← Halftime Report
Halftime Report
Stocks and the Trump Trade 1/21/25
00:47:21
Scott Wapner and the Investment Committee debate the Trump 2.0 Trade and where your money will work best. Plus, the desk discusses some of their stocks that are on the move today. And later, we cover the latest Calls of the Day on Teradyne, Reddit, Northrop Grumman and more. Investment Committee Disclosures
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- [00:01]
Stephanie Link
What does it mean to be rich? Maybe it's less about reaching a magic number and more about discovering the magic in life. At Edward Jones, our dedicated financial advisors are the people you can count on for financial strategies that help support a life you love, because the key to being rich is knowing what counts. Learn more about our comprehensive approach to planning@edwardjones.com FindYourRich Edward Jones Member, SIPC at.
- [00:32]
Scott Wapner
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 courseroom to the workplace. A different future is closer than you think with Capella University. Learn more@capella.edu I'm Scott Wapner, and you're.
- [00:50]
Josh Brown
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. All right, Carl, thanks so much. Welcome to THE Halftime Report. I'm Scott Wapner. Front and center this hour, the Trump 2.0 trade. As the president begins his own version of return to office, we'll discuss and debate where your money will work best with the investment committee as always. Joining me for the hour, Josh Brown, Joe Terranova, Stephanie Link, Brian Belsky. Is the first day of the second Trump term beginning? Stocks are up, up quite nicely, too, as you'll see across the board. We are green, the Russell the outperformer up one and a half percent. Steph, you first. No tariffs yet.
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Stephanie Link
Yeah.
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Josh Brown
Stock market likes it because rates came down a bit and stocks are, as we say, at the highs of the day as we come on the air.
- [01:42]
Stephanie Link
Yeah, I mean, it's good. And we've kind of been in this trading range right in the last couple of weeks. So uncertain uncertainty in general in terms of what the Trump presentation would be yesterday. I thought it was a little bit state of the union, quite frankly, versus inauguration kind of commentary. But he is inheriting a strong economy, two and a half, three percent economy. We've been talking about this for quarters on end. The he has pro growth initiatives, certainly lower taxes, deregulation. We've talked about that as well. The energy commentary. And to do something so quickly right out of the gate was a little surprising to me. But that should bode well for inflation. And so you have all of this wrapped up and you have kind of a upper single digit earnings growth. In fact, it's early season for earnings season, but you're running at about 10.7% earnings growth and you're on pace to do a record margin this year at 13.7%. And it's not just going to come from tech or comm services in my opinion. It's going to be the year where it comes from financials, health care and energy. You're going to see better profitability this year. So you don't need multiple expansion if you have earnings going higher for the right reasons because profitability is actually better than expected.
- [02:55]
Josh Brown
All right, Josh, So we have a nice gain in the markets today. And you know, you can make a direct line to a drop in yields. No tariffs to talk about quite yet though the commentary seems to be from most of the firms on Wall Street. Don't get too giddy or complacent on that issue for too long. Barclays saying that. Don't get too complacent. Goldman says well, more benign than expected. They're lowering their odds of a 20 percentage tariff on imports from China from 90 to 70. They still think they're coming, as does Wolf, which says the agenda on tariffs will be, quote, big but slow. And as long as that's the case, slow. The market going to be okay with this?
- [03:41]
Joe Terranova
I think so. And I would say that we're probably a week or two away from the Trump trade talk subsiding and people getting back to focusing on fundamentals and individual sectors and earnings growth for companies. Like we're kind of getting to the end of this. I feel like it started in November, maybe even late October, some would say. So this idea of like let's figure out what, what sector this is good for. Hedge funds have been doing this for three months already and it's kind of winding down and it's over. And one really interesting example of that, Scott, is take a look at biotech today. Arguably the group that has the least to do with any political kind of outcome. Biotech is the best performing industry group. Today the group is up almost 2%. It's not Trump. It's because Martini got awarded a $600 million contract from the government. Something to do with the flu. This is just like regular day to day stock market stuff and I want to see that broaden out. But if we think that there is still the potential for Trumpy sort of trade to surprise to the upside, I would focus in two places, energy and small caps. Let's take small caps. First year to date. The Russell 2000 is outperforming everything. I know when we say year to date, sort of funny, we're less than two weeks in, but humor me. The Russell's up 3.6%. International developed stocks up 2.5, spiders up 2.3. So kind of like a little bit of a horse race with small caps leading. And then oil, the commodity is $76 a barrel today, hit 79 last week. But that group to me is probably the best candidate for a surprise to the upside this year the way we saw a surprise for financial companies last year. So if we think that there is a Trump trade still to be done, it's probably in those areas and the market is telling you. But then again, you're going to get out of this mode where everything is about the politics and we'll go back to fundamentals. And I think there are just so many opportunities right now away from things that are directly related to tariffs or whatever. So I'm super excited for what's to come and I'm not terribly focused on every pronouncement on on Twitter.
- [05:59]
Josh Brown
Sure, Joe, you can get away from the politics. You can't necessarily get away from the policy that matters more than anything which can help the fundamentals. Bank of America January global Fund Manager survey says the bottom line is this, investors are bullish the US Dollar and equities and bearish everything else, that it is a US trade, it is an American exceptionalism trade. These are my words, not bank of America's global Fund Manager survey. But nonetheless that is a trade that has been thought about and talked about. And if that is the case, then what are the best so called Trump trades right now?
- [06:37]
Brian Belsky
Well, that's not any different than the last several years. The US has been the center of the universe and that's because the US has the energy independence and the US has these technological giants domiciled here. So it's very hard to sell someone on a strategy where you're going outside the US looking at developed international, looking at the emerging markets. I think what's really important is that eight days ago we were sitting here completely stressed out about the fact that a 10 year was at 4.79. We were stressed out about the dollar rising so significantly. You've got 23 basis points of yield relief. You've got the dollar which is pulled back 1.5%. And I think what that has allowed for to Steph and Josh's point is that you could recognize opportunities in the market without having to concentrate in technology, without having to concentrate in communication services. It doesn't mean that value elevates above growth. Growth is still outperforming value. But I could find opportunities in financials which is a second leading performer year to date. You could Find opportunity in industrials and materials. So I like the mid cap and large cap equity size class broadening out narrative because the earnings are supporting it, the earnings are supporting it, the policy is supporting it for the. And really it's a continuation.
- [07:52]
Josh Brown
I mean, because I shouldn't say. I didn't say no tariffs ever. I said no tariffs yet. Okay, well that seems to be the prevailing thought. The minute that you get tariffs of just let's say whatever it is, 20 to more percent on whether it's Mexico, Canada, China and whomever else, you're probably going to get a little bit of a backup immediately in yields, which is going to call into question the kinds of trades potentially that you're talking about ex financials. I can see why financials may still do well, but then I think it's, well, okay, everything else gets a little nuanced.
- [08:23]
Brian Belsky
That's the volatility within the context of the bigger journey. I think, I think you're going to see a lot of that. I think yesterday is interesting. I spent more time looking at the screen yesterday, seeing how market was reacting to some of the policies. You had a very wide range in the S&P 500, 105 handles in the S&P 500, volatile all over the place. I think what the market was comfortable yesterday with was the fact that there seems to be more of a deliberate approach for now, a deliberate approach in terms of implementing tariffs with China, I think semiconductors obviously responding to that today. I think the market kind of looked at that and maybe overlooked what appears to be onerous policy towards Canada and Mexico.
- [09:09]
Carl Quintanilla
Belsky Wapner, what's your thought? I'm a broken record. Financials, financials, financials. But just here's kudos on how we started off this whole show after Steph spoke. Josh nailed it. Exactly. What's happening right now?
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Stephanie Link
I didn't nail it.
- [09:27]
Carl Quintanilla
You did. You did. Awesome.
- [09:28]
Stephanie Link
I'm kidding.
- [09:29]
Brian Belsky
He tried.
- [09:29]
Carl Quintanilla
Stephanie, this is all about Josh right now. No, he nailed it. But I think what's going to end up happening is if you take a look at the big money center banks, right, which we've been bullish on in terms of the theme of scale now for two years. And Joe talks about momentum and he talks about liquidity. And we were on the show two weeks ago and we talked about why big tech was working because of liquidity and volume and all this kind of stuff. I think the liquidity in financials is going to begin to distribute out into the other areas in financials, whether that's Regional banks and asset managers and brokers and essentially small, small banks. And here's why, because we think that the deregulation trade in financials are way underplayed, number one. Number two, the majority of financial analysts, sector analysts in Wall street are way too bearish and their earnings are way too low. And number three, and most importantly, most of the catch up trade in financials, you know, finished, did very well last year was the liquidity trade into the big banks. So we think that there is another opportunity there aside from smid, aside from Valley and aside from dividend growth staff.
- [10:27]
Josh Brown
I know you agree by the way, in terms of these types of stocks at Davos, JP Morgan's Mary Erdo said of the banks, quote, they're in the beginning of go mode. More deals, lower regs. She talked about animal spirits. She used those words. That seems to be the prevailing thought of this space. In particular, you have Morgan Stanley, your largest position here. Bank of America, number two, truist, three wells four.
- [10:50]
Stephanie Link
Yeah, I'm pretty overweight in financials for sure and I'm happy about it. Seventeen banks have reported so far during this earnings season and the earnings growth is 26.4%. It's come from fees. We've been talking about fees, 40 to 50% fee growth. M and A really hasn't started that much but we did 3.3 trillion in global M and A last year. I expect that number to be much higher this year. So far, year to date we actually are at 100 billion and we're only 21 days into January and we've done 100 billion in M and A globally. So that will benefit for certain. The big surprise to me, Scott, really was net interest income, net interest margins last quarter I actually didn't expect much but. And we didn't get that much to be honest with you. But we did have companies that revised numbers higher. Wells Fargo, Truist, bank of America, bank of Mellon Bank, Melon Bank, Mellon, BNY BNY Mellon. Thank you, I got you back. Thank you. Profits are actually going higher without regulation so far. I guess that's my point and that that margin number is really very important. Can you imagine what it's going to do if we continue to see the net interest income story really play itself out?
- [12:01]
Josh Brown
Hey Josh, if you like small caps and you think if, you know there's a part of this Trump trade that's going to continue to work in maybe areas that have not worked in the past, you only own JP Morgan. Are you thinking about taking positions in some of the regional banks, which obviously make up the largest version of small caps.
- [12:22]
Joe Terranova
No, and I don't necessarily like small caps. I own small caps. I think they work tactically and I think in this particular year they could work tactically. But most of that is just a mean reversion sort of thing where they haven't had the same upside as larger capsized companies. And largely that's been a result of them just not being involved in the biggest, most predominant growth story of our time, which is AI. This is the year where we might actually see the benefits of all this spending hit the, the profit line for the consumers of AI technology. Not saying it will happen, but if it does, it would be an upside surprise. And the only thing that drives stocks in the end are surprises, good or bad. So that's something that could happen. The other thing that I think is is possible that could happen this year and we've had versions of this, 2017 being a really big example. We may start seeing a situation where global economies improve so that you finally get a tailwind for international developed stocks. A lot of people don't know this. Emerging markets actually had their first good year last year in a very long time and Chinese equities outperformed the S&P 500. If we get into a situation where the dollar continues to fall, which today is day one, so you know, bear with me, you will see allocators moving money into International stocks 100%. And if you do, that's a huge tailwind for an area of the market that's really had nothing but outflows for a long time and underperformance. So it's not that I don't like the AI plays and I'm not thrilled to see Nvidia up, etcetera, etcetera. But I just, when I said earlier, I feel like there are a lot of opportunities, the surprises could come from a lot of areas that we haven't had a lot of positive things to say. So yes, regional banks have to do well if the small cap catch up trade works. But to me international developed large cap companies are a fatter pitch and there are many others out there which we could talk about later in the show.
- [14:32]
Josh Brown
Joe, you got, you have the most exposure by a lot to the regional bank complex citizens BNY Mellon, if you want to play it that way, citizens 5th, 3rd, Huntington M& T regions.
- [14:45]
Brian Belsky
Yes. So basically, and by the way, from a strategic perspective, momentum is one of the best performing strategies, if not the best so far. Year to date it's up 6%. And the moment Momentum quickly identified early in 2024 that financials were a sector of opportunity and the regional banks were largely part of that conversation. Avoiding the apocalyptic scenario that was presented in 2023, Steph points out bank of New York Mellon, the revenue growth in that company. For you to say the revenue growth in that company, which was reported last week, you're talking about double digit revenue growth for a company that generally doesn't deliver that. Scott, you mentioned Citizens Financial again, seeing double digit revenue growth. So the growth is there, Brian. The growth is there for a lot of these regional banks. And the conglomerate of the financial sector is a tremendous opportunity. It's why we have carried in the Jyoti ETF the financial sector at nearly 30% weighting for the last three quarters. It's the aggregate of asset managers, private equity, money center banks and regional banks finally realizing a revaluation.
- [15:51]
Josh Brown
I thought that Stanley Druckenmiller with Becky yesterday had a really good take on the push pull of what new Trump policies are going to mean versus rising yields. Some of the other things that might make it a little more complicated to figure out. I'll paraphrase. Well, I'll quote part of it. He talked about being a believer in animal spirits. Right. I think like many we've heard from so many people over the last weeks who believe the same. We do a lot of talking to CEOs. He said companies on the ground, I'd say CEOs are somewhere between relieved and giddy. So we're a believer in animal spirits now in terms of the markets. And I think this is where I want you to come in on. He says it's complicated because you're going to have this push of a strong economy versus bond yields rising in response to that strong economy. And that kind of makes me not have a strong opinion one way or the other. So you can be bullish, Trump and Trump policy, but you can be maybe a little more middle of the road. I'm not so sure. When you see what the impact of all, all of that is, where you already have rising yields or at least elevated yield, you can stay here where we are 450. Do you want to make that a line in the sand? What about what Druckenmiller had to say?
- [17:06]
Carl Quintanilla
No, I think it's spot on in terms of especially the notion of relief and giddy because let's be clear, it's a clear signal that these tech CEOs are being involved, number one. But think about the massive performance that they've had they can only they're not going to be able to keep up that momentum, number one. Number two, with what you're talking about in terms of elevated yields, okay, that's normal. What people I think are missing, Scott, is that this is the path to normalization.
- [17:33]
Josh Brown
But, but, but inflation, yes, following suit is not normal. We're trying to work back to an environment where we get 2% or as close as possible.
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Carl Quintanilla
Inflation, we're working backwards on that. But, but whether or not we get to 2% I think is almost a moot point. I think what we're, what we're going to end up being is I think people are too focused on that 2%. I think if we start to see some sort of a stabilization at these levels of inflation, that's good because ultimately that will stabilize the bond market in a 350 to 450 type of range. And remember, the average 10 year Treasury, Scott, the last 75 years is 5%. So we just have to kind of get back into this notion of single, single high, single digits to low double digit stock market performance and earnings growth is actually positive and normal. And I think that's kind of where we're going. So somewhere between giddy and, and happy.
- [18:25]
Brian Belsky
I know where you're going with this. You're basically, you're basically saying, and you're right to question this, don't get too excited about yields coming down 23 basis point in the last eight days and inflation looking like it's cooling because some of these policies might stimulate an uptick in inflation and yields might not be done with the 5% level. And that's fair. The question is what do you do in that environment? And that's where I think everyone who's getting. And remember I'm equally weighted so I'm cool if the Mag 7 want to underperform. But don't get too excited about not owning the Mag 7 because in an environment like you're describing where we see friction into the inflation and we see the rise in yields, you're going to want to own those Mag 7.
- [19:05]
Josh Brown
Well, you, you're getting a pretty decent day today. By the way. Nvidia back above Apple in terms of market cap once again. So they've been trading positions, but that's where Nvidia is today. Speaking of Apple and you saw all of the tech CEOs or many of them, not all, but most at the inauguration too. Bezos not CEO of Amazon anymore clearly. But nonetheless his position matters. And you can see the photo there, there's Zuck along with Musk or Sundar Pichai, of course. And you know, Tim Cook was there as well. Not in this particular shop. But speaking of that, Apple got downgraded again today. And you know, I'm wondering, Steph, for a stock that you've watched so closely that you got out of as many were still hanging around. I know more. These are more questions about iPhone demand. So it gets downgraded to underperform at Jefferies. What was it a week or two ago where somebody else had cut the stock? Is this to the point where it's on the linked list?
- [19:59]
Stephanie Link
Well, it's down 15% from the 26th of December. And that being said, it had a really nice year last year and I, I bought it last spring when sediment got so negative and we had WWDC and we got excited about AI and the iPhone 16. And then more details came out. The stock rallied 37% in the into the fall and that's when I took profits and it went on a tear between the fall and the end of the year, up to 6% alone in December. I mean every day Apple was going up and you know, I was really bummed. But it has pulled back. It is interesting. I think sentiment is definitely changing. You only have 60% of the analysts now that have buy recommendations on it and just a couple of months ago you had 80% so you've had a couple of downgrades in terms of numbers. I still don't think the iPhone 16 with AI is going to be the super cycle, but there will be a point where the multiple comes in. Back in the spring of last year it got to 26 times forward. It's now at 30 times forward. It's down from 35 times. So I'm looking at it because it is such an important company at 7% of the S&P 500 in terms of the weighting. But I do still like the story very much long term. I just think I could probably get it even cheaper because there are still so many people that are involved in the name.
- [21:14]
Josh Brown
That's the rub on this whole thing too is that, you know, a lot of these downgrades are looking at the current landscape and saying, well, upgrade cycle is not good and it's not going to be good. Or at very least we're pushing out our, our models before you know, this AI Apple intelligence is going to really make it make a huge difference. Eric Woodring of Morgan Stanley told me a week or so ago that it's the 17 is where you Start. That's where it starts. If you're looking for it to start already, don't get all caught up in that. It's going to happen. It's going to be more rolling, though, than maybe other cycles have been in the past. It's going to be patient.
- [21:53]
Carl Quintanilla
I think patience pays off. You know, we have the good fortune of owning the stock now for 13 years. And so it's one of our top five holdings in tech and we would be inclined to actually buy more if we see additional downside. And I love the fact that less and less analysts are loving the stock because that's usually a contrarian positive. And so we'll be obviously monitoring it closely. But I do believe that this is a rolling type of activity with respect to Apple. But it's one of those names I believe that you absolutely, positively have to own.
- [22:22]
Josh Brown
All right. The other name I want to get to before we take a break here is Netflix because it reports after the bell we still have to wait a week for mega cap earnings of all of those big names. They start next week. And then it gets hot and heavy and we'll be all over that, as you know. And we'll lead up to it probably every day as we usually do. Netflix. Yes, show the chart, please. Please do back it out a little bit more so you can see the run that the stock is at this. Do a year. Let's do a one year on Netflix, please. And you can tell me what your expectations are for a chart that looks.
- [22:51]
Brian Belsky
Like that below the 50 above the 100 day moving average. That's where we are technically. This is a very interesting report tonight. Why? Because this will be the last quarter in which you're getting subscriber numbers. I think a lot has been priced in that has been positive for sports and live events. The question is if you see the subscriber growth from Tyson Paul from two NFL games, do in fact you see the subscribers staying? That's the key. What's the retention? And I think Netflix is going to have to resolve that question this evening. I think obviously personally long the stock and the ETF carries the stock, the momentum is well entrenched. The future looks good in terms of future live events, in particular for sports. But the ultimate question for me is when is the next price hike coming? Well, will they be able to pass that through? I think if the answer is yes, then the stock definitely coming reverts higher.
- [23:54]
Josh Brown
It's coming at least to where I was going with my next question. What if everything you say is great okay, but what if their cost per new subscriber is only going to go like that? Because as they get more into sports, it ain't cheap. They got to spend money on these sporting events. They love the NFL. It's been great for them. Tyson Paul, obviously, despite challenge cancel. It reduces Churn, but it costs them a lot more money. Josh doesn't. It's going to be a bigger player.
- [24:26]
Joe Terranova
You're right, you're right. But it's an investment because Churn is more expensive. So the, the, the necessity behind sports going into streaming. One of the aspects that is under discussed is that the dollar amount investment for the content itself, for the program itself, more than pays for itself on the back end. When you see the lower Churn numbers, one of the only things keeping the traditional cable bundle alive is people's affinity for their local sports teams. And that's not going to last forever, obviously. But I'm going to tell you right now, Netflix absolutely is going to have to pay up. I think you're dead right. But so what? The investment is worth it. Once people are subscribed to watch a certain sport or team or ongoing event like a WWE Raw, they do not cancel.
- [25:15]
Josh Brown
Yeah. You both own the stock, right? Yoshi and Bell.
- [25:19]
Carl Quintanilla
Yeah. I mean our great analyst Brian Pitts put it at $1,000 last week when he came out. We love this stock because of cash content and consolidation. When a four streamers making money. It's the Kleenex of streaming. This is an absolute home run stock.
- [25:32]
Josh Brown
You need to own even from here.
- [25:33]
Carl Quintanilla
Yes.
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Josh Brown
Because I mean it's been a home run obviously. Right. Went through the challenges, they had their issues. Stock got like 400 from 7 and now it's doubled from there.
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Carl Quintanilla
Correct. So think about just as a user, how much of a pain in the culo it is to just cancel and then come back. This company, the longer term play is the live sports. The longer term play, the margins on the majority of their content is very, very high. So they'll underneath, they'll continue to build that content and then the real money maker, and obviously the investments, the live sports thing, this is a home run stock.
- [26:07]
Brian Belsky
Just to set the expectation, sentiment and positioning on this stock is very full, very bullish. Do not be surprised if that needs to be shaken out a bit. Doesn't change your fundamental thesis. I'm with you on that. That just gives investors an opportunity to enter a name that they didn't previously.
- [26:24]
Stephanie Link
Hope they do. I hope it does pull back because I don't own it And I think 300 million subscribers with 30% operating margins and pricing power. That's something you have to own. I just can't do it at 28 times.
- [26:35]
Josh Brown
We'll lead right up to it on closing bell today. You can be sure of that. And we'll have talk to some shareholders too. Up next, we are going to speaking of shareholders, we are going to debate five committee stocks making moves today on earnings. One of today's top S and P winners is on that list. We're back up to this.
- [26:58]
Scott Wapner
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 to the workplace. A different future is closer than you think with Capella University. Learn more at Capella. Edu.
- [27:14]
Josh Brown
Weekdays at 5am Be first on world markets, first to the global business conversation.
- [27:20]
Joe Terranova
Get a jump on the investing day.
- [27:21]
Josh Brown
Every day with Frank Holland. Success starts early. Worldwide exchange, 5:00am Eastern, CNBC. All right, welcome back. Some committee stocks on the move. 3M, please on the screen because it's one of the best S and P gainers today. Stephanie link. It's a 52 week high.
- [27:52]
Stephanie Link
Yeah.
- [27:52]
Josh Brown
What do we think?
- [27:53]
Stephanie Link
I mean I thought the quarter was fine. I didn't think it was great. I'm surprised that it's up as much as almost 6%. But 2024 is in the rear view mirror. They did a lot of restructuring. They deleted a lot of portfolio changes. They're focusing on costs and operating margin improvement and they have a new CEO who has a proven track record. I think the guidance was what why the maybe the stock is actually acting better because of the 2 to 3% organic growth. They haven't seen 3% organic growth in like 10 years. Plus margin expansion also is for higher for this year. So all Systems go just 19 times. It's not as compelling as it once was.
- [28:25]
Josh Brown
Josh, what do you think about that? I mean I think Steph makes a real even case here. Good earnings. I don't know if it's justified the move you're seeing today. And it's I don't know if it's a full valuation but if not now it's getting there.
- [28:38]
Joe Terranova
It's not a cheap stock, but there's a reason it's not a cheap stock. People when people see a restructuring, any turnaround that actually has traction, they buy. They don't. The valuation almost becomes secondary because nobody really knows what the full earnings power is of a resurgent 3M. It's been like 10 years since we've Been able to be excited about the company. The only division within the company that's not growing currently is the consumer side. But transportation, electrical, etc. I think the reason the stock spiked so hard is probably that, that it's a turnaround that you could actually say hey, this is now definitively working. But also the guidance expecting 2025 full year 2025 earnings between $7.60 to 790. That range is good. Shares are up a lot, but maybe not enough to account for that level of earnings power in this year. And within a couple of months they're going to start talking about 26 numbers being too low. So I'm in this name. I'm sticking with it. It first surfaced as one of the best stocks in the market for me. Closer to like 104, 105 and I've ridden it the whole way up with the trailing stop has not let me down. This name remains in an uptrend and so long as it does, I'm okay with the 19 p. E. I don't think it's the end of the world.
- [30:00]
Josh Brown
All right, pushing towards 150 today, Steph. Back to you, Dr. Horton. They reaffirmed their guidance, they increased their buyback, their revenues beat. And we can take a look at the stock today as well for what was part of one of your favorite, if not your favorite or what your contrarian play last year, right?
- [30:15]
Stephanie Link
Contrarian, sure. And I think you need interest rates to come down further. You need 30 year mortgage fixed at 5 or, or less, not at 7. So it's not in the right direction. But this company is doing all the right things in terms of executing. They beat earnings by 7% closings, beat by expectations. Gross margins even were better than expected. Its stock is muted because the guidance for gross margins is on the lower end side. But stocks trading at 11 times earnings. Oh, by the way, construction times they said now for the last three quarters improved construction lead times. That actually is very positive for Home Depot and Lowe's and I own Home Depot as well.
- [30:47]
Josh Brown
Schwab beat revs beat earnings, beat Belsky. You own that stock still.
- [30:53]
Carl Quintanilla
We love the brokerage business. Schwab's organic business inside Schwab growing. That's the consistent business. You have the RIA business, you have the operational business growing. And the stock was, was an underperformer first half of last year and really kind of came on and we really like that name in terms of our value portfolio.
- [31:08]
Josh Brown
What about Prologis which was out today with an earnings speed of its own.
- [31:12]
Carl Quintanilla
This is a company that just got crushed in terms of expectations and have really under promised and now they've come up and delivered. We own the stock in our, in our REIT positioning and especially in our, in our tactical and value.
- [31:24]
Josh Brown
Want to give me something real quick, Joe on fifth? Third, we, we talked about regionals earlier, but let's go specific if we could for a minute. They missed.
- [31:30]
Brian Belsky
Well, the headline is that they missed, but they're still approaching double digit revenue growth. The reaction to the stock is a very positive one. And you've got three analysts that have come out, reiterated their outperformer buy ratings subsequent to that. So we're staying with that position.
- [31:44]
Josh Brown
Let's get the headlines with Seema Modi.
- [31:45]
Stephanie Link
Hi, Sima Scott, good afternoon. U.S. district Judge Eileen Cannon has blocked the Justice Department from sharing portions of Special counsel Jack Smith's classified documents report with members of Congress. In her ruling today, Judge Cannon said the court had a right to take protective measures to ensure a fair trial for the president, former co defendants and that allowing members of Congress to review the report would result in its public release. Israel's top military chief announcing today that he will resign from his post in March over the Hamas attacks on October 7. In a statement, Herzi Alivi assumed responsibility over the IDF's failure that day. The head of the IDF Southern Command also announced he would step down. And Prince Prince Harry's trial against Rupert Murdoch's British newspaper group was delayed earlier today in London because of last minute settlement talks. The prince is suing news groups, newspapers for allegedly hacking his phone and employing investigators to look into his private life from 1996 to 2011. Scott, that's the latest. Back to you.
- [32:45]
Josh Brown
All right, Seema, thank you. That's Seema Modi. Coming up, protection plays in the crypto market. Bob Ozzani has today's East ETF edge. Next we're going to find out about some new ETFs. Bitcoin is of course on the move yet again. It is above 106. We're back after this.
- [33:04]
Scott Wapner
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. Learn more at Capella Eduardo Global markets.
- [33:21]
Josh Brown
Up to the minute, front page news.
- [33:23]
Brian Belsky
Wake up to Frank Holland and Worldwide.
- [33:25]
Josh Brown
Exchange, weekdays 5am Eastern, CNBC live ambitiously. All right. Welcome back. Bitcoin pulling back slightly from a fresh all time high, did top $109,000. Yesterday afternoon we get more on the crypto trade under President Trump with Bob Pisani and today's ETF Edge. Bob, this is a really interesting one.
- [33:45]
G
Talk to me about this downside protection for Bitcoin. Can ETFs protect against drop in the markets or a drop in bitcoin? There's a demand for products that allow investors to still stay invested but provide some protection on the downside. Let's talk with Matt Kaufman, senior vice President Head of ETFs for Calamos. Tomorrow you're launching a new product, an ETF that aims to capture some of the upside of Bitcoin with 100% downside protection. 100%. How does this work? What do you give up for this?
- [34:15]
H
Yeah, we're excited about this one. Tomorrow we're launching the world's first protected bitcoin etf, cboj. You get the upside of bitcoin to a cap. There's no free lunch here and then 100% protection over that one year outcome period.
- [34:30]
G
And you're the upside is how much upside are you getting?
- [34:33]
H
So for the 100% protection, we're seeing 10 to 11 and a half percent upside. So good upside opportunity with no downside.
- [34:41]
G
So you participate up to 10 or 11% up and then you have 100% downside.
- [34:45]
H
That's exactly right. Exactly.
- [34:47]
G
I want to, we're going to talk a lot about this on etf. You're going to. President Trump is the crypto president. He has said that he's floated several ideas for crypto. He's proposed a crypto friendly SEC chair, it looks like in Paul, Paul Aikens. He's proposed a strategic bitcoin reserve similar to the Strategic Petroleum Reserve. What do you, and what does Calamus expect to see from President Trump and from Congress on crypto?
- [35:10]
H
Yeah, you're right. We're expecting a pro crypto economy over the next several years here. And we saw a Strategic Petroleum reserve more than 50 years ago. Like you said, we have gold reserves. And so if you're going to build a bitcoin reserve, you know, we think now is a good time to do it. You know, being able to protect, you know, a petroleum reserve would protect against oil, things like that, oil prices. Bitcoin might be a protection against inflation. So we're seeing that potential in the future.
- [35:37]
G
It is amazing the explosion of crypto products in ETFs that I'm seeing out there. We have filings just in the last few weeks, new products for Solana XRP the Ripple product and ETFs we're going to see more crypto products that look like they're bundled into indexes. What do you what does Calamo see coming down the road with crypto and ETF products?
- [36:00]
H
Yeah, there's a flurry of crypto related etc ETF filings as well. So again Calamos will have the first protected Bitcoin ETF Suite CBOJ and then we've filed for two other protection levels on 90% and an 80% cap. Rates just go up from there. 30% for the 90, 50% for the 80 and a lot of it's based on these options. There's Bitcoin ETPs in the market now. There's options on those ETPs and so we can build options based products.
- [36:27]
G
That's what's amazing to me. The exception explosion of derivative products around the bitcoin and around the crypto universe. We're going to talk much more about that. We're going to have a lot more coming up on the big year for crypto ETFs. That's coming up on ETF Edge at 1:10pm Eastern Time. Matt will be joined by Mike Venuto. He is the CIO and co founder of Title Financial Group. That's ETF edge.cnbc.com Scott Back to you.
- [36:49]
Josh Brown
All right Bob, good stuff. Thank you. That's Bob is on the up next calls of the day. Got a big downgrade today for one of Joe's stocks into earnings. We'll discuss next. All right, let's do our calls of the day. It's Terrady and which we're starting with today because it was downgraded to underweight. Morgan Stanley had it at equal earnings are next week. They've cut the price target to 117. And Joe they say the expectations are just too high.
- [37:16]
Brian Belsky
So they're basically coming after my position. I took a personal position in this. I said have a tight stop and at 125 and I said take a very small position. I didn't say the turnaround story was fully engaged. This is a prove it moment for this company. 13% of their revenue is related to Apple. They're relying on the AI chip testers here to really provide the revenue growth in 2025. And by the way the last three years this company has disappointed. They have missed the midpoint of their guidance in each of the last three years. So so you're carrying a very tight stop here. I read the Morgan Stanley report. There's a lot in that report that has validity, they are correct on a lot of their assumptions. And it's really incumbent upon next week's earnings to present the fundamental evidence that what appears to be a technical turnaround can also be a fundamental.
- [38:07]
Josh Brown
You just said it basically. Is it an Apple derivative play?
- [38:11]
Joe Terranova
No.
- [38:11]
Brian Belsky
At 13% revenue growth, I wouldn't say it's an Apple derivative play, no, because they're getting more engaged in the AI test, chip testing market. So I don't think it's specifically related to Apple. However, what we see going on at Apple is not helping the company at all.
- [38:26]
Josh Brown
All right, so we'll follow that again. Earnings are next week. Reddit, Josh. Price target goes to 200, they reiterate. Raymond James does their strong buy rating on the stock, which is having a really nice day.
- [38:39]
Joe Terranova
Yeah, a lot of firms have been chasing this price higher with their targets. Citigroup recently also saw Guggenheim put out a note recently. They're all going to be in the 200, their targets and with good reason. Launching International, which is what Raymond James is citing in today's upgrade, is a. Is a huge add to this story here. Keep in mind, most of the content on Reddit is US users in English, but if they're going to be using this material for AI and they're going to do so around the world, just having this be a portal for everyone in different native languages makes it that much more valuable. Also, the introduction of search, which could be game changing as people are bypassing Alphabet, Google and going directly to the source. If Reddit enables that, it's big advertising money. So that's what's happening here. One of my best trades of 24. Bought it in November. Staying long, I think we'll see 200 bucks.
- [39:36]
Josh Brown
Eyes of the day. 6% there. Northrop Belsky upgraded today at Citi Dividend Growth Machine.
- [39:41]
Carl Quintanilla
We own it in that portfolio. Just the guaranteed revenue from the United States government cash flow is just amazing.
- [39:46]
Josh Brown
Ross stores got downgraded today. You want to take that also, Stanley?
- [39:50]
Carl Quintanilla
Yeah, we love Ross stores, just like in SMID Cap World. Like we like TJ Maxx and Large Cap World. I think that's where you want to play the barbell in consumer discretionary and these types of names.
- [39:59]
Josh Brown
Okay. Gm, Joe T. Yep.
- [40:04]
Brian Belsky
Recent, recent addition to Joe upgraded at Deutsche. Yeah, the momentum's kind of flattened out since we heard the potential surrounding tariffs. I don't know, maybe February 1 means let's negotiate before we actually implement the tariffs. But that's the overhang on GM and Ford right now.
- [40:20]
Josh Brown
All right, got a headline want to bring you right now because it is moving. Can we say take a look at shares of Oracle, please? We might as well look intraday, which you can see the move higher because the President is set to announce billions of dollars in private sector investment in AI infrastructure today. And Oracle, OpenAI and SoftBank, these, according to a report by CBS, are planning a joint venture called Stargate. And that is according to multiple people familiar with that deal. According to cbs, Oracle, part of that. Josh, you want to, you want to take the whole owns Oracle here. Oh, you do now, hold on. Josh Belsky owns the stock. I know you used to, you want to talk about this? So this is going to happen. The President's going to make a speech today, we think at 4 o'clock in the afternoon on AI infrastructure, which is one of the hottest trades around right now, whether you're talking data centers or like we see here.
- [41:13]
Carl Quintanilla
So we're overweight technology. One of our primary themes heading into 2025 was to Barbell tech by maintaining the positions in the Mag 7, but building and being actually net overweight names like Oracle and Palantir especially. And so we think from a, from a fundamental momentum side of things, this is a great company, great leadership, great cash flow and actually is not that expensive. So we think this stock has much more to go.
- [41:37]
Brian Belsky
We own it as well. It's part of exactly what you said, that software AI story. We've got a group of names in that basket. The stock had more than recently pulled back a little from the December highs. But I think you've got to take a broader view of it. You really see the turnaround story that's been affected the last 18 months.
- [41:55]
Josh Brown
Okay, again, you're looking at the screen, you're seeing the move in Oracle. You're wondering why the spike on your screen, Josh, as I send it to you, it is because, according to cbs, President Trump is set to announce billions of dollars in private sector investment to build AI infrastructure in the United States. OpenAI, SoftBank, Oracle are planning a joint venture. That is why shares of Oracle are on the move.
- [42:18]
Joe Terranova
Yeah. Because if, if that sort of spending hits Microsoft's cloud business, orb cloud business, it's much more incremental. Like you almost wouldn't see it just given where those companies are in terms of scale. I think Oracle is the number four or five player and this is directly meaningful to shareholders. Now if in fact we're going to do a step, a step change higher in domestic cloud spending like Oracle, you're going to feel the effect of that immediately in the form of revenue and then eventually earnings. So that makes sense to me that you'd see that outsized move in this name and not, not necessarily seeing it in Amazon or Google or Microsoft.
- [43:03]
Josh Brown
Well, they are said, as we said, according to reports which we've confirmed that they are involved, involved directly in the joint venture, which is why shares are up near 5%. We'll take a break. We'll come back with Santoli on the other side with his midday word. Senior markets commentator Mike Santoli here with his midday word. What would your assessment of the trade so far be?
- [43:31]
I
I mean we're still feeding off of I think this reset that we got in prior weeks. Coming into last week we got a nice run of Goldilocks data. Obviously today, you know, whether it's about the lack of more high friction tariff announcements or not, it's directionally exactly the same as what we saw last week. Equal weight over market cap weight. It's rotational into the parts of the market that had the deepest pullback that were most impacted by yields. Now you have yields down dollar down. It all makes sense. And also the stuff that's furthest from its highs, right that'd be like things like the Russell and, and the equal weight S and P banks still really clear leadership. I think that's the most linear trade out there. But I really think it shows you to the overnight silliness in the equity futures in relation to the various tariff stuff. The market views tariff heavy tariffs and immigration restrictions as like wars of choice. We'd rather not have to deal with. I think the markets in a do no harm way. And the good news is we are where we are in the markets mostly because of what we can see in front of us, the earnings growth path where the economy is what the Fed's likely to do. Normal interest rates like all that stuff kind of builds to where we are right now. It's not to me very much about.
- [44:41]
Josh Brown
Speculative policy trades ex, you know, tariff headlines that are jarring over the next few days. It feels like there's a little bit of a pass, so to speak, until you get mega cap earnings coming down next week.
- [44:53]
I
All of that mega cap earnings are definitely a big part of the mix. I think that the ability to focus on company stuff is probably welcome at this point. And then you start to stretch into January. Fed meeting at the end of the month which isn't necessarily considered to be make or break but it's going to start to get into people's heads all Right.
- [45:10]
Josh Brown
I'll see you on closing bell. Mike, thank you. Want to go to the White House now? Bring in our own Eamon Javors who has more on that expected announcement this afternoon by President Trump regarding AI infrastructure. What do we know, Scott? That's right.
- [45:22]
J
A White House official confirmed today me that Masayoshi son of Softbank is expected here at the White house in the 4pm hour. They're expecting an announcement involving billions of dollars in funding for AI infrastructure in the United States. We lost last saw Masasan with President Trump down in Mar a Lago announcing a massive investment. So what we'll see here is whether this is a subset of that overall investment or if this is a new announcement involving new factories and new facilities. We'll also see which other companies might be involved in a joint venture here. What we do know is we are expecting to see the CEO of SoftBank, President Trump and potentially a number of other executives here at the White House in a couple of hours time making this announcement. And of course, it all goes into President Trump's goal here of announcing enormous new investments in infrastructure in the United States and also sort of kick starting economic momentum in the United States. You heard the president yesterday in his inaugural address say what he wants to do is signal to the world that America is back and signal to his voters that he's taking immediate action that are going to matter to them in terms of creating jobs. So, Scott, that's what we're expecting right now. We're going to work on some additional details here as we get them. But what we know as of right now is the CEO SoftBank here at the White House in the 4pm hour. Back over to you.
- [46:45]
Josh Brown
Yeah, we already know about, as you said, the $100 billion investment. We saw Masazan and President Trump at Mar a Lago several weeks ago in which remember the president was almost twisting his arm on live television to make it 200 billion. So we'll get more details coming up. Eamon, thank you. That's Eamon Jabbers. There's Oracle. It is on the move. We are as well for a break. We're back after this. Oh, it's going to be an interesting last hour. You could say that. Markets off to a nice gain today. I'll see you at 3:00 Eastern Time on closing bell with Anastasia Amoroso, Liz Young, Thomas Morgan Stanley, Sherry Paul and Alex Cantowitz and Jason Snipe as we lead you up to Netflix. And then of course that announcement from President Trump regarding infrastructure that we just told you about Josh final trade what.
- [47:30]
Joe Terranova
Is it Disney watching a potential cup and handle shaping up tactically Brian Belsky.
- [47:38]
Carl Quintanilla
Financials Financial Financials Affiliate Managers AMG it's.
- [47:42]
Josh Brown
Going to work one of these days.
- [47:43]
Carl Quintanilla
Yeah broken clock baby broken clock.
- [47:46]
Josh Brown
No I know Stephanie Link unitedhealthcare It's.
- [47:48]
Stephanie Link
A brand new position for me last week and I like it at 17 times earnings long term average is 24 times so I like the discount I.
- [47:55]
Josh Brown
Couldn'T resist I mean it was like three, four or five years ago Financials financials financials Jyoti no longer square now.
- [48:01]
Brian Belsky
X Y Z still believe this is one of the better stocks with strong.
- [48:05]
Josh Brown
Positive momentum we got near 450 on the Dow it is green across the board and the Russell was leading rates pulling back stocks liking it and I'll see you on the closing belt three. You've been listening to CNBC's Halftime Report, the podcast. You can always catch us live weekdays at 12 Eastern only on CNBC.
- [48:28]
Scott Wapner
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 is it time to reimagine your future? The right business skills may make a difference in your career. At Capella University, we offer a relative education that's designed to focus on what you need to know in the business world. We'll teach professional skills to help you pursue your goals like business management, strategic planning and effective communication, and you can apply these skills right away. A different future is closer than you think with Capella University. Learn more at Capella Eduardo.