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Halftime Report
Stocks and Sticky Inflation 02/12/25
00:44:08
Scott Wapner and the Investment Committee debate the hotter-than-expected CPI report and what it means for the record-setting rally. Plus the desk share their latest portfolio moves. And later, the Committee discuss the latest Calls of the Day.
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- [00:01]
Laura Castleton
Hello, I'm Laura Castleton with Janice Henderson Investors. Is a brighter future possible? At Janice Henderson, we think it is. We work to help our clients achieve superior financial outcomes and fulfill our purpose of investing in a brighter future together.
- [00:15]
Scott Wapner
We never forget that this means our thinking and our investments are helping to.
- [00:19]
Laura Castleton
Shape millions of futures. At Janice Henderson, we are committed to.
- [00:22]
Scott Wapner
Helping you invest in a brighter future. To learn more, go to Janashenderson.com.
- [00:31]
Joe Terranova
Are.
- [00:32]
Laura Castleton
You still quoting 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 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 February 2024 Nelson Report.
- [01:00]
Shannon Sokotia
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 Wapner. Front and center this hour, the markets that stick the inflation report, what all of it means for this record setting rally. We'll discuss and debate as always with the investment committee. Joining me for the hour today, Joe Terranova, Shannon Sokotia, Steve, Steve Weiss. We will check the markets. We are well off the lows, as you know, those guys just talking about that. Yes, it was a hotter than expected cpi. The Fed chair is still on the Hill. We're monitoring that mostly the same of what we got yesterday. No hurry to do anything on interest rates. And obviously the CPI underscores that. I mean, the market's sort of looking through this, taking it in stride. I mean you had kind of the same thing at the beginning of 23 and 24, which is why the market knows that obviously and is trying to keep its eye on the prize, so to speak, of what's likely to come in terms of tax cuts and everything else.
- [02:04]
Laura Castleton
So you're accurate in saying the market is looking through this. I would agree with that, but mostly right. But if we think about it, I think it's more about certain stocks which are looking past this. Metta higher once again today. Palantir higher, Spotify higher, Applovin higher. So I think there's some resiliency when you're able to go bottoms up and actually look at individual stocks itself. And I've been encouraging the viewers year to date to think about doing that. Let's not focus on where the overall market is. I think that's going to be a difficult game to play in 2025. In fact, if you go back over the last 60 days to December 12th, I think we have a chart here to show of the S and P and the Nasdaq. We're basically running flat. We're basically flat in the overall indexes themselves. So I think it's about where can I find some opportunities in the market. I agree with your overall assessment. Look, Scott, there's a lot of uncertainty right now. There is so much uncertainty. The last several weeks we've had to deal with deep seek, we've dealing with tariffs. Now we're dealing with an uptick in the CPI and all that should give you, rightfully so, some form of trepidation. We're still in an overall secular bull market. But don't focus on, hey, I'm just going to ride the index higher. Try and find some individual stock opportunities until you get further clarity. By the way, if you do, because I don't know where you're going to.
- [03:23]
Shannon Sokotia
The S and P and NAS are on pace for their third straight neg of week. I mean, it underscores, Shan, some of the problem that tech has had and why it's dragged everything like that a little bit lower. Larry Summers, the former treasury secretary, posts on social we're now in the riskiest period for inflation policy since the early Biden administration. Ken Griffin yesterday, I'm sure you've all seen the quotes by now from that UBS conference talking about the president's rhetoric and some chaos and tariffs, et cetera, saying the damage has already been done. From my vantage point, he says, quote, the bombastic rhetoric, the damage has already been done. It's a huge mistake to resort to this form of rhetoric when you're trying to drive a bargain because it tears into the minds of CEOs, makes it difficult for multinationals and I mean, look, it's a big Republican donor. He voted for the president, but he's telling it how he sees. He's one of the world's great investors. The market doesn't seem to be hung up on that. It doesn't seem to be hung up on what Summers had to say. It doesn't seem to be hung up on what Mr. Griffin had to say. As I said, earnings are better than expected. We're more than two thirds of the way through. And that's where the eye on the prize remains. Good earnings, good economy, tax cuts come in. So why get negative now?
- [04:36]
Scott Wapner
Well, I think that's what you really need to focus on is if we look at the last couple of years, Scott, it's really been driven. A majority of the gains last year were driven by multiple expansion. And so if we're looking and anchoring ourselves to Joe's point on looking at the underlying fundamentals and the ability for these companies to grow their earnings, if you think about some of the thrusts that are behind that, you know, taking tariffs aside, because our view is that they really are a negotiating tactic, and he's looking to the White House, is looking to extract some concessions from our allies and our trading partners. If you look beyond that, what you're looking at is you're looking at an environment where things like deregulation are going to benefit smaller companies. If you think about deregulation, if you think about regulation in general, it benefits bigger companies, right? They've got the funds to be able to, you know, have that competitive mode around their business. And so we think this will be more competitive around the other parts of the economy. You know, to Joe's point, if we think about technology and where people have been trying to position themselves within technology, you're looking for, you know, which of these mag 7 do I want to own? And now we're starting to see some divergence. You're seeing opportunities to get outside of that in tech, but more importantly, you're seeing earnings growth in other parts of the economy. So I think when it comes down to it, you're looking at where is the potential for the market to potentially go up and down. I think that's less of the argument today. The last thing I would note, Scott, is that when we look at this dynamic around the potential for broadening of the economy, a lot of the forces that we've been looking for, this economic momentum, it's already in place. We're seeing it over the last few months. Small business confidence. Scott, you talk about CEO confidence. Small businesses are much more confident in this environment than they have been. And I think all of those things really point to don't spend as much time looking at these larger indexes. Look at the underlying fundamentals. Look at things like Even in the Russell 2, I know you're going to come back to me on this and pressure me on this, but you know that that index itself is not very high quality. So looking within small companies that are higher quality in that universe, that are growing earnings this year, you know, Weiss.
- [06:37]
Shannon Sokotia
You look at the sector breakdown year to date, it's nicely split. You know, discretionary is negative. Tesla has a lot to do with that. Technology is negative. Really, Those are the only two spaces to look at. In large part because of what I wish I came up with this because what the Wall Street Journal talked about yesterday, the lag 7, not the mag 7. And it really has been lagging performance from most of these names outside of Meta, which as you know, is going from its 18th straight day of gains. That's the longest upside streak for any MAG7 stock, any NAS100 constituent, going all the way back to 1985. That run's been extraordinary. Amazon's had a nice little move of its own. Everything else is negative, though, year to date. The market, does that matter if you continue to have a lag 7?
- [07:29]
Joe Terranova
It doesn't matter to me. Candle, does it matter? The market, I don't really care. I care what the fundamentals of the Mag 7 are and how they're going to perform going forward. Not that. Not how they perform for a moment in time over an investment horizon. So we can make all we want of it because they're a large part of the S and P, they're a large part of the qs. But the facts are that permanent compound, just most of them and a momentary lull in their performance or execution, I shouldn't say execution they've been executing pretty well isn't going to disturb me. I don't think. You look elsewhere.
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Shannon Sokotia
Okay, the operative word is what you just said. Momentary.
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Joe Terranova
Yeah.
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Shannon Sokotia
Is that what it is?
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Joe Terranova
I believe in your mind, I believe that's.
- [08:11]
Shannon Sokotia
That's the whole game. I mean, if it's not.
- [08:14]
Joe Terranova
Yeah.
- [08:15]
Shannon Sokotia
You got a problem. If it is, no big deal.
- [08:16]
Joe Terranova
Right. And I believe it is. So if you do bottoms up work, you'll find you'll have conviction that it's momentary and that all the drivers are in place. Place the spending the. Which some could argue is way too large is there for the growth. It's not to fill, it's not to backfill on mistakes that are made. It's to say, okay, here's where the puck's going. We want to. We want to drive continued growth. So look, so I like the max of. In terms of the overall market, you know, I'm just not as sanguine about it. Sure. Earnings have been good. No secret. Sure. You know, a lot of companies take price increases in January. Typically, we've seen that before. A little more than usual here. But here's what's being missed. The commentary continues to be including from this desk, the Fed is on hold. Well, guess what, is it on hold for a hike or is there a hold for a cut?
- [09:13]
Shannon Sokotia
I think it's on hold for a cut. And let me tell you, evidence at all from either the data, frankly, or what they've said or any of the members have said that it's on hold for a hike.
- [09:24]
Joe Terranova
That's not true.
- [09:25]
Shannon Sokotia
No, it is true.
- [09:25]
Joe Terranova
No, it's not.
- [09:26]
Shannon Sokotia
Why do you think it's. Why do you think a hike.
- [09:29]
Joe Terranova
What about today's number? That's not evidence.
- [09:33]
Shannon Sokotia
What do you think the market is? If that was the case, if the.
- [09:36]
Joe Terranova
Market thought that was that easy, where it's one number. Oh, the market says hurrah. You know, I said the beginning of.
- [09:43]
Shannon Sokotia
23, in the beginning of 24, you had, you had inflation spikes as well.
- [09:47]
Joe Terranova
There's nothing to do to investment is. Look at what happened last quarter there.
- [09:52]
Shannon Sokotia
Are you investing as if you think the next move is a hike? Just put it on the table then. Don't argue, just put it on the table.
- [09:59]
Joe Terranova
Am I.
- [10:00]
Shannon Sokotia
No, no, you're not. You're not.
- [10:03]
Joe Terranova
That's not the point. The point is. Your point is we got one day to put point.
- [10:07]
Shannon Sokotia
No, no, no, that was high.
- [10:08]
Joe Terranova
Let me finish. We got one data point that was high. The market's looking through it. So hey, we're all clear.
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Shannon Sokotia
My point, we're all clear.
- [10:16]
Joe Terranova
Well, you just said that the market looked through it. There's no data that shows that the Fed may hike. So let me point to what Powell said. Powell said. Powell said we're very close to the neutral rate, which means that don't expect a lot of cuts. Now if inflation keeps going higher, we'll see PBI PPI tomorrow. That probably explained away as well. But if you see this March higher if tariffs, maybe it's not 25%, maybe it's 10%. That's inflationary, despite what the clown car of the cabinet members say. So you could very well see increased inflation. Larry Summers is not a fool. He's speaking what's accurate. Ken Griffin is not a fool. So I do think the risk to the market is not maintaining this narrative that's got us here. But what can go wrong? As a responsible fiduciary, I'd like to look at what can go wrong. I'm not saying investing on.
- [11:07]
Shannon Sokotia
I'm not scenario. I am not suggesting that you shouldn't prepare for any scenario. We're talking likely outcomes. The likely outcome is not a hike. That is not the likely outcome. You want Maybe it works for you to have this argument with me, which I'm not really trying to have with you, but the, that's not the base case in any, in any way shape or form is the next move is a hike.
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Joe Terranova
You've just made my point. It's not the base case. So the risk to that base case of the next move is lower is.
- [11:41]
Shannon Sokotia
Not even close to that.
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Joe Terranova
It's extended. Right. Scott, I'm pointing out the risks in the market. You're saying hey, they're going to cut eventually. Yeah, they could cut eventually. Then they cut from 6% or the cut from where it is right now. I don't know the answer to that. So if everything continues to go as rosy as it is, earnings continue to grow, you don't think that that's going to be inflationary? Of course it will be. When the economy gets heated up, it's inflationary. So I'm saying don't be sanguine is my message.
- [12:13]
Scott Wapner
I would say the offset to that is that I think a risk that we should be talking about when we talk about tariffs is that there's a point in time increase potentially in prices. But if we see an expansion of tariffs, Steve, to your, to, to your thesis, we're going to see growth deterioration. So you go back to 2019, Fed had to cut rates. Yeah, not that was, that was, you know, tariffs did not create, they created an inflation inflationary impulse initially but then growth slowed down. So I would say Scott, the real risk to the market from a tariff perspective, short term, maybe inflation, I don't think that puts the Fed off of their pause. I don't think to Scott's point, it puts them on a hike. The longer term risk to tariffs is growth. And so for, so if you want to be insulating your portfolio against tariffs, I think that that's where you should be looking. We are not in that camp. We're not worried about that because we think tariffs are short point in time as I mentioned earlier. But we want to talk about risk to the, to this thesis and risk to the market. It's growth.
- [13:14]
Joe Terranova
So let's talk about risk to specific sectors. Financials for example. Right. The thought process was last year financials did well and that eventually the Fed's going to cut to a level where M and A makes sense, financial sense, because of the typical debt that you put on a balance sheet. Now that scenario of rates being high continues to be in my view a governor against M& A. You don't know what sectors are going to be Look, I'm all for cutting costs. There are way too many excesses, way too much overspending government. But I'm also for a cogent, cogently communicated plan of doing it. Not sensationalism. And that's what we have. And that's what puts CEOs back on their feet. I've spoken to private equity firms. I mentioned that yesterday. They're not making any big acquisition in certain industries because they don't know what the rules of the road are. So that's a growth slower as well. For the financial industry.
- [14:10]
Shannon Sokotia
Financials are among the best performing sectors year to date.
- [14:14]
Joe Terranova
Yep.
- [14:15]
Shannon Sokotia
On the expectation of an environment that's going to be more conducive to dealmaking, which they still believe it. It will be. Just because you've had the slowest January in decades for M and A doesn't really portend anything. Obviously there's been a little more uncertainty introduced because CEOs don't know what's going to happen with tariff policy. More tariff policy than interest rate.
- [14:39]
Joe Terranova
Moving from here policy. It's not only tariff policy. Department of Defense. What programs are going to be cut? Where are they going to focus?
- [14:46]
Shannon Sokotia
Yeah, but you're thinking, but that's, that's so stock specific to things that you have like Leidos and Booz Allen and things like that.
- [14:53]
Joe Terranova
Not only them. General Dynamics have.
- [14:55]
Shannon Sokotia
Well, but you get my point in those areas.
- [14:58]
Joe Terranova
Sectors. Health care. Let's talk about health care.
- [15:00]
Shannon Sokotia
Another really good performer, right?
- [15:03]
Joe Terranova
Why is biotech a great performer now? I mean, so you take a look at health care and you say, where are things going to be cut? So right now the markets are autopilot saying, hey, you know, cutting regulation, etc. But there are real cuts going on to the buyers of the services of the companies that are moving higher.
- [15:23]
Shannon Sokotia
Joe.
- [15:24]
Laura Castleton
So I feel like we're having a conversation about the Giants winning the super bowl next year because if we do have to raise rates, I think it's, it's. You raise rates once at best. It's probably, it's probably an opportunity. But I think it goes back to where you started this conversation.
- [15:40]
Scott Wapner
You.
- [15:41]
Laura Castleton
You use the term the lag 7. I disagree that the lag 7 should be applied to how most of these are trading right now, because I think there are some of these magnificent seven that you want to make sure you have in your portfolio. Absolutely. Amazon. I think Amazon is on the same trajectory that Netflix was in terms of what it's going to do with streaming. Al Michaels talked about this last week. Live sports they are only going to further engage with live sports. It's going to add upon the businesses they have right now. With E commerce in cloud, you turn your attention to matter. Clearly they have gained an advantage as a result of what's going on with TikTok. The algorithms are ultimately going to change if someone in the US buys that company. So I think you want to stay with meta.
- [16:25]
Shannon Sokotia
No one has suggested at all at any time that you, to use your words, should have these in your portfolio. No one has said that you shouldn't have them in your portfolio. They're two different conversations. The simple suggestion is as a group, it has been the lag 7 because I told you, year to date. That's why tech is among the worst performing groups. Most of the Mag 7 stocks are negative.
- [16:52]
Laura Castleton
Except for the two I just mentioned.
- [16:53]
Shannon Sokotia
Yeah, except for the two. Right.
- [16:54]
Laura Castleton
And I'm highlighting the two. So I'm trying to encourage the viewers. If you're looking at the Lag 7.
- [16:59]
Shannon Sokotia
You think the viewers are sitting there thinking, I'm going to sell. I should sell the Mag 7 because they're lagging.
- [17:03]
Laura Castleton
Let's don't look at. But let's not look at that totality. Let's not look at them in totality. Let's try and identify in 2025 they're not all going to go up universally the same as they did in prior years. They're going to be. Some of those names are going to perform well. I'll tell you a name that I don't think is going to do well. Tesla. And we own it in Jyoti. I am concerned about Tesla with the tariffs as it relates to graphite. Graphite is a real problem for ev. EV makers when you're thinking about the need in batteries. China is the largest.
- [17:36]
Joe Terranova
They have much bigger.
- [17:36]
Laura Castleton
They have much bigger problems with the graphite issue is a huge issue. And Elon Musk isn't going to like what he continues to see as we have these tariffs continue to be applied because the margin squeeze is going to happen.
- [17:46]
Shannon Sokotia
Let me just get to a news alert quickly with Pippa Stevens regarding Chevron. Pippa, what are we learning here? Hey, Scott. Will.
- [17:52]
Laura Castleton
Chevron will reduce its workforce by 15.
- [17:54]
Scott Wapner
To 20, 20% beginning this year, with most of the cuts complete before the.
- [17:58]
Laura Castleton
End of next year.
- [18:00]
Scott Wapner
The company said this is in keeping with its prior announcement to reduce costs by between 2 to 3 billion dollars by the end of next year. It of course comes as Exxon also looks to cut costs with both companies reporting Q3 profits. That were down on lower commodity prices. This news was first reported by Barron's. And Chevron is cutting its workforce by between 15 to 20%. Scott?
- [18:21]
Shannon Sokotia
All right, Pippa, thank you. We'll keep our eye on shares of Chevron, obviously, for the remainder of our program today. Let's talk about some other groups rather than continue to have this debate about inflation and otherwise, because I do want to get to some things we've talked a lot about. Let me just silence that about momentum of late. Jeff DeGraff today says it's not overbought, even though a lot of these stocks are up a lot. Joe mentioned Palantir is up 67% over one month. And Applovin, he talked about up 18. Goldman's up 16. Weiss, you're in that. Welltower, a new record high today. Walmart is up 10% in a month. It's in the Jyoti price Target today to 115 from 105. Carvana's up a bunch. Robinhood, GE, Costco, Royal Caribbean, AbbVie, Netflix, some of the cyber stocks. What's going on with momentum?
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Laura Castleton
So you want to use the term overbought?
- [19:20]
Shannon Sokotia
I would say I disagree with DeGraff said it's not.
- [19:23]
Laura Castleton
Well, I would disagree with that because I'm beginning to see in the last several days, as we see the overall index kind of teetering, that a lot of the momentum names and momentum strategies are underperforming for the first time this year. So I could tell you if you look at the factor of momentum, the last two or three days have been a difficult day.
- [19:40]
Shannon Sokotia
Al likes your shout out, by the way, relative.
- [19:42]
Laura Castleton
Tell Al I said thank you very much. Relative to everything else. Relative to everything else. Okay. Momentum is struggling now. Are there areas, as I mentioned at the top of the show, like Spotify, like Apple Love and like Palantir, like Walmart, that you could still find opportunities? Yes, without question you can. But if you're looking at the factor overall of momentum, it does appear to be a little bit tired. It does appear as though it needs to catch its breath. And price action the last several days is absolutely reflecting.
- [20:11]
Shannon Sokotia
Invertive is part of the momentum trade, which was getting hammered today as our, as our chart of the day. But you bought more.
- [20:19]
Joe Terranova
Well, keep in mind, I said yesterday I was going to sell going into the earnings. I sold part of it.
- [20:25]
Shannon Sokotia
We bought it back on the dip.
- [20:27]
Joe Terranova
I bought it back this morning. It was down more this morning. I bought it back back this morning. Look, the quarter was pretty good. The issues were a couple of things quarter was actually I thought excellent. Where do you see companies growing at 30 and 50% in different metrics? But the book to bill for the fourth quarter, not usually. It was one to one. It would have been nice to see that higher. And the conference call really hasn't done anything which I listen to partially before coming on air to you know, once the dies cast that's down, it's down. But everything remains in place for this company to continue its growth. So, so I'm still there. I bought back what I sold. That was good sale would have been better sales. I said if I sold it all and came back in but, but I didn't know how the quarter go. Quarters are just very, very fickle as is the reaction to them and there's no rhyme or reason. We see stocks that miss and stock goes up, we see stocks that, that execute and they go down. So the best thing is pay attention to the quarter for trends. But the trends are in place then don't get, don't get.
- [21:28]
Laura Castleton
No, that's an important point. And Scott, you mentioned before how important earnings have been to where price has traced out over the last several weeks. There are a variety of different stocks like Vertif that actually have reported really good earnings, went into their earnings at or near highs, 52 week highs or all time highs and subsequent to that the response left you puzzled because they were adequate earnings but maybe they weren't good enough. So if you could pull up a chart of Eaton, you'd see the same thing reported at the end of January. Chart, look, chart, look really good earnings were good, stock rolled over. Look at deckers. I mean you and I have talked about deckers for the better part of the last six years. If you pull up a chart of deckers it is literally hit the deck after earnings and the earnings on it were not very good.
- [22:18]
Shannon Sokotia
I do have some breaking news from Washington. We will get to Megan Casella for that. Megan.
- [22:23]
Scott Wapner
Hey Scott. We're just learning from President Trump posting on Truth Social that he just held what he called a lengthy and highly productive phone call with Russian President Vladimir Putin. Now a lot of details here from the President saying that they discussed Ukraine, the Middle east, energy, AI, the power of the dollar, among other subjects. And he also says that the two countries have agreed to work together very closely including visiting each other's nations. We've also agreed to have respective teams start negotiations immediately and that he would start those including by also calling right now Ukrainian President Volodymyr Zelensky to inform him of the conversation. So that's coming now as we know also, Scott, that Treasury Secretary Scott Bessant is in Ukraine meeting with Zelensky today. So potentially launching those negotiations. Trump saying in this true social post that Secretary of State Mark Rubio, John Ratcliffe of the CIA, Michael Waltz, the national security adviser, and Steve Witkoff, the special envoy will be leading those negotiations. So we don't know exactly yet the contours of those, what exactly that they will be discussing. But of course, this follows the prisoner swap that we saw American Mark Fogel coming home last night from Russia. So following on all of that and building on Bessens Trust trip to Ukraine today, Scott, that's what we have for now.
- [23:36]
Shannon Sokotia
Back over to you. All right, Megan, thank you very much for that update. That's Megan Casello on that important conversation that the President just had. Let's get to a couple more moves, Joe, if we could. So you bought cb. Cvs.
- [23:48]
Laura Castleton
Cvs, I bought cvs.
- [23:50]
Shannon Sokotia
Why did you do that?
- [23:51]
Laura Castleton
Kudos to Larry Robinson, Glenview Capital, who took a position in this stock a few months back. So finally you're seeing some positive momentum here. You have the earnings growth, you have a reduction in cost. And I think this is an easy trade. Remember, I use the word trade more than anything else. You want to buy this against yesterday's closing stock price, which was 55. If you're trading it. If you're an investor, you have enough here to believe that there is a fundamental turnaround in this story. I haven't owned this stock in years. And I've been waiting for an earnings report like we got today where you could say to yourself, okay, fundamentally this looks like an inflection point and certainly technically, with that large gap open higher, it's worth taking the risk.
- [24:36]
Shannon Sokotia
The Tepper convinced you on Alibaba? Is that why you bought that?
- [24:40]
Laura Castleton
Listen, there is clearly. Right.
- [24:42]
Shannon Sokotia
Completely serious.
- [24:43]
Laura Castleton
No, I know you are. You don't go against David Tepper. But we had a nice conversation about it Monday.
- [24:50]
Shannon Sokotia
You think Weiss is the only one influence influenced by what he says?
- [24:52]
Laura Castleton
I think. I think everyone who, who trades and invests is influenced by David.
- [24:57]
Shannon Sokotia
Why'd you buy?
- [24:57]
Laura Castleton
For sure, the reason why I bought is we discussed it on Monday. We talked about jd we talked about pdd, we talked about Baidu.
- [25:05]
Shannon Sokotia
Yes, we talked about all, all of those, as a matter of fact, because he upped his positions from his 13F that we got on Monday.
- [25:11]
Laura Castleton
What I did was I went back, by the way. I love that Ty. Jack, that's great.
- [25:14]
Shannon Sokotia
Continue, please.
- [25:15]
Laura Castleton
I went back and I looked at where are we with momentum and where are we with the potential for momentum to extend itself. And if you look at Baba right now, it just took out its recent high from the last six months above 118 and change and it looks like now it has a path towards 150. So more than anything else we could say yes. Thank you, David Tepper for introducing the concept, the idea to me. But looking at the momentum, it looks really strong and it looks like it go to 150 and I want to try and capture.
- [25:44]
Shannon Sokotia
All right, good stuff. We'll take a quick break and when we come back, Carrie Firestone is going to join us. She's just made a number of moves in her portfolio. Some new buys, new trims, positions and she sold a name as well. We're back right after this.
- [25:59]
Laura Castleton
Our state has changed a lot in the last 140 years. We know because Multicare has been here guided by a single purpose, making our communities healthier. That comes from making courageous decisions, partnering with local communities to grow programs and services and expanding healthcare access to those who need it most. Together, we're building a healthier future. Learn more@mycare.org Are you still quoting 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 Discover is accepted at 99% of places 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 February 2024 Nelson Report at Capella University, learning the right skills could make a difference. That's why our business programs teach you relevant skills you can take from the course room to the workplace. A different future is closer than you think with Capella University.
- [27:11]
Shannon Sokotia
Learn more at Capella. Edu. All right, I told you. Carrie Firestone has made a number of new moves in her portfolio. In fact, she has and she joins us now. Hi, Kara. Good to see you. Thanks for coming on.
- [27:36]
Carrie Firestone
Hi, Scott.
- [27:37]
Shannon Sokotia
All right, so let's go through these. You bought more. I said there were three. Let's do one at a time. EPAM Systems. Why'd you buy more?
- [27:43]
Carrie Firestone
Now it's a software consulting business. That business is starting to improve. Number one reason is that they moved everyone out of Ukraine. It was Ukraine centered. It's not anymore. And business is starting to pick up to integrate AI for a lot of their customers. Customers.
- [28:00]
Shannon Sokotia
You Know, we'll keep an eye on the stock in a little bit of a move trying to go positive, you know. Another one is Broadcom. We need to tell you obviously how the chips have traded Broadcom and Nvidia, though Nvidia has had a nice little bounce back. Why did you buy more Broadcom?
- [28:15]
Carrie Firestone
Well, we've owned it and we looked for an opportunity. The stock had traded down some and it's essential in terms of integrating for data centers who really need to use more chips for AI. It's, it's equally a growth story the way in video is. And it was an opportunity and so we took it to buy some.
- [28:33]
Shannon Sokotia
Okay. Kemed.
- [28:35]
Joe Terranova
Yeah.
- [28:36]
Carrie Firestone
So Kemet is in the hospice business. Strange mix, Hospice. They also own Roto Rooter and the hospice business is growing nice double digits. We think that's going to continue. And the Roto Rooter business, which was always historically a strong business, has been sluggish and it's starting to pick up. And we think again it gives us an opportunity for steady growth in a choppy market.
- [28:57]
Shannon Sokotia
Why did you take some? I mean, look at health equity. It's a record intraday high today. Is it? Is the story any more complicated than that? As for why you decided to take.
- [29:06]
Carrie Firestone
Some profits here, it's pretty much valuation. We've owned this name for years. It's done exactly what we wanted it to. It has been a play as with financials on better economy, full employment. They're in a health savings business and higher interest rates do help them. It's just a fairly big position. We took some off the table floor.
- [29:27]
Shannon Sokotia
Obviously likes the timing of your move. Wabtech, you trim that as well?
- [29:33]
Carrie Firestone
Yeah, I think that was lucky because we did trim it before the earnings. This is a company, it's in the railcar business and rapid transit. It's a really high quality industrial. It's been a strong stock. It's outperformed and we just again trimmed it. And I think that it was the right move before earnings which were a little disappointing today.
- [29:53]
Shannon Sokotia
Okay. You own Wabtech, Joe, right?
- [29:56]
Joe Terranova
Yes.
- [29:56]
Shannon Sokotia
What do you think of taking some profit here?
- [29:58]
Laura Castleton
I think it's obviously pretty good when the stock is down 9%. Another example of a name at or near an all time high. Here you go, 2025. Guidance is light and the street is going to punish you. So if you are at an all time high, Steve, you better make sure you blow out earnings and guidance.
- [30:15]
Joe Terranova
You know, rarely have I ever seen such emotional acceptance of any moves as carries made by the flaws in the background. Congrats.
- [30:24]
Shannon Sokotia
Never happened with you.
- [30:26]
Joe Terranova
So I said rarely.
- [30:28]
Shannon Sokotia
Something out of the ordinary. You mess with the bull, man, you get the horns. Carrie, you also sold Fortive.
- [30:38]
Carrie Firestone
Yeah. So Fortive was a name that we bought a few years ago. It spun out of Danaher. It was very high quality precision industrials. Danaher Management, we had experience with that company and that management group and we thought it was a great idea. In fact, they've made acquisitions that we haven't loved. They've grown earnings, but not to the extent that the market expected. And now they're going to break up the company. And we really don't love that strategy. So we think we have other opportunities, opportunities with high quality industrials in the next few years than this one.
- [31:10]
Shannon Sokotia
All right. Thank you again. We'll see you back on the desk soon. That's Kerry Firestone joining us with these new moves. To the headlines now with Silvana now. Hi, Silvana. Hey, Scott.
- [31:17]
Carrie Firestone
Good afternoon to you.
- [31:18]
Laura Castleton
The US Reportedly agreed to send a convicted Russian money launderer back home in exchange that freed American schoolteacher Mark Fogel. According to NBC News, Alexander Vinick is currently in US Custody and awaiting transport back to Russia. By the end of the week, he will leave behind $100 million worth of digital assets. As part of the agreement, the full Senate voted to confirm Tulsi Gabbard to.
- [31:44]
Scott Wapner
Become the next director of National Intelligence. She had one of the most contentious.
- [31:49]
Laura Castleton
Confirmation hearings of President Trump's cabinet picks so far. She faced scrutiny over her defense of whistleblower Edwards Snowden after declining to say whether his actions amounted to treason.
- [32:01]
Scott Wapner
And the bank transfer app Zelle reports.
- [32:04]
Laura Castleton
It topped $1 trillion in payments last year as more customers turned to the instant transfers over making cash or check payments. However, the rise in its use comes as Zelle faces accusations of failing to properly investigate fraud complaints and reimburse victim.
- [32:21]
Shannon Sokotia
Scott, I'll send it back to you, Silvana. Thank you for that. That's Silvana now. Coming up, we're going to talk about some of the day's biggest movers. That's committee stocks. We got some good calls to get to as well. We'll take a quick break and we will do it next.
- [32:34]
Laura Castleton
Are you still quoting 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 that take credit cards nationwide. And every time you make a purchase with your card, you automatically Earn. Welcome to the now it Pays to Discover. Learn more@discover.com credit card based on the February 2024 Nelson Report. Check out the all new CNBC Sport Podcast where sports business and investing collide from media deals to team valuations, private equity moves and more. Catch the biggest business stories on the CNBC Sport Podcast. Listen on your favorite platform.
- [33:31]
Shannon Sokotia
All right, welcome back. We'll show you Lyft and Uber. We don't really have much to talk about as it relates to Lyft because there's no ownership. Stock was down a bunch yesterday on those earnings and the booking guidance, but Uber obviously has ownership here. Weiss, I'll give you the first one on this. You know, the stock has been so uneven lately. Big down and then big up on the Ackman revelation that he had taken this position. What now?
- [33:57]
Joe Terranova
So look, so you know, borrow a word from Joe's lexicon. There's momentum here and that momentum is going to continue to drive the stock higher. They are executing execution hasn't been as smooth as it was that a year ago. But there are always bumps along the road. And I do believe that you need it's a unique company, Lyft. I'm actually surprised it's where it is. This seems to be a one player universe. And you know, while Lyft is talking about, you know, about autonomous cars, robo taxis, you know, that's going to be a commodity. And what you still haven't solved for is the cost of putting robot taxis on the street. Nobody's talking about that. And again, you know, you won't have the drivers paying for the insurance, you won't have drivers paying for the maintenance. You won't have the drivers paying for, you know, paying for the ev, essentially. So that will hit profit margins. And so we got to hear about that. That could potentially be disastrous for Lyft if they have to assume those costs instead of drivers assuming.
- [35:04]
Laura Castleton
And the momentum in Uber has gotten even stronger this week. Normally when you see something, something like we had last Friday, big spike, move higher, you say to yourself, okay, that's a little bit of exuberance and you'll see it pare back and do a little bit of corrective behavior, has not done that at all, has even approached where it was coming into Friday. The momentum's building going into the 80s, I think, clearly.
- [35:27]
Joe Terranova
Right. But, but just to be clear my point, so they won't have the drivers to split the cost of the ride with the fees, but we don't know how much that is versus how much the cost driving is. So until we see that work out, we don't know what the profitability of either company is going to be going.
- [35:42]
Shannon Sokotia
For Arista Networks under suppressor. Let's show the stock. There's some suggestion that the weakness that you see on your screen could be due to possible insider selling that the chief technology officer and the senior vice president of software engineering soldiers 160,000 shares on February 6th. That's what I have in front of me here, Joe.
- [36:06]
Laura Castleton
Okay, what's important, what's up with that? What's important here is that earnings are next week. You're talking or needing a 63% margin. You're talking about 20 plus revenue growth really approaching 25%, talking about at least 16 or 17% EPS growth options market pricing in 9% move, which is a pretty big move. I still think they're participating in the AI networking build out. I like where it is in terms of already experiencing a little bit of correction after deep seek. I think it's in a good place here and adequate earnings. You should get a positive response.
- [36:41]
Shannon Sokotia
All right. Travelers, they expect a pre tax catastrophe loss of 1.7 billion from the fires out in California. You own the stock?
- [36:48]
Laura Castleton
Yeah, we're getting clarity here. I think Allstate now comes in at 1.1 billion. Chum Chubb rather comes in at 1.5 billion. I think for each one of these insurers that price has already factored in these catastrophic, catastrophic loss numbers already.
- [37:05]
Shannon Sokotia
Berkshire's buying more Oxy stocks down a lot from last April when it hit the record high. What do we own the stock?
- [37:15]
Laura Castleton
But I think this is more about Oxygen. I really do. I think this is about Oxy and this is how you have to think about it. So Berkshire takes the stake up now to I think somewhere around 28%. But it seems as though Berkshire made the purchase, last purchase in December. They seem to like this level. 45, 46, 47. I think 45, 17 is the lowest price has been over the last three years. So I think that gives you comfort if you're an investor in Oxygen, that you know, you have this quote unquote investment well, that's going to come in and find a certain price appealing. And that price seems to be somewhere around 45, 46.
- [37:52]
Shannon Sokotia
What's your take? Shannon Energy, which is off to a decent start this year, a little less than 5%. So it's, you know, among the, it's in the middle of the pack or to the higher end of the pack of good performers.
- [38:03]
Scott Wapner
Yeah, I mean, we just keep talking about these factors that are going to push energy prices down. I mean, we saw obviously in the CPI today, Scott, certainly not that carry through in transmission. And I think you're seeing some pressure on energy today as a result of some of the potential discussions around Ukraine. So I think that in the near term, certainly from the Trump administration's perspective, they want to pull energy prices down. And if we get resolution in Ukraine of any different variety, I think we're going to see some, some pressure and a ceiling for energy prices. So I think that's going to flow through to the stocks over the next couple.
- [38:33]
Shannon Sokotia
Had a busy Sorry to interrupt you. We've had a very busy day down in D.C. from the Fed chair on the Hill once again to some news out of the White House. We have more, in fact, from our amen jabbers. EAMON SCOTT that's right.
- [38:44]
Eamon Javers
Speaker of the House Mike Johnson at the other end of Pennsylvania Avenue is saying that he believes that Donald Trump is considering reciprocal tariff exemptions for the pharmaceutical and automotive industry, that Reuters reporting that Johnson said on Wednesday he believes Trump is considering exemptions to those tariffs specifically for those two industries. Not clear whether that would be entirely exempted or individual products exempted within that industry's set of imports. We'll have to wait for more detail from the White House, but I can tell you, Scott, that I talked to Kevin Hassett this morning here at the White House. He's the National Economic Council director and he said that he's been making phone calls to foreign leaders to talk about reciprocal tariffs. He was on the phone, he said, as early as as recently as this morning with foreign leaders talking about how those tariffs would be structured. He said. Howard Lutnick over the Department of Commerce is also making calls with foreign leaders talking about the structure of those tariffs. It did not sound from that conversation that I had with Hassett this morning that they are prepared to announce reciprocal tariffs as soon as today. What Hassett said is they might announce progress on reciprocal tariffs today or tomorrow, but not the imposition of reciprocal tariffs today or tomorrow. So some nuance there, but some important nuance in terms of what it is they're thinking now, Speaker Mike Johnson saying those exemptions could be coming for the pharmaceutical and automotive industries as well. So some moving targets here in terms of when these tariffs are coming, what they might be tariffing, specifically in which countries might be affected.
- [40:15]
Shannon Sokotia
SCOTT it would be welcome news, obviously, for the likes of Jim Farley, the chief executive officer of Ford Eamonn, who You know, in the last couple of days has been lobbying pretty hard against tariffs and what it would mean for the auto industry. It was just a day ago or so where he suggested that this talk is causing, in his word, chaos in the auto industry, could lead to layoffs and the like. And I'm sure you've heard similar from others within the auto industry as well.
- [40:43]
Eamon Javers
Yeah. And you saw Ken Griffin of Citadel making some comments about the sort of chaos that the tariff talk has created in terms of US Trade relationships around the world and whether the United States is a reliable trade partner or not. So the White House seems to be calibrating all of that. You know, I can tell you that earlier in the week we were given the impression that those reciprocal tariffs were coming as early as Monday. That hasn't happened yet. And what you're hearing from folks like Kevin Hassett is that a lot of these negotiations are still ongoing. So clearly there is a window now for people to weigh in with this White House and make the case that these tariffs either are going to be damaging if they're put in or should be put in with exemptions that leave them out of it, frankly, or whatever the lobbying might be. But a lot of that is going on behind the scenes. You get the sense that, you know, the phones are burning here in the West Wing as different industry groups try to get this administration's attention.
- [41:38]
Shannon Sokotia
Yeah, no doubt about that. Good point, Eamon. Thank you. That's Eamon Javors at the White House. As you see, Santoli, as in Mike, is here next with his midday work. We're back. Senior markets commentator Mike Santoli on the desk for his midday word. What are you thinking about today?
- [41:54]
Laura Castleton
Interesting how the market, you know, kind of sought not to overreact to cpi, just never broke containment.
- [42:00]
Joe Terranova
Right.
- [42:01]
Shannon Sokotia
The lows of the day in the.
- [42:02]
Laura Castleton
S and P was well within the week's range. The yields are up, but they haven't blown out to the, to the recent highs. Whether you can massage the numbers and say that makes sense because it was some one offs or not. What I find interesting about it is the rotation takes you into some weird places. You got some regular old defensive sectors and then you got the craziest, lowest quality junk flying as well. I think part of that is upstart, massive upside reaction to its results last night. Crowded short. Every other short gets covered on a day when you thought it was going to be risk off. So there's a lot of that still running through this market. And until we get toward maybe February expiration It seems like the market's a little bit kind of pinned here in a range.
- [42:43]
Shannon Sokotia
Yeah. And we said, I mean for the most part, earnings continues to be the story. You wouldn't have a market that looked like this if you had a bad CPI and bunch of bad earnings.
- [42:51]
Joe Terranova
That's right.
- [42:52]
Laura Castleton
No, it absolutely supported by the earnings flow and even the here and now economic numbers. I mean, you're fine, the Fed's on hold and you're growing a two and a half percent.
- [43:00]
Shannon Sokotia
You just have the tariff uncertainty that, you know, more people are talking about, whether it's Griffin or, you know. Yeah, Farley or whoever.
- [43:07]
Laura Castleton
Seems like the market's trying to build up some calluses against every headline.
- [43:10]
Shannon Sokotia
All right, I'll see you on closing bell. It's Mike Santoli calls the day Next wife. Let's talk some Taiwan Semi because it was reiterated by today at bank of America, it says deep seat accelerates AI adoptions. That's a positive for tsm. What do you think?
- [43:44]
Joe Terranova
Look, the story's bright for tsm, whatever chips you use because chances are they're the ones making them. So most outsourced to chip manufacturing and Taiwan Semi is the leader in that. So for them it truly is a win win as we talked about last week. So I still like it. I still think it's very reasonably valued right here and would add to if it weren't one of my largest positions.
- [44:10]
Shannon Sokotia
Okay, that's a pretty good looking chart as well, Joe. EOG upgraded today to outperform RBC. The price target goes up by five bucks to 155. They say the upgrade is because of, quote, continued strong operational performance, exposure to improving natural gas prices, premium commodity price realizations and the potential for stock buybacks.
- [44:33]
Laura Castleton
The two that I like there are improving natural gas prices and increased stock buybacks. In addition to that, this has had strong relative outperformance of nearly 10% versus the energy sector overall over the last 52 weeks.
- [44:46]
Shannon Sokotia
All right, we'll take a quickie. We'll come back, we'll talk about some winners, losers. And we still have final trades to do as well. Let's talk about Iron Mountain. That stock right on your screen here. It's a three month losing streak. Irm, you own it.
- [45:09]
Laura Castleton
Well, the concern, the concern here is its exposure to potential budget cuts. And they are storing documents, paper documents for, for the U.S. government. And it's clear, I think last night there was, there was a tweet about it that Doge could be potentially coming after that. So they report earnings tomorrow morning and they absolutely have to address this concern.
- [45:28]
Shannon Sokotia
Okay, I will see ON Closing bell, 3:00, Glenn Kacher, tech investor, is going to join us, so it's a good time to check in with him. Eric Woodring, the star Morgan Stanley analyst, is going to talk Apple with us. Brent talking to him and Adam Parker. So I hope you'll join me then. Let's do some finals. Mr. Weiss, what do you got?
- [45:42]
Joe Terranova
I'm sticking with Vertive. I think that the stock got 8% cheaper today, so it's a good opportunity to get in.
- [45:48]
Shannon Sokotia
All right, Shannon.
- [45:50]
Scott Wapner
Health Care. What Joe didn't mention on CVS is that Aetna's MLR came in lower than anticipated. So if we see that for other MCOs, that could be a boost for the sector.
- [45:58]
Shannon Sokotia
Yeah, Joe, why'd you leave that out?
- [45:59]
Joe Terranova
I don't.
- [45:59]
Laura Castleton
I don't know, because I was fixated on your tie and jacket combination. Spotify.
- [46:04]
Shannon Sokotia
You're excused.
- [46:05]
Laura Castleton
Spotify a chart that looks as good as your tie and jacket combination.
- [46:09]
Shannon Sokotia
Thank you very much. Pandering to the host.
- [46:11]
Joe Terranova
Oh, man.
- [46:12]
Shannon Sokotia
I'll see you on closing bell. You've been listening to CNBC's Halftime Report, the podcast. You can always catch us live weekdays at 12 Eastern only on CNBC.
- [46:27]
Laura Castleton
All opinions expressed by the Halftime Report participants are solely their opinions and do not reflect the opinions of CNBC, NBCUniversal, their parent company or affiliates, and may have been previously disseminated by them on 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 expression of an opinion. 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.com halftime reportdisclaimer check out the all new CNBC Sport Podcast where sports, business and investing collide from media deals to team valuations, private equity moves and more. Catch the biggest business stories on the CNBC Sport Podcast. Listen on your favorite platform.