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Halftime Report
Stocks in the Second Half 7/1/25
00:44:09
Scott Wapner and the Investment Committee focus in on the second half of the year as the strongest month of the year gets underway. Plus, the Senate passes President Trump’s sweeping tax bill, the desk debate what it means for the market. And later, Josh Brown adds another name to his ‘Best Stocks in the Market.’ Investment Committee Disclosures
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- [00:01]
Scott Wapner
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- [00:07]
Steve Kovach
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- [00:14]
Scott Wapner
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- [00:16]
Josh Brown
Can build and place trades better.
- [00:18]
Scott Wapner
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- [00:32]
Joe Terranova
Okay, close your eyes, exhale, feel your.
- [00:34]
Josh Brown
Body relax and let go of whatever you're carrying today. Well, I'm letting go of the worry.
- [00:41]
Joe Terranova
That I wouldn't get my new contacts in time for this class.
- [00:44]
Josh Brown
I got them delivered free from 1-800-contacts. You guys, they're so fast.
- [00:49]
Joe Terranova
Oh, sorry.
- [00:50]
Josh Brown
Namaste.
- [00:52]
Scott Wapner
Hi there.
- [00:53]
Josh Brown
Did you find everything okay? Yes, I did because I found the exact same contacts as my eye doctor prescribes.
- [00:59]
Joe Terranova
F1,800 contacts.
- [01:00]
Josh Brown
And here, give me that. Attention shoppers. Did you know 1,800contacts has 45 million contacts in stock?
- [01:08]
Scott Wapner
Okay, we checked the brakes. Everything looks good.
- [01:11]
Josh Brown
You know, speaking of checking, did you know 1,800contacts triple checks every order? Yeah, they make sure you get exactly what you need when you need it. 1-800-contacts. So good, so fast, so accurate. You'll want to tell everyone too. Download the app or visit 1-800-contacts.com today and save on your first order. 1-800-contacts contacts.
- [01:32]
Scott Wapner
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. Hi, welcome to the Halftime Report. I'm Scott Wapner. Front and center this hour, stocks in the second half as the strongest month of the year gets underway. Now we're trading it with the investment committee. Joining me for the hour today, Josh Brown, Joe Terranova, Stephanie Link, Jim Laventhal. We will go to the markets here, give you a look at where we stand at 12 noon in the east mix today. You do have the dow jumping by about 1%. We're a little bit of give back on the NASDAQ too. And Joe, I think that's a really interesting characteristic of this market today as the second half gets underway, a bit of an unwind from some of the momentum names that have run a lot. A lot of the big winners like the Netflixes of the world are down 4%. Some of the AI power names which have run a lot are down. It really seems to be pretty distinct today the selling in those high flying names.
- [02:35]
Stephanie Link
Let me try and Explain why that occurs. At the end of the second quarter there was a very strong push in the direction of the leaders. Classic end of quarter portfolio window dressing. First day of July, first day of the third quarter, now it's all about the laggards. I mean Steph and I were just like, you have names, you have Best Buy, you have target up 6%. Those stocks are both down double digits on the year. And health care, you have Merck which is up about 3%, down double digits on the year. Lululemon making a comeback today, the trade desk making a come today. Financials, the one bank that hasn't worked all year. Usb that's higher today. And Jimmy's really excited about this.
- [03:13]
Jim Laventhal
Really.
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Stephanie Link
You have the Russell up over 1%.
- [03:16]
Scott Wapner
Even while the S and P and.
- [03:18]
Stephanie Link
The NASDAQ is down.
- [03:19]
Scott Wapner
You know, Jonathan Krinski has a pretty good note out today talking about the unwind Stefan momentum and how things like discretionary, which you know was the worst sector year to date thus far, is going to have a catch up trade. One day makes nothing obviously, but you have had a run up in so called lower quality, higher beta names. And if you do have an unwind in that trade and you do have a reversion into some of the laggards, it could get a little interesting in this market.
- [03:50]
Joe Terranova
Oh, it'll get very interesting in this market because broadening out is very, very healthy. Right. And so to me, look, at the end of the day we might have these fits and starts between growth and value, momentum and lack of momentum, but it all boils down to earnings. And if you believe we're growing at two, two and a half percent in GDP. Two and a half percent. Two and got to go.
- [04:11]
Scott Wapner
Hang on two seconds. I want to go down to D.C. i have breaking news. Emily Wilkins is on Capitol Hill with the latest on the bill. Emily.
- [04:19]
Emily Wilkins
Hey guys. So we are getting very, very close to that final vote taking place. But at this point it does seem like the Senate has the votes to pass the Trump mega bill and of course that that $4 trillion tax package along with it. This comes after there was some adjustments to, to the text and in that one we saw all but three Republican senators vote for it and then J.D. vance coming in with the assist getting that bill over the finish line. So we are still waiting for the final bill to pass but at this point it's looking very likely that that could come definitely within the next hour. Much likely. Way, way sooner than that, guys.
- [04:55]
Scott Wapner
All right, we'll come back to you as needed. And you'll keep us up to date? Of course. Then it goes back to the House and the President would like it all done by the 4th of July. Admits that it's going to be hard to do that and we will track it. We're showing 10 year obviously because there are concerns we're continuing about the deficit. But that's your picture now. S and P is a fractional loser. I'm sorry for interrupting you Step I want to get that news out back to you. Broadening obviously would be good and what a lot of people are waiting for and tired of a top heavy market.
- [05:24]
Joe Terranova
Right. So I think overall earnings are going to be good at about 8 to 10%. I think that's going to positively surprise for the year. Expectations are for about 5% top line growth mid single digits, margins expanding. In the first quarter we saw margins expand 61 basis points. But it was mainly the magic seven that drove the margin expansion. So can you imagine if we start to see a broadening out better results? And I think of the groups that I like, I mean I still like tech and industrials but financials to me are my. It's my favorite sector right now because they're the cheapest.
- [05:53]
Scott Wapner
And I think even at a record.
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Joe Terranova
High total miss people are not giving credit for deregulation. And we are seeing it in spite of spades.
- [06:01]
Scott Wapner
That was Mike Mayo notation yesterday.
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Joe Terranova
We had the stress tests on Friday. We're going to get the SLR relaxation IPO rules are going to get relaxed and so and then you get M and A and then you get capital markets and the valuations are still cheap. You asked about discretionary and by the way financials and discretionary is about 23% of the S&P 500. So if they get going that could certainly help the overall broader averages. But discretionary is interesting because I was starting to worry about the labor market. I was starting to worry about the weekly jobless claims and today we got a jolts number that was better than expected. Quit rates that were better than expected. Initial claims last week were a little bit better than expected. So jobs, wages, little lower. Inflation. You can make an easy case to own Discretionary that is absolutely lagged.
- [06:45]
Scott Wapner
Josh, I'm going to go to you. July is the best month over the last 20 years. The s and P has been positive for the last 10. The setup looks pretty good as BCA upgrades stocks today. Now they're only at neutral. In fairness they downgrade cash to underweight. And you do according to bank of America have the biggest net selling of equities in some 10 weeks. What do you make of all that?
- [07:12]
Mike Mayo
Look, I think there were three things that kept people cautious. This, this March in April, myself included, just people saying, all right, this doesn't feel like it's going to be as good a year as 20, 24. Those things were softening of the economic data, which has partly reversed, partly not, but certainly the wheels have not fallen off. That was one, to the Rose Garden moment, which was absurd and was reversed as well. And then three, this concern about what earnings would look like with any kind of tariffs interfering with the cost of doing business. And we have largely been able to put those items behind us. We don't have an economy that's grinding lower or slowing down by any means. It's not as fast as it was, let's say, in 23, but it's not as slow as we thought it might be.
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Scott Wapner
Josh, forgive me, I'm going to take it from you again. I'm going to take the ball from you. I'll give it back in a moment. I just want to get back to Emily on the Hill. I guess it's now official. Yeah, Scott?
- [08:19]
Emily Wilkins
Yes, it is now official. The senators, they've been here for more than 24 hours, so they voted very quickly. But yes, as we said, 51 to 50 with JD Vance breaking that tie. Now, the Trump megabill has passed in the Senate. It now, of course, heads to the House. We have heard from a number of lawmakers there, fiscal hawks, even some more moderate members who have had concerns about the bill. But Mike Johnson is determined to try and get this done, getting a vote on this as soon as tomorrow. And that would get it to the president's desk by July 4th. Now, will that happen? That remains to be seen to be seen if lawmakers digging their heels are not on some of their concerns, but certainly a lot of momentum with this Senate passage today. And a lot of the other thing, of course, is that they've made a lot of last minute changes to the bill. It sounds like that excise tax on solar and wind might be out. And of course, we're reviewing additional changes to get a better sense of what the Senate just passed. Guys.
- [09:17]
Scott Wapner
All right, Emily, thank you. Emily Wilkins down in the halls of Congress for us following all of that, it's interesting to see the move in in the bond market. And I'm just wondering, Josh, I'm just going to make you pivot for a moment to react all, all of this as it's developing. Can we put that back up, please, of the 10 year or whatever you had up there, please. There it is. Whether you think the bond vigilantes are going to have the last word here or at least want to have a little bit of yell before things calm down in the, in the treasury market.
- [09:51]
Mike Mayo
That could be. And perhaps that's a headwind that we need to think about. And perhaps there will be a day or two where a spike in the 10 year gets the attention of the stock market and there's a little bit of puke as a result. But I really don't think that that's the main thing. I think the much more powerful trend that's happening right now is the weakness in the dollar. And one of the points I wanted to get to before we went back to Washington is that one of the things powering investor portfolios forward this year is international stock exposure. I haven't been able to say this in a while. I looked at my own 401k yesterday and I had to refresh the page because I thought there was an error. I'm doing double the performance of the S and P in my retirement account. And the reason why is 40% allocation to international stocks. You're talking about a gigantic asset class that's been a drag year after year after year. We're coming off one of the most incredible spades of performance for international stocks almost every region. And this is really important for investor psychology. They no longer are just looking at the SPX and saying, all right, a lot of my portfolios doing well. They're making money all over the place. Through Friday, international stocks were outperforming US stocks by 12.6 percentage points. That's the widest gap in 24 years. 2001 was the last time we saw anything like that. When you look at the effect of the dollar, which I think again, more important than the bond market at this current moment, if you strip that out, international stocks are still up 11% year to date. So yes, it's in part a weak US Dollar phenomenon, but there is earnings growth all over the place. We talked last week about South Korea, European countries have earnings growth again. It's a miracle. So it's great for investor psychology when they're making money not just in the us, not just in the NASDAQ or the mega caps, but they're making money throughout their portfolio. And that's the case right now. And I think it's a big positive.
- [11:58]
Scott Wapner
Jimmy, it's going to be worthwhile watching that dollar, the move lower to start the year, which is the worst open to a year in decades. There's some talk today questioning whether the dollar move is bottomed now. You have to pay attention to that. The bond market. Do you want to weigh in on, on what you think now that this bill has at least passed the Senate, of course it's going to go back to the House. Don't expect much of a roadblock there. But you never know until it ends up on the president's desk with his signature on it. And Sharpie.
- [12:26]
Jim Laventhal
Yeah, I mean there's, there's still a lot of sausage making to be done as the expression goes. To answer your question directly, the 10 year at 427, it's right there. That's fine. I mean that's, look, on a day like today, the markets are soft a little bit, but there's a little bit of divergence. Bit a little, a little bit of broadening out. It gives a chance to sit back and say what really matters here. I'll tell you. The Treasury 10 year treasury at 427, Scott, makes me feel good, makes me feel I can look right past it. I do want the dollar to start coming back and that leads into where my head is as I can sit back a little bit and look at the broader picture. I'm glad we've got the budget bill getting to a conclusion, but we got to get trade deals done. I don't think any of the four of us have mentioned that yet. We got to get some trade deals done. And I was looking, looking just before you came to me at one of my favorite stocks, you know, broke my heart to sell General Motors. I had to sell General Motors because of all these trade ramifications. Now I start to think with the stock up 5% today that maybe what the market is sussing out is that when we get the rules of the road done in terms of where people are supposed to set up factories, that a company like General Motors can adjust to that and shouldn't be trading at 5 times earnings, that maybe those earnings themselves are depressed and going to be higher than expected and should get a higher multiple. I need to take another look at General Motors. But my point being is that a lot of good things can come together. I don't like where the dollar is, just to answer your question directly. I do like where the ten year treasury is. I like that the House and the Senate now have to why do you.
- [13:49]
Scott Wapner
Love, why are you in love with where the 10 year treasury yield is?
- [13:52]
Jim Laventhal
Because it's the sweet spot. It shows that the treasury market is saying two things. We've got growth ahead, but it doesn't look like it's going to be hyper inflation inflationary. It doesn't look like the deficit is going to get more out of control. Nobody likes where the deficit is. But the combination of the deficit impact from this budget bill, granted its final form, still needs to take shape. That combination with tariffs looks like it's going to be neutral. That's what the cbo.
- [14:18]
Scott Wapner
It's also suggestive that the Fed is still in no rush to do anything as Chair Powell reiterated today in point Portugal. What's interesting to Goldman raises their 2025 Fed rate cut forecast to 3 from 1 September, October and December. And it's because the tariff effects have been smaller than we expected. That's what they say. Those are their exact words. Whether it remains so, we'll see. But Jay Powell has already said if not for the tariffs, he'd already be cutting rates. So you know, he's got his finger on the switch, so to speak.
- [14:54]
Joe Terranova
And that was the bright spot from his speech last week and he reiterated it today too. So we now just have to wait and see. Just like he's waiting and see. I think they're behind Scott. I think they should be doing it, but that's not my call. That's their call. So the point being is after his comments last week, I thought July was absolutely off the table, but September also likely off the table. And I actually think September is a real possibility. Now I don't know if we're going to get three, but by the way, I don't think we need three. I think they should be doing it. But I think this economy has been resilient, I mean to 2 1/2% in GDP and inflation. It's coming down.
- [15:30]
Scott Wapner
Well, you'll do, you do get the so called, you know, the deadline if you believe that it's a real line on the tariffs before the next Fed meeting as well. So let's see how it plays out and whether, you know, even as far fetched as it might seem to some, if July ends up being live in.
- [15:51]
Stephanie Link
Any way, I think September 18th is when we'll get the first cut. I like that. He gave us some form of guidance last week as it relates to his thought process with inflation. He said okay, the inflation is going to show up in June and July. I don't think it's going to show up in June and July actually. And I think that's going to be the reason why they are going to be cutting rates in September on September 18th I thought auto sales were interesting. Auto sales representing the clear premise that there was a pull forward in demand and that obviously has dissipated. And I think the same type effect will be seen throughout the summer. That's why I'm not expecting an inflation.
- [16:27]
Scott Wapner
Spike notable to Josh today despite a little bit of give back in the Nasdaq. As we said, it's underperforming which you haven't been able to say all that often lately. UBS says tech stocks have more to go despite all time highs. Dan Ives says you get another 10 plus percent in the second half with the tailwinds of AI in video on the doorstep or certainly walking up the sidewalk to the doorstep of 4 trillion in market cap. Metta hit a record high this week. Microsoft 14 all time intraday highs in the month of, of June. That's the most ever in a single, in a single calendar month.
- [17:08]
Mike Mayo
Yeah, look, there's no question that technology has dominated the leaderboard this year. You look at the top 20 year to date performers through the first half, six of them are tech. But then when you look at like another five of them you could kind of say are tech. Right. Like there are consumer discretionary names that are basically tech companies or you got companies like, like Uber, that's considered an industrial, but it's a, it's an app based business. So tech is. Tech is all over the place. 84% of S&P 500 technology names are above their 50 day, 68% or above their 200 day. So more than 2/3 of the index in a long term bull market. Almost all of these names are, are in a short term bull market. And then when you look at RSI you, you really have a situation where 52% of tech names are at an RSI 60 or greater which is confirming these uptrends which means the accumulation is coming along with these higher prices. People are buying them up. The lowest RSI in S and P tech is payc I never even heard of it is at velocity, that's at a 42. Most of these names are viable. And when you think about the drivers as to why it's earnings, these companies are growing their earnings at a faster rate in general than the companies in most of the other S&P 500 sectors is not happening in a vacuum. It's not like investors are waking up every day and saying oh let me just bid for the same group of stocks for no reason. They're buying companies that are coming in with better than expected numbers and raising the bar and until that stops, like until we get to an earnings quarter where all of a sudden you've got a lot of companies disappointing, it can and will continue.
- [18:58]
Scott Wapner
The wild card in all of this is Apple, which had a bad first half by anybody's scoring, down 18% year to date, only eclipsed by Tesla which was down 21% percent in terms of large cap Mag 7 stocks. Now there is a report that Apple is weighing using Anthropic or Open Air to power Siri, which would be a major strategy shift. Steve Kovach is our tech. Oh, he's not ready. We'll get to him in a minute because we're going to go to him on that story, which feels a little bit like as some I've read, you know, this is Apple throwing in the towel on trying to do it organically. If you can't beat him now, he is ready. Kovac's with us now. Steve, you there?
- [19:42]
Steve Kovach
I'm here.
- [19:43]
Scott Wapner
So you read it that way, throwing in the towel. If you can't beat him, join them. I mean, what's the deal here? Because it is a strategy shift, no doubt.
- [19:50]
Steve Kovach
Yeah, you can, you can say it's throwing in the towel, Scott, but I choose to be the optimist here. And look at it. This is the way for them to not fail to deliver on their promise and deliver it on time. So if they can't get their own personal system up to snuff in time for the 2026 delayed launch, well, here they go. They have this nice little backup with anthropic or OpenAI technology that has been proven to work to run on that layer. By the way, Scott, this is a cheaper way to do it. Think about Copilot over at Microsoft or Perplexity. What they do, they build their own services on top of these AI models from Anthropic and OpenAI. In fact, Mustafa Suleiman, the CEO of AI over at Microsoft, he told me a couple of months ago that's why they're taking this approach of using other people's technology and incorporating it into their own apps and services because it saves them money. Don't have to spend ginormous amounts of money on Nvidia chips. You don't have to go out there like Mark Zuckerberg and spend $14 billion investing in a startup to snap their CEO away. They can do it much cheaper than that by partnering or licensing the technology. And at the same time they're buying themselves just a little bit more Runway to do it themselves over time.
- [21:06]
Scott Wapner
I mean, the fact that you started out by saying, I want to be the optimist, let's be honest. Okay. And that's why you're laughing, because you know exactly what I'm going to say. You've been anything but. Does it this turn around, in some respects, the way that you will now view what might lie ahead for this company as it relates to their ambitions?
- [21:28]
Steve Kovach
Yeah, and I think that's why we're seeing the optimism in the stock. I mean, it's up another percent today on top and 2% yesterday because they'll be able to ship this at least closer to on time than they were before. Because they're going to use their own technology. This, yes, it's an admission they couldn't build it themselves, but we kind of knew that already. Scottish they told us they were going to be able to build it, didn't deliver, did not execute on it. And now they're going to turn to technology that actually works and incorporate that. That is, that is good news for Apple. Getting its Apple intelligence system out there and delivering on that promise of what they call the more personal Siri, this idea that it can incorporate into all the stuff stored on your phone, including your third party apps. If they're using an anthropic model, for example, running on Apple private cloud, by the way, Scott, this wouldn't be running on Google or Amazon's cloud like anthropic Curly does. They're going to be running in that private cloud as well. So you get that privacy layer on top of it, you get technology that's proven to work, unlike Apple's. That seems like a winning formula to me.
- [22:28]
Scott Wapner
All right, hang with me for a minute because I'm going to pivot you to something else in a second, but I want to talk to the crew. Better late than never Cloud. Is that how you.
- [22:37]
Stephanie Link
Cloudy Clarity, clarity, clarity, vision clarity. That's what they needed to deliver. They needed to deliver a plan.
- [22:43]
Scott Wapner
I mean, this isn't like. This isn't in stone. This is just a report.
- [22:46]
Stephanie Link
Okay, but. But it's also at least an understanding of what they're going to do if they cannot curate on their own some form of an AI strategy. There's an understanding that potentially they could step out and do something beyond that. And that's what we've wanted. I think that's what we've wanted all along. I think that stabilizes the stock. Clearly I own the stock through the etf, but if I didn't own the stock, I would buy it.
- [23:09]
Scott Wapner
Does this. Josh jumpstart this thing now for the second half because it needs a comeback.
- [23:16]
Mike Mayo
I don't think so. I read the Apple bloggers, they're disgusted. This is not a positive development. Maybe it's making lemonade out of lemons. But the idea that the largest, most well capitalized, most innovative technology company on planet Earth is missing this moment and doesn't have a way to put their imprimatur on a GPT general purpose technology, mega wave, like what else? What are you doing? Like smaller AirPods. So I'm a, look, I'm a shareholder, I'm a, I'm a long term fan and believer in Apple. I just, I don't think this is a positive. Maybe, I mean you just. As a relief rally, I don't know.
- [23:58]
Scott Wapner
You, you just, you just called it the most innovative tech company on planet Earth. I mean there, there are some who would just take issue with that statement in and of itself. Were they?
- [24:09]
Mike Mayo
Well, they can't. Well no they can't because the App Store, literally the App Store, you thought.
- [24:15]
Scott Wapner
Weiss was choking yesterday on live tv. I don't know what he would do today at that, at that statement. And Kovac can even weigh in on that too. If like the only knock frankly on this, this company from the naysayers has been the lack of innovation. They don't, they're never first with some innovative thing but they end up being the best.
- [24:40]
Mike Mayo
Yeah, and also innovation doesn't always mean first.
- [24:46]
Scott Wapner
Hold on a second, Sorry, I'll get back to you. My bad. Kovac.
- [24:49]
Steve Kovach
Yeah, yeah. I mean look, I take it a different way than Josh does. I mean looking at they're going to be actually able to ship this and I, I go back to again, my example of perplexity and copilot, especially perplexity. No one's criticizing Perplexity for not building their own AI systems in house. They license it from anthropic and from chat OpenAI just like Apple is supposedly going to do. And no one's knocking down perplexity for that. In fact, everyone's saying Apple should go out there and buy perplexity capacity. So I see it a different way. They're looking at technology that works. Yes, it's an admission they couldn't do it in house. Maybe one day they actually get there. But they can do it and do it in a less capital intensive way and do it in a way that can actually ship this thing on time. Because the last thing that they need to do is have another embarrassing delay like they had this year and have Another WWDC that's kind of a lackluster AI event while everyone else is pushing for forward there.
- [25:45]
Scott Wapner
Josh.
- [25:47]
Mike Mayo
I agree with 100% of what Kovac just said, but that wasn't the question. So the question was, is that the thing that kickstarts this? No, it's not. It's a good solution for the problem that they have. And I think Steve's right. This is way better than another false start with. With their own thing that that ends up being a bust. Like this is. That's why I said it's like making lemonades out of lemons, but it's still lemons. And no, I don't think this is the thing that takes Apple to a new high. So better luck next time. Maybe they'll get the robot thing right because they missed this. They are not a significant meaningful player in the LLM ecosystem. They may someday become one through partnerships. But that is the historically been what Apple has done. What Apple has done is they've looked around and they said, okay, this guy started this, this company started that. Here's literally the best version. Do they have the best version of AI enabled chat? Do they have the best chatbot? No, I don't think they have the fifth best. So that's the answer to your question. No.
- [26:57]
Scott Wapner
All right, I'm gonna leave that there, Steve, I'll let you go. Thank you very much. Steve Kovac with good insight there. You want to weigh in? You don't even own it.
- [27:07]
Jim Laventhal
No, I do own it, but.
- [27:08]
Scott Wapner
Oh, you own it.
- [27:08]
Jim Laventhal
That's right, you do own it. I added to it. I added to it during the April deluge. I mean, up 10%, but that's nothing compared to the markets. We know it's underperformed. And what I would say to this. Look, I think Josh is right. We know that these guys innovate after the fact and we'll call it innovation. They're good at copying. The problem that I have with the stock and I do. And I'm thinking about trimming it at the very least is it's just too darn expensive.
- [27:32]
Scott Wapner
You're thinking of trimming it? Yeah, they just had a bat. Why are you trimming it now?
- [27:37]
Jim Laventhal
If you'll give me a second. Because it's too darn expensive.
- [27:40]
Scott Wapner
Pure Labenthal facet. What are you doing?
- [27:42]
Jim Laventhal
It's too darn expensive.
- [27:44]
Joe Terranova
It is.
- [27:45]
Jim Laventhal
It's just too darn expensive for the growth rate in front of it. Now, I'm not going to sell the whole thing. And the reason I'm not going to sell the whole thing is because it can stay darn expensive.
- [27:53]
Scott Wapner
You're going to sell the stock 20% down.
- [27:55]
Jim Laventhal
Wait, wait a second. You missed the part where I said I just added to it in April. It's up 10% from there. So I would take that trading lot off of the table. But even if it were down 20%, by the way, I've held this thing for years. So in terms of being down, we're looking at the wrong time perspective here. But my point overall is that is this going to be the market leader going forward in terms of share price? Forget what they do with any of the of the GPT. Just forget that. Is this going to be the market leader at 29 times earnings? I just don't think so. For the growth rate. Will it? Will the shares grow? Yes, they will. Why? Because they're in every passive index in large size and they buy back shares like crazy. So I'm not going to eliminate the position but in terms of waking up in the morning and being excited about it, I'm not.
- [28:38]
Scott Wapner
Okay, we'll take a break. We have a move from Steph to get to. We have an update to Josh's best stocks in the market group. He said on the verge of a breakout. We'll tell you what it is coming up.
- [29:00]
Josh Brown
McCormick knows unbeatable flavor starts with the right spices. It's why we created Flavour seal. So anytime you peel back the seal of McCormick herbs and spices, you can be confident they will pack the same amount of flavor as the day they were packed. The kind of flavor that brings out the best of your favorite recipes and keeps everyone coming back for seconds or maybe even thirds. McCormick flavor sealed for unbeatable flavor.
- [29:29]
Scott Wapner
At.
- [29:29]
Josh Brown
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@capella.edu.
- [29:45]
Joe Terranova
First on CNBC, SEC Chairman Paul Atkins.
- [29:48]
Scott Wapner
On the changing regulatory landscape, crypto policy.
- [29:52]
Joe Terranova
And his capital formation agenda.
- [29:54]
Scott Wapner
Squawk box tomorrow 6am Eastern and streaming on CNBC.
- [29:58]
Stephanie Link
Plus.
- [30:15]
Scott Wapner
That move from Stephanie Link. You bought more Dr. Horton. That's an interesting move. I mean the home, the Construction ETF, the ITB is having its best day since May 12. But housing Piper Sandler says the recovery is at least two years away.
- [30:31]
Joe Terranova
I mean it's been horrible to own this stock or anything housing related.
- [30:34]
Scott Wapner
Why you buy a mortgage for?
- [30:35]
Joe Terranova
Because it's cheap at 11 times forward estimates. I think the guidance that they gave with regards to margins and deliveries has been not kitchen sink but it has come down to reasonable levels. I am intrigued with the interest rate move. We talked about the yields earlier today. They're at six week lows. The 30 year fixed is still high at 6.8% for mortgage. That has to come down. But I do think you will see that actually start to come down. And maybe, just maybe we do get a rate cut in the fall.
- [31:04]
Scott Wapner
These stocks are going to fly with one rate cut.
- [31:07]
Joe Terranova
Yep. Because it'll be directional. Absolutely. Especially with them down as much as they are and as. And the valuations are really really cheap.
- [31:15]
Scott Wapner
That's the interesting play. Right. With the way rates are moving. The market's not stupid. It knows that. What you think that rate cuts are probably coming in the fall.
- [31:25]
Joe Terranova
Yeah.
- [31:26]
Scott Wapner
Yet maybe rates have a different story to tell.
- [31:28]
Joe Terranova
I think you have to be patient on this one. But I really do like them. The execution has been really very very good. The best in the industry. The only better one is Toll Brothers. They're both really great. But I don't need to own two.
- [31:39]
Scott Wapner
Best stocks in the market. Josh, a new addition. It is hlt. It is Hilton. Why?
- [31:47]
Mike Mayo
Yeah. So this is a potential breakout. It's not quite in progress but it's getting very close and I thought I'd spotlight this. Basically we saw a golden cross happen. As the stock climbed out of its liberation day lows. Hilton was in a 24% drawdown. Now it's back to within 4% of 52 week highs. Got that 50 day crossing back over the 200 day look. This sector itself, leisure, lodging, travel, service industries in the S and P, every single name, with one exception is above its 50 day. The sector is just absolutely on fire. We talked about the cruise lines the other day and Hilton should follow through here. The last earnings report was very strong. 6% adjusted EBITDA growth, $300 million in net income, a 7% pipeline increase and 927 million returned to shareholders during the course of the quarter. Full year guidance looked great and that's why the stock's working. So I think the two seventies is where traders want to watch for that trigger. If it can get through the 270s on convincing volume, I think it's a pretty good setup. And I would effectively use the 200 day moving average as my risk management. It's like low 240s, let's say 242, 243. And each week I would basically move that stop loss up so long as the uptrend continues.
- [33:10]
Scott Wapner
Do you have a thought here, Joe?
- [33:11]
Stephanie Link
Looks good. I agree with you, Josh, on Hilton. I think Marriott has a very similar chart. Both balance sheets are in good shape. In the past, the ETF has owned Marriott. I don't believe we've ever owned Hilton. But if the momentum continues, certainly they qualified as candidates to be included.
- [33:26]
Scott Wapner
All right. We'll follow that stock. Thank you. Let's get the headlines now with Kate Rogers. Hi, Kate.
- [33:31]
I
Hey there, Scott. President Trump says he'll discuss Gaza when he meets with Israeli Prime Minister Benjamin Netanyahu at the White House next week. He added that he would be, quote, very firm with Netanyahu on the need for a speedy cease fire. During a visit to Florida today, Trump also appeared hopeful that an agreement could be reached for a hostage exchange between Israel and Hamas. The dean of Yale Law School will run the Ford Foundation. Heather Gerken will lead the philanthropy group which said today that the constitutional law scholar will take the helm in November. Gerkin said she was looking forward to working at the foundation to, quote, protect democracy and rule of law. She succeeds Darren Walker, who served as president for 12 years. And Jimmy Swaggart, one of the first preachers to bring his ministry to a massive television audience, has died. The Pentecostal preacher began his television ministry in 1973. He was later involved in prostitution scandals in the 1980s that led to his suspension and defrocking. He was 90 years old. Scott, back over to you.
- [34:31]
Scott Wapner
All right, Kate. Thank you. Kate Rogers. Coming up, a big pop for the casino names. Contessa Brewer follows that money for us. She joins us next.
- [34:54]
Josh Brown
McCormack knows unbeatable flavor starts with the right spices. It's why we created Flavor Seal. So anytime you peel back the seal of McCormick herbs and spices, you can be confident they will pack the same amount of flavor as the day they were packed. The kind of flavor that brings out the best of your favorite recipes and keeps everyone coming back for seconds or maybe even thirds. McCormick flavor sealed for unbeatable flavor.
- [35:23]
Scott Wapner
At.
- [35:23]
Josh Brown
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.
- [35:54]
Scott Wapner
All right, we're back. Farmer Jim had a jump in his step today when he saw shares of Win which were up. Contessa Brewer had to make an appearance here with that news to tell us exactly why Jim had a jump in his step today.
- [36:09]
I
Why wouldn't you? I mean we've been waiting for this kind of results out of Macao.
- [36:13]
Scott Wapner
Well, because you haven't recently. But anyway, please continue.
- [36:16]
I
Well, look, here's the deal. We are now seeing back to back month over month gross gaming revenues coming in much higher than expectations. The street was expecting maybe a 2 to 5% improvement over last year. It got 19% improvement, $2.6 billion for the destination for the month of June. Now what's remarkable about this is that yes, we're seeing visitation increase, but we're seeing per visitor spend decrease by 13% of the over last year. So those numbers are what give investors and analysts pause because if you're seeing a big jump in gross gaming revenue that is really fueled by promotional spending, it maybe has less impact than visitors who are coming and spending a lot of money. We'll have to wait till earnings to find out how this breaks down. Is it breaking down with gaming or in food and beverage, in entertainment, concerts and that's a big one right now. They're not even breaking out entertainment as a spend. When they analyze the numbers, they're looking at shopping, for instance. Are they coming and shopping. And the other thing that we're seeing is overnight visitors are not growing as fast as day trippers. So that bridge from Hong Kong to Macao made a huge difference for people coming just in a day. One more thing to point out here. You're looking at shares of Melco up 12%. Its three month performance has been remarkable. Up 54% right now. Las Vegas Sands up 9% today win up 9%. MGM Resorts up almost 8%. But I want to point out even Caesars today is getting a huge lift. There just seems to be a lot of enthusiasm, bullions potentially around.
- [37:59]
Joe Terranova
What I wanted to see was a little bit of activity because all of these stocks have been just down for the last year and a half. We all expected that when they all opened their country that from COVID that they would see better trends and they just haven't. So this is the first real meaningful number.
- [38:13]
I
Even, even when they showed in earnings that they can do, they can show enormous growth year over year. Singapore is on fire back to being by far the most lucrative hotel casino resort in the world. And yet Las Vegas Sands is just, its shares are not demonstrating any of that.
- [38:31]
Jim Laventhal
So obviously today's move is on Macao. We know that and that has been the driver for these stocks. Steph, your Las Vegas sand and my win. But what I submit and have been saying for Quite some time that it's far more than just Macao. There is very little respect given for the growth that's been going on in Las Vegas in Boston. Now granted there's been some decrease, you know this in the average room rates and such like that, but it's still very strong. And the thing that in win is really not priced in is the Dubai concession that they won a few years ago and that they're building right now, which should be online in the very beginning of 2027. Now that's granted 18 months away, but that is not in the stock. And Dubai is a major growth area. We know that because Disney's going there as well. If you look at on the map, that's where a lot of people can travel to in a very short notice.
- [39:18]
Joe Terranova
And the reason why I own Las Vegas sands is because 60% of their revenues is actually tied to Mexico Macao, 40% to Singapore. So they got nothing else. And so I was just hoping that you would see a recovery in Macao while Singapore actually could drive some of the earnings growth for the company. But really cheap. This whole sector is very, very cheap.
- [39:36]
Stephanie Link
And for the both of you, potentially the next catalyst could be that the analyst community comes around. They raised the sentiment and accordingly raised price targets. Because if you look at when the 12 month price targets, only 104 stock is at 101 right now in Las Vegas Sands is 49. The stock is close to 48.
- [39:53]
Jim Laventhal
Quarter after quarter. They put up good results quarter after quarter. And it's just not believed by the analyst community. Yeah, I can hear it on the conference call questions. It's just not believed it's going to continue. You're absolutely right.
- [40:05]
Scott Wapner
Might you have to add one of these names on the momentum?
- [40:10]
Stephanie Link
That's a little bit way off because we also look at quality as well.
- [40:14]
Scott Wapner
Why do these fall short then?
- [40:16]
Stephanie Link
They fall short on the quality metric because of return on equity and debt to equity.
- [40:21]
Scott Wapner
I know that's, I don't like that.
- [40:22]
Jim Laventhal
Sounds like, I mean that sounds like.
- [40:23]
Joe Terranova
Las Vegas Sands is buying Las Vegas Sands.
- [40:26]
Stephanie Link
Las Vegas Sands is much in a better balance sheet.
- [40:28]
Joe Terranova
6% of their share outstanding. So yeah, they're doing what you just said. That might be on your short list then.
- [40:33]
Scott Wapner
Thanks. Better position up next. Sent Tolle. He's here with his midday work. Our senior markets commentator Mike Santoli is at the desk today. Pretty obvious what's happening within the market market today. But what do you make of it?
- [41:09]
J
Yeah, I mean obviously it's just mechanical kind of torque in this repositioning of, you know, we did have a big run in the stuff that worked at the end of the quarter and so you get some reversal of that. And I think it somewhat reflects that. If there's something this market has to answer for, it is it's not been the broadest, most inclusive run to the highs. Now it's not that it's just a few stocks, but it's been selected active and there's like only 50% of all stocks are in an uptrend and all the rest of it. So there's an opportunity for the rest to do a little work and catch up. I don't know if it's the start of something. We never know if it's the start of something. Heavily shorted stuff, laggards, all of it getting picked up. You know, we'll see if it matters. What's interesting too is the pop in yields really was after jolts. So 10am is when you got that boost. Who knows if that's really a number that we should hang our hat on in terms of the job openings going up. It's not unwelcome, but it sort of complicates how people were leaning because people were leaning or at least bracing for a weak jobs number on Thursday. I don't know if it was because they're reading clues or just, hey, you never know, one of these monthly reports might actually lay an egg.
- [42:19]
Scott Wapner
I think the market participants are going to err on the side of almost always that what you're just looking at and what you just said, the jolts being better than expected, the yields being up is a sign of a stronger economic growth coming rather than the bond vigilantes going crazy over a tax bill.
- [42:38]
J
I agree. It's almost generally, almost always going to be the case, especially when you're starting at four and a quarter and people have been playing the lower yield trade.
- [42:46]
Jim Laventhal
For a little while.
- [42:46]
J
So it's really again just forcing traders to move their feet a little bit relative to what they were expecting. So maybe not a big deal, but something to keep in mind as we get toward Thursday.
- [42:55]
Scott Wapner
Okay, good stuff. I'll see you on closing bell. That's Mike Zantoli. We're back right after this. More trades. All right, let's talk about more second half forecasts. BTIG has one today. The top stocks or their top picks for the second half. Starbucks, Fiserv, Capital One, Snowflake, Applovin, Expedia. On that list, Joe T has Capital One, Applovin and Expedia.
- [43:37]
Stephanie Link
Of Those three names, I like Capital One the best. I like Steph's point as it relates to the financial sector. I think the financial sector remains strong for the remainder of the year. Obviously with Discover, that conglomerate now is one of the largest competitors. The Visa and MasterCard as well. So I think Capital One is the one name I would look at applovin little suspect in terms of the way that it has traded recently. Never really. Despite the market rallying so significantly. Ever able to take out its February highs in Expedia. That's really been underperforming for us certainly relative to Booking Holdings.
- [44:12]
Scott Wapner
And you think it still will? Yes, because I mean look, this is emblematic of today's trade laggards to leaders.
- [44:20]
Stephanie Link
Yes, yes.
- [44:21]
Scott Wapner
And you just think it's a one day phenomenon.
- [44:23]
Stephanie Link
I do.
- [44:23]
Scott Wapner
I think booking just positioning.
- [44:25]
Stephanie Link
I think Booking holdings clearly is in a much better position.
- [44:27]
Scott Wapner
All right, Snowflake. Steph, we mentioned on the list.
- [44:30]
Joe Terranova
Yeah, I mean looks had a Great year. Up 40% year to date. New CEO is executing. They have launched 125 new products and product revenue growth last quarter was 28%. They guided for 25% with margin expansion and free cash flow accelerating. So the story is happening. This new CEO is delivering more than delivering. It's had a nice run though and it's not cheap. So I certainly would not be chasing it right here.
- [44:52]
Scott Wapner
Josh, you sold Starbucks a few months back, but it is on this list. You still have any thoughts? You still follow the name. What would get you back into it?
- [45:03]
Mike Mayo
I like it. I mean I was in it. I was in it on it on a trade, on it on a technical trade. But fundamentally I like it. I think this stock's been consolidating for the entirety of the post pandemic period. It had two major overhangs. One, one was inflation and getting the pricing right and then the other was China. The inflation thing, I think they can get through a little bit easier. The overhang of China and whether that, whether that's still going to be a growth engine or not is still an open question. But they have the right CEO. I think he's going to figure it out. I like the name. Fundamentally I'm just not in it right now.
- [45:39]
Scott Wapner
Okay, we'll take a break, we'll come back and we'll do finals next. All right, Adam Parker is going to join me at 3 o'clock today. Gene Munster 2 Apple, Tesla markets Tech. We'll do it all and I hope you join me then. Josh Brown, what's your final.
- [46:03]
Mike Mayo
Amazon. Mark Mahaney just took his target to 280. I think he's gonna be right that YouTube.
- [46:09]
Stephanie Link
Second day in a row. Amazon. Yeah, I'll give you another one.
- [46:12]
Joe Terranova
American Express.
- [46:12]
Stephanie Link
I agree with Josh on Amazon.
- [46:14]
Scott Wapner
American Express was not the second day in a row. Yesterday was bad.
- [46:16]
Stephanie Link
Yeah, yesterday was bad. Mercado Levi was. It was the other day that I had the second. I had the same one.
- [46:21]
Scott Wapner
Sorry to bring it up.
- [46:22]
Stephanie Link
Yeah.
- [46:23]
Scott Wapner
Farmer Jim spread the pain.
- [46:25]
Jim Laventhal
Citigroup 13% more until it gets to tangible book value.
- [46:28]
Scott Wapner
Okay. And Steph must be Chipotle.
- [46:30]
Joe Terranova
Chipotle. New products are coming.
- [46:32]
Scott Wapner
All right. Good stuff. Thanks, everybody. I'll see you on the 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.
- [46:48]
Josh Brown
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 halftimereportdisclaimer McCormick knows unbeatable flavor starts with the right spices. It's why we created Flavour Seal. So anytime you peel back the seal of McCormick herbs and spices, you can be confident they will pack the same amount of flavor as the day they were packed. The kind of flavor that brings out the best of your favorite recipes and keeps everyone coming back for seconds or maybe even thirds. McCormick flavor sealed for unbeatable flavor.