Halftime Report: Stocks and the Trump Trade (January 21, 2025)

Hosted by Scott Wapner and Featuring Josh Brown, Joe Terranova, Stephanie Link, and Brian Belsky

1. Introduction and Overview

[00:49] Scott Wapner opens the episode by highlighting the focus on the "Trump 2.0 trade" as President Trump embarks on his return to office. The panel discusses the immediate positive reaction in the stock market, noting that stocks are up across the board, with the Russell 2000 outperforming by 1.5%.

2. Market Performance and Sector Analysis

[01:35] Josh Brown attributes the market gains to a slight drop in yields and notes that stocks are reaching daily highs.

[01:41] Stephanie Link elaborates on the stability within the trading range over recent weeks, emphasizing the strong economy inherited by President Trump. She highlights pro-growth initiatives such as lower taxes and deregulation, expecting these to positively influence inflation and earnings growth. Stephanie points out that earnings are on pace for a record margin of 13.7% this year, driven by sectors like financials, healthcare, and energy—not just technology or communication services.

Notable Quote:

"The key to being rich is knowing what counts." — Stephanie Link [00:00]

3. Financials and Big Banks

[02:55] Josh Brown discusses the cautious optimism around tariffs, citing Barclays and Goldman Sachs' views. He notes that while tariffs haven't been implemented yet, firms advise against complacency.

[03:41] Joe Terranova anticipates the Trump trade conversation to wind down within a week or two, shifting focus back to fundamentals and earnings growth. He highlights biotech as a standout sector unaffected by political outcomes, citing Martini’s $600 million government contract as a catalyst for the biotech sector's performance.

[05:58] Josh Brown references the Bank of America January Global Fund Manager Survey, emphasizing investor bullishness on the US Dollar and equities, framing it as an "American exceptionalism trade."

[07:51] Brian Belsky agrees, underscoring the resilience of the US market due to energy independence and technological giants. He praises the recent yield relief and dollar pullback, suggesting opportunities in financials, industrials, and materials. Brian advocates for a broad-based equity approach supported by strong earnings and favorable policies.

Notable Quote:

"Financials, financials, financials." — Carl Quintanilla [09:09]

4. Stock-Specific Discussions

4.1. Apple and Technology Stocks

[19:58] Stephanie Link analyzes Apple’s recent performance, noting a 15% decline since December 26 despite strong earnings last year. She discusses the changing analyst sentiment, with buy recommendations dropping from 80% to 60%, and expresses caution while maintaining long-term optimism.

[21:14] Josh Brown and Carl Quintanilla reinforce the importance of holding Apple, despite current downgrades, highlighting its significance in the S&P 500 and potential for long-term growth.

Notable Quote:

"I just can't do it at 28 times." — Stephanie Link [26:23]

4.2. Netflix

[22:21] Brian Belsky discusses Netflix’s upcoming subscriber report, emphasizing the importance of retention from new sports and live event subscribers. He is optimistic about future live events but raises concerns about cost management.

[25:31] Carl Quintanilla praises Netflix as a "home run stock," crediting its content strategy and high margins, while Brian Belsky and Stephanie Link express bullish sentiments despite high valuations.

Notable Quote:

"This is an absolute home run stock." — Carl Quintanilla [25:31]

4.3. Oracle and AI Infrastructure

[41:12] Carl Quintanilla and Brian Belsky discuss Oracle's stock movement in anticipation of President Trump's announcement on AI infrastructure investment. They highlight Oracle’s strategic positioning in the AI and cloud market, anticipating substantial revenue growth from upcoming initiatives.

Notable Quote:

"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." — Brian Belsky [19:04]

5. ETF Products and Crypto Discussions

[33:04] Bob Pisani introduces a segment on protected Bitcoin ETFs featuring Matt Kaufman from Calamos. The discussion centers around a new ETF offering 100% downside protection with capped upside potential (10-11.5% over a year), catering to investors seeking exposure to Bitcoin without significant risk.

[35:10] Matt Kaufman explains the mechanics of the protected Bitcoin ETF, emphasizing its design to capture upside while safeguarding against losses. He anticipates further crypto-related ETF products, including those linked to Solana and XRP.

Notable Quote:

"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." — Matt Kaufman [34:29]

6. News Headlines

[31:45] Seema Modi delivers a news segment covering:

• Legal Rulings: Judge Eileen Cannon blocks the Justice Department from sharing Special Counsel Jack Smith's classified report with Congress to protect a fair trial for the president and co-defendants.
• Military Leadership: Israel's top military chief announces resignation following the Hamas attacks on October 7.
• Prince Harry's Trial: The trial against Rupert Murdoch's British newspaper group is delayed amid settlement talks.

7. Closing Thoughts and Future Outlook

[44:40] Mike Santoli provides a midday assessment, noting that the market continues to benefit from favorable earnings growth and a stable economic outlook. He anticipates a focus on company fundamentals over political speculation, with upcoming mega-cap earnings playing a significant role.

[45:22] Eamon Javors previews President Trump's imminent announcement on AI infrastructure investment, expecting a collaboration with SoftBank and significant funding to bolster the US AI sector.

[47:30] Joe Terranova and Carl Quintanilla discuss the impact of the Trump administration's infrastructure plans on companies like Oracle and emphasize the strategic importance of AI investments.

[48:28] Conclusion by Scott Wapner: A reminder that all opinions expressed are personal and not endorsements, followed by a sponsor message from Capella University.

Notable Quote:

"Patience pays off... You absolutely, positively have to own [Apple]." — Carl Quintanilla [22:21]

Key Takeaways

• Trump 2.0 Trade: Positive initial market reaction with expectations of continued growth supported by pro-growth policies.
• Sector Performance: Strong earnings growth in financials, healthcare, energy, and biotech, with specific opportunities in regional banks and small caps.
• Stock Focus: Mixed sentiments on tech giants like Apple and Netflix, with strategic outlooks on Oracle’s role in AI infrastructure.
• Crypto Market: Introduction of protected Bitcoin ETFs catering to risk-averse investors, anticipating more crypto-related financial products.
• Upcoming Announcements: Significant focus on President Trump's AI infrastructure investments and their potential impact on the market.

Notable Quotes with Timestamps:

• "The key to being rich is knowing what counts." — Stephanie Link [00:00]
• "Financials, financials, financials." — Carl Quintanilla [09:09]
• "This is an absolute home run stock." — Carl Quintanilla [25:31]
• "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." — Matt Kaufman [34:29]
• "Patience pays off... You absolutely, positively have to own [Apple]." — Carl Quintanilla [22:21]

This summary captures the essential discussions, insights, and conclusions from the episode "Stocks and the Trump Trade," providing a comprehensive overview for those who haven't listened to the podcast.