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Halftime Report
Tech Pullback Stirs Market Fears 8/20/25
00:44:24
Frank Holland and the Investment Committee debate the tech pullback and what it could mean for a bigger pullback on the horizon. Plus, the desk shares their latest portfolio moves. And later, the XRT hitting a 52-week high, the committee debate how to trade the retail sector. Investment Committee Disclosures
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- [00:01]
Frank Holland
Fidelity Trading Dashboard brings live data, news and charts into one screen. Because better trading starts with finding what you need fast. Available for free@fidelity.com trading dashboard. Investing involves risk, including risk of loss. Fidelity Brokerage Services, llc Member NYSE SIPC.
- [00:17]
Capella University Announcer
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- [00:48]
Frank Holland
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.
- [00:59]
Dave Nadig
Listen in.
- [01:04]
Frank Holland
Thank you, Carl and Sara. Welcome to the Halftime Report. I am Frank Holland in for Scott Wapner, front and center at this hour, the AI about face tech and momentum. High flyers are coming under a bit more pressure today, raising concerns of a bigger pullback that could be on the horizon. We're going to debate the rallies road ahead and much, much, much more with our investment committee. We have Joe Terranova, Carrie Firestone and Bryn Talkington. But first we're going to check of the markets. Taking a look in the red across the board, as you can see, but off of our lows of earlier, at least when it comes to the S and P S and P pulling back about three quarters of 1%. Also coming off a three day losing streak. The Dow after an intraday high, it hit yesterday, pulling back today fractionally. The NASDAQ the hardest hit down about 1 1/3rd of 1%. And with that, Joe, I want to come over to you looking at some of the markets moves this week. A lot of people said, well, it's profit taking, people are just taking some profits. But people don't take profits when they think the market's going to keep going up. So have we seen a significant change in sentiment?
- [01:59]
Joe Terranova
Well, no, no, no, wait a second. It can be profit taken but, but that profit taking could be motivated by some catalyst that you're seeing in the marketplace. I think one of those catalysts, it'd.
- [02:10]
Frank Holland
Be a negative catalyst that would make you take the profits.
- [02:12]
Joe Terranova
Oh, of course it would be a negative catalyst. But I think one of those catalysts really relate to Friday's Jackson Hole speech. I do believe that Chairman Powell, there's a high probability that his words are not in rhythm with the market expectation, which is pricing in nearly an 80% cut in September. So I think you're ultimately going to get a reluctant cut. So what's happening within the market last several days is very clear. You are seeing what was the leading factor in the market, the momentum factor. That's where the profit taking is unfolding. And it's interesting because really what unfolded in the first part of August is you had this dramatic acceleration in the momentum factor. It was driven by names like Palantir. Not surprisingly, Palantir peaked on August 12. The following day, the momentum factor peaked at on August 13. So a lot of those momentum names, you're seeing that there is a want to call it a temporary top. It could be a permanent top. Let's not hope that it is. But there could be a certainly an inflection point in the second week of August. In addition to that, I think what's important is we had the rebalance for our ETF at the end of July. And what we witnessed with a lot of the momentum names that we entered, they have not worked out. We entered software names like Datadog, even Microsoft Cadence Design. They're all down. Datadog's down 10% since we entered that. Microsoft's down 5%. We entered a bunch of crypto names like Coinbase, that's down dramatically. Block is down as well. So, so what we were doing, we were recognizing Q2's momentum, kind of going with it. But guess what? That's a false breakout. What that really represents is exhaustion in the marketplace. And that puts you where you are today, where you have this exhaustion element that's leading to a modest correction in the market, driven largely by where the strength of the market has been year to date, the momentum names.
- [04:10]
Frank Holland
All right. We certainly see a slowdown when it comes to momentum. I don't know if you guys covered this one halftime this week. Joe, if you were here earlier, evercore size Julian Emanuel came out with a note saying, kerry, I'm talking to you about this. If we see a neutral or a slightly hawkish Jay Powell could see a 7 to 15% pullback in the markets. I just got off the phone with him. He believes we're already seeing that pullback start right now as more and more investors believe that we are going to see at least a neutral or hawkish Jay Powell. Do you agree with that sentiment that some of this action is basically front running with the expectations of Jay Powell at Jackson Hole on Friday?
- [04:41]
Carrie Firestone
Well, I don't think we're going to see a very dovish Jay Powell. So that's just a fact. He has been data driven. And since the data combines, combines inflation, which isn't going down, and job growth, which of course seems to be falling, he can't be all in one way or the other. So I would take that off the table. I would say it's the second half of August also, so people are on vacation where we have sort of flatlining in the market or malaise in the market because people have seen this enormous spike since April 8th. There's a little chart we put together that shows that since April 8, the bottom the Nasdaq Composite is up 40%, not 5, not 10 or 20. 40%. Nasdaq 100 up 37%. S&P 529%. Even the equal weight, which doesn't have, you know, of course, the huge mega caps driving it ahead of 22%. So, sure, it's time to take some profits. That's not profits of a little bit, it's profits like 80%, 90%, 100% in some names. Makes perfect sense for the market to do that in our opinion.
- [05:52]
Frank Holland
All right, so you're saying basically it's somewhat exhaustion. You have huge run ups from those April lows following the quote unquote Liberation Day tariffs. And the markets run up. And to Joe's point, the momentum has slowed down a bit. People want to take some profits off.
- [06:04]
Carrie Firestone
The table and vacation and some big vacation.
- [06:06]
Frank Holland
And it is August here on Wall street, in all fairness. Brian, coming over to you. Also get your take on some more the action we're seeing in the market. Something else to point out. I was looking at this earlier. If you look at our CNBC market strategist survey, our team does a great job. Michael Bloom, the rest team at Pro. The median target for the S and P is 6,500. That's about a 2% increase from where we are right now. The average is basically where we are today. So, I mean, when you look at the institutional side, at least there doesn't seem to be a lot of optimism for us to go up from this point anyway.
- [06:36]
Bryn Talkington
Well, I mean, we'll see how. We'll see how we get there. But I think looking at 2018, which once again was when, when Trump really leaned in on the China tariffs, you know, who spoiled the party was newly elected Jay Powell thought that inflation was going to ramp, was going to ramp up again and started becoming hawkish at almost the exact same time as we're having this today and I, I wholeheartedly agree with Joe and Kerry. I think exhaustion is very important word to use. Gravity is once again you can't have a Palantir or these types of companies just going at this huge angle upward way over there. Even 10 and 20 day moving averages, you just have to have that come down. And I think that when you look at the data that's come out, CPI was a really good number. But once again the tariff components don't, don't penetrate through cpi. They absolutely show themselves in ppi. And if you look historically, you know there's a higher pie. Are those companies in those industries that are showing those inflationary signs because the tariffs going to ultimately push those through to the consumer. And I think that's what's going to be difficult about Powell going into Jackson Hole. So, so I agree with Kerry. I do not think he's going to be dovish. And so I just do think we have a set up between seasonality. Jay Powell once again looking for the data to confirm we're not going to get what we're asking for. And so that could set up for a little bit of a, of a pullback. But I don't think it'll be meaningful. And I continue to think people will buy the dip because of all of the stimulus, the stimulative effect of the big beautiful bill that's coming into the economy.
- [08:10]
Frank Holland
All right, Brent, two points in seasonality. September of the last 10 years has been the worst month for the S and P average decline of 2%. So I get you on seasonality, but I want to go back to cpi. You said it was much better than expected. I mean headline was a little cooler than expected, core is a little bit hotter and it didn't really show that very clear trend of downward inflation. I was actually talking to Roger Ferguson, former Fed vice chair about that today. I mean he agreed it wasn't that great of a cpi and it was a very bad pie if you're someone that wants a rate cut. So when you put those two together, I mean it seems like I was, yeah, great.
- [08:43]
Bryn Talkington
No, is that components, the components of tariffs do not populate through CPI. And so CPI is, you know, below 3%. Right. And Powell has been very clear, we don't need to see inflation at 2, it needs to be going in the right direction. So when you looked at cpi, we all got excited, right, to say, oh, tariffs are not having an impact on inflation because the components don't go into that. You know, owner equivalent rents has nothing to do with tariffs. Ppe it does. So and so what I'm saying is that Powell has this juxtaposition of pie is showing you that tariffs are having an impact the CPI doesn't. And so I think that you will continue to see a more hawkish Jay Powell because those, the PPI to me is the more relevant number when it comes to looking at the tariff impact.
- [09:31]
Frank Holland
All right.
- [09:32]
Joe Terranova
So after the PPI is when you had the adjustment and that's where the market had to begin to kind of recalibrate towards what we're all speaking about, which is this reluctant cut that might be coming. It's not going to be a forceful 2024, Jay Powell that's going to speak about, okay, we're going to pivot away from focusing on inflation now. We're going to focus on the labor market and most likely in September we're going to cut rates. That's a very clear message to the market. This message, I think is going to be a message where he's going to be on both sides of the fence. And I think the market is going to have a degree of difficulty with that. By the way, I don't think your premise is that in order to buy risk you need rate cuts. I think the premise on if a rate cut happens is does it finally allow the opportunity for the long awaited broadening out not just on a cyclical basis but on a more prolonged time frame? That's really the portfolio reallocation that is going to be most impacted if in fact you get the beginning or the restart on cutting rates once again.
- [10:38]
Frank Holland
So it sounds like you keep saying reluctant. So 50 is off the table, 25 is a maybe. And even if it happens, Kerry, you're.
- [10:44]
Joe Terranova
Not right now you're getting 25, but it's probable in September. I think you're getting 25 and there's no guarantee you're getting another 25 now later in the fall.
- [10:53]
Frank Holland
No, maybe not until 2026 is what you're saying.
- [10:55]
Carrie Firestone
I mean, the market would be extremely surprised if there was a rate cut of more than 25 basis points now.
- [11:02]
Frank Holland
I mean, you'd be surprised now. But before pie, there was bubbling up murmurs.
- [11:06]
Carrie Firestone
Well, I mean, we've heard a lot from the White House how important it is, how it's necessary. You know, I mean, there's, there's been a lot of talk about it. It hasn't come from Jay Powell. Right. And this market believes there's going to be 25 reluctant, but that's probably the right thing given the labor market is softening. But you know, with the type of rally that we've had, particularly in the big cap names, this is just understandable. I think it's healthy, it's reasonable. And you know, let's not forget people keep talking about how strong earnings have been this quarter. What was strong were about six companies earnings this quarter.
- [11:45]
Joe Terranova
I just want to point out one thing. Sorry for one thing and I want to see if Bren wants to comment on this. Last week I said if you have concern about a potential correction in the market and you're looking to reshape your risk, go out the options market right now, provide you cheap enough insurance, go out, buy some insurance, buy some volatility. And what's been somewhat surprising to me is actually this week volatility really hasn't spiked as much as you would have thought. Thought that it would. You're looking at the Vix. I think the high for the Vix was 17. It's still at 16, which is very arguably pretty, pretty cheap insurance if you still need to go out and buy it. So I'm somewhat surprised by that. And that leads me to believe these disaster calls. You need to buy disaster puts because we're going to get this 15% correction. I just don't agree with that or see the evidence that in fact that's unfolding.
- [12:32]
Frank Holland
But to your point, according to 22V Research, investors are scooping up downside protection on the triple cues. Obviously make a cap tech at a very fast rate and we're talking about put options there. So we are seeing some people buy into those downside.
- [12:45]
Joe Terranova
Josh made a great point though yesterday on the show he talked, he said, I don't know if the QQQ is where you want to go for that option protection because if in fact a deeper correction unfolds. Listen, the market has proven over the past several years the first place it's going to go is back to the mega caps and that's the overwhelming market cap weighting of the qqq. So you might actually be buying protection in in something. The market's going down and that actually will ultimately be the safe haven.
- [13:16]
Frank Holland
All right, I want to go back to another one of Brent's points about buying the debt. Piper Sandler came out with a note today. I'm just going to read part of it. Given the technical evidence of constructive market breadth amid increasingly bearish sentiment, we believe investors should continue quote unquote buying the dips, particularly in micro groups sectors showing the best relative strength. Care agree with this, Disagree with This thesis that you want to buy in the dips in the areas that have already been showing strength, which I would think would be megacap Tech, to Joe's point, and some of those other areas, when they go down, they seem to have a natural floor.
- [13:46]
Carrie Firestone
Yeah, they, they do, because people look to them as leadership, their leadership in the economy, in profitability and market capitalization and an earnings growth, growth. So it's important to own them. It's also important, in our opinion, to be diversified. You don't want to just own six or seven names. A portfolio is more than that. And it's, it's good to have other parts of the market represented in your portfolio, which we believe in and everyone here I think does. But if you don't own them, you're taking a big risk, right? You want to be naked those big cap names at your own risk. Because honestly, that's where we continue to see the stocks come back and the earnings also come back strong.
- [14:26]
Frank Holland
And speaking of mega cap Tech, we have Nvidia coming up just one week from today. I've talked to a number of traders, I don't know any traders that are adding more money to Nvidia earnings. They all say they're pretty much holding steady. They expect a beat and a raise. But the question is how big of a beat moves the stock higher? I think for a lot of people. Another stock that we've been talking a lot about on Halftime on my show, Worldwide Exchange is Apple and just how to view it. So, Joe, you're looking at this. You've made some moves in your personal portfolio when it comes to Apple actually making a pretty big trip.
- [14:52]
Joe Terranova
Listen, one of the benefits of this show is we're actually active in the marketplace. We're not just talking about how we're feeling about markets. We're actually doing things. And if you disagree with what I'm, what I'm saying, listen, you have the ETF out there. Go short it, go buy some puts, knock yourself out, have a good time. But my position in Apple over the last several weeks, it's a trading position, it's not a portfolio type position. So I've been riding the momentum higher. I've been buying high, continuing to buy it higher. I started at 206. I bought it all the way up to 232. I spoke each time on air when I bought it and I said I'm going to manage the risk. When I think I see the exhaustion, I think I've seen the exhaustion. It got to about 235 to 36, it looks like. Like that's a temporary ceiling. I think it could go through there eventually and go back towards 240 to 45. But the near term, the smart thing to do was ring the register, take a little profit, reduce the size. I cut the position in half. I have no problem with that. And I deployed the capital back into the market. We'll talk about where in a little bit.
- [15:58]
Carrie Firestone
Were you ever overweight apples? We're.
- [16:02]
Joe Terranova
So you're thinking of. Oh, it's in terms like if you measure it, this is that it never was. Don't think about it from a perspective of a portfolio. Don't think of it as you're a portfolio manager. An Apple 6% and I'm going to have an 8%. This was a trading position. This was a trading position and just buying it and continuing to buy it as the momentum moved higher. And when you're doing that, you have to keep, you have to keep a tight stop. And in my mind, that's exactly what.
- [16:29]
Frank Holland
What I did before we move on and Brett, I want to come to you, I know you're also an Apple shareholder. Is there a price where you would get back into Apple as a trading position? Right now we're just looking at it trading at about 227. Is there a price where it again becomes attractive?
- [16:41]
Joe Terranova
I don't look at it as a specific price. I look at it in terms of how it's reacting, how it's reacting to the overall environment. The last several days, it seems as though, look, what I was identifying of last several weeks is that I felt very strong, strongly that growth managers were underweight Apple and they very quickly had to return their positioning and rebuild their positioning once again. And that's kind of a tsunami. And I wanted to ride that momentum tsunami. And that's exactly what I did. I still have half my position. I still think the stock could move higher. I'll manage the other half of the position. But this is purely, purely, purely, purely, purely rather a trading position to 10.
- [17:20]
Carrie Firestone
Is where the 100 day moving average. So I would say that's where you reenter.
- [17:24]
Frank Holland
Okay, Carrie, with some trading advice coming over to you, I'll tell you what. Kerry gave us some more fodder to talk about. You go Carrie's thesis here that 2:10 is where you want to get back in at the 100 day moving average. 100 day moving average.
- [17:38]
Bryn Talkington
100 day. Yeah, I was just looking at that. And if you actually look at the chart, it was making slightly higher lows. Each time which is important. Right. And so, so it was making higher lows and so I think if you can get an opportunity to come back in around the 210. I don't know if you'll get that opportunity but I do think I added to the position around 210 to 15. I think in line, in line he was at 206. I think if you go back and listen to the earnings call, it was an excellent earnings call. And even though iPhone growth was only 2% the top line growth was, was much better than that. And I do think iPhone 17 whereas 16 was kind of like whatever. I do think iPhone 17 because they are full, you know, all in on getting some actually consumer AI wins is going to be a better, a better rollout and they continue to do well in China, especially with the Mac. And so I think the negativity of Apple is somewhat over. And this is a buy the dip stock for sure.
- [18:35]
Frank Holland
Brink, what are you expecting? I mean Apple intelligence, we haven't seen much. What could they do on this phone that would be considerably better than the 16 to juice that refresh cycle?
- [18:45]
Bryn Talkington
I think everything they do is always incremental in terms of, in terms of the iPhone. Tim Cook talked about and this is a basic thing but I mean I travel a lot where you would have real time language translation, right. So I mean Google translates clunky and the other ones but real time language translation. I mean to me on the, on the camera being able to do actually what Android already does very well and transportation terms of erasing people and, and which to me is like another negative against Adobe. And so I think with the photography with real language translation now Siri is still the Trojan horse though, right? And so ultimately from a consumer device Siri needs to be exponentially better. It's still irritating to work with but I think that's the opportunity there. I think they will get it right. But it's going to be a 2020. Tim said it's going to be in 2026. And so I think buy the Dip here, it'll be a good name longer term.
- [19:39]
Joe Terranova
It also helps you go to the White House to give the President a gift.
- [19:45]
Frank Holland
No, sure, we're going to move on. By the way, I just want to throw one other thing in here. Dan Ives, everybody knows him, well dressed guy from Wedbush came out with a note saying he views tech sell offs like yesterday's opportunities to own the core winners. Skepticism will persist on the sell offs of some volatility the bears will come out of hibernation mode and try to spark more white knuckle moments. But in his view, the tech bullseck will be intact at least another two to three years. And with that, Brett, I'm going to get to one of your moves. You're selling some Salesforce. Give us a sense. Why sell sales? Oh, buying, I apologize, buy. I misread that one. You're trimming Dell. You're buying Salesforce. That's what happens if you're looking down at the paper too fast and laughing at Joe's jokes.
- [20:23]
Bryn Talkington
Yeah, yeah. So I sold about two thirds of the Dell position. I love Dell, by the way. And if Dell gets down into the low one hundreds, I will add back to that. I think Salesforce is uber in the 60s and that if you go back and listen to the earnings call, they're actually next earnings is September 3rd, so they're even later than Nvidia and Dell. They had great earnings. And Marc Benioff has been very clear. Let's focus on free cash flow, let's focus on margins, let's focus on growth. And so financial stability and also growth. And so I think what they're doing, I think the market is completely missing this, this nonsense that some other nebulous AI is going to come in and take over. What Salesforce is, is doing just is absurd. Salesforce is using AI. Their acquisition of Informatica I think is going to be great. It's going to be accretive the year after next. And so I just think this is an unloved space stock that's getting caught into the hedge fund shorts of shorting these software companies. And this is one to me, and it's been up the past few days that it can easily trade up, you know, 15 to 20% after earnings because I just think the market is missing this name. And it's an uber in the 60s.
- [21:38]
Frank Holland
All right, also about Dell. Big infrastructure player, your trim in that position. What's the motive? What's the motive behind that trend?
- [21:46]
Bryn Talkington
Yeah, so you got to know a Dell. Dell's growth engine is their infrastructure services group. And inside of that, that's where they are like the key tech stack within the AI build. I think they're taking really strong market share from smci, but because it's just part of the company, they still have a big consumer company with the computers. I think that as the stock got into the high 100 80s, I just felt it was going to be at a top. And so I think a temporary top. Once again, they're buying back shell shares I'm a huge fan of Michael Dell. I'll definitely looking to be get back in if I get it, if I get an opportunity into the like low one hundreds.
- [22:24]
Frank Holland
All right, Kerry, coming over to you. I think you want to say a couple of things about Salesforce. You're also a shareholder.
- [22:28]
Carrie Firestone
Yeah, absolutely. So Salesforce has suffered as a stock because there hasn't been enough to show for all of the spend on AI that they describe described. And it's starting to happen. As Brian said, this is a company that dominates a market and there really has not been any competition that people can say, oh, they're taking over the CRM business because there is, you know, a better product or it's cheaper, easier to use. Not true. Salesforce has that market and they continue to improve it. We're starting to see as you users of Salesforce, at our company, we're starting to see some of the enhancements which we believe will really play out in earnings growth over the next several years. So goodbye.
- [23:15]
Joe Terranova
Brent, do you see?
- [23:16]
Carrie Firestone
I mean, goodbye.
- [23:17]
Joe Terranova
Yes, Carrie, I know you follow Adobe. Do you see the same opportunity that Brin's talking about in Adobe?
- [23:25]
Carrie Firestone
I think Adobe, it's tough. It's really a tough call because I has been able to, to penetrate what Adobe has done for their clients and reduce the amount that they need to spend on Adobe products per person. It's, it's really been difficult for them. And we, we held it for a long time, we believed in it and, and then we, we did sell it.
- [23:47]
Frank Holland
Does the Figma going public, does that also change your view of Adobe? They do have some overlap in some of the things that they do.
- [23:54]
Carrie Firestone
Well, I would say it's competition. I mean, you could say, oh, well, it isn't really. They do something complementary, but Adobe wanted to own them, they wanted to incorporate their technology. Now they can't. Right now they can't.
- [24:08]
Frank Holland
Brent, did you have a take on Adobe or the fact that Figma's public and even though it's complimentary, still a competitor on Adobe?
- [24:16]
Bryn Talkington
First of all, the chart looks terrible, right? Salesforce has really started to flatten out here. Here Adobe looks terrible and I don't think there is a consumer or an enterprise. You don't care. You want the best products. Whether you go to Adobe, Canva, Sigma, there's not that sense with CRM. We have all of our secure data inside of there and we want to be able to take that secure data and be able to manipulate it faster. And so to me, I think Salesforce has a Huge TAM to become stickier as they're incorporating AI with their Informatica acquisition. Another small one versus Adobe to me is like I'm just going to go to the cheapest product. I think from a consumer standpoint, the Android phone and the iPhone, the applications you have just on the phone are also going to be an affront to Adobe.
- [25:04]
Frank Holland
I want to move on to some other moves again ahead of J Pal and Jackson Hole. Joe, you're making a move in the financial space. Broadridge, CBOE and tradeweb. You already actually own tradeweb, but you're adding that position.
- [25:16]
Joe Terranova
Yes. So Trade Web is in the Jyoti etf. I took the capital that I raised out of regular register on Apple, deployed it into the ETF and the Jyoti, and then thematically, I talked three weeks ago about the refiner trade. I just want to be clear that has not worked out. So I am considering how I'm going to manage around that risk. There were three names, Valero, Marathon and Phillips 66. Phillips 66 is the doing the best, but they're all down about 3 to 5%. That's not working out. I've got a little bit of a challenge there. The new thesis that I'm investing in is I've added these three names, Broadridge, CBOE and Trade Web. Trade Web, rather. And what I see is strong engagement in the financial services industry. Strong engagement, whether you like it or not, some of the activity that we see in the options market, I'm not comfortable, comfortable with it. But listen, it's leading to really strong volumes. And if you look at the earnings and you look at the technicals of cboe, they look really good. Broadridge Financial, they are serving the asset management industry. They are providing strong technical support. They are in the places that you need to be and they are now looking at international expansion. They just did an acquisition in the UK with a couple of companies, Signal and lastly tradeweb. This is the electronic trading platform for where you will find fixed income. And for many years you wondered when fixed income would find itself on an electronic trading platform. That's exactly what Tradeweb has done. They've perfected the model. Very strong company represented by both strong revenue growth and strong momentum.
- [26:58]
Frank Holland
All right, the two new buys and also the AD and Trade Web, all of them in the green right now. TRADEWeight up about one and a half percent. All right, coming up next on Halftime, more of the day's biggest movers. A pop for TJX and a drop for Target. We're going to debate the state of retail and how the committee is playing it. Halftime's back in just two minutes. Stay with us.
- [27:16]
Bryn Talkington
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- [28:16]
Frank Holland
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- [29:32]
Frank Holland
Welcome back to Halftime. You saw the Dow just barely peak into positive territory right now, looking at two retailers moving in opposite directions after earnings. Take a look at Target shares. They're lower, down more than 7% as sales slipped and the company named a new CEO. But then take a look at TJX higher after an earnings beat and raise guidance those Shares up about three and a third percent. Joe, we're going to come to you. You own TJX and what a company, what a story this year. Discount retailer mostly immune from tariffs. You know we see a stretched consumer. They seem to be a place where the stretch consumer wants to go. Just your take on the earnings and everything else.
- [30:08]
Joe Terranova
Well, off price retail is in the sweet spot right now and TJX perfects off price retail better than anyone else. The, the management team has the ability to look at the brands that have had too much inventory and need to dispose of that inventory. And they're excellent at sitting back and waiting and understanding when that moment's going to arrive and to be acquiring that inventory inventory on the cheap. And that's what they do that allows them to kind of manage through this quote unquote tariff headwind. Certainly the department stores are feeling it, other apparel makers are feeling it. But TJX has the ability to navigate that process. And it's just not my words that you should be listening to to for the believability it's really evidenced in the margins. So if you look at other apparel names you're not seeing margin expansion. You look at TJX and you're seeing margin expansion. It's just a phenomenal job on the part of management in managing the business through what should be a really difficult cycle for them.
- [31:14]
Frank Holland
Are you telling us you're a Maxinista?
- [31:18]
Joe Terranova
No, I'm not saying. I am saying that yes. I have been to a tjx. I think it's a phenomenal stock to.
- [31:24]
Frank Holland
A Marshall for sure.
- [31:25]
Joe Terranova
I know but, but I do appreciate, I do appreciate the stock certainly for what it's done.
- [31:31]
Frank Holland
I'm not going to ask anybody else. I don't put you on the spot. Joe, Bryn coming over to you. What do you make of the quarter? And also we can work in Target here. TGX strength targets weakness lowering guidance once again and changing the CEO of course.
- [31:43]
Bryn Talkington
I mean TJX has just been on just such strong not only price momentum but they, I mean Joe walked through it. They've totally sidestepped the tariffs. So it's just like they're, they're executing on, on that factor and then the chart looks good. So that's always great when you get great fundamentals with great technicals the stock goes higher. Target's got its own host of issues. It's like Walmart. Look at pull up wall Walmart. Wal Mart's upper percent today because Target's woes benefit Walmart because Walmart not only from a product perspective, continues to go higher end. When you go to Walmart online, they have so many more products that, that you can't get into the store. And so I just think, you know, Target's just stuck in the mud between their products are too expensive and there's so much more competition between Amazon, Walmart and then a TJX, an Aloe, a Lululemon, etc. I just, and I think that naming an internal person as the CEO, maybe he's the right person but from optically you want to have like a Brian Nichols that Starbucks did, etc. To try to get some excitement that you would have some change coming to get the price moving. The stock, the price of the stock moving.
- [32:54]
Frank Holland
Right. I want to clarify one thing. They also guided for lower full year sales year over year. Not saying that they lowered their guidance. Carrie, did you have a thought about Target and what's going on? The change of CEO Brian Cornell moving to Executive Chairman?
- [33:06]
Carrie Firestone
Yeah, I would say that it's an example and we've seen many of them that when a company, particularly in the consumer space such as Nike, falls from grace as Target, which was a darling of the market, darling of investors for at least a decade, when it falls from grace, that can take years before it can turn around operationally and the stock.
- [33:31]
Frank Holland
All right, we also have Wal Mart reporting its earnings tomorrow. I want to go to Brent's point here. Is Target's loss, Walmart's gain, does that strengthen the outlook for as an investor for Wal Mart going forward? The fact that Target's having some weakness? We continue to see reports that the stores aren't quite the same as they were before. Not the same, I guess differentiation when it comes to discretionary merchandise that a lot of people were used to finding in Target. And of course Wal Mart has a very big grocery business.
- [33:55]
Joe Terranova
Wal Mart has extended what has been a phenomenal period of price appreciation far longer than anyone who studies fundamentals and valuation can, can suffer through. Because people will tell you it's 40 plus times. Why is Wal Mart at 40 plus times? Well, the reason it's at 40 plus times is partly what Britain is talking about, that they are capturing, capturing market share, they're capturing the traffic, but they're also delivering on the earnings and revenue growth. And you're going to see that in the report tomorrow. In the prior quarter they talked about the need to raise prices gently, gently on some goods. You'll hear more about the pricing strategy tomorrow. I think the biggest risk and I've said this in the last week related to Wal Mart is the potential threat that's going to come in the grocery from Amazon. Amazon seems to have real intentions here on building out that business that could be a competitive threat to Wal Mart. So we'll see how we navigate through that. I don't think you want to fight the price momentum that you're seeing here in Wal Mart until you get a quarter that fails to deliver the consistency that's represented in what we're seeing here in these charts.
- [35:10]
Frank Holland
All right, looking at Wal Mart shares, up about four and a half percent over the last three months since the last time the retailer reported its earnings, up about 1% right now. With that, let's get to the headlines and Silvana Hanow at CNBC hq. Hey, Silvana.
- [35:22]
Bryn Talkington
Hey, Frank. Good afternoon. Israel has approved a takeover plan of Gaza City that would push thousands of civilians in northern Gaza. Down south, the Israeli military confirming to NBC News of the plans, which include include calling up 60,000 reservists for the ground operation. Meanwhile, Israel also approved a settlement project that would split the occupied West Bank.
- [35:45]
Carrie Firestone
A plan Palestinians and rights groups say.
- [35:48]
Bryn Talkington
Could end any hope for a future Palestinian state. Chinese President Xi Jinping is in Tibet today to mark the 60th anniversary of the country's founding as an autonomous region after the 14th Dalai Lama fled to India.
- [36:02]
Carrie Firestone
She made a trip to Tibet in 2021.
- [36:06]
Bryn Talkington
And starting tomorrow, the price of the PlayStation 5 console will go up to $550. In the U.S. sony said today it made the decision to raise prices from $500 because of a challenging economic environment. The pro edition of the PlayStation will cost $750, Frank.
- [36:26]
Frank Holland
Yeah, I mean, that's a notable story. But I got to tell you, when Madden comes out, I'm buying it.
- [36:31]
Bryn Talkington
And I'm still, I know you're a gamer.
- [36:33]
Carrie Firestone
I know you're a gamer.
- [36:33]
Frank Holland
It doesn't matter. It doesn't matter. I need Matt. I actually need college football. Savona now back at cnbchq. Great to see you. Thank you. All right, coming up next, Mike Santoni joins us with his midday word. We are back right after this.
- [36:48]
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- [37:18]
Joe Terranova
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Frank Holland
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Joe Terranova
So step by step, there's no time.
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Frank Holland
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Joe Terranova
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- [37:46]
Frank Holland
And we are back on halftime. Senior markets commentator Mike Santoli joins us with his MIDDAY word. Mike, what is the midday where we're seeing a lot of weakness in tech. Joe pointed out a slowdown in momentum. What's really the word that encapsulates today?
- [37:58]
Joe Terranova
I mean it might be whipsaw, it might be reallocation. Yesterday I called it a riptide, which it kind of feels like it's sort of really dragging under just a certain category of stocks really kind of tried to stabilize here. The action is very erratic. And I feel like this happens sometimes. You get into a period markets had a huge run. The most aggressive stocks have had an even better run. Things are getting a little bit crowded, maybe a little bit frothy. Weaker seasonal period. Momentum wanes a little bit market wide and the market tries to get away with rotating around it as opposed to just across the board pullback. We're going to have a correction. So far it's working. The equal weighted S and P is outperforming the market cap weighted by like 1.2 percentage points a week to date. The rest of the world non US Stocks are holding up fine. So this for now is localized in high growth mega cap momentum. Mike, if the markets may be getting ahead of Chairman Powell being a little bit more hawkish than maybe we expected before the PI, do you view that as somewhat healthy, as a setup? It probably is, yes. I really struggle to figure out what the market is trying to tell us about that because the bond market is very subdued right. To your yields actually lower today. Maybe that's just a risk bid, risk off bid. But it's not to me saying, oh, we have to prepare for actual hawkishness, as in fewer cuts in general. But maybe it is in terms of the path between here and September, mid September's Fed meeting. Maybe we have a little bit of a rethink.
- [39:27]
Frank Holland
Well, Jay Powell on Friday. We'll get a few answers. Mike Santoli with his MIDDAY work coming up next on halftime, the state of the crypto trade is many of those stocks they sell off this week. Look at those charts. Robinhood this week down more than eight and a half percent. Coinbase down about four and three quarters. We're going to get the committee's take on halftime right after this. And welcome back to HALFTIME with your we have your ETF edge. We're seeing two big pushes in the industry this week, getting very different receptions. Let's jump right into it. Joining me now is independent ETF expert Dave Natick. Dave, thanks for joining us.
- [40:02]
Dave Nadig
Thanks for having me.
- [40:03]
Frank Holland
All right, let's start off first, get back to those two big players diving into the active management arena. We got billionaire investor Ron Baron launching his own fund and low cost king Vanguard filing for a new fundamentals fund, but with some higher fees. So is this a trend in this space and is this space getting a bit crowded right now? Active and passive ETFs, they're about 50% of the market, each about 2300 apiece.
- [40:25]
Dave Nadig
Yeah, it's been really interesting. We've had a huge run into active management this year, although very little of it has been what we would call traditional active stock pickers. So to see a fund like Barron show up is actually something to note. Now, Baron has some of the most expensive mutual funds out there. Some of them are almost 2% a year. We don't really know what the fees are going to be on the etf. We expect those are going to be lower. But it's really interesting to see one of the storied stock pickers, one of the only folks who's actually managed to beat the Qs over time, showing up in the ETF arena a little bit late to the party. At the same time, Vanguard's bringing their Wellington strategies, which certainly are not charging one and a half percent, but they're going to be more expensive than the average etf. I think this is recognizing the reality that investors are looking for things that are a little bit different than just buying the market. It's very much part of what we're seeing so far. 37% of the flows in the last month went into active products. This is definitely a trend.
- [41:22]
Frank Holland
All right, moving on on the crypto front, after a series of product approvals, the sec, it's now actually delaying decisions on President Trump's own Truth Social Trapper Tracker, XRP derivatives, and some other parts of the offerings that are out there. What's going on? What do you what's your take on this?
- [41:39]
Dave Nadig
Well, the regulatory environment has gotten cleaner with the passage of the Genius act and much of the other things we're seeing at the fcc. And we do have things like east funds pulling in huge assets that this year we've had close to $30 billion in inflows into crypto ETFs so far this year. But the edge cases, whether it's staking in a theory and whether it's meme coins, the SEC is definitely pushing the pause button there a little bit. I suspect we'll see a lot of these products launch before the end of the year, but I think we're going to be in a little bit of a lull while the SEC figures out what they're really willing to allow the ETF industry to kind of get away with here. The biggest edge case we've seen so far has been Solana being staked. That's a Rex Osprey fund that got kibosh very quickly and then finally traded. I suspect we'll see the staked versions of Ethereum ETFs very soon and then probably will open the window on some of these altcoins and meme coins down the road.
- [42:35]
Frank Holland
All right, Dave Nadig, ETF expert, thank you again. Good to see you. Thanks for having me. Bryn, want to come over to you now. You have some crypto exchange. Expose your take on some of the moves happening in the crypto space when it comes to ETFs.
- [42:47]
Bryn Talkington
Yeah, I mean, I think that this allows firms like ourselves, institutions, people that don't are not going to have their investments in a wallet be able to buy these securities in the market. So I think it's just hypercharges, the adoption of crypto. And obviously there'll be winners and losers. I mean, I still think that you've got Bitcoin as digital gold, and Etherium obviously is a payments rail. And so I continue to think those are going to be the, the two big winners. But it's great to see the genius act and just more clarity around it versus the enforcement that you had from the Gary Gensler regime.
- [43:26]
Joe Terranova
We added Robinhood, we added coinbase, we added XYZ, we added PayPal, we added them all for the technical momentum, strength on the fundamental side. I'm having dinner with Anthony Scaramucci Monday night. He's back from his SALT crypto conference in Wyoming. He'll explain to me why fundamentally I need to own individual crypto securities.
- [43:45]
Frank Holland
All right, looking at coin right now, up about a half a percent. Still ahead, more of the day's biggest movers and your final trades. Hattam's back right after this. And we are back on halftime. Our friends at the Golf Channel, they're following the PGA's tour's stop this week and it's at the Tour Championship, reporter Todd Lewis, he has the he drew the good straw. I don't know if it's the short one, the long one, but he's in Atlanta with much more on what to expect. Todd.
- [44:21]
Dave Nadig
Yeah, it's a good one because we're going to crown a FedExCup champion here in Atlanta at Eastlake. But the news of the day comes from PGA Tour CEO Brian Rolapp. He's been only in that position for 18 days. For those who do not know his history, he was a top tier executive with the NFL, took the job here at the PGA Tour. Many thought he would actually replace Roger Goodell as the commissioner of the NFL. But now he is firmly planted as a new CEO of the PGA Tour. And he announced today the formation of a future competitions committee that's going to be made up of six PGA Tour players and three business executives. And chairing that competition committee will be none other than Tiger Woods. He also spoke of three things he wants to see from the PGA Tour parody which is pretty self explanatory. You have that NFL a simplified aspect for fans to understand and also scarcity. Now that's an interesting word, scarcity. That means possibly fewer players in fields for tournaments having bigger signature event style tournaments that we currently have on the PGA Tour, more of them, but also fewer tournaments possibly on the PGA Tour schedule. We shall see. But in regards to this week, Scottie Scheffler is the favorite. I mean listen to this last top 10, last missed top 10 he's had on the PGA Tour was at the Players. Since then he's played 13 events, five wins, nine top five finishes. So Scotty Scheffler is a pretty good chance of winning the FedEx cup once again here in Atlanta.
- [45:48]
Frank Holland
Todd, thank you very much. You enjoy Atlanta and all the play down there. And also be sure to follow Golf Channel's coverage of the Tour Championship. It begins tomorrow with round one coming up at 1:00pm Eastern. All right, stay with us here on Halim. Final trades they're coming up. And we are back on halftime with our final trades. Brent, talking to Europe first.
- [46:26]
Bryn Talkington
Let's let's roll a salesforce like the technicals here. The market gets it wrong all the time. AI is going to make this company stickier and stickier.
- [46:34]
Carrie Firestone
Carrie I like that tree. Brent, I'm giving you American Express exp. It's seems to be hitting an inflection point on the stock. It's well below the market multiple.
- [46:44]
Frank Holland
This is the shock Boston based company right there.
- [46:46]
Joe Terranova
Boston based company right on tjx. It's pulling back slightly today. Going towards yesterday's high gets into yesterday's range. I think you want to buy it, not because it's a Boston company. Yeah, Yankees had nine home runs last night.
- [47:01]
Frank Holland
Carrie, that's good. Do it for halftime. We leave the regional rivalries alone for right now. The exchange with Leslie Picker starts right now. You've been listening to CNBC's Halftime Report, the podcast. You can always catch us live weekdays.
- [47:16]
Joe Terranova
At 12 Eastern only on CNBC.
- [47:21]
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- [47:48]
Bryn Talkington
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- [47:54]
Bryn Talkington
To view the full Halftime Report disclaimer.
- [47:56]
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Please visit cnbc.com halftime reportdisclaimer is it time to reimagine your future? The right business skills may make a difference in your career. At Capella University, we offer a relevant education that's designed to focus on what you need to know in the business world. We'll teach professional skills to help you pursue your goals like business management, strategic planning and effective communication, and you can apply these skills right away. A different future is closer than you think with Capella University. Learn more@capella.edu.