Joe Terranova
Nvidia by the way, is officially entering correction territory. It's down 10% from its November 7th closing high. We'll talk about a related stock that is having a really great moment of its own but we'll do that a little bit later because we have a move around it. But we knew that at some point these were not going to trade as a monolith. In fact they've separated themselves from one another. You've had record highs today for Alphabet, record high today for Amazon. You've had recent record highs for Metta and Apple. And then the distance is a little bit for the Nvidia's of the world or Microsoft, which hasn't hit a high since the summer.
- [11:49]
Kerry Firestone
Yeah. So it's very interesting what I wrote down my notes. These are the stocks in the Max 7 that are at all time highs. Right. Apple, Google, Matt, Amazon, Tesla. And what isn't on that list is Nvidia. So all of the talk we've had over the last few months about the market broadening, the market did broaden in the third quarter. It's not broad. In the fourth quarter we a little chart if you want to show it. I mean we've really gotten to a point where 76% of the market gains are back in the MAG7.
- [12:17]
Joe Terranova
Take us through this. What did you want to show?
- [12:19]
Kerry Firestone
Yeah, so what you see is that in the second quarter of this year we went from the MAG 7 represented 110% of all the gains in the S and p. The other 493 names were down and then that changed in the third quarter. They were only 9% of the gain but now they are 76% of the gain this quarter, except in video. So the market, if you talk about broadening, it's just the Mag seven is broadened away from Nvidia. It's the other names in the mag 7.
- [12:47]
Joe Terranova
These are, I mean this trade, Jim is back with a vengeance. That that's how we've been describing it. And you could I think make the argument that it's even better that it is back the way it is without Nvidia carrying everything. Because some doubted the fact that well, if Nvidia struggles well, you know that means that the Mag sevens are going to go down and then the overall market's going to be in trouble. Not so fast. You've, you've had a continued big jump in tech positioning according to Deutsche bank today you're looking at the stocks month to date for many of these names and it is stark obviously where Nvidia is relative to the rest. But they suggest positioning is very elevated again factoring in modest reacceleration in earnings growth, bucking the gradual slowing over the last three quarters.
- [13:31]
Amy Raskin
The leadership is absolutely growing. And I know we're going to talk later about one of the newer additions to the $1 trillion market cap club but I remember last decade and it wasn't more than 10 years ago, was less than that. When Apple first crossed 1 trillion that was a big, big deal. Now that's becoming kind of ho hum like that's almost an everyday occurrence. Certainly it's healthy, you know with regards to Nvidia and good analysis Kerry. I think we all know that it corrects quite often and then usually that is a setup for, for a very big rally which I think is going to happen again. There's no indication that demand for the chips that they're producing has gone down at all. The only thing I would worry about with Nvidia is when their supply catches up. There's just no, I don't see that on the near term.
- [14:14]
Joe Terranova
Wake me up when that happens. Exactly. It doesn't feel like it's anywhere anytime soon.
- [14:19]
Amy Raskin
If I can just go ahead. You talk Joe about you know, dip buying if Bitcoin corrected well hey guess what, have it happening in Nvidia. But you'll see the buying come in.
- [14:27]
Joe Terranova
Oppenheimer today says that last week's acceleration in large cap growth, that is the mega caps confirms a resumption of a larger breakout.
- [14:35]
Jim Laventhal
So here's what bothers me about it and it absolutely could. I'm not dismissing, I'm not forecasting what the future ultimately could look like. I'm just understanding the environment of now. If, if there was this desire to own mega caps and to own own mega cap growth, why is Nvidia not performing as well? It would just be universal buying. So I call into question, hold on. I call into the question the possibility that if you look at around the world, Asia weak, Europe weak. The China trade which everyone was so excited about in September and October fell apart. The US is the only place right now to invest and I just want wonder if we looked for post election areas of the market where you saw underperformance, you didn't have the underperformance in Nvidia. Nvidia was performing through the election. You had underperformance in Alphabet, you had underperformance in some of the Mag 7 to your point on the chart. And I wonder if that's what's going on. I wonder if the reason why S and p growth is up 4% this month and S&P value is down 3% is more a fact of money. Just trying to find a home in the places that the third quarter didn't see the strong outperformance.
- [15:48]
Kerry Firestone
I mean, it's mostly regulation. I think the stocks that were, you think people like Google, even people thought about, oh, you know, maybe coming after Apple. These are stocks that have rallied really, really hard because that regulation risk is not there as much. And in video wasn't just up. Right. You had a 500%.
- [16:09]
Joe Terranova
We're still up 160 plus percent this year. To your point, I mean you have a ticket like one of those ticket machines where you pull a number outside the gate of Mar A Lago, right. And every tech CEO is coming down, it says the big and the digital number. Right. Tim cook, you're number 65 because he was there for a Friday evening dinner with the President Elect. And they've all been, the tech CEOs have been parading down there in part for what Kerry said this administration had been all over them. And even if the President elect in his first term was kind of all over them too verbally.
- [16:49]
Scott Wapner
Right.
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Joe Terranova
They don't want to see any of these things go into real action. So they're down there trying to make sure it doesn't happen.
- [16:57]
Scott Wapner
Right. And it could work. So that's, you know, it's worked before. So I think it's a smart strategy. I think that's what they're going to do. I don't think this means that they're up for four years though. I think, you know, we saw this a little bit in 2016. The trade that worked right after Trump was elected didn't follow through for the next, you know, for the next three and a half years. So I think it's, we have to be careful. But I do think a lot of this is fund flows. We had record flows into the US Stock market in November, out flows in every other market that also can't continue. 40% of the s and P earnings comes from abroad. It can't be that the US just works and the rest of the world falls apart.
- [17:35]
Joe Terranova
Unless, unless this is the epitome of the American exceptionalism trade.
- [17:41]
Scott Wapner
The problem is that, that 40% of S&P earnings comes from outside the U.S.
- [17:45]
Joe Terranova
No, I understand, but nowhere is American exceptionalism on more full display than with these hyperscalers. Because we have the greatest technology companies on planet Earth, period.
- [17:56]
Kerry Firestone
That's part of why they've started to dominate again, because everyone recognizes that these Mag 7 are Mag. Right. But there's a lot of mad Tesla's.
- [18:07]
Scott Wapner
Earnings, like they come from everywhere. And Tesla's up 70%. I mean, that's a musk thing. But again, I think it's going to be hard to see the earnings if we say the rest of the world is going to fall apart. That it's, it's just a hard, it's hard to square that circle.
- [18:21]
Jim Laventhal
Scott, to your point, I mean, the dollar is up 6%, 6% in this quarter. And that's a reflection of the exceptionalism. Now, at what point does that hurt?
- [18:30]
Scott Wapner
Not good for.
- [18:31]
Jim Laventhal
At what point does it hurt earnings? Okay, I don't know the answer to that. But you have to acknowledge the strength in the dollar is real and it's a representation of something tangible that's gone on.
- [18:42]
Joe Terranova
You feel like you think Masa is at Mar a Lago with, with President Elect Trump because of American inferiority. No. He's $100 billion based on the exceptionalism that he wants to be a part of and get a return on that investment from. And he's far from the last who's going to be talking about sizable investments in the United States as you bring.
- [19:05]
Amy Raskin
Up Masa, And I was listening to the interview with both of them earlier, the thought that comes to mind. It's an old saying, but capital goes at the flows to where it's treated best. And generally speaking, that has been America. But especially under a President Trump administration, that is likely to be the case. That's why it's flowing here.
- [19:22]
Joe Terranova
All right, so Fed. You guys realize the Fed's going to make a decision?
- [19:27]
Jim Laventhal
Sure do.
- [19:27]
Joe Terranova
Right? I mean, I mean, bitcoin, I don't know. Maybe if the Fed cuts a lot slower, it's going to upset bitcoin. I don't know. But you do have a decision on Wednesday where it's widely expected, Amy, that they're going to cut rates. Goldman's hot seas has removed one from next year as we sort of expectations. Right, Right. Smaller cuts. The likelihood of getting another 50 seems outlandish. The likelihood of getting as many as we once thought equally as outlandish. So they take their, they pare their, their expectation back. Evercore. ISI has a price target for the S and P for 25 at 6800. So we're still optimistic even if we're going to get fewer and smaller cuts.
- [20:06]
Scott Wapner
Right. We're really optimistic. So I mean, coming into this average price target was 2% above where the S and P was. So we started the year around 4700. The average price target was about 4800. This year we're starting probably 6166. Between 6000, 6100 and the average price targets close to 7000. So we're starting in a very different place this year in terms of optimism and it goes to everything that we've been talking about US exceptionalism, Mag 7, everything going to work. Expectations are hard, are high this year and it's going to be harder to meet that.
- [20:37]
Joe Terranova
It's funny, I wanted to get through some moves before we bounce from our A block today. And I'm looking on social media and a viewer says Amy gave viewers a big winner two months ago. That doubled, tripled and it is IonQ. IonQ. It just so happens, coincidentally we were slated to talk about it. So here's your conversation that I think you were hoping we'd have. You trimmed a little bit of it.
- [21:01]
Scott Wapner
I did trim a little bit. Just because it got to such a big percent position. We put it in at 12 or $13. It got to 39ish. It's now in the lowish 30s but it's been a great stock. It's been a big winner. I didn't expect it to do this in two months. We still like the company long term. We're just managing the position size. This is a quantum computing play. It is actually has customers and performing computing for four real life companies and the government. We like it a lot from a longer term perspective. I just trimmed a little.
- [21:34]
Joe Terranova
All right, I appreciate you, Dominic, for, for talking about that because it just worked right into what we were trying to do. All right, so there's that. Joe, you have some moves as well. You sold the xbi.
- [21:44]
Jim Laventhal
Hasn't worked. Bad trade hasn't worked. Health care is abysmal. I just, you know, I've had a full year of trying to find opportunities, trying to find where there's momentum in the healthcare space and the momentum presents itself and then it just kind of falls apart. I still think the health care industry is working off the effects of COVID and I think Covid took the attention away from the health care industry in terms of R and D. So out.
- [22:12]
Joe Terranova
Of xpi, you want to assess that, that it's been a bad trade, it hasn't worked and whether you think it's going to work in 25.
- [22:19]
Kerry Firestone
I remember when you bought It. And I said, I remember thinking and saying, I love that you pay attention.
- [22:24]
Jim Laventhal
To what I say.
- [22:24]
Kerry Firestone
I remember that, especially in this space. I mean, it's, it's a trade that needs patience. And it's hard to have patience when I'm not talking about you, I'm just talking about the trade itself. When you have an administration that might say, we don't believe in all of this, we're going to cut funding, we're going to get rid of the nih, maybe the FDA should be privatized, you know, who knows? And therefore you have to have more patience to see the underlying value of what those businesses are going to put produce over the next decade. And so it's hard to own right now. I agree with that.
- [23:00]
Jim Laventhal
Can I ask you, Carrie, people have said to me, because I was talking to someone about this trade the other night before I got out of it, and he's, he's a hedge fund manager and he said biotech can't go up without lower rates. Is that true?
- [23:10]
Kerry Firestone
No, I don't think that's true. I think biotech can't go up without the IPO market starting to heat up and people caring about new companies, new entities, you know, new products, new ideas. Is, had no interest since lower rates.
- [23:25]
Joe Terranova
Obviously help companies that rely on a tremendous amount of capital. So the, the cheaper cost of, lower cost of capital is obviously we get.
- [23:34]
Scott Wapner
That health care never works in an election year.
- [23:36]
Joe Terranova
You're right about that. It is, it is a very tough place. All right, a couple other moves. You bought DocuSign and Datadog. Yes, Right. And Zoom. But I think you told us about Zoom before, didn't you or.
- [23:47]
Jim Laventhal
No, I told everyone that I would buy Zoom. I bought.
- [23:49]
Joe Terranova
So you did. So DocuSign and Datadog, why?
- [23:51]
Jim Laventhal
Okay, first of all, Zoo is more of a longer term investment. Zoom, what I see there is that they're pivoting towards AI. I think what you want to do with Zoom, if we could quickly throw this shot up, forget about everything that happened with this stock before December of 2022, they weren't living in a real world. In fiscal year 2021, they did 365% revenue growth. That world is over. It's a new world for Zone, for Zoom. It's a company with a reasonable valuation. This is an investment long term. DocuSign and Datadog, these are trades. These are trades. I think that before the year closes out, you're going to see some of these emerging software names that had strong momentum that has tailed off over the last couple of days and I'll include App Lovitan in this conversation. I think you're going to see flows back into these names and I think you're going to see these names close out the year strong with a strong S and P itself.
- [24:46]
Joe Terranova
All right, we're going to take a quick break. When we come back we will tell you our chart of the day because it is Broadcom, it is surging another record high after its post earnings pop last week. We have a move related to it as well and we will document that next.
- [25:08]
Scott Wapner
Support for this program is provided by Chevron. The Anchor offshore platform is utilizing breakthrough technology to enable us to produce oil and natural gas in the US Gulf of Mexico at pressures up to 20,000 psi. A new industry benchmark, Anchor is part of Chevron's plan to produce 300,000 net barrels of oil equivalent per day by 2026 in the US Gulf of Mexico, home to some of our lowest carbon intensity producing operations. That's energy in progress. Visit chevron.com anchor Are you still quoting.
- [25:40]
Joe Terranova
30 year old movies? Have you said cool beans in the past 90 days? Do you think Discover isn't widely accepted? If this sounds like you, you're stuck in the past. Discover is accepted at 99% of places.
- [25:54]
Amy Raskin
That take credit cards nationwide and every time you make a purchase with your card, you automatically earn cash back. Welcome to the now it pays to Discover. Learn more@discover.com credit card based on the.
- [26:06]
Joe Terranova
February 2024 Nelson Report TWAS the nights before Christmas. Despite last minute stress, few were delivering except Walmart Express. Stockings were hung by the fireplace, the chair knowing in about an hour stuffers would soon be there onto the road. Walmart Express Delivery went chock full of wondrous things in the Saint Nick of time sent.
- [26:25]
Kerry Firestone
Let's go get Express delivery in as.
- [26:27]
Scott Wapner
Fast as an hour even on Christmas Eve.
- [26:30]
Joe Terranova
Orders must be placed by 4pm local.
- [26:31]
Scott Wapner
Time on 1224 subject to availability. Fees and restrictions apply.
- [26:34]
Joe Terranova
Express Delivery to y'all and to all a good night. Welcome to your Walmart. We're back Broadcom. I mentioned our chart of the day because it has hit a new record high. Goldman Sachs stocks today raising its price target to 240 from 190. You bought more ahead of the print?
- [27:06]
Scott Wapner
Yeah.
- [27:06]
Joe Terranova
Good for you.
- [27:08]
Scott Wapner
Worked out? Yeah, we really like this name from a longer term perspective and the quarter wasn't a blowout quarter. I mean Hawk was very exuberant and so I think people got and were excited about the guidance but we like their ASIC strategy longer term, we think it has real legs and we do think that they're really well positioned to continue to gain share sort of as AI broadens out. And it's not all about training you, my friend.
- [27:37]
Jim Laventhal
Yes, sir. No good.
- [27:39]
Joe Terranova
Are on the wrong side of the Broadcom trade because, well, you sold it on December 4, right?
- [27:46]
Jim Laventhal
Do I defend myself and say, okay.
- [27:49]
Joe Terranova
I know it was up a lot, but you got out to say, you're.
- [27:52]
Jim Laventhal
Right, you're right way too soon.
- [27:54]
Joe Terranova
By the way, it's up 45% since you sold it. I'm going to just want to make sure our viewers have all the facts and you're right.
- [28:00]
Jim Laventhal
I'm going to give you a great closing. I'm going to give you a great closing. Bell plug. I'm sitting with Anka Crawford the other day in the commercial break and she's literally schooling me because I say to her, well, Hock Tan said, right, that he expected this to be the quarter, that it's the non AI revenue you that makes the return. And I was skeptical. I'm like, okay, that's. I just don't see that. And I felt as though the AI story was already priced in. She looked at me, she said, no, it's not. It's going to be about the. She nailed it. 100% nailed it. And it is about the AI story. It goes beyond whatever I could have imagined. It exceeded those expectations. And again, I'm sorry, but it's in a testament to the non discretionary approach that we take with the ETF and the strategy.
- [28:46]
Joe Terranova
You got to listen because they stayed.
- [28:48]
Jim Laventhal
Into Avago and I thought my way out of it.
- [28:50]
Joe Terranova
You got to listen to the peeps we have on the closing bell. Crawford.
- [28:54]
Jim Laventhal
She nailed it.
- [28:54]
Joe Terranova
Alger. Stacey Raskin has been telling us on that program that this is the second best chip stock for AI outside of Nvidia. He has made that case over and over and over again. And after the numbers came out this time he was talking about their non AI businesses having bottomed, which turned right, which. Which are making the turn and that this is just the beginning for what they're trying to do related to AI that the ramp up, the upside is potentially huge.
- [29:23]
Scott Wapner
I think that's right. I mean, I do think you're going to need these companies. The hyperscalers want custom Asics, they want their own chip, they want to make it, they want to design it and they want to optimize it for what they want it to do. And Broadcom is the best position playing for that. They're all going to Broadcom for that.
- [29:40]
Joe Terranova
I have a few other chip names that are in the news today. ASML target cut to 939 from 851. That's at B of A. You own that stock?
- [29:47]
Scott Wapner
I do. We like it. We haven't added to it in a while. We keep looking at it again. We're underweight tech, so it's a, it's a name that I might get to. But I just don't think there's a real near, near term catalyst to move. Move it very soon.
- [30:00]
Joe Terranova
The equipment names, Jim, are in the news today too because Deutsch has taken kla Applied and LAM targets all lower. You own Applied, they take it to 170 from 200. You can see on your screen here the other calls that they made as well.
- [30:17]
Amy Raskin
Earnings in this sector have been disappointing for a couple of quarters. That does not take away the long term thesis here, which is simply that sector semiconductor plants are being built all over the world. The whole supply chain for semiconductors has been reconfigured and continues to be reconfigured for several years. So Amy, you just made a very good point. There is no near term catalyst. We'll see what the upcoming earnings are. But if you look at a lot of these companies, the earnings revisions have been down on the back of earnings that have come in less than expected. Still, the long term thesis and the valuation on a lot of these companies is very inviting. You just have to be patient.
- [30:50]
Joe Terranova
KLA and a matter yours. Right. So kla, I told the, I said the price target with that. What that was a matter 170 from two KLA to 725 from 750.
- [31:02]
Jim Laventhal
KLA has been in the strategy since November of 2020. We actually sold out of Lam Research a couple of quarters ago. Consumer electronics has to come back once again. And I think, you know, the Trump administration at some point is going to have to address the consternation that exists as it relates to the semiconductor industry and the relations with the Chinese. I think at some point that is ultimately is going to have to be addressed if these stocks are going to make the patient return that you're expecting to higher levels.
- [31:30]
Joe Terranova
All right, the headlines now with Contessa Brewer. Hi Contessa.
- [31:34]
Scott Wapner
Hi there, Scott. The Treasury Department announced new sanctions this morning on North Korea and Russia. They affect North Korean banks, generals, other officials, along with Russian oil shipping companies, companies. The US Sanctions are intended to disrupt North Korea's support for Russia's war in Ukraine. Kyiv estimates about 11,000 North Korean troops are on the battlefront. Israeli Prime Minister Benjamin Netanyahu is back in court today for the second week of testimony in his long running corruption trial. He was indicted in three cases and is accused of accepting gifts and offering regulatory favors for media tycoons in exchange for favorable news coverage. Netanyahu denies the charges. He is the first sitting Israeli prime minister charged with a crime. And Supreme Court Justice Kantanji Brown Jackson made history this weekend. She became the first justice ever to appear on Broadway after she made a cameo in the musical and Juliet. Yesterday she was featured in three scenes as Queen Mab. That's a character created specifically for the evening. But you know, Scott, she probably has a lot of experience because you know the courtroom and the theater of justice.
- [32:46]
Joe Terranova
I hear you. All right, Contessa, thank you. Contessa Brewer. All right. Up next, no stop in Netflix. The shares up roughly 90% this year, near another record high. One Wall street firm sees no signs of that rally slowing down. We'll debate it next.
- [33:04]
Scott Wapner
Support for this program is provided by Chevron. The Anchor offshore platform is utilizing breakthrough technology to enable us to produce oil and natural gas in the US Gulf of Mexico at pressures up to 20,000 PSIA. A new industry benchmark, Anchor is part of Chevron's plan to produce 300,000 net barrels of oil equivalent per day by 2026 in the US Gulf of Mexico, home to some of our lowest carbon intensity producing operations. That's energy in progress. Visit chevron.com anchor Are you still quoting.
- [33:36]
Joe Terranova
30 year old movies? Have you said cool beans in the past 90 days? Do you think Discover isn't widely accepted? If this sounds like you, you're stuck in the past. Discover is accepted at 99 of places.
- [33:50]
Amy Raskin
That take credit cards nationwide. And every time you make a purchase with your card, you automatically earn cash back. Welcome to the now it pays to Discover. Learn more@discover.com credit card based on the.
- [34:02]
Joe Terranova
February 2024 Nelson Report. Hi, welcome back. President Elect Trump just wrapping up up that news event at Mar a Lago. Let's get to Eamon Jabbers who has the highlights. There are many over this, what, 90 minutes? Yeah, it was a long one, Scott.
- [34:29]
Amy Raskin
And a lot of business topics covered. I'll give you a couple of bullet points from the tail end of the presser here that we didn't take live on cnbc. The former president talked a little bit about the killing of the United Healthcare CEO and some of the outpouring of support for the alleged killer online he's called that a sickness in this country. He said it was a terrible thing that happened, said he can't even believe that there is such support for the alleged killer in that case. He also talked about the Des Moines Register threatened a lawsuit against that newspaper and its parent company, which is Gannett, because in his view, he said the Des Moines Register's polling before the election amounted to election interference. It would be interesting to see if he follows through with that lawsuit threat and what the basis is for that lawsuit. I've never seen a presidential candidate sue a newspaper for its polling before. But he has had some recent success against abc, so maybe feels like he wants to continue that. We also saw him talking about Tim Cook in his meeting at Mar A Lago, and he suggested that CEOs are coming to meet with him in a different way than they came in the first term. He said in the first term that he had back in 2016, 2017 timeframe, CEOs were hostile to him. Now he says CEOs are no longer hostile to him. They all want to come. They all want to be his friend. And he seems highly energized and encouraged by that and rattled off a list of people who had come to see him, including Jeff Bezos of Amazon, who says Scott is coming there this week. Back over to you.
- [35:56]
Joe Terranova
All right, Eamonn, appreciate that. Thank you for the update. That's Eamon Javers in Washington. Well, there's been no stop in Netflix this year. The stock's risen more than 90%. Now, Oppenheimer suggests today that there is a lot more room to run. The firm raised the price Target to thousand and sixty five dollars from 825. It's our call of the day as a result. Julia Borsten with us now to look at why shares have rallied so much. This is one of those best performers that people don't talk about enough, I don't think.
- [36:22]
Kerry Firestone
Scott.
- [36:23]
Scott Wapner
That's right. Netflix shares are up 95% over the past year on confidence that the company.
- [36:28]
Kerry Firestone
Will continue adding subscribers.
- [36:30]
Scott Wapner
And we'll also have some new growth drivers. Netflix added 23 million subscribers in the first three quarters of this year.
- [36:36]
Kerry Firestone
That's after adding 3, 13 million last fourth quarter.
- [36:39]
Scott Wapner
Now Netflix is going to stop reporting subscriber numbers next year as it works to shift focus to profitability. But here are some key areas that investors are counting on to drive growth. First, Netflix's move into live events with two Christmas Day NFL games is seen as a great way to attract users and also advertisers and second is advertising. The company says ads will be a.
- [37:02]
Kerry Firestone
Meaningful revenue contributor post 2025.
- [37:05]
Scott Wapner
It also helps the company offer a lower price subscription, which in turn minimizes churn. And that's third. Netflix's broad content library gives it leading retention, which means it has lower churn than its rivals, which are actually seeing growing churn. 57% of analysts have a buyer overweight rating on the stock, 35% have a hold and 7% have a sell.
- [37:26]
Kerry Firestone
Shares up about half a percent today. Scott.
- [37:29]
Joe Terranova
All right, Julia, thanks for that. That's Julia Borson. Joe, you own the stock. It really has been remarkable, up 90% year to date from where this stock was. Remember when it traded down to 400 after, you know what, 700 to 400. And here we are.
- [37:44]
Jim Laventhal
I think what's remarkable is the analyst community is so far below current price in what their price target is over the next 12 months. $840. That's well below. You can make the claim that the stock is expensive from a valuation standpoint relative to history and certainly to its peers. It trades at 39 times, which is a 50% premium to its peers. But I think it's warranted. I think live sports is creating such an opportunity for revenue. In advertising, you're talking about a multibillion dollar opportunity. So this journey into live sports, you could, you could criticize the Tyson Paul fight and say it didn't live.
- [38:27]
Joe Terranova
People still paid for it. They got subs out.
- [38:30]
Jim Laventhal
Exactly right. People watched it. So all you're criticizing is, well, the content isn't.
- [38:35]
Joe Terranova
You're going to watch the NFL game, too.
- [38:37]
Amy Raskin
Exactly.
- [38:37]
Jim Laventhal
Oh, they sure are. And I'll be one of them. So I think it's a tremendous opportunity as it relates to advertising. Now, is it vulnerable to some form of a correction if we turn the calendar into new year? You see a lot of stocks that are being sold that were held off because of taxes. Yeah, potentially it is. But I still think that's not an inflection point.
- [38:57]
Joe Terranova
That'll be a January test for the market. No doubt. A lot of big winners. You've added Amy to Disney.
- [39:02]
Scott Wapner
I did.
- [39:03]
Joe Terranova
Recently. Right. The Target goes to 135 from 122 at Rosenblatt today.
- [39:07]
Scott Wapner
Yeah, no, we, I think the whole streaming space has gotten more rapid. I mean, it's almost hard to follow. There's a new deal sort of every day of somebody getting out of something or spinning something off. But we do think Disney is on the right track now with its streaming YouTube raising its pricing. You know, Sort of is raising the umbrella for everybody to do that. So I do think they're well positioned. The valuations come down a lot. Orman's in charge of finding the new CEO. So just things lining up better for them.
- [39:35]
Joe Terranova
Watching the airlines today, Delta Air and United name top picks at Barclays. Jimmy, you have Delta.
- [39:41]
Amy Raskin
Yeah. It seems like a lot of things are going right for the airlines right now. The pricing is good. Demand is still, you know, off the charts. You've got great labor relations. You don't have fuel price pressures. So there's a lot of things going right. As far as why the stocks have not done anything recently. I mean, they've had a very good year and I think it's just a small pullback, a consolidation before they go higher. But I just don't see any headwinds here.
- [40:05]
Joe Terranova
All right, airlines to autos where there appear to be a bunch of headwinds now.
- [40:09]
Amy Raskin
Yeah.
- [40:09]
Joe Terranova
Ford got downgraded today to underperform. That's at Jefferies. We can show the chart and see what it's doing off of that downgrade. There you go. It's down well near 4%. So you sold General Motors the day that tariffs were talked about for the autos. It's down 13% since then.
- [40:28]
Amy Raskin
Yeah.
- [40:28]
Joe Terranova
Are these like. I don't know. What are they? Are they investable here? Well, OEMs.
- [40:34]
Amy Raskin
I mean, look, from a valuation point of view, yes. From a sentiment point of view, I'm not rushing back into gm. I do like Mary Barra. I think she's done a very good job with the. With the multiple tasks that she's had. But let's also face it, Scott, that right after the tariff announcement, a couple of bad news has came out. One was there downsizing, China, restructuring it, taking a multibillion dollar charge, and then they shut down the cruise division. So is this kitchen sinking? I think so. But 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.
- [41:09]
Joe Terranova
Okay. We will take a break. We'll come back and we will have Mike Santoli. Actually, we have. I'm sorry, we do not have Mike Santoli. We have sector nomics. And we'll talk about whether a red sweep means a lot of green on the screen. Dom Chew is sweeping that up for us. He'll join us next. All right, welcome back. Only two weeks left to trade in 2024. 7s and P sectors posting double digit gains this year. But will the coming red sweep in D.C. lead to new winners and losers. Dom Chu as today's sector nomics. Hey, Dom. All right. So, so, Scott. The top three sectors of 2024 are comm services, tech and consumer discretionary. The bottom three are energy, materials and health care, up more than just about 3% or so. Now, this all comes in a year when the S and P was up 27%. So now we are exactly five weeks away from the inauguration of President elect Donald Trump when he takes office. The 119th Congress will be waiting for him on Capitol Hill after the Republican sweep, putting the GOP in the White House, the House of Representatives and the United States Senate. Now, the last time Republicans had the White House and both houses of Congress was from 2017-19. The S&P was up 11% in those two years. The Democrats won the same setup in 2021, and the S&P for those two years was up about 1%. 2022 was a rough year. Now, with the help of our friends at Y charts, we went back to 1991 and checked on one party seats to see which sectors fared the best. When the Democrats take both houses of Congress and the presidency, energy fares the best. It's up around 2.3% or so. The second best performing sector for Democrats is real estate. It's up about 2%. And tech comes in third, up about 1.6%. When the Democrats sweep Washington. Now, when the Republicans sweep Washington, the best performing sector overall is real estate, up about 1.5%. Utilities comes in second with the average year in a GOP sweep up about again, one and a half percent. And energy ranks third on that list on average in 1991 when the Republicans swept the Washington Triple Crown, up about 1.3% as well. So as we talk about the state of play, those are just some guidelines, but still in recent history, this is how those sweeps tend to go. Scott, I'll send things back over to you. All right. We'll see how it all plays out in real time. Dom, thank you very much. That's Dom Chu. Still ahead, Nike reports its results later this week. Shares are down more than 25% year to date. We'll have the setup coming up. Nike reports on Thursday stock has not had a great year. I think we know that you sold it in May. Amy?
- [44:12]
Scott Wapner
Yeah.
- [44:13]
Joe Terranova
What would get you to buy Nike back?
- [44:15]
Scott Wapner
Oh, I don't know. I mean a new CEO plan. I mean strategy. Well, they have a temporary CEO, right? I haven't. I actually haven't followed it. So last time I checked, they had a Temporary CEO.
- [44:25]
Joe Terranova
They have a new CEO.
- [44:26]
Scott Wapner
Okay. Well, I haven't, I haven't been looking at it.
- [44:28]
Joe Terranova
So this thing was like out of sight, out of mind, out of my real.
- [44:31]
Scott Wapner
I really, I was done with it and I'm happy to be done with it because it hasn't, it hasn't worked. But I do think they need to, you know, they have a lot, a lot of new competitors and they have, they need new product and to start gaining share back because they've been leading. Share.
- [44:46]
Joe Terranova
Joe, you previously owned it.
- [44:48]
Jim Laventhal
I did. Let's talk about deckers all time high.
- [44:51]
Joe Terranova
Would you buy Nike back? What would get you number? Buy Nike back?
- [44:53]
Amy Raskin
No.
- [44:54]
Jim Laventhal
Did you see what Foot Locker reported?
- [44:55]
Joe Terranova
Why would you buy.
- [44:56]
Jim Laventhal
Why would I buy Nike back after what Foot Locker reported?
- [44:59]
Joe Terranova
No.
- [44:59]
Jim Laventhal
No interest. No interest.
- [45:01]
Joe Terranova
Great American company. No, no.
- [45:04]
Scott Wapner
They need new product. I mean they have to start.
- [45:07]
Kerry Firestone
I'm sorry, need more time.
- [45:09]
Amy Raskin
Even if they have a great quarter, you still have time to get into the stock. And I'm not for one second saying they are going to have a great quarter. But with the amount of disappointment that this has had, it's going to take two or three good quarters in a row for this to really get some momentum. I don't think there's any urgency here.
- [45:22]
Joe Terranova
Mean you prefer on still?
- [45:25]
Amy Raskin
Yeah, I mean that's where you talk to people and are they buying on or Deckers or excuse me, Hoka or are they buying Nikes? They're not buying Nikes. I just, I haven't seen that, that turn around.
- [45:36]
Joe Terranova
All right, we'll come back out and do finals. Next to our closing bell today. Dan Ives, Cameron Dawson, Chris Heisey, we'll take you through that final hour trade. Let's do finals here. Farmer Jim. Farmer Jim Leventhal. What do you got?
- [45:57]
Amy Raskin
BlackRock Markets keep going higher. BlackRock's assets under management are going higher with it.
- [46:02]
Joe Terranova
All right, thank you. Asset managers doing well today too. Kerry Firestone.
- [46:08]
Kerry Firestone
Okay, so sticking with financials, I'm going to give you Schwab trades for 17 times earnings and after a flat year of epsilon growth, big growth next year, 24%.
- [46:17]
Joe Terranova
Amy Raskin.
- [46:18]
Scott Wapner
Impinge. It's a small cap semiconductor stock that has a lot of growth in front of it. We like it a lot.
- [46:23]
Joe Terranova
You know what the market cap is?
- [46:24]
Scott Wapner
It's about 5 billion.
- [46:25]
Joe Terranova
5 billion, okay. Has it had a good year?
- [46:27]
Scott Wapner
It was up a lot. It was up over 100%. It pulled back. We trimmed it a little bit. I spoke about it, I think on the show around to 20. It's now like 150, but I think it's still up 89% for the year.
- [46:38]
Joe Terranova
Wow. Okay.
- [46:39]
Scott Wapner
Good year.
- [46:40]
Joe Terranova
Watch it. Looks like it's moving now, too.
- [46:42]
Jim Laventhal
Joe T. Consumer Discretionary Name Urban Outfitters Strong momentum.
- [46:46]
Joe Terranova
All right, I'll see you on closing bell at 3:00 Eastern. The exchange begins now. You've been listening to CNBC's Halftime Report, the podcast. You can always catch us live weekdays at 12 Eastern only on CNBC. All opinions expressed by the Halftime Report participants are solely their opinions and do not reflect the opinions of CNBC, NBCUniversal.
- [47:10]
Scott Wapner
Their parent company or affiliates, and may.
- [47:12]
Joe Terranova
Have been previously disseminated by them on.
- [47:13]
Scott Wapner
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.
- [47:24]
Joe Terranova
Expression of an opinion.
- [47:25]
Scott Wapner
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.
- [47:42]
Joe Terranova
Gifting is hard, but here's a Give the gift of connection from US Cellular.
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Scott Wapner
Not sure what that means? Here's a slightly more specific hint. You can choose four free phones and.
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Joe Terranova
Get four lines for $90 a month from US Cellular. Your family wants new phones?
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Scott Wapner
How do we know?
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Joe Terranova
They told us. The good news is that compared to wrapping presents, you're great at getting hints.
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Scott Wapner
So take the hint and get them.
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Joe Terranova
Four free phones and four lines for $90 a month.
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Scott Wapner
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