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Halftime Report
Stocks Surge on Tariff Delay 5/27/25
00:43:04
Scott Wapner and the Investment Committee discuss the big day for stocks as the President once again backs away from his tariff threat. Plus, Jim Lebenthal buys more Alphabet and defends his position in Cleveland-Cliffs. And later, Josh Brown shares a stock from his “Best Stocks in the Market.”
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- [00:00]
Scott Wapner
A rich life isn't a straight line.
- [00:03]
Josh Brown
To a destination on the horizon. Sometimes it takes an unexpected turn with detours, new possibilities and even another passenger or three.
- [00:15]
Jim Labenthal
And with 100 years of navigating ups.
- [00:17]
Joe Terranova
And downs, you can count on Edward.
- [00:19]
Josh Brown
Jones to help guide you through it all. Because life is a winding path made.
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Joe Terranova
Rich by the people you walk it with.
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Josh Brown
Let's find your rich together. EDWARD Jones, Member, SIPC As America's leading.
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Joe Terranova
Business lender, bank of America is on.
- [00:36]
Josh Brown
Your corner and in your corner. With $215 billion in business loans and over 3,700 business specialists across the nation.
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Joe Terranova
We help businesses thrive so communities prosper. What would you like the power to do? Learn more@bankofamerica.com LOCALBUSINESS bank of America Official bank of FIFA Club World Cup 2025.
- [00:58]
Scott Wapner
Copyright 2025 bank of America Corporation. All rights reserved.
- [01:03]
Josh Brown
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. Welcome to the Halftime Report. I'm Scott Watner. Front and center this hour, this big day for stocks. The president once again backs away from a tariff threat. We will discuss and debate what all of it means for the markets. Joining me for the hour, Josh Brown, Joe Terranova, Shannon Sokosha and Jim Labenthal. We will check the markets. Guys just told you we're pretty much highs of the day, almost 600 on the Dow. Nasdaq's having a biggie S&P back above 5,900 as well. Joe, we said at the time of that tirade that the market didn't really believe that it was going to happen. Many of the notes that came out that day says it was the words they used to describe the threat, things like preposterous, the idea that you're going to get 50% tariffs on the you now, you still may, but you're off the hook for another month and that's all the market needs.
- [02:08]
Shannon Sokosha
I think the market is actually becoming desensitized to all of this tariff negotiation.
- [02:12]
Josh Brown
It certainly feels like it's trying to.
- [02:14]
Joe Terranova
Yeah.
- [02:15]
Shannon Sokosha
But I think we're allowing for other things that are positive, fundamental conditions to step forward. Such as since Thursday morning at 830, you've seen a retreat of nearly 18 basis points for a 30 year Treasury, 15 basis points for a 10 year Treasury. Last night we heard from Japan that they might be adjusting the debt issuance. So last week I was kind of advising everyone let's rely on the technical formation. You still have from two weeks ago, a price gap in the S&P 500 from 5,700 to 5,750. We didn't break below that. That keeps in place the near term momentum that allows for a potential run towards the altar time highs. Now I don't know what happens when you go beyond the all time highs. It could be a bull trap. I'm not sure that you break out from there, but it does feel to me like technically we are pointing towards that all time.
- [03:07]
Josh Brown
Shannon it looked like almost a formality when the China tariffs were rolled back that we were going to get that all time high. We're like 4% away at that moment. Most people on this desk, most that I talked to said yeah, I mean what's going to stop stocks from going to an all time high? Then we got the posts that morning of the FIF 50% on the EU, the 25% on Apple and the market's like, well here we go again. And we sort of backed up then we were like 6% from the high. But here we are trying to march back as we are. We desensitized as Joe says at this point.
- [03:43]
Scott Wapner
Well, I think the threat even as early as, as recently as the beginning of last week though, Scott, was that were to, to Joe's point where yields going to unwind this momentum and was this, you know, expensive or potentially very expensive tax bill going to create the pressure on the long end of the curve that could disrupt this? I don't know if we're desensitized. I just, I think what we are is that we're being much more prescriptive and thoughtful about tariff impacts at the individual company level, which frankly is what's critical in this environment. If you're looking at fundamentals and then you're also looking at Scott, you're looking at this, this scenario in which a lot of the more pro business catalysts that people were really looking at as coming to fruition in the second half of this year and into 2026. Those are starting to be incorporated into earnings expectations now. So you know, you've taken your sort of one time hit and everybody from the White House to the Fed has said it's probably this transitory one time hit from tariffs. You've incorporated that into your guidance. And now unlike what we were talking about maybe that first week of April, this perhaps is not going to be the derailing of the economy. And so therefore we're back into this mode of looking at the potential for all time highs. I was asked last week, interestingly, if I felt we were going back to the lows, if we saw a 10 year above 5%. My view is that there's going to be a lot of buyers that come in as it approaches 5%. And we've seen that obviously with other central bank intervention over the weekend. So I think that really what you're trying to do is look at fundamentals, how are Earnings Incorporated and trying to parse out what is a true broad economic impact, such as rates with specific tariff impacts on individual companies.
- [05:20]
Josh Brown
Jimmy, the yield move is obviously significant. You see it on your screen. We're showing you intraday moves on yields for the 10 and the 30. So you've come off the burner on that, which is undoubtedly helping the situation. The fact that the tax bill may not look what's going to probably look close to what it passed in the House, but it's not going to be that. Right. Maybe that's helping take a little bit of the sizzle off of the move in yields to the thought that the Senate's going to take a look at this and some already have and they're speaking out even on the the right and suggesting. I don't think so.
- [05:54]
Joe Terranova
Yeah, expensive. I'm glad you went there, Scott, because the tax bill is really what's on my mind. We're getting a lot of inquiries from clients saying they're worried about the deficit, they're worrying about the dollar. And that makes sense because the headlines as you're referring to, Scott, about the tax bill are all that this is going to be deficit busting, budget busting. But I think what's being lost there is that when we score the deficit, at least by the cbo, the Congressional Budget Office, it takes into account none of the potential pro growth, pro economic growth, pro revenue aspects that may come from it. May that's called dynamic scoring and that's not in the CBO estimates. Nor for that matter does it take into the fact that the tariffs that we're talking about as a negative here and we get it right. I don't like the tariffs. But on the other hand, there is a silver lining. They do put some money into the Treasury's coffers. So I think what we're seeing here is possibly the market is getting desensitized, to use that word that we're talking about to tariffs, because it's looking at the tax bill and saying, hey, wait a second, all right, clearly there's some spending here that the Deficit hawks don't like, but it looks like it might just be getting paid for by these tariffs and by the pro growth initiatives that are coming out of it. I know not everybody's going to agree to that. I know that. Okay. But I'm just saying that that's a possibility for why the market is getting desensitized to tariffs that are coming one way or the other.
- [07:07]
Jim Labenthal
Yeah.
- [07:07]
Josh Brown
I just don't think the market believes anymore that they're going to be to the level of where the threats were.
- [07:13]
Joe Terranova
I agree with that. Hallelujah. Hallelujah. I mean, and also to this point, you know, we're one month, one and a half months away from the 90 day pause on the reciprocals. The markets may be saying, look, I'm tired of this. Just set the level and let's move on. Companies will adjust.
- [07:28]
Josh Brown
Josh, JP Morgan's trading desk today says the next 300s and P points are higher and they point to a number of factors for their tactically bullish hypothesis. Stable macro data. In other words, some of the soft data doesn't necessarily show up in the real data or positive earnings, which I think everybody can admit earnings were better than people feared and a further de escalation of the trade war. Well, we keep getting a every other daily reminder that what is a threat is not necessarily the reality. And all of those are going to add up to the sum of 300 points or whatever on the S and P. The number of points isn't significant. It's the move and the direction.
- [08:12]
Jim Labenthal
Yeah, I wrote about this over the weekend on my site. I think like there was this idea of a bull trap and that being the thing that we all need to be guarded against. But then when you looked at some of the breadth measures and I saw somebody talking about a super Zweig bread thrust Marty Zweig used to follow. Like when you have a rally or you punch out of a trading range and you do so with like 90% of the stocks higher, it being more meaningful than just that. The index does it itself. And we had multiple bread thrusts in May and I think that speaks to just the allocations going into ETFs. So it may not be that meaningful versus history, but it's still meaningful. And you know, I think right now, obviously the path of least resistance is higher and some of the factors that I think about are the flows and people are buying almost no matter what's in the news because everybody figured out the trade, the trade war stuff is just for attention. It's not serious. It's not real. I think it took the market a while to get there, but that's where we are. You had $437 billion into ETFs year to date. We're on pace for another trillion dollar year into ETFs and obviously a lot of that going into stocks. Voo, which is the Vanguard's version of the S&P 500, took in $65 billion in the first four months of this year. Last year, 116 billion total. So we're going to shatter that full year record. The guy that was quoted from Vanguard said during April we saw a 5 to 1 buy to sell ratio I think in that ETF. So it tells you how oblivious or apathetic the investor class is to all of these trade war headlines. You get a one day reaction, they come in, they immediately buy the diploma. And Larry Fink was in the Middle east last week talking about how there's still $11 trillion in money markets. Even if only 10% of that chases a new high in the S and P. That 300 point call could end up being conservative. So this is where I think we are, big picture. It's a tough thing to fight. I don't think a lot of people want to fight it. I think a lot of people want to believe we'll have tariffs, the tariffs will come off, there might be an earnings hiccup, but in the end the economy will stay on track.
- [10:42]
Josh Brown
Yeah, I mean, I think that's a sane view of sort of where the market has come to right through all of the trials and tribulations of headline driven selling. Even the day of those two social media posts, there was a moment where you felt like, I think this market might go positive by the end of the day. Now I don't think it quite got there, but it made a couple of runs and it closed way off of the initial lows. We woke up, the market was down a lot. And in the situation to Josh's point is far different.
- [11:14]
Joe Terranova
And you know, Josh as usual said something that triggered a thought in my mind when he mentioned the Middle East. Maybe this isn't just getting desensitized to the trade wars or not taking it seriously. However rephrased it. There's actually capex going on around the world. We know about humane Saudi Arabia, we know about Qatar, we know about France, where there's a new development going up. I mean these, these data cent and look, this flows through whether you're in video producing chips or you're a concrete manufacturer or a steel manufacturer. There is demand to build these things all over the globe and that is pro growth, any way you put it.
- [11:47]
Josh Brown
Speaking of Nvidia, Josh, tomorrow is the biggie. Right after the bell we get earnings. Shares by the way, are having their best month. Best May, best month since May of 24th. So it's been a minute since we've seen Nvidia feel this energized especially going into a print. Most of the notes out today are positive. Reiterated overweight at Piper, reiterated overweight at Morgan Stanley. Have price targets of 150 and 160 respectively. Dan Ives obviously bullish going into the number. What about you?
- [12:19]
Jim Labenthal
I'm bullish but that, that never changes. So maybe that's not, maybe that's not that helpful. This is what I would say about the setup. There's massive call buying in the stock going into these numbers. I think the call buying is warranted because we've already heard from their biggest customers and all of their biggest customers have told us not only were they affirming their current spending plans on AI, but they actually thought that there was room to, for upside to that spending. So if your customers are saying that publicly six weeks ago, why would you expect anything other than another blockbuster in video report? The setup is very simple. Revenue is expected to grow 66 and a half percent year on year to $43.37 billion for the quarter. That's obviously slower than the 260% pace of growth last year. But we know that that's reflected in the multiple. We're looking for 73 cents on earnings. They crushed the last report and I think if you look at where the stock trades, yeah, it's rallying but it's still 10% below the all time high. And, and I think on a PE basis it's one of the cheapest of the mega cap stocks. 24 times earnings. Cheaper than Apple, cheaper than Amazon, cheaper than Tesla, cheaper than Microsoft. Should it be? I don't think it should be. So I like the setup going into the print and that's where I think we are.
- [13:49]
Josh Brown
Give me guys if you could like a three month, I don't know, back it up a little bit because the intraday doesn't really tell the full story, I think of what tells a better story. This stock got what under 90 bucks? Wasn't like 80 80s, right? Look at that. It gets down to that area. You're like, well the stock has really traded sideways for a good period of time. And here you go for a springtime move higher. The stock's back 135 heading into the number. So it changes the dynamic of the setup.
- [14:18]
Shannon Sokosha
So like Josh, I think the setup is a bullish one. I actually think the January 7th intraday high at 15313 could be in play after earnings. But like Josh, if there's a mess and I could be wrong, we're human beings, we could be wrong on this, my bullishness is not going to change because the stock would move lower. And I still see tremendous amount of positive fundamentals surrounding the stock. If you pull the lens back 11 months, the stock has basically been in a very big trading range. I think if you go back to the end of June last year, you're talking about maybe it's up 2%. And why is that? I think that's because investors have had to adjust their expectations. Josh mentioned, I think it was in May of 24 when they reported, they reported year on year growth of 262%. Next thing you know, in August they're reporting 122. So that begins the deceleration in the revenue growth and I think you can expect to grow year on year 200 plus percent. So the deceleration in that revenue growth is something that investors have become to acclimate themselves to. And I think we're at a point now where there's enough bad news priced in. We know the H20 ban. We, they've already said to us 5 to 8 billion dollars per quarter that's ultimately going to be the hit. So I think there's enough priced in here negative that I think you potentially have a nice setup where the stock breaks.
- [15:43]
Josh Brown
That's Piper's view that they say they think there's going to be a revenue miss that they top line miss because of the macro uncertainty and also the 20 ban. They say investors should weather the uncertainty and stay long. The stock, I assume you're, you're doing that.
- [15:57]
Joe Terranova
I am. And you know I bought some at 120 before it went down to 90 or whatever it was bought more there and I'm happy with it. Now just to put numbers through Joe, what you were saying, I mean I won't do this for very long. With a 10 year track record on this stock is annualized at 73% which is unlike anything I've ever seen in my life. 10 years. However, to your point, over the last six months it's exactly flat. And why is that? It's because the growth rate has come down. This is a fact. If you look at FactSet which is my data source. This. You know, six months ago you were looking, looking at 40% projected earnings. Now it's 14%. But that's okay. I'm not looking at Nvidia and saying we're going to get 70% returns from here. But can you get double what the s and P500 if you got 15% over the next 12 months on a stock of this size, frankly you should be happy with it. And I would be happy with it. And I'll bet there's a little overshoot to that. But to the Piper Sandler note, sure there could be a little miss here. I don't think that the key thing here is the demand is there. This is where what I was talking about with Humane in Saudi Arabia, the France data center, which is going to be the biggest in Europe. These things are going up all over the place.
- [17:00]
Jim Labenthal
People who are choosing whether or not they want to buy in video are not making that choice on an absolute basis. Like in video versus nothing. It's in video versus the field. What is the field? Apple right now trades at a 31 times trailing P E. It sells at 30 times price to free cash flow. Nvidia is probably going to outgrow Apple. Maybe not in every single quarter over the next three to five years, but probably over the period. I think most reasonable people would say that that's what the expectation is you're getting in video at a significantly lower valuation to that expectation growth. Now if you're somebody that's more concerned with things like dividends, buybacks and the reliability of the iPhone ecosystem, you might pull the trigger on a buy of Apple. If you're somebody that's looking more for bang for your buck on the AI trade, you're buying Nvidia. And if you get an adverse reaction, by the way, earnings were unbelievable last time they reported the stock fell 8 1/2% the next day. Day that's a gift if that, like if that's what ends up happening here. There's a top line miss because of like global macro and you can scoop this thing up down almost 10% the next day. I feel like that's what you want if you're, if you're an investor.
- [18:24]
Josh Brown
These things have been similar. Apple and Nvidia really in market cap size only of late. No, you write that the, you know, $3 trillion Nvidia had become the, the biggest eclipsing Apple. But the recent trajectory of the stock as we just showed on that charts like no contest. Speaking of Apple's trying to break an eight day losing streak. It's the worst since January of 22. I know everybody owns that. Morgan Stanley's Woodring, Eric Woodring is out defending it today to 35 is the price target. We'll see what happens with the 25% tariff. Melius Research defending that name too. I should also mention that the chips, it's not just an Nvidia story today. Today it's the chips in general. The Sox is trying to break a seven day losing streak. And you did have a call today on Applied Materials, Joe, which you own, which Oppenheimer says sell.
- [19:14]
Shannon Sokosha
No, I'm not sure you want to sell the semi equipment names. I think the semi equipment names is where you're actually seeing the biggest recovery in terms of price.
- [19:22]
Josh Brown
They say though that the momentum is poor, which you look at more than anything else.
- [19:26]
Shannon Sokosha
The momentum when you spend, when you pull the lens back on momentum for the semis, it looks poor over a 12 month period. The point of emphasis on that is just the simple fact that the SMH I believe is down 2% over the last 52 weeks and you've got the SMH which is actually higher by 20 plus percent over the last 52 weeks. But in the near term when you're looking at the last six weeks, semiconductors are beginning to have a little bit of that recovery, that price rebound. And the area that it's really strongest in besides Nvidia is a lot of the semi equipment names. So it is KLA Corp. It is LAM Research, it is Applied Material. I actually like LAM Research, which we don't own the best of the names that I have mentioned. But semis right now are without question experiencing mean reversion in particular to the software industry.
- [20:15]
Josh Brown
May's been a good month for tech, as everybody knows, especially in the mega cap universe. Alphabet has been, it's, it's up 8%. Manybody would take 8% but like I take that beginning of the month. But then you compare it to the 24% of Nvidia, the 16 of Metta and Microsoft and even the 11 of Amazon and you're like, well, what's going on with this name? We had the questions about search market share drops. Stock had rallied from that day of the Eddy q sell off, 15% back. Right. You said you were saying staying with it now you've added more.
- [20:49]
Joe Terranova
Yeah, it probably doesn't surprise anyone the way I've spoken about it. It has become a battleground stock. I'm surprised it's become such a battleground stock, but I understand why? Given the questions that you just listed out, Scott, and I'm clearly answering that I think they're going to meet the competitive threat, that I think they have the intellectual chops with which to do so. And relative to the performance or the relative performance, I see that as an opportunity. I'm very happy with my Amazon, very happy with my Nvidia doing what it's doing right now. And I see the opportunity to add to Alphabet, particularly after the development conference last week where they're really showing their capabilities at this multiple roughly 17 times forward earnings. I could be wrong, but I'm not sure how much downside there is. Famous last words.
- [21:31]
Josh Brown
If I am wrong, Tesla's a big winner today too. Worth noting. Elon Musk posting over the weekend back to spending 24. 7 at work and sleeping in conference server factory rooms claims goes on to have a little more to say there. As you know about technologies rolling out and the like. Sleeping in the office though, Joe, doesn't make people like your brand better necessarily. And from CNBC, we have sales plunging in Europe, 49% on brand damage and rising competition. But there's been a sizable amount. I think everybody can intellectually admit there's been brand damage caused by Musk. And the degree to which they can recover, if they can, remains the most reasonable question to, to entertain.
- [22:15]
Shannon Sokosha
I agree with that. But as a shareholder at least you have comfort that he is at least acknowledging that he needs to be there. He needs to resolve some of the challenges that they have in front of him and he needs to stimulate the growth once again, whether it's autonomous or whatever that growth engine is ultimately going to be. He has to step forth and really initiate that innovation in a meaningful way. But there is challenges. Let's not lose sight of the fact that the stock is still down on the year somewhere around 14 or 15% as we come on the show. So he's got that headline risk. And I have to tell you, you mentioned Apple and we touched on it briefly. I think Apple has headline risk as well because remember, Jensen Huang was in the Middle East. Tim Cook was not in the Middle East. Tim Cook is has unrealistic expectations for him right now in terms of production here in the United States.
- [23:05]
Josh Brown
All right, headline risk, the last stock we do in our A block today is about headline risk. At least today it's Cleveland Cliffs, it's down 5% or at least it was the last time I checked. The odd man out, it would seem in the US Steel Nippon deal, it's a $6 stock, let's see. Cliffs, please. It's down 23% in a month. It's down 35% year to date. I made a note, obviously, next to. Jim owns Cliffs. Why? With many question marks next to it.
- [23:34]
Joe Terranova
Yeah.
- [23:35]
Josh Brown
Other than not wanting to make the CEO mad at you for selling it, literally, why do you own the stock?
- [23:40]
Joe Terranova
Well, basically, because I think it's undervalued and I think now there's a. There's a little bit of a theme on the desk. I'm not walking away from this, believe me. All right. But there's a theme.
- [23:49]
Josh Brown
The amount of social media. Perfect posts regarding this name and you. On a day like this, There are many and we need some.
- [23:58]
Joe Terranova
This is not how I expected the stock to turn out. It's not how I expected the company story to turn out. You know, it's why you build a portfolio, because you can't have a bunch of Cleveland Cliffs in it. They have a turnaround story in place. I think it's a credible turnaround story. It is, however, a turnaround. And what that means for me is I can't put new client money in it. I've put a little bit more of my own money in. In the recent weeks since the. Since the earnings announcement. They have what is to me, a credible turnaround plan. I think the downturn on Friday and today on the back of the sort of ambiguous news about Nippon Steel and US Steel, I think it's overdone. I think this is a stock that's now being looked at as if it's somehow going out of business, which I really don't see. I'm looking at the bond prices. I don't see any sign of distress in the bond. Bond prices. But the fact that that's the conversation that I'm having with myself is very uncomfortable. That's why I'm not putting new.
- [24:51]
Josh Brown
Why is it so binary to their. In business or going out of business? Maybe. Maybe the stock and this company is just impaired for a while. Like it. Can you back the chart up again, please? Like where we had it initially when the stock was like north of 11. The turnaround story. The turnaround story definitely has turned around and gone in the wrong direction. The market from last summer doesn't believe that this is a stock that's worth owning.
- [25:20]
Joe Terranova
Doesn't believe. I mean, we can say as many negatives as we want about the share price performance and frankly, the company performance. Okay. However, I think that it is the wrong price at which to sell it. Now you should say to Me. And you probably want to say to me, well, how did you feel about it at $8, Jimmy?
- [25:35]
Josh Brown
How does that. Honestly, I don't, I just want to know from a stock that you, you've recommended numerous times and some of our viewers undoubtedly bought the stock in, was that February? In February or even prior, you back it out further. As we said, you can look what the stock was higher than that, bought it then on your recommendation and been riding it down and riding it down. And you saying it's, it shouldn't do like this. It's undervalued. It's undervalued. It's undervalued. Way undervalued.
- [26:02]
Joe Terranova
Here's what I'm saying to you. Them I'm not going to take a temporary loss and turn it into a permanent loss. And that's the, that's the strongest thing I'm going to say. However, however, you have to have this in a portfolio. And I say this every time we have this discussion. This is not my only stock. It shouldn't be you, the viewers only stock. Look at the other stocks that I disclose and talk about. It's in a portfolio. If I had all Cleveland Cliffs, I wouldn't be in business. I'm in business. I've got a vibrant business because I have a portfolio. It's not just Cleveland Cliffs.
- [26:27]
Josh Brown
Okay, good stuff. Up next, debating the consumer comeback.
- [26:30]
Jim Labenthal
We have a very big week of.
- [26:33]
Josh Brown
Retail earnings on tap. We'll find out how the committee is playing the space because a lot of names are moving higher today. There's Discretionary. It's one of the better performers on the board and it goes far beyond just Amazon and Tesla. We're going to name some names. Speaking of, Josh Brown just added a new one to his best stocks in the market. I'll tell you what it is coming up.
- [26:51]
Joe Terranova
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- [28:38]
Josh Brown
I mentioned a huge week for retail earnings. How about these names? Dick's Sporting Goods, Kohl's, Abercrombie, Best Buy, Capri, American Eagle, Foot Locker, Burlington, Ulta Beauty, Gap. And that's just some of the names that are reporting. We did have consumer confidence today. The highest reading since February. Many names are on the move today. Booking holdings all time high. TripAdvisor doing well. Hilton Carnival, Royal Caribbean. That's you, Joe. Top pick for the second half of the year at Bernstein. 290 bucks is the target there. They say it is at the vanguard of the industry renaissance.
- [29:10]
Shannon Sokosha
Well, it's about the balance sheet, the improvement in the balance sheet. It's about restarting the dividend, it's about paying down debt. It's really about navigating what was a very difficult environment coming out of the pandemic and doing it exceptionally well. And that's the reason why shareholders are paying the premium for it.
- [29:26]
Josh Brown
Okay, Delta, United, they're also higher today. Jimmy, you have Delta.
- [29:30]
Joe Terranova
That should be. And they should be. The traffic overall is still quite high. Higher than last year on a seven day average consistently. So the traffic's there. The question is what are the revenue that they're getting and what's the cost? Well, fuel is down, we know that. And Delta in particular has done an excellent job of monetizing the front of the plane with their Delta plus and all that. Sort of stuff. So I do think that this, this stock and the. And the sector got knocked down way too much during all this tariff tantrum. It has more room to come back.
- [29:58]
Josh Brown
All right, the casino's doing well. LVs and Wynn, which you probably have seen today. How about Disney Memorial Day box office was a record. Jimmy's favorite. Lilo and Stitch had a big weekend.
- [30:08]
Joe Terranova
Live action. Live action.
- [30:10]
Josh Brown
Help.
- [30:11]
Joe Terranova
And you look. I think it's all the same theme here, which is that the worst has not come to pass. Let's go to the heart of this weekly. Jobless claims continue to remain strong. The labor market is strong. Companies are not laying people off. And as freaked out as customer as consumers have been, as we see from today's consumer confidence, they're getting back on the balls of their feet and they're going to go do things. We saw it in the Disney report a few weeks ago that the themes, the experiences, whether it's cruise lines or the theme theme parks are doing really quite well. There's no sign of this abating. There's no sign of it. When Wind reported three weeks ago, they showed absolutely no sign of demand deterioration.
- [30:45]
Josh Brown
Rinker, Texas Roadhouse and Josh, your Shake Shack nicely higher today too.
- [30:51]
Jim Labenthal
Yeah. Shocks up about 7% on the day. I think Jimmy's nailing it. It's like, look, nobody wants a trade war or tariffs to be like this lingering thing that hangs over the bond market and makes Wall street chief economists rethink their upside targets. But honestly, I can't think of anything that's further away from the actual activity that I see when I look at data. I'm not talking about. I walk through the mall, look at all the shoppers just looking at the data, which you do are gloomy about it.
- [31:22]
Josh Brown
And that's neither here nor.
- [31:23]
Joe Terranova
That's their answer.
- [31:26]
Jim Labenthal
They're answering the University of Michigan survey negatively. We know that. But that's not how they're acting. It's not how they're behaving.
- [31:33]
Josh Brown
Politically is a great example.
- [31:35]
Jim Labenthal
Amazon's a great. Yeah, it's all politics. But like, look at, look at the share. Look at the stock price of shock. Look at Amazon. Look at the credit card companies at Visa and MasterCard are both on my best stocks list right now. That's not an accident. And you just go like, name it after name after name. And the reality is it may not be as gangbusters as 23 or 24, but it's still pretty darn good. The consumer might be answering surveys negatively, but that's not the way they're actually functioning in the regular economy. They're just, they're not acting that way.
- [32:11]
Josh Brown
Yeah. Shan, Tapestry, Ross, Starbucks, all higher today, too. What about the consumer?
- [32:15]
Scott Wapner
Yeah, I mean, I think if you look across, like you just mentioned, a number of industries, Scott, what's not working is probably more targeted. Right. Home building, home improvement, some of the digital retailers. Right. Because I think to Jim's point, consumers are still looking for experiences in this environment and with higher rates, that perhaps becomes the real mitigating factor for the home building sector and for home improvement. And I think that's going to continue to be an overhang.
- [32:39]
Josh Brown
All right. We could have named other names, too. I mean, there are just so many in that space that are up today. As we begin a very big week for retail. Let's get the headlines now at Pippa Stevens. Hi, Pepper. Hey, Scott.
- [32:49]
Joe Terranova
While the president attempts to block foreign students from attending Harvard, the Trump administration is considering requiring all foreign students applying to study in the US to undergo social media vetting. That's according to a new report from Politico.
- [33:02]
Josh Brown
Quoting a cable signed by Secretary of.
- [33:04]
Joe Terranova
State Marco Rubio, Politico reports that in preparation, the White House is ordering embassies and consular offices to stop scheduling new interviews with foreign students.
- [33:14]
Josh Brown
A huge explosion at a chemical plant.
- [33:16]
Joe Terranova
In China's Shandong province, killing at least five people and injuring 19. Six people are still missing. That's according to China State TV.
- [33:25]
Josh Brown
The blast caught on video and verified.
- [33:27]
Joe Terranova
By Reuters was strong enough to blow out windows more than two miles away.
- [33:32]
Josh Brown
And Southwest Airlines is ending its bags.
- [33:34]
Joe Terranova
Fly free policy starting tomorrow. It will now cost $35 for the first bag and 45 for the second. The move formalizes an announcement in March.
- [33:44]
Josh Brown
It would halt its bags fly free rules.
- [33:46]
Joe Terranova
Premium customers will still get the first bag free.
- [33:49]
Josh Brown
Scott, back to you. All right, Pippa. Thank you, Stevens. Up next, today's ETF edge in your second half playbook for bonds. We will be right back.
- [33:59]
Joe Terranova
This is an ad for Roundup for lawns. It kills weeds down to the root without harming your lawn. It works on crabgrass, dandelions, clover. It works on weeds with names you can't e even pronounce. It's Roundup for Lawns. When used as directed, always read and follow pesticide label directions. Are you still quoting 30 year old movies? Have you said cool beans in the past 90 days? Do you think Discover isn't widely accepted? If this sounds like you, you're stuck in the past. Discover is accepted at 99% of places that take credit cards nationwide and every time you make a purchase with your card, you automatically earn cash back. Welcome to the now it Pays to Discover. Learn more@discover.com credit card based on the February 2020 for Nelson report.
- [34:43]
Josh Brown
Welcome back now to Dom Chu. He has today's ETF edge for Dom. All right, so Scott, treasury yields are slipping today after President Trump delayed his steep EU tariffs until the month of July. That comes after 30 year yields just last week jumped to the highest level since the fall of 2023. So how should investors approach this type of volatility in an area of the market that's generally known for its stable stability? I guess relative stability. So joining me now is Joanna Gallegos, the co founder and COO of bondblocks. Joanna, you've spent a career in the fixed income markets and then developing exchange traded products, exchange traded fund products. I wonder if you could take us through what the bond market volatility has told you about the dynamic that's developing in our broader market overall.
- [35:30]
Scott Wapner
Well, even despite all the volatility in April, I think that bond ETFs have been working and they've been working really hard for your portfolio. In fact, most categories in fixed income year to date are in positive returns and status. And so what you really need to be thinking about right now is you need to be thinking about income and how it's offsetting all the volatility we've experienced. But you need to be precise and we like a few important categories.
- [35:55]
Josh Brown
What types of categories are you looking towards if you are out there looking for that, that reliable, relatively reliable bond market income?
- [36:02]
Scott Wapner
Yeah, I think there's a lot of strength in the bond markets, especially in the corporate markets because the economy is showing resiliency as we've been talking about all morning on CNBC. But essentially there's three areas. We like short treasuries because they're yielding over 4% and that's a great place.
- [36:17]
Joe Terranova
For you to access that yield.
- [36:19]
Scott Wapner
We like short corporates and that's because if you reduce the interest rate in your corporate exposure, you can reach out for more for more yield in your portfolio and income that offsets volatility. And then we really like private credit. It delivers only 5% of the volume of S&P5,530% of the volume of Ag, but it's yielding over 7% and even 8% from a yield to maturity perspective. So that's a great place to start for the second half.
- [36:45]
Josh Brown
All right, this is perfect. This is just a snippet by the way, we got a lot more on the credit and rate markets overall. Coming up at cnbc.com/etf edge, Joanna will be joined by Todd Swift Sohn, the technical strategist over at Strategic securities to have a big roundtable conversation about the bond market. Scott, tune in to the online show. We'll see you later on. We will, Dom. Thanks. That's Tom Chu. Up next, Josh Brown's latest best stocks in the market. We reveal the new name. We're back at 2. Welcome back. A new name on Josh Brown's best stocks in the market. Tell us what it is.
- [37:21]
Jim Labenthal
Well, the name is Snowflake. And this is really exciting because this is a stock that came public at $120 per share. It immediately opened up at like $300 per share, got as high as 400 a year later and then spent the last three years selling off. It made its ultimate low last September. So not that long ago and ever since, the stock has been working really well. Just hit our list of best stocks on the market. Stephanie Link is in it much lower. She does something really special with these types of names. She identifies them before they become the best stocks. So I'm basically giving you the news that right now this thing is working out and has the potential, I think, to get back towards some of those older highs. The thing I want to tell you about it is this is not being driven by multiple expansion or hype the way the original IPO was that led to a 72% drawdown. This is being driven by improving fundamentals. The last earnings report was fantastic. That's what propelled the stock into the list. They now have over 600 companies paying them a million dollars or more each year in revenue, which is up 27% year over year. So their customers, customers, here's the point, are actually spending more money with them. They have a net revenue retention rate of 124% which means not only do they keep their customers, but their customers are ratcheting up how much they spend. And I think that speaks to the importance of Snowflake as an AI play, which is something that when it had come public, nobody was talking about AI. So that's what I think is happening with the name and I think it should be on people's radar.
- [39:09]
Josh Brown
It's interesting. This was a one time Berkshire name, if I recall right. Maybe they had it even in private before it went public. And you as well, I recall us having conversations about this stock when it went public.
- [39:23]
Jim Labenthal
Yes. I said it's an amazing company, they're doing great things. I just don't want to pay for it. What the market wants to pay for it. The good news is you don't have to worry about that from a valuation standpoint. Look, here's the knock on Snowflake. They were not focused on profitability when they came public. They were focused on owning the space of what they do. For people that aren't aware, it's basically taking all of a company's data across multiple platforms. Think about how many different platforms and software providers a typical large corporation uses, unifying that data, putting it all in one place and then delivering it in a format that decision makers can actually look at it and say, oh, we should do A instead of B. I'm oversimplifying, but this is hugely important. If we're talking about companies doing these huge Capex spends on AI, well, why are they doing it? They're doing it because there's something in the data that's going to help them improve profitability, sales, whatever. Snowflake becomes really important to that. You now have a company that has gross margins expanding from 59% when it went public to 67% today. Full year profitability is not as far off as it was when it first came public. So I think it's a different situation.
- [40:46]
Josh Brown
All right, good stuff. By the way, be sure to sign up for CNBC Pro. For Josh's best stocks in the market, you can go to cnbc.com/josh brown or scan the QR code on your screen. I'll take you right there. Up next, Sentoly. He joins us with his midday word. We're back with our senior markets commentator Mike Santoli here at Post nine for his midday where are you starting to think about the summer setup?
- [41:08]
Joe Terranova
Sure. I mean tactically, look, market is kind of re emphasizing sizing today. That last week was pretty routine, was a kind of an overstretched market that was not having to look too far for excuses to back off a little bit. The summer though does set up as interesting because we are just kind of shuttling around a similar range here. We bounced off of this morning, the election day close. We bounced off the 20 day moving average. We bounced off the 200 day moving average. It's just this obvious spot for us to pick up here. But Jim, July looks sort of like a lot of threads are going to have to be bundled together. Obviously it's going to be the tariff deadlines for whatever deals might happen. You have a Fed meeting that's the last one until late September. Because you have Jackson Hole in the middle. It might be a live one. Maybe you get the final, the federal budget deal coming through and then it's going to be the first kind of tariff inflected earnings season. So I'm not saying nothing happens to till then. But I think that's maybe when you have something more decisive than this range trade we've had, which is very benign and probably very encouraging that we're picking this back up toward the upper end of the range.
- [42:15]
Josh Brown
The idea that Joe put forth at the beginning of the program, the market started to get desensitized to some of the tariff and trade threats and all that. We make that. Yeah.
- [42:22]
Joe Terranova
I think another way to put that is it's pricing in progress. Right. Which may or may not, which probably is going to come. But it's desensitized to the bold provocative headline catching threat of the 50%. Like we believed that for 12 seconds that it was going to be something like that and then backed away from it. That does make sense. So 5935 or 5940, that's what we traded at 1pm last Wednesday. That was when we had a little bit of a sloppy bond auction. Then that segued into oh Johnny, I've is going to destroy Apple. And then that segued into 50% EU tariffs, tariffs and Apple tariffs. And now we're just unwinding it. And since the consumer confidence number this morning, it's been just ratcheting highers on the funicular. It's like the world's most boring roller coaster on the way up.
- [43:07]
Josh Brown
All right, good stuff. I'll see on closing bell. That's Mike Santoli. Coming up next, the danger zone One firm says this sector has the worst set up in the entire market. We do have exposure on the desk. You might have some exposure as well, which is why we will debate it and trade it next. All right, we'll go to Dom Chu who has a market flash for us.
- [43:27]
Joe Terranova
Hi, Don.
- [43:27]
Josh Brown
All right, so Scott, what we have are shares of Whole Logic right now the medical technology company halted for volatility up 7% prior to the halt. And this is all on an FTSE story citing people familiar that says that private equity firms TPG and Blackstone had in recent weeks offered roughly $16 billion to take the health group Whole Logic private again. That's according to an FTSE report citing sources familiar Hologic they say in recent weeks had rejected this non binding offer that would have valued the company at roughly the 16.3 to $16.7 billion range on an enterprise basis, Scott. That includes debt. So we'll keep an eye on hold Aussie shares. We'll tell you when they reopen up 7% before the halt. I'll send things back over to you. All right, thanks for the update there. That's Dominic Chu. Speaking of health care, we told you earlier what was working. Well, it's time to tell you what some say to avoid. Wolf today says health care is the worst setup from a sector level in the entire market. They say it's been steadily trending lower for months. Without a doubt, the worst setup from a sector level. Should the XLV lose 130, it puts in play the October 2023 low of 122. So we can throw up the XLV and it'll show you what we're about talking. What are you talking about? It's the worst sector. In May, it is the second worst sector of the year. Shannon, what do you think about this space?
- [44:46]
Scott Wapner
I think that's a challenging call. I mean, if you look at Med1, if you look at Medtech, you look at life Sciences, you know, maybe there's a little bit of pressure on the providers right now, though outpatient certainly looks a little bit more, in our view anyway, attractive than hospitals. But then you look at pharma, obviously there's the overhang there. I think importantly, Scott, you know, if you think about what's happened with managed care, unh in particular, but others battling medical loss ratios, there's starting to be a little bit more attractiveness in those prices.
- [45:17]
Josh Brown
Okay, we'll do finals next. Let's do finals. Josh, what do you have?
- [45:25]
Jim Labenthal
Kinsale Capital stock is looking great today and every day.
- [45:29]
Josh Brown
All right, Jimmy Wabtech.
- [45:30]
Joe Terranova
Solid industrial in a solid industrial space.
- [45:33]
Scott Wapner
Industrials M and A is probably a catalyst here.
- [45:35]
Josh Brown
All right, had another call on the street today. Upping industrials.
- [45:39]
Shannon Sokosha
Urban Outfitters continues to march higher.
- [45:41]
Josh Brown
All right, see you 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. All opinions expressed by the Halftime Report.
- [45:58]
Joe Terranova
Participants are solely their opinions and do not reflect the opinions of CNBC, NBCUniversal.
- [46:03]
Josh Brown
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- [46:05]
Joe Terranova
Been previously disseminated by them on television, radio, Internet, or another medium.
- [46:09]
Josh Brown
You should not treat any opinion expressed on this podcast as a specific inducement to make a particular investment or follow.
- [46:15]
Joe Terranova
A particular strategy, but only as an expression of an opinion. Such opinions are based upon information the.
- [46:20]
Josh Brown
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.
- [46:31]
Joe Terranova
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