D (2:52)

And I expect that you can.

B (2:54)

Looking overseas, you see really strong performance in China here, domestically. I know the tape today looks as if it's returning to where it was prior to Chairman Powell, but I think you take the other side of that. I think the broadening out thesis is something that has validity as we move towards the remainder of the year.

A (3:11)

Jimmy, you were talking about 5 to 7% pullback in stocks and you had been selling some things, taking some profits in anticipation of that view playing out. That was the wrong move so far.

D (3:23)

It has been the wrong move. I still haven't put that cash to work. I actually added to it, Scott, with the AMAT sale last week, in the long run. And I've been trying to hold these two thoughts, thoughts visible and to our viewers at the same time. The two thoughts being one. In the short term, we're entering September. We've had a heck of a rally. Yes, earnings estimates are going up, but we're trading around 22 times next year's earnings estimates. There's been a lot of good news that's come out. I mean, a lot of good news. I don't think Jackson Hole really could have gone any better.

A (3:53)

Was there a lot of good news? I mean, we had Jackson Hole speech was I guess, good news if you wanted a rate cut in September. But leading into Jackson Hole, there wasn't a lot of good news in a couple of weeks prior, well, hotter than expected inflation prints. People were saying, well, I mean, maybe we're going to take earnings cuts off the table now.

D (4:10)

Scott, earnings came in much, much better than expected in the second quarter. And unlike the prior quarters, what you're not seeing this time is the third quarter estimates being taken down. No longer are people saying that we've just brought forward earnings from the future. The market now believes that earnings are going to grow. In fact, for next year, the earnings estimate is $301. And you know, that puts us just a hair under 22 times next year's earnings. Point being is I don't think that we can get a meaningful rally in the short term because you need earnings growth to Come in better than expected. You're just not going to get any indication of that until late September at the earliest, which is pre announcement season. Now I do think that earnings are going to come in better than expected. But my point being is September is kind of a desert. I don't know what other good news can come in. Yes, maybe a China US trade deal, but we've still got at least 60 days on that. I don't think that's going to come in.

A (5:02)

What do you think? Do you think a rate cut for September is now in the market, fully 85%.

D (5:06)

I think that there is room to be disappointed in that. I hope that I am not disappointed. I'm counting on it. But 85% chance in the Fed funds futures market of a cut in September leaves more room to the downside if for instance, cpi, PPI next week, excuse me, in two weeks, comes in hotter than expected. So all I'm saying is in the short term I see a slight risk to the downside. I'm not rushing to put that money to work in the long run. I, I think the budget bill is stimulative. I think tariffs paid for it. I think earnings continue to grow and eventually the housing market starts to recover. There are things to look forward to in 2026, but you got a treacherous desert in September of this year.

A (5:45)

Biggest risk, Weiss was hawkish. Powell and you didn't get it. And that's why you have the bullish commentary that I read at the top of the program. Along with Jefferies raising its S and p target to 6,600 for the year end. UBS looks at same, the same number for the year end says you'll go to 6,800 by the middle of next year. That's not that much upside. But the idea is that I'm not reading any bearish notes today. I'm not reading really bearish notes from anybody because Powell might have saved the day for this rally in some minds on Wall Street.

E (6:20)

Yeah, you know, it's funny, I agree with you that there was a lot of bad news going into it. You know, earnings are always backward looking and they were. And it was a great earnings season, better than I, than I expected, you know. But going forward, let me tell you what can be positive. The base case, always temporary, is oh, there's a sell off. So what's the largest sell off? We typically see on average about 2%, but it's really much more modest than that. But the debate will now be is it going to be 50 or is going to be 25. So 25 being the base case and that's what drove the market. I was surprised the extent of the rally. But what I am concerned about, frankly is to what is the point that you just made, which is everybody's on the same side of the trade and the VIX is down at around 14 as Joe mentioned. So when everybody lines up on one side, that should give you some, some reason to be concerned. However, I'm like everybody else, you know, I've stayed invested. I'm looking for opportunities to, to buy a little more. I'm looking at Dick's, for example, on the retail side. Been a long time since I've been there, haven't bought it yet. And I think the market is positioned to go higher. It's discounted everything once and then as with rates, which I do think it pulled forward, it discounted it again with the rally on Friday. So we're clearly in a bull market. And I'm saying long.

A (7:44)

Well, I mean there are two trades to be on one side or the other of. There's the markets going up trade. Ed Yardeni, he's sticking with his view 6600, but he's not on the same side of the trade of the Fed going to cut in September because he makes the point that they might not. And he says August CPI and employment reports might convince the FOMC to hold off on easing if they are hotter than expected. And we think likely we're sticking with our associated targets for the S and P for both the end of this year and then at the end of next year, which is, you know, a higher number for certain. I guess I take from that to ask you, Shan, can all of this work? Those targets work? Can the bullish narrative work if the Fed does what Yardeni suspects it might, despite what Powell said in Jackson Hole and the perceived pivot that sent the market off to the races on Friday in the market still go up if the Fed does not cut.

C (8:41)

The markets could go up, but it wouldn't be because of the broadening trade. We would, we would get more of a concentration, Scott, once again in growth in technology and parts of communication services. The broadening trade that exists I do think is predicated on this rate cut expectation for September, not because the companies need it necessarily, but because the sentiment is behind it that this justifies the.

A (9:04)

Hang on two seconds. Let me go to the White House. Megan Casella has a news alert for us. What are we learning? Meghan? Hey, Scott. So the president is just wrapping up.

C (9:11)

About an hour's worth of remarks with reporters in the Oval Office. And he was asked towards the end there about this intel deal and the US government taking about a 10% equity stake in Intel. He was asked whether it was hypocritical of him to take to look towards nationalizing a private company in this way way and whether this deal might present.

A (9:29)

A model for a new way forward.

C (9:31)

Take a listen here to what he said.

A (9:34)

Is this the new way of doing industrial policy?

E (9:37)

Yeah, I sure is.

D (9:38)

I want to try and get as.

A (9:39)

Much as I can.

D (9:40)

Now in the case of intel was.

B (9:42)

Interesting, but I hope I'm going to have many more cases like it.

C (9:46)

He hopes he's going to have many more cases like it. He went on to say much more about intel, saying there will be other cases. If he has that opportunity again, he.

A (9:54)

Would do the same thing.

C (9:55)

And he said it's not a shame. It's called business. If somebody is willing to give you 10% of a company and you're not paying for it, he would do the same thing again. So very clearly saying there, Scott, very strong words from the president that he likes this idea of nationalizing these private companies or at least taking a stake in them as the federal government and that he will not hesitate to do it again. The only question now is just what sort of companies might come next.

A (10:19)

Scott? Yeah. And how it's justified if he or anybody else in the administration, frankly, feels a need to make a case by case justification. We'll see. Megan, thank you very much. Megan Cassell at the White House. We're going to kick this around because, Weiss, I want your take on this. This is a brave new world in the way that we may have to think and talk about free markets and the way they have operated for many, many, many decades and the way that they may operate from here forward in the current administration, if not beyond.

E (10:59)

Yeah. So look, so to me, this wrong move, it does appear that that was a hostage ransom, so to speak, with intel, that the CEO gets to keep his job and in turn U.S. government going to take 10%. Now, if you follow Trump's thinking through, even though Kevin Hasard said it today that it's unlikely he does that, but there he goes, he's doing it. Is that what's going to be next? Is he going to want to make a successful investment and go after companies that aren't buying intel products? So this is not what, what America is built on. This is not a free market. This is just the opposite. This is going back to where we saw Czechoslovakia was lots of other, you know, companies that were previously, you know, run by dictatorships. This just shouldn't be. Republicans agree with that. Democrats agree with it. It's just the wrong thing. You don't know as an investor how to pick winners and losers in this case. So intel already said we will not sell anything to the government. So is there going to be a penalty? Because in order to get this going, Trump's going to have to have a penalty system. So this can only go one way, and that way is bad.

A (12:11)

I mean, Jimmy, you. You've had people raise the issue of whether you can make a national security case out of the intel specific example. I think that's an absolute fair question. When you hear about this, the first thing I thought about was I've covered activist investors for a long time, okay? Many of them take positions that are less than 10%, like right at that threshold, but yet they still have a loud voice and argue for change, buybacks, mergers, all sorts of stuff. That. What precludes the administration from weighing in, whether it's intel or another business in another industry, on what it should do with its corporate capital, what it thinks is best for shareholders, now that it is one.

D (13:06)

Let me embrace what you're asking and then talk about the risks of this specific policy. In embracing what you're saying, I will point out, and I think I did this a week or two ago, Scott, that the prior administration, different set of metrics, different set of driving forces, had requirements that it put on the CHIPS Act. Those were social requirements. I'm not here to judge them. I'm simply stating that the Biden administration, in exchange for the loans that were granted on the CHIPS act act, had various requirements about diversity in the workplace, childcare, things like that. Again, not for me to judge. I'm simply saying that both administrations had requirements that came out of this. So I don't think it's necessarily new that the government is saying, I want something for this. But, and this is where Steve is, I totally agree with what Steve is saying. There are some unintended consequences that cannot be foreseen at this point in time.

A (13:59)

Well, it's a slippery slope.

D (14:01)

It's a slippery.

A (14:01)

Nothing else. It's a slippery. That it's the right move or not. It's nonetheless a slippery slope.

D (14:07)

And to your point, though, it's the same thing with an activist. There are always unintended consequences. In this case, though, you know, intel is developing these foundries. It doesn't have customers for it. Who's to say that the administration doesn't say to Nvidia, look, additionally, in exchange for getting your China licenses, you've got to build your chips at Intel's foundries. Now that we're, we have an ownership, that's just a hypothetical. That's part of the slippery slope.

B (14:30)

So we have a sovereign wealth fund in the United States. I mean that basically that is what we are implementing. And if you think about the semiconductor industry, and I'm not going to sit here and pontificate on whether I agree with it or disagree, but I'll tell you this much, I think intel, if you're looking at the stock today to purchase it, you're feeling a lot better about buying it than you did three months ago because the administration is going to be behind it. The administration doesn't want to see that stock price go back to $1718. And I think the entire semiconductor industry potentially will benefit from the fact that you're now going to have this government interaction with it. So I don't know, you look at it from the take of an investor and you say to yourself, do you want to invest alongside the government in these companies? Probably, yeah.

A (15:20)

I mean, it just, as far as I see it, it just, it changes the calculus and the questions around what we have always believed to be a free market capitalist system. Now, some screamed to the heavens in the depths of the crisis when we rescued certain companies and let other systems fail that were either on the brink of insolvency or we felt like there was a chance that they were going to go there if something dramatic didn't happen. Now, intel doesn't appear to be in that specific predicament. But doesn't it change the way we discuss what we thought free market capitalism once meant or not?

C (16:08)

Well, the justification that was later used is that the US Government did pretty darn well on those financial services investments that it made during the great financial crisis. But I would say, Scott, the challenge here is, I think what Jim and Steve have voiced is what does this mean for other competitors in this space? I mean, Joe, I would question whether this would be something that would benefit all of those companies because it actually could create a different competitive landscape for those that perhaps are not receiving that government backing. And so I would look to other sectors, perhaps like health care, Scott, where we could potentially see a spillover effect from this type of announcement.

E (16:46)

Hey, Scott, if I could just put one more point in. This is not a sovereign wealth fund. Sovereign wealth funds invest like any other manager. This is a targeted approach at Intel Now I have no issue when we had the all the grants from the CHIPS act, why given the that fact free we shouldn't have influenced how they run their company. We should have influenced it with DTI and the others. But the companies always have the option of not taking the money. Now when we granted we should have taken the Biden administration should have taken passive stakes in the company. Now you could say okay, why passive? They're putting money in. Why passive is to preserve the capitalist system. So there's nothing that the government could do in terms of their expertise in helping intel build a better business. But they can influence the customers and that's what I'm concerned about.

A (17:39)

All right, you want to finish your point? We're going to move on because I want to get back to the markets because I got a lot to get to.

B (17:45)

Yeah, the last point I'll make is look, if, if you want to just, if you want to dismiss that it's not a sovereign wealth fund, that's fine. But in practice it's acting in a very similar capacity where you see the government basically, basically investing in domestic companies and that's something that we see around the world and it's probably coming to the United States. The administration has made clear that that's their actual intention.

A (18:09)

All right, so it's an interesting story, a lot of interest around it, there's no doubt about that. And we'll see what other developments we get, if any. We thank Megan Casella for bringing us the latest from the White House. We were on the topic of what happens in this market post Powell and the pivot that he made in Jackson Hole. The so called broadening trade as we've discussed on this desk already was the biggest beneficiary of all the talk going in to late last week. And if I show you what the gainers have been leading into that you will see exactly what I'm talking about. Because the small caps have ripped the home builders have ripped the airlines, the banks, especially regional banks, healthcare, biotech, the equal weight S and P finally wakes up a little bit and then Roth Capital today says being too short, the underweight sectors of this market is now the largest risk truist upgrade. Small caps calves. RBC says they may have more room to run as well. Jimmy, what do we think?

D (19:10)

I think I look in my portfolio where I have a lot of names that frankly were not performing well in 2023 and 2024 and I like what what I'm seeing and these are non technology names. Yes, I do like to Tease Joe about Wynne Resorts setting a new week high today. Yeah, I mean the highest since I've owned it. And there's clear momentum there. And think about what that is. That's a discretionary stock. That's like. That's the antithesis of. If we're worried about the economy, this is where people go to spend the most discretionary of their dollars. You mentioned airlines. Airlines are really having a nice little run here. They were kind of left for dead after the Liberation Day announcement. Small caps. Small caps have a lot of room to recover here. A lot of room. Same with the rsp. I just like what I'm seeing. I like it. It makes sense to me. It's something that I've called for for quite some time as the odds of a recession over the months and quarters have just done nothing.

A (20:03)

I see how you can, you can like what you see and be so positive about a broadening trade while at the same time suggesting you wouldn't be put any money into the market right now because you still think we, we could get a pullback maybe, but nothing. I think the pullback until next earnings season.

D (20:20)

Well, we're talking about one month. And by the way, Scott, if I'm wrong, I will come out and I will say I was wrong and I'll put that money to work at higher prices than today. But I do think that there will be point specific companies that have whatever sort of hiccup over the next month, whether it's market related or specific to earnings announcements that, that they may or may not make. I'm happy having the dry powder with the market overall trading at 22 times. Where I really have not taken money from though, Scott is some of these laggards that are not catching up that are now catching up. You haven't heard me talk at all about trimming wind or Cleveland Cliffs which is finally showing some life here or Delta. I mean these are things I just want to let these ones run. What have I trimmed from? I've trimmed from Oracle, I've trimmed from JP Morgan. Things that have done exceedingly well. AMAD I took out because it's just a terrible under.

A (21:09)

Cleveland Cliffs by the way is down 8.5% in a month. If that's showing life, we better get out to defibrillator.

D (21:15)

Wait a second. It's up here today we just two days ago we were talking about.

A (21:19)

I was out. Thank God.

B (21:20)

I think when you're looking at this.

D (21:21)

Oh it was last week. You were in. You were giving me props. The whole world Said, wait a second, what is it?

A (21:26)

One day's worth of props. One day's worth. I know it feels like a lifetime's worth to you, but it was one day.

B (21:32)

Come on, Jimmy, you know you don't get more than 24 hours. I think when you look at the list though, you have to think about where sentiment and where is positioning because that's really going to drive where the momentum goes for the remainder of the year. And looking through this look, small caps without question, I think sentiment is as bearish and as skeptical as you can find relative to maybe banks or homebuilders or even health care. There's very large skepticism that small caps can begin to build the type of of momentum that will allow it to have some form of a cycle.

A (22:03)

We have a new amount of skepticism around the trade. Since we're talking about that and since we're going to get in video this week, I feel like there's more questions lately being asked about capex Bubble. Yeah, what the return.

B (22:16)

A lot being written about it, if you will.

A (22:18)

If you look at month to date, Apple's the biggest winner but that's not. That hasn't been considered one of the hyperscalers around. You know, real generative.

B (22:29)

Jimmy's, Jimmy's Alphabet's got a 52 week.

A (22:32)

Met is down 2 1/2 percent. Right. They reorganize their unit. They announced that last week. Again Microsoft hasn't traded well. Amazon hasn't traded very well.

B (22:42)

I don't know that fundamentally it's because there's a. There's this overwhelming concern as it relates to AI. There's a lot being written about Cap. There's a lot being written about capex overspend and guess what? In reality we're not going to know whether that is actually true until the coming quarters. It's just going to be something that is an after the fact. No one is going to be able to really see if these companies are overspending in the moment. They're not sitting in the headquarters of these companies. So the possibility does exist. I'm not dismissing that. I think more than anything else the reason why you're seeing Meta and Microsoft and some of the names you're mentioning that are underperforming recently is because capital is going away from there. It's going into things like the equal weight S and P.

A (23:29)

Mega Cap run. My point is done because, because of all that.

B (23:33)

But it's not. I don't know that the fundamentals are supporting what you're suggesting. It's not like money's running away because you're seeing a deterioration in the fundamental fundamentals. You absolutely can see that over the coming quarters. I'm not calling into question that premise, but the reality of that has not happened today.

A (23:50)

Don't suggest that that the run may be close to done in quotes because of declining fundamentals. They simply look at reposition on the desk, have looked at.

B (23:59)

If it's repositioning, fine, I would acknowledge that that's fine. I have no problem if you say it's repositioning but let's not attribute it to some change in the fundamental fundamentals because in the most recent earnings that wasn't represented and you still have in video reporting this week and they're on pace for 200 billion in revenue in fiscal year 26 and every indication.

D (24:18)

Scott Intact. That's intact. I mean, I'll make this quick, Steve. You know last quarter we had that, what, $5 billion write off on China chips from Nvidia. How much of that are they going to reverse now that their export licenses are in place? It's not going to be the whole thing, but some of it's going to be there. And that's not the only reason that earnings and guidance from Nvidia are likely to be better than expected. Now the stock I would argue is cheap at about a 1.4 times peg. But just be careful. I mean it's rallying into earnings and one wonders it's had a few times where it's reported great earnings and gone down afterwards.

A (24:48)

Well, Goldman today says the near term gains may be limited even though you get a couple of price target bumps for Nvidia Weiss. What you want to say?

E (24:55)

Yeah, I'd say look this the first of all analysts like talk long term except comments like that they're lagging, sort of ridiculous. They're very short term stocks have had major moves. At some point they got arrest. Now let's go back to Sam Altman's comments where he said there may be a bubble here. Why would Sam say that? Sam would say that to keep money from going into competitors. I mean valuations are lunacy. So he's right about that. But he doesn't want potential competitors to get funding. So that's part of it. Sarah Fryer straightened that out on on CNBC last week, said no, there's no bubble. It's growing extremely fast. So I'm not really concerned. I can tell you that as far as data centers go, we had a private investment in a data center site. So right now they don't have a hyperscaler in there. They're in negotiations with a few of them. If they don't get it, then we'll. And I'll bring that news to you.

A (25:53)

I know, but nobody, nobody ever partying in the bubble says there's the bubble. No one ever in the, in the bubble raises their hand and says, you know what? The bubbles, bubbles about to break. You never really realize until after the fact.

E (26:06)

To me, to me it depends where you invest. So I'm not investing in the next open AI at a thousand times revenues because they just started business businesses and somebody gave them a $10 million research contract. That's not. We're investing. That is a bubble. A lot of those companies will go belly up, undoubtedly. And the valuations for an open air will reset lower. However, I don't think the technology is a bubble. That's what it's all the stakes going.

A (26:35)

Into the print on Wednesday. Put that back up, if you guys could, please. Nvidia is up 38% in three months going into the print. So if you don't think that raises the stakes. Okay, I think it does. We'll see quick.

B (26:50)

I think it raises the stake as well. And I think, look, you're making an excellent point on a bubble, but you've had people who for the last seven or eight years have been telling you this is a bubble. As the, as the market has marched higher, you will be able, once the bubble bursts, momentum works both ways. In an uptrend and a downtrend, you will be able to take your position and adjust it accordingly. When the fundamentals and the evidence represent that the bubble has bursted. And the problem is when bubbles have bursted in the past and the market rolls over, that's the point where people who were bearish all along take the other side of it and start buying on the way down. You have to have the discipline.

A (27:29)

Second inning of the AI trade. That implies that we're not even close to peak bubble. If there is, if there even is one.

B (27:37)

And what, what, what I'm part, what I'm relaying to you down which part of the trade.

C (27:42)

That's what we're in the second inning of. We're only in the second inning of the first stage of this. We have seven more innings, Scott, where this is going to expand to all of the other industries and sectors and they're going to implement AI and create greater productivity. And that's why you have to see that shift.

A (27:57)

All right, let's take a quick break. When we Come back, grab the popcorn because Netflix just hit a major milestone. We'll talk about that and how the committee is trading what has been a very, very, very good stock over the last year. We're back after this. As a salesperson, the search for the right buyer or buying groups can feel like you're endlessly sifting through leads and.

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A (29:40)

All right, welcome back. Let's take a look at Netflix Today. They had their first ever box office win with K Pop Demon Hunters. We bring it up because the stock's been red hot. We have ownership on the desk and Shannon is the only person on this desk who has seen it, which means you get the first comment. Even though you don't own it, you're in the mix. You helped give them their first ever box.

C (30:01)

A combination of great animation, a fantastic soundtrack, but most importantly, releasing this into the summertime where this demographic was thirsting for new content. And so if you take the combination of new stars that they brought in, but this is a great example, Scott, of the type of content that Netflix is willing to try out for a very low budget and then be able to quick, quick, quickly jump to putting this in the box office and taking advantage of the sing along aspects of this movie. I Think this is indicative of their continued innovation in terms of their business model.

A (30:34)

You know, Weiss, they, I think Shannon makes a good point. They have the, they have the financial wherewithal to take risks, if you will, where others might not be willing to take the same kinds of risks. That's one of the reasons why investors like you continue to gravitate towards this name.

E (30:55)

Yeah, and the other reason is they constantly add to their value proposition. If you go Back to BlackBerry, BlackBerry was a great technology when it came out, but it was one and done. Netflix, whether it's their live, you know, houses or, or places that they're building in various cities and will be expending, expanding on. So to have that real live interaction, it's just branding. And they continue to brand and they continue to do quite well. Now the release in the theaters and prior releases, they weren't really for revenue. They make plenty of revenue with their core business. It was to continue to get their name out there, not only to attract subscribers but also to retain them. So it just continues to be great management executing strong, extraordinarily well Joe, well.

B (31:44)

Said by both Shannon and Steve. That's exactly what this is. This is an attempt to grow subscribers in an area that maybe they feel as though they do not currently have the interest on the part of these potential customers and for a very nominal amount. And what did it earn? About 18 or 20 million this weekend they got back 18 to 20 million on this and they got the eyeballs. I think it's excellent. I think the stock has pulled back to a level here around the 100 day moving average where you're inarguably going to find some longer term support. They are winning in terms of streaming. And look, we are in a world that continues to go more and more towards streaming. Anyone who's gone to buy a TV recently, the first question they'll ask you is do you need anything other than a smart TV and streaming capability? Are you going to go into a trip traditional cable provider or not? And that's a real question because right now the younger generation, the answer to that is no. Just give me the tv, I'm going to plug it in. If I have wireless, I have all I need with the streaming apps.

A (32:46)

I mean, I think they're, they're, they're reaching, They've gone a long way to reach some of the eyeballs. You're talking about them not reaching. You can go watch Squid game.

B (32:54)

They're making a very clear, they're making a very clear attempt to go out and get some of the eyeballs that they currently don't have. And they're doing it through the theaters.

D (33:04)

Amazon tried it.

A (33:05)

I'm trying to help you out.

B (33:07)

Amazon has tried it. Apple has tried it through the theaters and it works.

A (33:11)

I don't think he got what I was talking about.

C (33:13)

He did not.

A (33:13)

He did not. Right. I just kept going right over all of you obviously did. By the way, Netflix prime to accelerate their content. Reiterate overweight 1560 price target at Wells Fargo FTAI target goes to 230 from 190 BTIG reiterates by today. Weiss, that's you.

E (33:31)

Hey, look, you know, we're talking about more often, but talk about execution. They've been executing brilliantly. They have credit lines. Two and a half billion was the last deal about six months ago or so ago. I think they'll get another one or that will be increased. And aviation. Jim's point about Delta and others, I think stock keeps moving. It's had a monster monument move so far and I'm glad to be a shareholder, but I'm not ready to sell this yet.

A (33:56)

Okay, thank you. Ulta Target to 590 from 520 outperform tells the advisory. Joe, you own that. And Spotify also has some new services that we do them both at once. Ulta first, then Spotify. You own. You own both of those.

B (34:10)

Ulta has regained its technical momentum and its fundamental momentum as well. That's represented in the earnings. That's a recent addition to the etf. Spotify have talked about this now over the last several years been a very strong winning position for us and rightfully so. Why? Because what they're doing, fundamentally they're raising prices and they're not losing their subscribers. They're actually increasing premium subscribers up to about 275 million in that regard right now. They're cutting back on costs which. And they're doing this in a very strong way that's allowing margins to lift somewhere above 30%. So in all of the cases that we're citing here in this block, Netflix, Spotify, Ulta. What are you talking about? You're talking about companies that are executing and you're talking about that shareholders are rewarding them for that execution and it's represented in strong momentum.

A (35:00)

Okay, let's get the headlines now with Silvana now. Hi, Silvana.

D (35:02)

Hey, Scott.

A (35:03)

Good afternoon.

C (35:04)

Gaza health officials say Israeli strikes on.

A (35:06)

A hospital in southern Gaza today killed four journalists, including a freelancer for the.

C (35:11)

Associated Press and a Reuters contractor. They say a total of 19 were killed when two missiles hit the Khan Yunis medical facility. The Israeli military released a statement saying it regrets any harm to uninvolved individuals and does not target journalists. The Department of Health and Human Services just named a COVID vaccine critic to lead the CDC's incident.

A (35:34)

Influential COVID 19 immunization task force.

C (35:38)

MIT Professor Retse will take the post. He has previously said Covid shots should.

A (35:45)

Be taken out of the market and.

C (35:46)

Has called into question the safety of MRSA vaccines. And China's Pop Mart is looking to supercharge Labubu sales even more. The company announced it's rolling out a.

A (35:58)

Miniature version of the popular plush toys this month.

C (36:02)

Last week, Pop mart reported profits skyrocketed.

A (36:05)

400% for the first six months of the year. Scott Silvana, thank you very much, Silvana. Now next ETF Edge. Look at the best opportunities in the energy space right now. I'll tell you where they are next.

B (36:24)

My name is Josh Brown. The best stocks in the market is very simple. These are stocks with good fundamentals, a great story and technically they're in the process of rising higher. Everyone needs to invest. The cost of living goes up every year. The purchasing power of the dollar goes down.

A (36:40)

Assuming we're all going to be here.

B (36:41)

For a very long time, we're going.

A (36:43)

To need more money.

B (36:44)

The stock market is how that happens.

D (36:47)

Join Pro for exclusive access to Josh.

B (36:49)

Brown's best stocks in the market@cnbc.com Beststocks.

A (36:56)

Welcome back Don Chu as today's ETF Beds. Dom, tell us more. All right, so Judge, Raw oil and nat gas are the subject to headline volat volatility in these days. But if you still want exposure but with some more stability, energy infrastructure might actually be the way to go. Joining me now is Paul Baiocki, the head of fund sales and strategy over at SSC Alps Advisors. Paul, this is an interesting trade right now. The Alerian MLP ETF is celebrating its 15th anniversary this month. What is that ETF and how does it work?

D (37:28)

Well, it owns a basket of master.

B (37:30)

Limited partnerships which are a subset of the energy infrastructure space. They're their own unique structure.

D (37:36)

Typically investors come to that category for high yield, but as the space has.

B (37:40)

Evolved over time, it has been a less complete version of the energy infrastructure.

D (37:45)

Space companies that own and operate the.

B (37:47)

Pipelines, that move, that store, that process crude oil and natural gas.

D (37:51)

But it is the largest, most liquid fund.

B (37:53)

As you mentioned, we're ringing the bell tomorrow at the NYSE to celebrate the 15 year anniversary.

A (37:58)

All Right. So all the pipeline operators, the ones who collect the toll for moving all of that energy nat gas across those pipes. But we're also, Paul, about to cross that Labor Day end threshold. We're starting to think about the fall and natural gas prices as things get colder. What's the outlook you see there?

B (38:14)

Well, I think the outlook for natural gas is being driven more than it has historically by just seasonality and more. Some of these longer term implications around AI datacenter electricity demand and the increasing electricity demand writ large, which is part.

D (38:30)

Of an electrification theme that we've been focused on. So I think investors are sort of.

B (38:35)

Waking up to the evolution, evolution of the definition of energy beyond simply crude oil and natural gas and maybe thinking it more in terms of power and how they can capture some of these longer term trends beyond to your point, the near term supply and demand dynamics impacting natural gas or crude oil for that matter.

A (38:52)

And of course AI and data centers factor into that trade as well. All right, Paul Bayaki, thank you so much. We're going to continue this conversation over@etfedge.cnbc.com we're also going to be talking about surprising international performance like in places like Greece. Yes, Greece. Paul will be joined by Malcolm Dorsen, senior emerging markets portfolio manager at Global X Advisors as well. Scott, I will send things back over to you guys. Dom Chu, thank you very much. Appreciate that. Up next, a record run for the banks. We'll find out how the committee is playing that. Some new notes out today. Talk about it next. Let's talk about the banks today because Citi has added BlackRock, Cap One and Charles Schwab to its thematic 30 list. Jimmy, you own BlackRock. Joe, you own Cap One and Charles Schwab. They say we focus on opportunities within the S and P. But outside of the the most discussed theme, I thank you for doing that. The goal is to highlight opportunities to pair with growth to round out a core portfolio or build out a value sleeve. What do you think, Jimmy?

D (40:05)

Well, I really like blackrock here. I mean this is a stock I think you can buy right here if you don't own doesn't get talked about as much as Blackstone or Apollo or kkr. But they are getting into and rapidly expanding their private markets business. This on top of top of a traditional asset management business which is simply growing not only with the markets but as they continue to develop new products. Whether it's iShares on the passive side or some of the active things they're doing, they've just Got so many different pistons in this engine. 22 times forward earnings may seem a little pricey, but for the growth rate that they're doing, not just with the markets but with new products, I think it's. I think it's attractive.

B (40:42)

Joey, In January of 2024, I saw more momentum for the financial sector go from a significant underweight to an overweight. And we've carried that overweight today. I keep waiting for the moment where we're going to begin back paring back positions, but no, we're building positions. So it's really about engagement and activity within the financial services industry. Last week I added personally three names. Cboe, Trade Web and Broadridge Financial Services. Going beyond what we already own in the etf, whether it's regional banks, insurance companies, names like JP Morgan, we added Morgan Stanley. I own Goldman Sachs personally. You mentioned Charles Schwab, other names like Interactive Brokers and we've got some crypto exposure as well. So for some reason the momentum continues to swell in the financial sector and to date you've got been rewarded for it. I think there's fundamental validity behind it. I also believe it is a valuation argument as well. Years of an undervaluation relative to other sectors, you're seeing a rebuild there.

A (41:50)

Wow. You sure you got all of it out? I did.

B (41:54)

It's Monday.

A (41:54)

You sure?

B (41:55)

Come on, it's Monday. We got it. We got to give the viewers a lot.

A (41:58)

Well, I was hoping to. With Shannon. We have any time left? We have any time left in the segment. I.

C (42:08)

Like you took all of it. No, just kidding. I think, I think when you look at this, if you, if you think about that trade, which is what they're citing here, the ability to not only monetize upcoming M and A and lower interest rates, but also be able to create greater efficiency. I mean, this is where financial services really manage to create greater profit margins coming into the gfc. And I think we could see another round of that margin improvement over the next three to five years.

A (42:36)

All right, we got a bounce. We'll come back with Santoli on the other side. Mike Santoli, our senior markets commentator is here at post 9 this midday word. All gain, no pain, is what you ask some of your notes today, because.

B (43:06)

That is the way Friday seemed, is that the market was deciding that was a possibility. Now, a lot of it was just slight offside positioning. People had to be a little bit, I think, cautious about whether you were going to get a real green light out of Powell. You got mostly one, although the dollar index is up today and small caps are taking a breather and the Dow is holding its breakout. But the whole growth into value trade, that seemed maybe a little exaggerated on Friday. Yields are up. Exactly. So you're kind of having just a very partial give back of that conclusion. But big picture, I do think the market got a bias toward a rate cut in a still good economy, at least with earnings rising. And the market can live with that. I don't want to sneeze at the breadth of Friday's move or, you know, the volatility crush and all these things that seem to say the market feels like it's on firmer footing and back in gear, but it's happening near the highs. And I think that is a little bit dissonant.

A (44:07)

Hang with me for a second because we have a news alert with Becky Quick, who joins us now, I believe, on the phone. Hey, Bex, what do you got?

F (44:14)

Hey, Scott. I just got off the phone with Warren Buffett and he just added a little clarity to the news release that both CSX and Burlington Northern put out on Friday afternoon. In it, they talked about how they're linking up. They've got a lot of partnership that they can work together to make sure that freight can make it all the way from the east to the west coast, and that there's this cooperation between them. Clarity to add to this is that Berkshire Hathaway is not in the market to buy a train company right now. That is what I heard from Mr. Buffett himself. He said that back on August 3, he and Greg Abel met with Joe Henricks, who is the CEO of csx. They met in Omaha alone in his office, no advisors or anybody else on this. They talked through all of it. And Buffett and Abel made clear at that point that they were not going to be making a bid for csx. But they really thought there was a lot that they could do to cooperate and work together and come up with those same synergies that there would be even if the two companies were combined. Now, that letter that you saw on Friday, the press release was put out kind of detailed how they can do that partnership together, what they're planning on doing. And Buffet tells me that, by the way, the huge advantage here is that BNSF has unlimited resources to spend on anything that they think makes sense. So this is really a way to get freight across the country for their customers without having any of the slowdowns or shutdowns or needing to take two to three days to transfer over to another train line that they would be working this out, but without actually putting a deal on the table. And that's important because if you've been watching CSX shares over the last couple of months as bankers have talked about the potential for a deal, well, you've seen those shares really pick up a huge amount. This is a partnership that would get at that without paying that premium to do it. But the two companies seriously have a lot that they can do together. Buffett also told me that, by the way, it's not just csx. They're not in the market to bid for any train company at this point. There've been some speculation that maybe they would put out a competing bid against Union Pacific for the other railroad, but that's not in the cards at this point either. So just some important context to add to a developing story that's been out there for a couple of months and that we've seen along the way. And it's probably worth paying attention to all of those train shares today.

A (46:33)

Well, we continue to follow his every move. Obviously. Becky, you've been at the forefront of this from the very beginning. Did he give you any indication broadly, or did you take anything away from your conversation about this particular deal on how he views the current market environment at all?

F (46:51)

Just the current market environment for the train stocks? I mean, look, obviously they've run up a lot. He didn't say anything specifically about it, but I would take away from it that, yeah, if, if you're an investor who's getting into these stocks because you think there's going to be a big deal that happens, that's not the case.

A (47:06)

Yeah.

F (47:08)

You know, there's a partnership that could be had. Not if you guys remember, just like a week ago, the Commerce Secretary, Howard Letnick, was on Walk on the street and he was talking about some of these things. David Faber asked him about the potential for the deal if the Trump administration would be in favor of that. And he said he was going to stay out of it. It wasn't his view to get things done. But even Howard Lutnick looked at it and said, look, there are certainly synergies that could be out there, but we don't care if it gets done through a merger or if it gets done through a cooperation between. Between the two companies. It was very eerie. What he was talking about is very similar to what this company used to. These two companies just announced on Friday.

A (47:44)

Yeah.

F (47:45)

There are questions as to whether the Trump administration would even approve a combination of these companies. We'll see. The Transportation Service Board would be the one who would okay all of those things. But if the market is looking for another bidder to come in, Boulder, Union Pacific or another big bid to go through with csx, it's not going to come from Berkshire Hathaway.

A (48:06)

Yeah. And I mean maybe the market. Well, certainly. And looking at the price action as you are delivering this report which is clearly moving csx, maybe the market's doubtful of that as well, of somebody else maybe entertaining this. Becky, thank you so much for the reporting and for calling in to the show. But Mike, I'll get your comment here as well as, you know, Buffett and company.

B (48:29)

Yeah, I mean, I think just the resistance to kind of throwing more capital in this direction, I'm sure they feel as if being SF is great exposure to the overall US Economy. Any efficiencies you can get with this sort of joint cooperative deal with csx. Also, of course, I think the market was naturally going to that place when it came to an activist investor in csx. You have at least nominally these companies in play. So you have one potential bidder, you know, outright removed from that. So you have to take some of that premium back and it's the stocks going back to where it was about a month and a half.

A (49:00)

Yeah. Well, I mean, Faber this morning on the air, I mean we've done well to surround this thing between Becky and David. He reported this morning that no talks were being had either. So we continue to try and advance the ball. At least it pertains to that. That reporting latest from Becky, they're moving CSX down three and three quarters percent. So that's an interesting one. You want to finish?

B (49:19)

It's only about that was just going to say, I mean, mean, you know, it's like a $62 billion market cap right now. I mean it's a small number, the.

A (49:27)

Mountain that Berkshire sitting on of cash.

B (49:29)

Exactly. And you know, they're in the market for big deals, but it doesn't seem as if this is the particular area where they want to, you know, necessarily get messy with that.

A (49:38)

All right, I, I'll see you on closing bell in a couple hours. Mike Santoli, you want to, you want to talk about what you think is going to be at stake for the.

B (49:48)

Remainder of the week in the time.

A (49:49)

That we have left before we do finals with Nvidia on Wednesday.

B (49:52)

Nvidia is going to be incredibly important in terms of this broadening out thesis that most people right now are trying to position around. If Nvidia and I agree with you in your remarks before, I think the bar is incredibly high for Nvidia. I think the fact that it has run up so aggressively over the last 90 days really puts it in a position where they have to blow the numbers out here to see some follow through upside. If in fact they don't, I think that probably benefits the broadening out thesis because other areas of the market which have been unappealing will continue to see some rebuilding in position.

D (50:30)

I just want to caution everybody, the last four quarters, Nvidia has reported great results. But on two of those four quarters, it's gone down. The other two at the right after earnings. The other two haven't been spectacular responses either.

A (50:41)

Part of the problem is the stock's done so well that.

D (50:43)

Exactly.

A (50:44)

You can you get the continued raising of the hurdle.

D (50:48)

Yes, exactly.

A (50:49)

We'll see.

B (50:50)

And also keep in mind that reaction has not knocked the market down in its totality.

A (50:56)

Steve Weiss, you got a final trade.

E (50:58)

Google, it's been stealth, but it keeps moving up every day and I think it got their stuff together.

A (51:04)

All right, thank you very much for that, Farmer Jim.

D (51:07)

Lockheed Martin. Look for more news coming out of the Golden Dome project.

A (51:11)

Thank you very much. Telecom. Shan, is that you?

C (51:14)

Yeah, Telecom Media. Just some opportunities in communication services perhaps outside those big heavies.

A (51:21)

Are you still riding that Netflix wave?

C (51:23)

I'm pretty happy about the Netflix wave.

A (51:26)

All right, three stars or however many rotten tomatoes you get for what is being good.

B (51:30)

Joey, tough to invest in traditional oil and gas right now, but you can look at the refiners. It looks to me like they're turning back up higher.

A (51:36)

All right, I'll see you on the Bell with Greenhouse. David Zervos is going to join us. I'm looking forward to that. Jeff DeGraff, Kevin Gordon, Keith Lerner. I'll see you then. 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.

C (51:58)

Participants are solely their opinions and do.

A (52:00)

Not reflect the opinions of CNBC, NBCUniversal, their parent company or affiliates, and may have been previously disseminated by them on television, radio, Internet or another medium. You should not treat any opinion expressed on this podcast as a specific inducement to make a particular investment or follow a particular strategy, but only as an expression of an opinion. Such opinions are based upon information the Halftime Report participants consider reliable, but neither CNBC nor its affiliates and or subsidiaries warrant its completeness or accuracy and it should not be relied upon as such. To view the full halftime Report disclaimer, please visit cnbc.com halftime reportdisclaimer.

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My name is Josh Brown. Everyone needs to invest.

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We're gonna show you exactly where the.

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