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Halftime Report
Stocks and the Fragile Ceasefire 4/9/26
00:46:06
Scott Wapner and the Investment Committee debate the fragile ceasefire in the Middle East and what it means for the market and your money. They share their strategies for the weeks ahead. Plus, we've got a Street Fight between Jenny Harrington and Josh Brown. They debate whether Netflix or Disney will be higher by end of year. And later, we hit the latest Calls of the Day.
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A rich life isn't a straight line to a destination on the horizon. Sometimes it takes an unexpected turn with detours, new possibilities, and even another passenger. Or three. And with 100 years of navigating ups and downs, you can count on Edward Jones to help guide you through it all. Because life is a winding path made rich by the people you walk it with. Let's find your rich together. Edward Jones, Member SIPC not every sale
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happens at the register. Before AT&T business Wireless, checking out customers on our mobile POS systems took too long. Basically a staring contest where everyone loses. It's crazy what people will say during an awkward silence. Now transactions are done before the silence takes hold. That means I can focus on the task at hand and make an extra sale or two. Sometimes I do miss the bonding time. Sometimes.
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AT&T business Wireless connecting changes everything.
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D
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, thank you very much. Welcome to the Halftime Report. I'm Scott Wapner. Front and center this hour, the markets, of course, a fragile ceasefire, concerns about the Strait of Hormuz taking some of the steam out of stocks up until a few moments ago. And that's when the headline did cross about Israel agreeing to direct talks with Lebanon. The market obviously got a lift. We'll show you now. We'll discuss and debate all of that with the investment committee. And joining me for the hour today, Jenny Harrington, Malcolm Etheridge, Jim Leventhal and Josh Brown. Let's show you the markets. You'll see exactly what I'm talking about. Really didn't look like that, but 10 minutes ago was red flat. Ish. Now we've gotten a nice move kind of everywhere in the market. So there are questions about the durability of the ceasefire. I think everybody can understand that. Even so, there are some folks like Fundstrat's Tom Lee who say enough positive things have happened that the worst is clearly behind this market. Here's what he told me yesterday on closing bell.
- [02:16]
C
Listen the bottoms in, Scott, because last week was a period where the war was getting worse and oil was going up, but stocks weren't going down. So that's a good precondition. And today, now we have the rate of change that the war is de escalating. So I think stocks are now in the process to go back to their all time highs.
- [02:36]
D
Okay, so we'll go to Josh Brown first, who Looks to us today to be doing his best. Rodney Dangerfield, back to school moment at the University of Miami, better known as the U. What do you think? I mean, I don't know. It's like you have to address the backdrop where what are you doing?
- [02:57]
E
I am at the Herbert School of Business at the University of Miami which is celebrating the fact that they have just broken into the top 40 business schools in America for the first time. Well on their way to a top 20 business school in America. So, but let's, let's, let's, let's address the issue at hand. I think what Tom said is spot on. When you have continued bad news and stock prices stop reacting to it, that's a wake up call for people who have been pressing their bets on the short side that maybe they might be overstaying their welcome. Last week we saw an explosion in people buying puts. We saw a huge move into cash in a lot of areas of the market. And I think we got to the point where we had sufficiently beaten up multiples for growth stocks and we'll talk about some of the Max 7 names in a minute. But people just looked at that and said okay, I get it. This conflict could drag on. Maybe it doesn't. It's impossible to know. Even the people most responsible for the decision making themselves do not know. But here's what I can tell you. Earnings growth revisions are still trending higher. Analysts continue to take their numbers up. The first few companies that we got had nothing but good things to say. Look at the Delta news about what's happening with corporate customers, regular households, consumers. And it just, it's enough is enough. And I like that backdrop. I wouldn't suggest to you the bottom is definitely in but if I had to bet one way or the other, I would bet we have substantially digested a lot of the negatives and now we're going to hear some great things from companies as they report. So I said this on Tuesday. The amount of positive preannouncements looks great. The amount of negative pre announcements is really low. And here we go.
- [04:44]
D
Yeah, I mean here we go. The market's clearly going. As you see, S and p is only 2 1/2% away from its all time high.
- [04:54]
F
Yeah, it's amazing.
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D
Feels crazy to say that given everything that we've been through. I know, you know, the ceasefire development was enough to give this market a big bump. This latest news that we're showing you on the bottom of the screen here regarding the Israelis and Lebanon that has moved the market in the last several minutes, what do you think about what Tom Lee had to say and now how this environment looks?
- [05:19]
F
So yesterday I was in Washington D.C. and I had one for the client. And to your point about, you know, it's only down so much, I said improbably, unbelievably, you know, your portfolios are still in good shape. I think it stuns everyone when they look at the, at the actual numbers and see that the market's essentially flat. Lots of strategies are actually up. So with Tom Lee's comments, I think he's right. I just come at this same perspective with a slightly different, with a slightly different path to getting there. I think we got very close to the brink. I think we looked over the edge and we didn't like what we saw. And as an investor, what I bet on is I bet on President Trump's self preservation tactics and, and instincts. And I think when, you know, we're at that ugly point on Tuesday night, nobody wants to see oil go to 200, nobody wants to see the Middle east get any worse. That's worse for everyone. So, you know, so where we are is backing slowly away. I agree with Josh that the bottom may not be in, but I also think that our worst case scenario is a lot less bad than it used to be. And you know, and I'm working on my client letter and you know me, Scott, I generally skew negative, right? So I'm writing this letter and I'm working on my outlook and it's frankly kind of hard to skew too negative because what you have is earnings that are expected to grow 16% this year over next year. Earnings are expected to grow another 16% in 2027 and interest rates that, well, they might not be going down. They are unlikely to continue to go up. And at the bottom of all that, at the bottom of the market is interest rates and earnings. And you have a consumer that, you know, I'm skeptical about the health of the consumer. We're all on board with that. It's a K shaped economy and a K shaped consumer. But you hear comments from Delta and Levi's and they're saying, look, the consumer is still in okay shape, particularly the high end consumer continues to grow. So even I'm not that dark in this moment. Wow.
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D
Kevin, timestamp this moment.
- [07:18]
F
Thank you.
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D
Please.
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F
But I'm not buying Apple yet. I'm not buying Apple yet.
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D
Sorry. It's not too crazy. This is historic. This is a historic moment in the anthology, in the history of this program that Something has occurred that Jenny Harrington is now not that dark. The sun has come out, ladies and gentlemen. What can I say? Malcolm, what do you think? What do you think about where we are here? I mean, it feels like the market is now looking for an excuse to go higher.
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G
Yes.
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D
All you need are some consistent headlines and feeling better about the broader scenario of the straight and peace talks.
- [07:56]
G
So I think Josh and Jenny have put a lot of technical reasons around this and given it some very, very good sounding reasons for why this market wants to go higher. Frankly, I think it's just the FOMO trade. It's literally the knee jerk reaction to we learned our lesson with Liberation Day. We saw the Nasdaq go up 10% in one day, basically when we got the all clear via Twitter. And no one wants to be on the wrong side of that trade. And so whether it's too early now or we're very close to this finally being the cease fire that ends it all. No one wants to be wrong and no one wants to miss out on that trade. We can see it based on what people are buying right now. The only thing that's I think going to matter here is tech and financials because that's where the opportunity is. Those are the things that have been sold off the most and that's what everybody's crowding into at the moment, trying to right size their portfolio holding.
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D
Not everybody, I guess is on the same side of the bullish, bullish boat yet. Jim, like Piper's Craig Johnson says, not convinced that the market's out of the woods. And he points out that at least in his mind, to maintain a new bull cycle, it's going to take a combination of things, namely crude oil retreating to its around 70 bucks and a significant decline in yields. Now yields are moving lower. I thought Jeff DeGraff yesterday on closing Bell was quite interesting in suggesting that he as well wasn't exactly buying the big back bull case yet until yields came down further. Took a little of the stress off there. Now that is progressing in the direction that you would like to see. I think people would feel a lot better if you got back around four, four and a quarter. Now we were almost at four and a half couple of weeks ago at the real height of the conflict and the tensions, it felt like, oh boy, yields are backing up. This is now a double problem for this market.
- [09:52]
H
Right. It got dangerous for a second, but not for very long. I mean, four and a half percent, you go above that and generally the markets have had trouble with it. But even so it wasn't there for very long. We've been hanging out in the 430 to 440 range, even in the height of the, of the hostilities, which frankly was not too bad of a level. But yes, the markets of course like slightly lower yields here. Just to, to summarize, I think we can say the bottoms in because hostilities have gone down and both sides seems to want to take an off ramp in some direction or another. Is it going to be a perfect cease fire? No, of course not. There's going to be hostilities continuing, but it doesn't look like they're going to get worse. Where I think we have to be careful though is I don't think the volume volatility is over. So I think Josh alluded to this maybe and sort of what does the bottom look like? We can rattle around at this level for a little while, particularly as we get into earnings. Yes, we're going to have excellent top line growth from technology, we're going to have good earnings from energy. But there are going to be some sectors that are going to feel the heat from higher energy prices and that will just create volatility. So if you're looking at the market right now and saying, oh my God, I got to dive in right now, you can take some right now, you can buy some but leave some dry powder. There will be volatility and we're going to set new highs this year, but there will be volatility in the short term.
- [11:07]
D
You know, you know what, Josh? I'm not sure that enough people are talking about either, which I'm hearing from some fund managers. The idea that if anything, this conflict, the war, has muddied the investment outlook and the confidence in that outlook outside of the United States to a significant degree. That what looked like another outperformance possibility from outside the US Relative to in has now overwhelmingly turned back towards the United States. Our economy is still in good shape. Our earnings are going to be, as you guys all already suggested, in really good shape. We are oil self sufficient natural gas. We produce a lot of both. That dynamic feels like it's changed, which makes the investment case I would present a little more durable here than some were potentially giving it credit for relative to outside the U.S. yeah.
- [12:11]
E
So we build diversified portfolios at with and it's very difficult to time these regime shifts where US will outperform and then international and then it goes back. So I think the better way to handle that potentiality is to constantly be rebalancing and balancing back toward what you think the right allocation should be. In recent years investors had thrown their hands up and said what do I even need to bother with international stocks? What are they giving me that I can't get from the S and P? Well we found out over the last year on a rolling one year basis developed stocks ex US So the way to think about that would be like Japan and Europe are up 48%, emerging markets up 55. The US is only, I say only tongue in cheek, up 34% in that same period of time. So a globally diversified portfolio over the last year looks incredible. And even year to date that trend continues. And I want to stress it's not just because value stocks had their best quarter versus growth stocks in Q1 of this year that we've seen in a really long time because it's across the board. I'll give you an example. Year to date international momentum stocks are up 9.2%. US momentum stocks are 1.3, shareholder yield 6.6 versus 3.3. So you go down the board and you come to realize yeah, it would be great for international stocks to get some sort of a detente in the Middle East. It would be fantastic if Israel is having direct talks for example with with Lebanon. A lot of these developments would benefit international stocks even more than the bounce that we would see here in the US because of those threats that you cite. So I think you raise a really important point and I think right now investors who have that global diversification are feeling pretty good about the way their portfolio is reacting to the developing news.
- [14:03]
D
Let's dive in on these mega caps if we could because the gains again today for names like Amazon, really nice follow through for Metta. You take a look at those stocks. Look at Amazon today at better than 5%. Andy Jassy today in the shareholder letter pressing his case for big AI spending. Malcolm, you own that name. They plan to invest 25 billion in data centers in Mississippi, create 2,000 jobs there. There's feels like positive calls almost every day from the street as well on that name.
- [14:33]
G
I think Amazon's a little bit separate from the rest of the mega cap tech names that are turning positive or have turned positive at the moment as well because the shareholder letter basically said we are reaffirming our plans to spend $200 billion now on CapEx related to AI, but here's why. And so we've been asking these questions this whole time. Why are the the hyperscalers spending so many tens hundreds of billions of dollars each year developing AI? And Amazon said We basically have built a tangential business in Trainium that is larger in scale than Broadcom. So if we wanted to have a standalone chip business and sell this outside this company, we could see about $50 billion in revenue here in this, in this company in a year. That answers the question of why are you spending so much money to grow your AI business? And I think that is what the market is responding to at the moment.
- [15:28]
D
Related Think about Amazon, Jimmy.
- [15:30]
H
I like it a lot here and I think you just did a good job of explaining that there are multiple businesses here. And I think about the transportation business, the logistics, we haven't even mentioned the retail business. You know, that's their bread and butter. But I think the way to look at this is that there for all of these companies, we're in the first of two years of heightened capex. Obviously last year was big too. But when you look out past 2028, it's highly unlikely that these capital expenditure plans go higher from where they are. We should start to see the gains starting to come in, the rewards being reaped and you're going to look back at this price. If I look at Amazon just as an example, at 28 times forward earnings and say what was everybody thinking not piling into this hand over fist or Microsoft, another name now at 20 times earnings, which it has rarely been at as a valuation over the last 20 times, I strongly suspect that well before the next two years are over, we're going to look back at these prices and say why weren't we buying these handover fist? I have been by the way.
- [16:25]
D
Well, I'll give you why not. Other, other people have too, by the way. I'll come to you in just two seconds. J.P. morgan's retail radar. Retail moved from buying the dip to now skipping the dips and selling into rallies. However, there is an exception. They did buy the Max 7 led by net purchases of Tesla, Nvidia, Microsoft, Meta. So when in doubt, when feeling a little bit, you know, concerned about the overall environment, I may not be buying the dip like I used to. But if I am doing things, I'm doing it in the mag 7 because I can trust the earnings growth and I can trust what I feel like is a durable story, more so than some of these other places in this market.
- [17:05]
F
So the beef I have with the sentence you just said is it used the word feels way too much. And I don't think that we should be doing things on feelings right now. I think that we should be really focused on numbers and I think what you said is totally reflective of our audience and of people out there. Like they are saying I feel good about this, I'm going to do it. But here's the reality that even though I'm rosier than usual, I still think the playbook for this year is different than the playbook that's, that's, that's worked in the past couple of years. So even though also people felt good about the Mag 7, you know, maybe some money's to going coming in, it's still underperforming the broader market. And where my head's at on why maybe you don't want to pile into the MAG7 is the following. Back in 2024, MAG7 had 40% earnings growth. 25 is 21%, 26 is going to be 24%. So still amazing earnings growth rate. But 26 over 25. Only 3% acceleration in earnings growth. They're trading at about 30 times. Take a step back and you look at the rest of the, of the S and S&P 500, the other 493 stocks and you have earnings growth going from 9% this year to 12%. So also 3% acceleration in earnings growth but a nearly 10 almost 12 point multiple point discount. So you've got the rest of the.
- [18:15]
E
I don't have the same numbers as you do.
- [18:17]
F
Okay, fine. I'm looking at J.P. morgan's guide to the markets right now, Josh.
- [18:20]
E
So I have 21% year over year earnings growth for an equal weighted basket of the Mag 7 and forecasted revenue growth of 13%. So maybe it's the equal weight that's doing that. And you're looking at a market cap
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F
and I'm looking at like JP Morgan's
- [18:39]
E
page 926 times forward, not 30.
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F
Okay, so the argument remains the same. You have a huge valuation premium and a roughly the same earnings growth acceleration. I think this broadening last, I think there, there's going to continue to be opportunity outside and then it goes back to Malcolm's capex Converse comments, which is those are huge numbers. And so we really need to adjust to the Mag seven going from being cash cows to cash burners. And that might, that might actually in the long term put more pressure on their valuations. All I'm saying is keep your options open. Don't think that you need to go straight back into the Mag7 playbook.
- [19:17]
G
I think we might be in danger of giving the Mag 7 too much credit here too because regardless of what the earnings growth expectation number actually is between you And Josh, the reality is when we say the tech sector is going to do all the heavy lifting with within earnings, it's really the semis. The semis are where the growth is actually expected to happen because within all of the Mag 7 the free cash flow that they used to have is all going into capex. So some of them are going to even have negative free cash flow by the end of the year which means there won't be any earnings to speak of. Which means it's all up to Nvidia, Micron, maybe Broadcom and that's really where all of the earnings growth is expected.
- [19:53]
D
I think you guys are forgetting a bit as well. Josh, maybe you want to weigh in on this is that the multiples of the mega caps have compressed so.
- [20:03]
F
Oh they have.
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E
I'm not forgetting that they're even more.
- [20:06]
D
I know you're not. I know you're not. I know you're not.
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E
That's the linchpin of the case for these stocks.
- [20:13]
D
That's the cherry on now.
- [20:16]
E
Now can I, Can I, can I point, Can I. Yes, can I point out, Can I point out these stocks are significantly cheaper than where they were when they topped in price in November. Most of these stocks topped in November, not all. If you take that same equal weight portfolio of the Mag 7 that I talked about, it's been below its all time highs for 110 consecutive days going back to the market bottom in 2022. This is the second longest time it spent below those highs other than the liberation day which took 151 days before these stocks came back to their highs. And here's for Jimmy. Let's just talk earnings. Let's. If we want to talk earnings and multiples and we want to talk about how much cheaper they are. Metta and Nvidia have a PEG ratio in the bottom quintile of for the S&P 500 in English valuation adjusted for growth those two stocks are in the 20% of the S&P, the 20% cheapest of the S&P 500. Google, Microsoft, Amazon are now in the middle quintile, the third quintile for PG ratio only. Apple and Tesla are expensive relative to the market. When was the last time we've been able to say that?
- [21:30]
D
Right. I want to hit, I want to hit matter too because the follow through as I mentioned Jenny, you're going to get fall back here. Metta has had an incredible bounce over the last couple of days. They turn out their first model with their superintelligence team. Stock goes Bananas yesterday. There's your week to date. Are you kidding me? Up 11%. The kind of gains that you don't see on a single day. Even in the context of a really powerful market move like we had yesterday. Metta has some really nice follow through. How do you see this? This stock here, they're going to commit to spending an additional 21 billion with core weave. They're going to have the first back to back weekly gains since January. So it's been a minute overweight at JP Morgan. 825 is the target there.
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F
So we need to remember that it's still down 4% on the year. So it's still lagging the broader market by 4%. But this also reminds me a point I should have made which is, hey, maybe you don't want to do the Magic 7 comprehensively, but there are great stocks and great companies within it. So in the case of matter you've got 19 and a half times earnings, you have still huge free cash flow generation. Yes, they're spending a ton. That makes us nervous. But earnings are expected to grow almost 20% for the next three years. It's like 27% drifting down to 16%.
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D
Would you say, would you say the PE up he was 19.
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B
It's 19 and a half times.
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F
So in that case, you know, I guess what did the market close at like 19 times for the quarter. So it's drifted down a little bit. It's right in line. This company probably does deserve a premium. I think one of the challenges is when we're talking about valuations, it's, it's what's reasonable to pay. And what I don't like saying is well it used to be at 60 and now it's at 40. Therefore it's a great price. No, like what's the right multiple to pay? But I'll tell you, when you have a stock that's growing at 20%, 19 times earnings is the right price.
- [23:16]
D
There's forward about. There's a little more than 21 of the forward p according to our numbers. Even so that's, that's not exactly a very rich premium.
- [23:24]
F
Yeah.
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D
Which leads me to wonder why nobody else owns it. Jimmy, why don't you own.
- [23:30]
H
I own. Because I own a lot of exposure in other names. You know, if I think about the spending that Jenny just mentioned, then I come back to Oracle, which is also spending. You know, it doesn't the have social media impact that meta.
- [23:41]
D
You'd rather own that you'd rather. Are you making the case right now? For, for an Oracle over a meta. Was that what this is going?
- [23:48]
H
I am. But let's be very clear. Oracle is higher risk. It's got a higher return potential. And nothing is free in this market. If you want higher return, it comes with higher risk at this point. And on the forward multiple, I think a lot of bad news has been priced in.
- [24:02]
D
What's this stock trade at. What's the multiple here?
- [24:05]
H
Well, you know, I think it's around 19 times forward. But really what you're looking at here, and this is the same as what I said with Microsoft and Amazon, is you roll forward two years and that multiple goes down below 15. The question here that hangs over it, actually there's a few. Okay, but is open air good for the money is one of them. And as OpenAI has raised funds recently, quite a bit of funds, I'll add, and maybe going public later this year, I think that question becomes less and less. There's a lot of esoteric stuff with Oracle. I mean, let's. This, you know, people don't think about this, but the whole Paramount bid for Warner, guess who's backstopping that Larry Ellison. Guess what's on the, you know, on the block for that is Oracle shares. Now, the more that we hear news like, hey, Saudi Arabia and Abu Dhabi are at least partially financing that deal, the risk of those shares being on the table, those Oracle shares from Larry Ellison become less and less and I do think just so messy for a spring hire. Sorry, Joshua.
- [25:00]
E
It's just, it's just so, it's. I think, Jimmy, it's just so messy. Like that's where Amazon. I agree, you want to export, you want data center exposure, you have Amazon. And now Amazon is talking like a chip maker. To Malcolm's earlier point, Graviton, Trainium and Nitro are $20 billion in annualized revenue. You imagine they start pricing this stock like it's actually in the semiconductor business. In Jassy's own words, if they, if they started selling these chips to third parties like the companies they compete with, that could be 50 billion in annual revenue. If Amazon got a re rate higher on a chip, on a, on a chip business, we think like you get the data center exposure that you get it with Oracle, but a much clearer, cleaner story and a chart that doesn't look like death warmed over.
- [25:53]
H
I love Amazon, Josh. I've got a lot of it. I agree with you 100% in a portfolio, construction, having an Amazon, having a Microsoft, as kind of, I'm going to say this stabilizing functions within the portfolio gives me some room to take a
- [26:07]
D
little more risk with like the Adobe Oracle.
- [26:10]
H
I feel like that's a little. Just a little of a cheap shot, but okay, yes, you are correct. I'm a little sensitive because the, the darn stock keeps going down Adobe, but okay, no, you know what? If you're gonna make 100, right, you're 100% right, Scott. That is exactly right. It gives me room for an Adobe in addition to an Oracle. Okay, sorry, I was hypersensitive. My bad.
- [26:33]
D
No, Jimmy, it's all good. As they say, you can chug the water, you can do it on camera. You know, our Jimmy water cam is not set up yet.
- [26:42]
H
Toast.
- [26:43]
D
We're working.
- [26:44]
H
Toast.
- [26:44]
D
We're working on it. We will do our calls of the day. Next. We have a bullish note on one of Malcolm stocks hitting a new high. And later, the under the Radar name that just hit Josh's best stocks in the market list. We'll show it to you coming up.
- [27:05]
I
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- [27:36]
J
struggling with their mental health at some of the highest rates we've ever seen. But most aren't getting the support they need, and that needs to change. I'm Dr. Guy Winch, your host for season three of the Visibility Gap presented by Cigna Healthcare. This season we're focusing on men's mental health, bringing together real stories and expert insight to explore the pressures men face every day and why opening up can feel so difficult. Join us for the new season wherever you stream your podcasts, not every sale
- [28:06]
B
happens at the register. Before AT&T business Wireless, checking out customers on our mobile POS systems took too long. Basically a staring contest where everyone loses. It's crazy what people will say during an awkward silence. Now transactions are done before the silence takes hold. That means I can focus on the task at hand and make an extra sail or two. Sometimes I do miss the bonding time.
- [28:29]
C
Sometimes AT&T business Wireless connecting changes everything.
- [28:37]
D
Let's take a look at Disney shares today in the news because they are planning layoffs under their new CEO as many as a thousand positions. Stock's not doing a Whole heck of a lot here. Jenny, you first on that one since you own it.
- [28:51]
F
Yeah. So important to remember that Disney has 231,000 employees, so 1,000 layoffs isn't that big a deal. It looks like it's being done to become more efficient and not because there's any, like, shortfall in demand or worries there. We need to, you know, we're watching the impact of higher oil prices on travel demand. The comment I made earlier about the Delta CEO saying, hey, we're seeing demand is fine. My guess is translates over to Disney. But most importantly, Disney is a cheap stock at this point. It trades at 14.1 times earnings. It has a 6.5% free cash flow yield. Those are tremendous numbers. And a business like this with that kind of franchise value, it deserves a premium. So going back to what should you pay? All I know is you need to is it's worth more than 14 times.
- [29:40]
D
Okay, well, I guess we'll find out. Yeah. Netflix target. Josh. 115 from 110 overweight Morgan Stanley. Everybody is now on this bandwagon again.
- [29:52]
E
Same price as Disney. Way cleaner story. We'll have another debate. Jenny, I will bet you Netflix gets back to 120, which is where it traded before the Warner Brothers ridiculousness. The time. And in the time that it takes, we'll put a time limit on it. But I would say you want to make 20% in an entertainment media play. Netflix, not Disney. And loser buys Van Leeuwen. Ice cream and. Or a double cheeseburger. What do you think?
- [30:22]
F
Double cheeseburger and ice cream. I'm totally in. But the only thing is, you need to be like, all right, Jen, if you lose, I will let you pay for that bet in short order. You can't drag it out for another year or two.
- [30:33]
E
No, no, no. Let's do. Let's. Let's do. Let's do. Let. Let's do. Let's do end of year. And I'm going to tell you right now, I'm going to tell you right now, I'm even going to spot you the dividend. You could count that and you could have total return Disney if you want it. But like, to me, can I get. This market is not. This market is not interested in dirty stories.
- [30:53]
H
I'm in Disney. I'm in Disney. Look, I'm not saying anything negative about Netflix, but I do think that I'm on Jenny's side on this. And when I think about Disney, when I think about the things. Want to buy me a burger?
- [31:02]
E
Too.
- [31:04]
H
We can do that. Yeah. Why don't we get my cardiologist on the line right now and see what.
- [31:09]
D
Why, why would you make that case? Or how would you make the case that Disney is going whatever, by the end of the year? Yeah, okay. By the end of the year. Eight months. Ish. That Disney is going to have a better return over the next eight months
- [31:22]
H
than Netflix because it's too cheap. And I think about what's making it cheap. You touched on it, Jenny. But it's basically, I think, fatigue from the consumer at the theme parks in particular with prices. Now that fatigue is being felt now doubly by higher oil prices as they ease, often as the economy continues to improve. I think we're going to find out that the discount that's in the market for Disney shares is way too great for that risk.
- [31:49]
E
Can I say one last thing on this?
- [31:50]
D
Yeah, of course.
- [31:51]
E
You know, do you know, for all the talk about Disney plus subscriber ads and box office and on and on and on, Disney actually makes more profit on selling churros than they do on selling content and entertainment. With Netflix, you could talk about consumer fatigue all you want. You know what they did last week? They raised prices. You know who, you know who made a peep? Nobody. Everybody pays. Two very different stories. The Netflix story is cleaner. They can raise prices when they need to. Very little churn. They have every major sporting event in the world now. They are just dripping in content. And you don't have all these other concerns about lodging prices, gas prices, blah, blah, blah. I think this Name gets to 120.
- [32:38]
D
Can we show. Can we see. Hang on. Can we see? Just two seconds. Can we. Can we see Disney over the last year, a one year.
- [32:45]
F
This is the point I want to make to.
- [32:48]
D
So there's a stock that has at best done nothing at a time, showed 10 years where we're sitting having a conversation all the time about how resilient and seemingly strong the economy has been. And in that kind of environment, should Disney really look like that? Besides a peak in 21, the stock is done next to nothing.
- [33:14]
F
Yeah, but there's been a lot going on. Right. They had to get out of cable, they had to get out of linear. They had all these management challenges. Like it's really. It's a business. To Josh's initial point, that's complex and complicated and messy. My two final points on this is actually if you can zoom in on that chart and show me the last three months, two things. So my first point is only Josh Brown would know about churros sales. And the second point that I want to make is you can see and this, this supports Jimmy's point that there's a catalyst that could ratchet it up 20% and that is when you saw the war breakout in Iran and you saw fossil fuel prices and petrochemical prices really spike up. There were all sorts of consumer prices that got hit. Everything from, everything from the airlines to Disney. Knowing that the consumer might be under more stress. I saw in my portfolio ups, amcor, Arda, all these weird little companies. So I think if we saw oil price, you might actually have that oil prices decrease again. You might have that as the catalyst for us to win this.
- [34:15]
D
Malcolm, you get the last word. Who's going to win this bet?
- [34:18]
G
Oh, it's Netflix.
- [34:22]
F
It's a four way lunch.
- [34:24]
G
Josh already made the point. Netflix is basically utility at this point. You're not going to give up your Netflix subscription the same way you're not going to give up your Spotify subscription the same way you're not going to give up your cell phone bill. So those things to me are inelastic at this point. They've proven it. They have pricing power, they have a install base. Shall we say Disney, not so much.
- [34:46]
D
I'm going to put a, I'm going to put a X poll out for people to vote because I think I know how it's going to break down. But we'll find out. Julia Boorstin has the CNBC news update for us. Hey Julia, Leah.
- [34:58]
K
Hey, Scott. House Republicans block Democrats efforts to force a war powers resolution against President Trump in the Iran war. Democrats failed to overcome a procedural hurdle to bring the vote to the floor. Senate Democrats say they will force another War Powers act next week when Congress is set to return. Russia's Supreme Court criminalized the activities. The Nobel Peace Prize winning human rights group Memorial labeling it as extremist and banning its activity in the country. The Supreme Court says the group aims at destroying the basic foundations of Russian statehood. Memorial says the ruling allows authorities to crack down on any of their participants and supporters. And Kia plans to launch a pickup truck in the United States by 2030 and to manufacture at least one variant in the U.S. the Kia pickup will be a smaller midsize model compared to companies like G, gm, Ford and Stellantis. Scott, back over to you.
- [35:52]
D
All right, Julie, thank you very much. Julie Borson. Coming up, Josh Brown. Best stocks in the market and under the radar tech play that's hitting record highs. The reveal is next.
- [36:04]
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- [37:04]
B
Not every sale happens at the register before AT&T business Wireless, checking out customers on our mobile POS systems took too long. Basically a staring contest where everyone loses. It's crazy what people will say during an awkward silence. Now transactions are done before the silence takes hold. That means I can focus on the task at hand and make an extra sale or two. Sometimes I do miss the bonding time. Sometimes.
- [37:29]
C
AT&T business Wireless Connecting changes everything.
- [37:36]
D
We're doing Best stocks in the market according to Josh Brown today, the first Flex Limited Yeah, ticker symbol Flex. Go ahead.
- [37:49]
E
This is a trip down memory lane for me. Back in 1998, I worked at a brokerage firm that made a market in this stock and we pitched it all summer. They basically were one of the primary beneficiaries of the wave of PCs. Dell and Gateway and Compaq were really good at designing computers and then marketing them, but somebody had to build them and ship them, and that's what Flex does. Fast forward 30 years. Obviously much more sophisticated business. But the idea is the same. Every time you hear about AI CapEx spending, you should remember we're talking about millions of pieces of equipment that have to be manufactured, assembled, the components have to be sourced, and it's a global supply chain and Flex sits right in the middle of it. They have a thousand customers. They're also involved in in medical equipment. They work with Tesla on EVs. Other customers, Cisco, Hewlett Packard. And so they are benefiting from this AI CapEx spending wave, which we just got confirmation from Andy Jassy at Amazon. There is literally no end in sight. Every time a new data center is announced Think about companies like Flex. Technically, this is a really easy story. The stock just broke out. It's still being rediscovered. People have forgotten that they exist. Similar to Corning, Sienna, Dell Computer, some of the old winners from the 90s. This is the new wave and they're all a part of it. Price is rising above 50 day. The 50 day is about 64. If you're a trader, that's your stop. 200 day is 59. If you want to give it a little bit of a longer leash, you're more of a long term investor. Think about that as an area to cut risk. So long as it stays above maintains this breakout, I think you can own the name. And as more people learn the story, find out how integral they are. I can imagine more institutional sponsorship here and the stock could move way higher.
- [39:42]
D
Jenny, what do you think?
- [39:43]
F
So Josh, when you were starting to talk about the way they had to, you know, the way Flexi. I'm so old school, I start to call Flextronics.
- [39:49]
E
I know, me too.
- [39:51]
F
Back when Jim and I knew each other at Goldman in 98, it was off like. Yeah. So. But it's interesting when you were talking about how they're the ones who actually build the computers, they build the products. I was researching Hewlett Packard, right. Because I've got this dividend discipline and I have to have something with the dividend. But I was researching Hewlett Packard kind of along the same thought process that the only, you know, as long as the trend is in place, as long as all we do is become more and more and more automated consumer electronics, electronics, all sorts of hardware is necessary. Hewlett Packard didn't work for me because there was a CEO change and I'm not sure that he'll preserve that dividend. But then I went down the path of Best Buy. And you may remember about a month ago I added Best Buy to the portfolio. It's got a 6% yield, trades at 10 times earnings. So if you want to play a derivative of Flex with an income component, Best Buy is a kind of interesting, more old school way to do it. But you know, another old school.
- [40:45]
E
Yeah, it's consumer. Yeah, Best Buys, the consumer side and Flex is there. But the real story here is that the revenue is becoming higher quality revenue because they are moving up in the value chain for their customers. They're now involved in these long cycle contracts designing the products. It's not just about. It's not a Foxconn. Like they're not just putting things together and shipping them. They're very involved, especially cooling racks for AI systems, etc. So it's, it's upskilling itself. But a lot of people remember this as oh yeah, they make the PCs, they make the Nokia phones. This is a whole new ballgame and that's why I'm looking at the stock. I'm not long personally yet but it has broken out very much on my radar now.
- [41:27]
H
I like the name. My competitor in it is Cisco and it's had a slightly lower return but half of the beta so half the volatility. And I love both of these names for the reasons you're suggesting but Cisco is just right in the sweet spot for me. I think you should look at that as a stock, you know, one of these breakout stocks.
- [41:44]
D
All right, well we'll see if it makes the best stocks in the market list. Santol is next. All right, welcome back. Senior markets commentator and overtime co anchor Michael Santoli is here at post 9s and P more or less year to date flat now.
- [42:03]
L
Yeah.
- [42:03]
D
What is your take on this market here?
- [42:05]
L
Flat year to date it closed 6878 on the day before the Iran conflict started. So we're you know, a percent away from that or a little bit less than that. One thing I think I have to continue observing is that we were really flat and turning in sideways while earnings estimates went up before all this happened. So I think that sort of sets a little bit of a base and a context for why feels like these prices are not out of hand relative to reality. An hour and a half ago I said the market is seeking permission to move on. Now it's contingent, it doesn't have permission but every incremental release of stress around the process seems like a cease fire might hold is enough to loosen things crude. WTI has traded in the last 24 hours 116 down to 92 up to 102 down to 97. That tells me nobody knows what what's going on but incrementally it's not making new highs and maybe our tolerance band around, you know, WTI above 90 have widened out a little bit. So I think that's where it sits right now. What's really interesting is the market's version of back to normal is selling software with both hands and buying banks and industrials which is what was going on yesterday a month and a half ago
- [43:15]
D
and yesterday that's what today is dynamic was.
- [43:17]
L
It's antsy to get back to that mode. Who knows if it lasts. But that's interesting that that's the kind of rotational shifts that are going on.
- [43:24]
D
Let's look at the 10 year two guys. Is there a magic number now for, for yields because there are still some non believers in this whole bounce back until you see more of a come down in the 10 year yields for
- [43:38]
L
one I mean I think 430 is, is the upper bound of where it could be comfortable. I think for a lot of folks it breaks down further from there. If you get you know, obviously below four and a quarter it starts to feel like that's acceptable. You know I think it's a weird moment because we had a downgrade of 4th quarter GDP. Most of nominal GDP seems to be coming from inflation right now. Normally that's not going to be friendly for multiple so you want to see inflation trend lower and rates follow but so far we're able to at least at this point, you know, stomach it because it's still rangebound. I mean the 10 year has been in this zone for such a long time at this point.
- [44:15]
D
All right, I'll see you on closing bell it's Mike Santoli. We'll do some calls of the day
- [44:18]
E
next
- [44:20]
D
to some calls the day Digital Realty initiated overweight to 11. That's a canner. Best of both worlds. Malcolm Etheridge.
- [44:29]
G
Yeah, I like this story that to me it's a much cleaner way to play the data center build out in the air race than Oracle who's trying to to turn itself into a data center landlord right now from a legacy tech company. If you just look at the fact that it's. It's debated still whether we're in training session season or whether we're in inference season. But Digital Realty's USP is the fact that it gives you the ability to co locate both under one roof which is very strong case for it which is the reason it's probably bumping up into a new 52 week high today at 190 I think is where we are right now.
- [45:01]
D
What about Fiserv the target to 60 from 68 Jenny at Citi.
- [45:05]
F
So Fiserv is all about the management and if they can get past all the downward revisions. But you know there's a price for everything. This thing's trading at about 7 times earnings, has a 13% free cash flow yield but it really is just about will they stop revising down now they had that new management team come in last year and they've done a good job so far and they've gotten things back on track. So I think they will. The Price target increase to. Remember, that's only a 7% bump from where it is now. So it's not a huge, audacious call.
- [45:31]
D
Okay. Kinsale price Target lowered to 280. It was 360. Josh at canter, they're still neutral on it. What do you think here?
- [45:38]
E
Yeah. Yeah. So this is one of two insurance companies I have exposure to, the other being Berkshire. This is just not the right market environment for these names. I'm in them for the long term, and obviously, I'm not thrilled to see the stock act the way that it has. Not participate in the rally this year. But, you know, these things come in and out of favor based on premiums, based on the rates, environment. And right now, this sector is ice cold. So I wouldn't tell people to even look at it at the moment.
- [46:08]
D
Jenny, United rentals target to 825 from 810. BNP Paribas does that, while at the same time, Bernstein cuts the target to 903.
- [46:17]
F
Right. So. So again, you know, be careful with the price targets. So the first practice target says, okay, there's 19% upside. The second one, where they cut it, still says there's not. Sorry, 19% upside. The second one still says there's 9% upside. Here's the thing on United Rentals, again, it's just affordable now. It trades at 16 times earnings. It has 9 to 14% earnings growth ahead. It's got a 6% free cash flow yield. And we all know that the infrastructure in the United States is pretty, pretty rotten. There's a lot of crumbling roads, crumbling bridges, crumbling tunnels. Everywhere you go, you see United Rentals. Equipment. You know, it's cranes, it's bulldozers, it's lights, everything to, you know, to build houses and to build infrastructure. I think it's one of those companies that has infinite demand. Like, yeah, there's some economic cyclicality, but we've owned it forever. We've had huge returns. I think it's been in the portfolio for about 11 years now, and it'll probably be in the portfolio for the next 11 years.
- [47:12]
D
Okay. Delta, number of price target changes on that airline today raised to 85. 85 is the high today. There's about six calls in front of me. 85 is the high at. At Argus, Jimmy.
- [47:26]
H
Analysts don't quite know what the earnings are going to be here for obvious reasons. Some people going into yesterday's call thought that the firm would. The company would be barely profitable this year. They reaffirmed. They didn't quite reaffirm they didn't walk back guidance, which is in the midpoint. $7 a share. Who knows what this year will be Next year they're going to earn $8. The stock's trading at eight times that multiple.
- [47:47]
D
Okay. And finally, Spotify Market outperform 800 bucks its citizens. Malcolm.
- [47:53]
G
Yeah, I get it. I think this one's set up really to, to go positive from here. It's retrenched quite a bit over the last 3, 612 month period. Period. But just talking pricing power, comparing it to Netflix earlier, I think this is probably more interesting a story right now when you look at how much Netflix has rocketed up by comparison in the last three months.
- [48:13]
D
Okay. They say the margin expansion is underappreciated an upside path to EBITDA in 26 and 27. We'll take a break. We'll come back to final trades. All right. We do have some initial results. This poll is by no means over. However, at this moment, it appears to be a runaway in the favor of Netflix. Nearly 83% of you think that it will have a better total return by the end of the year that Josh Brown will be eating. I think it's up to two burgers at this point. We haven't discussed the venue in which they will be consumed, but we can get to that.
- [48:49]
E
We're going to go to Bobby Van's. They grind up the steaks from the day before.
- [48:54]
D
There you go.
- [48:54]
E
It's going to be the best burger you've ever had.
- [48:57]
D
Closing bell. Mike Wilson, Ed Yardeni, Brian Levitt, Mike Mayo, Sarah Malik, Dom choose live at the Masters. Can't wait for that. What's the final trade? Quick, Josh.
- [49:06]
E
Netflix.
- [49:08]
H
Crh.
- [49:10]
G
Asml.
- [49:11]
E
Go.
- [49:11]
D
Chips Schwab as a Charles.
- [49:14]
F
Yes, that's the one.
- [49:15]
D
Green across the board. All right, we'll see you. It's going to be an interesting last hour, I can tell you that. I'll see you on the closing bell. The exchanges 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.
- [49:34]
M
All opinions expressed by the Halftime Report participants are solely their opinions and do not reflect the opinions of CNBC or its 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 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 halftimereportdisclaimer the day begins
- [50:09]
N
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D
Mmm.
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