Halftime Report: Stocks and Sticky Inflation – February 12, 2025

CNBC's "Halftime Report" offers an incisive look into the day's market movements, featuring insightful discussions with top investors and CNBC’s Scott Wapner. In the February 12, 2025 episode titled "Stocks and Sticky Inflation," the panel navigates the complexities of current inflation trends, Federal Reserve policies, sector-specific performances, and geopolitical influences impacting the markets.

1. Market Overview and Inflation Concerns

Sticky Inflation and Federal Reserve's Stance

The episode opens with a focus on the latest Consumer Price Index (CPI) report, which indicated a hotter-than-expected inflation rate. Scott Wapner emphasizes the market's resilience, noting, “the market's sort of looking through this, taking it in stride” (00:59).

Joe Terranova adds depth to the discussion by highlighting the uncertainty surrounding Federal Reserve actions. “If the CPI underscores that... the market knows that...” (01:30), he explains, suggesting that despite the higher CPI, the Fed appears hesitant to make immediate changes to interest rates.

Resilient Stock Performance Amid Inflation

Laura Castleton counters the broader market sentiment by pointing out that specific stocks continue to perform well regardless of inflation concerns. “Metta higher, Palantir higher, Spotify higher, Applovin higher...” (02:04), she observes, advocating for a bottom-up approach to identify resilient individual stocks.

2. Sector Analysis and Stock Performance

Technology Sector and Momentum Investing

Shannon Sokotia discusses the underperformance of major technology stocks, particularly referencing the "lag 7" phenomenon where most MAG7 stocks are trailing. She notes, “The S&P and Nasdaq are on pace for their third straight negative week,” attributing part of the decline to the tech sector (06:37).

Joe Terranova remains optimistic about broader market fundamentals despite sector-specific challenges. “The last couple of years... have been driven by multiple expansion,” he asserts (05:00), suggesting that underlying economic growth supports market optimism.

Momentum Strategies in a Volatile Market

Laura Castleton expresses concerns about the sustainability of momentum investing, stating, “momentum strategies are underperforming for the first time this year” (19:39). This sentiment is echoed by Shannon Sokotia, who acknowledges that while individual momentum stocks like Spotify and Apple remain strong, the overall momentum factor appears tired (19:58).

3. Policy and Tariffs Impacting Industries

Reciprocal Tariffs and Industry Exemptions

A significant portion of the discussion centers on the potential introduction of reciprocal tariffs by the Trump administration. Eamon Javers provides updates on congressional and White House negotiations, indicating that exemptions may be considered for the pharmaceutical and automotive sectors (40:14).

Shannon Sokotia highlights the industry's response, mentioning, “Jim Farley... has been lobbying pretty hard against tariffs” (40:43). This ongoing policy uncertainty adds another layer of complexity to market dynamics, particularly affecting sectors like automotive and technology.

Potential Economic Implications

Joe Terranova warns of the long-term risks tariffs pose to economic growth, stating, “We're starting to see some chaos and tariffs... it tears into the minds of CEOs” (03:23). He argues that while tariffs might provide short-term inflationary relief, they could stifle growth and investment in the broader economy.

4. Earnings Reports and Investor Sentiment

Earnings as a Market Driver

The panel underscores the critical role of earnings reports in sustaining the current market rally. Laura Castleton remarks, “earnings have been good... the Fed's on hold and you're growing a two and a half percent” (42:00), indicating that robust earnings are bolstering investor confidence despite inflationary pressures.

Stock-Specific Insights

Several stocks are analyzed for their recent performance and future potential:

• Chevron (CVX): Shannon Sokotia reports workforce reductions to curb costs amid declining profits (17:51). Laura Castleton adds, “Chevron is cutting its workforce by between 15 to 20%” (17:54), reflecting the company's strategy to navigate lower commodity prices.

• Amazon (AMZN): Laura Castleton discusses Amazon's strategic moves in streaming and live sports, projecting continued growth (16:25).

• Lyft and Uber: The discussion touches on the sustainability of their business models, especially concerning autonomous vehicles and cost structures (33:57).

5. Geopolitical Developments and Market Impact

US-Russia Negotiations

A pivotal moment in the episode is the revelation of a high-level phone call between President Trump and Russian President Vladimir Putin. Scott Wapner reports, “they discussed Ukraine, the Middle East, energy, AI, the power of the dollar” (17:51), highlighting potential areas of cooperation and negotiation.

This geopolitical engagement follows the recent prisoner swap involving American Mark Fogel, suggesting a thaw in US-Russia relations that could have significant implications for global markets, particularly energy prices and international trade dynamics (31:16).

6. Final Trades and Stock Recommendations

Strategic Stock Moves

In the concluding segments, panelists share their latest investment decisions:

• Laura Castleton opts to buy back shares in a stock after a dip, emphasizing the importance of “benefiting from fundamental turnaround” (25:59).

• Carrie Firestone discusses acquiring more positions in EPAM Systems and Broadcom, citing their growth prospects in AI integration and data centers (27:43).

• Joe Terranova maintains his position in Verti (VRT), believing the stock has become more attractively priced following a recent decline (45:08).

Risk Management and Sector Focus

The panel emphasizes focusing on sectors with strong fundamentals and growth potential while being cautious of overexposure to volatile sectors like technology and financials under current economic uncertainties (10:00, 14:10).

Conclusion: Navigating a Complex Market Landscape

The February 12, 2025 episode of "Halftime Report" provides a comprehensive analysis of the current market environment, characterized by persistent inflation, cautious Federal Reserve policies, and geopolitical uncertainties. Through expert insights and strategic stock evaluations, the panel underscores the importance of a disciplined, bottom-up investment approach amidst a landscape of sector-specific challenges and broader economic headwinds.

Listeners are encouraged to stay informed and consider the nuanced factors discussed when making investment decisions in this dynamic market climate.

Note: All timestamps correspond to the provided transcript and are enclosed in brackets for reference.