Dominic Scheer (3:22)

You know, Stephanie, if there are that many mixed signals in the marketplace right now, it almost begs the question, is it the status quo going forward? Because the status quo has been a slow grind higher, not an exponential move or a parabolic move for the markets, maybe certain parts. But if there are that many conflicting moves happening and signs in the marketplace, do we just keep that slow, steady grind higher or, or do you expect a churn for quite some time?

Stephanie Link (3:50)

I think you're going to see a slow, steady grind higher, but I think the equal weighted S and P is going to outperform the S and P. And that's because of what Joe just talked about in terms of the broadening out in your question, are we seeing a broadening out or something that's more, something that gets me more nervous and I'm not nervous. I mean the economy is growing at 3 and a half, 4%. The consumer is K shaped. It's mixed. We'll talk about that later. But I still believe the consumer is in a relatively healthy position because the labor market continues to be pretty good. Inflation is coming down as well. And of course the other part of the economy is AI. And it's not just AI, it's data center, power grid. We've been talking about that ad nauseum. But that, that is a huge tailwind to this economy and I don't see that changing anytime soon. Capex numbers are going higher, not lower. And I don't think they're going to go lower anytime soon as well. And then of course we have productivity, which has been a surprise to the upside side at 4.9%, which is very good. Lower inflation, higher productivity is the definition of Goldilocks. And so to me you just need software to stabilize and have some of these other parts of the market do better for the equal weight S and P to do better. And I think that that's really what's going to happen. That's the theme so far this year. I feel very confident about that and I am overweight in energy, in industrials and materials, even in discretionary financials have been disappointing. But I think there's your opportunity as we continue to broaden out as we

Dominic Scheer (5:17)

talk about a catch up trade. MALCOLM There are other parts of the market that are beginning a lot more attention these days besides those mag 7 names. I remember it was, you know, weeks, months ago that Ed Yardeni had talked about this idea of the magnificent seven versus the, I think, what was it? The fantastic 493. The other 493. It's kind of playing out the way it is right now. But to Stephanie's point, what exactly gets an investor or trader to feel like there is a stabilization that's going to be in effect for some of those beaten down names, especially in software and

Malcolm Etheridge (5:48)

AI I don't know that we're going to see it anytime soon. I think that to the point that these guys are making about the equal weight being the thing to, to carry the weight of the entire market right now for investors, I think we have to look a little bit further under the hood because it does look like a duck kind of going smoothly across the pond, but you can't see those feet going aggressively underneath the water. And what I mean by that is there's this huge divergence right now between the best performers in the S and P and the worst performers. So the best performers right now are energy and materials. Right. And then last year's best performers and our worst performers, which is tech and financials and I'm talking so far, year to date, in 2026, if that continues, that disperse dispersions between those sectors is what's worrying to me as an investor, not necessarily just the equal weight index itself because what that means is I've made this case before, but something has to go meaningfully wrong within tech for the rest of the 493 to catch up and take over that gigantic ownership stake that was 35% roughly of the cap weighted index, it's now about 29%. So it is starting to come in. If that continues to go that way, that means something's gone meaningfully wrong for the trade and everything else that's carried us the last three years.

Dominic Scheer (7:03)

Brin Meaningfully wrong is what's arguably happened to certain key stocks in this market overall. I wonder from your perspective if it's meaningfully wrong for the market to have reacted the way that it has. Despite the fact that many of these mega cap stocks that carry such weight in the markets have seen significant notable drawdowns yet we are still a handful of percentage points away from record highs in the overall market. Is there a worrisome sign that there is a meaningful decline that should be at least on watched out for in this particular move?

Bryn Talkington (7:40)

I think a lot of us on the, on the panel have been talking about for some time that we're going to continue to see dispersion within these tech names. And I mean good lord, you can see that with just like Google versus Microsoft. And so I think that dispersion is going to continue. I think what's ironic, I mean we're big fans of rsp, we've owned it for two years. Glad to see it's doing a little bit of a catch up trade. But when you actually look at earnings and margins squarely, all of the earnings and margins still come from tech. But what's happening as we all see is the market does not like the CapEx spend. And until there's a clear line of sight of what each of these individual companies are actually solving for, I think these especially like the Microsoft, the Amazons are going to be under pressure because as they continue to spend that capex and if you just go first principles, what is Microsoft actually solving for? Are they trying to have us all use Copilot? Well so far that's been I think kind of a failure. Same with Amazon. Alexa is still terrible and those are just like basic things that the market needs to see with these companies. And so I think until the capex slows down, which doesn't seem like it's going to slow down, these individual names that we really don't know what the spend ultimately is for I think will continue to be challenged. And then on top of that software I think there's been a ton of technical damage. So many of these names Dom, are well under the 200 day and you know the proper adage is nothing good happens under the 200 day moving average. And so I think it's going to be tough sledding for the next few quarters at least especially in the software names.

Dominic Scheer (9:19)

You know the earnings story because we are still in the kind of thick of earnings season, we're winding things down at this point but there have been fundamental reasons why people should remain somewhat constructive. The earnings season has shaped up actually pretty well. Maybe Some of the stocks that have reported into this decent earnings season have seen sell offs in their shares post earnings report. Is that kind of damage something that should be worrisome? Do earnings actually matter? And I'm curious because HSBC put out a report, right? They had some commentary. The S&P 500 is headed for its fifth consecutive quarter of double digit earnings per share growth tracking 13% well above pre season consensus of 8%. But the S and P remains rangebound struggling to break above 7,000 as sentiment opposed to earnings is driving market movements. The sectors with the highest earnings growth and positive earnings revisions like tech and financials are lagging the overall market. You guys have made this point. I wonder then is there a fundamental catalyst, Stephanie, in your mind as an investor that looks at things like valuations and fundamentals, is there a reason why you should be a little bit wary about what's happening with the price action now given a stronger earnings season on a relative basis?

Stephanie Link (10:34)

I think we have to keep it into perspective, Dom. Last year The S&P 500 grew 18%. The year before that it grew 24% and the year before that 23%. So headed into 2026, while things are really good in the economy and earnings are double expectations of 13% and have momentum to continue the strength expectations are a lot higher. So you're certainly not going to get, I don't think multiple expansion, but I do think you're going to continue to see earnings revisions higher. Now the market may not pay for that today, maybe they don't pay for it for the next six months, but eventually earnings matter. Stocks follow profits on the way up and on the way down and right now they are being revised higher. I'm not sure they're going to get to Ed Yardeni 17% growth. However, I'm comfortable with about 10%. And by the way, I'm comfortable with the S and P 500 doing 8 to 10%. That would be better than the long term average. That's, that's really what we should probably expect this year just given that we've had such a nice run over the last couple of years.

Dominic Scheer (11:35)

Malcolm, even if there's no multiple expansion, if earnings grow by 8 to 10%, the market should grow by 8 to 10%, right? Isn't that the way that people are viewing it right now or are there other macro factors we mentioned geopolitical politics at the top. We mentioned some of those sentiment changes, volatility hurting some of those investor moves. Do you believe as though people will remain constructive enough Given fundamental earnings growth stories that they stay in this market despite what they've seen in mega cap tech.

Malcolm Etheridge (12:07)

Yeah, I think the way you framed it is as if we're all acting logically. And what I think you have to consider with the sentiment shift is there's been a lot of parallels drawn to the tech wreck the 2000s.com burst. And that is what I think a lot of investors of all sizes are concerned about being on the wrong side of this time. So the parallels between how much money has been put into the dirt to build out these data centers, the expansion of AI, how rapid it is, how excited everyone is, AI is going to control everything. And I think that narrative has gotten a little bit exhausted for investors who are making sure that they're not the last one out the door. And so I think we're seeing that play play out a little bit more in sentiment versus the technicals. All the reasons we're talking about why you should want to own this market. You should want to own a lot of the stocks whose earnings are still driving all of the growth in the broader index. But that isn't what's happening right now. And I think it's purely based on sentiment.

Dominic Scheer (13:02)

You're nodding, Joe.

Joe Terranova (13:03)

It's what it's well said. And I do think, and I've been talking about this over the last several months, I think there is a degree of AI fatigue. I think there's a fatigue as it relates to positioning. Who at this point does not know that you need to have exposure to AI, whether it's industrials or technology. And I believe the financial services industry is there in terms of the speculation, in terms of positioning. And at times the market needs to recalibrate that positioning. But I also think in terms of earnings as well. So we've well understood for the last several years the large majority of the earnings growth is attributable to what we're seeing in AI. So the areas of the market that you began to show with talking about broadening out, where I think you see the opportunity, it's the areas of the market that maybe have not had the tailwind of AI. Maybe it's energy, maybe it's materials, maybe it's some of the industrials that are not directly related to the data center build out. It does not mean that the rest of the market which has benefited from AI is in a perilous position. It just means that maybe it's part the of. It's in a period where it's a pause at some point that will Ultimately refresh.

Stephanie Link (14:10)

I think you still want to have the industrial exposure though on, I mean the demand and the numbers that are coming out, I mean last week verdict was up 25% because they had orders up 200%. That's, I mean that's. Those are incredible numbers. A book to bill of 2.9 times. I have never seen numbers like Vertif put up and the momentum is just there. So I think maybe you want, maybe the mag 7 they take a pause and a lot of the reason is because they're spending like drunken sailors at number one and number two, free cash flow is going down and so the terminal value gets. It calls into question. So to me, plus Everybody owns it. 75% of institutions own Mag 7. So it's known, that story is known. But I think lesser of the known are the other derivative plays. I mean that's why one of the reasons why utilities have done so well this year, it's not necessarily a defensive call. It's really because they are benefiting from the build out as are, as are the industrials. And so I think you can still play that theme. Just you have to migrate to different areas and I know you're there.

Joe Terranova (15:15)

No, I think we're saying the same thing. I don't think it's binary. I don't think you look at it and you say okay, I'm either long or I'm out. I just think it's the degree of which you have that on ownership. And I think we reached maybe an extreme level in 2025. We're there with Vertif. We see no reason to move to the sidelines on it. I just think it's the degree of your ownership right now that you call into question.

Dominic Scheer (15:37)

But there are certain places in the market where from a degree of ownership perspective or a momentum perspective, there are places that have been generating fear a little bit more. So specifically I want to bring one part of the market in because it has been a stock of the moment moment over the course of the past couple of days and that's Palo Alto Networks and cybersecurity in general. All right, this was a, it was bullish for a lot of folks out there. People bought into the story about the AI kind of ripple effects, the need for cybersecurity as part of that ecosystem going forward. Yet we have seen some very negative price action in certain parts of the market. Palo Alto Networks is one of those. We've seen a couple of analysts moves lowering price targets, lowering some of their, their ratings on this stock. I Wonder, Stephanie, you actually own Palo Alto Networks. Do you feel as though there are some of those places in the market that have been indicative of enough of that fear trade around AI? And is cyber one of those that falls into that software AI disruption type category?

Stephanie Link (16:36)

Well, it might in the short term, Dom, but the long term story in cybersecurity is very powerful. And it's because of AI that cybersecurity is going to be bigger because AI is not as secure. And when you have companies that are coding using AI instead of human beings, that's also not very secure. And so to me, Palo Alto is positioning themselves to win over the long term. Is it going to be rewarded today? Yesterday? Certainly not. I don't know anyone who expected the $30 billion worth of M and A that this company has done in the last five, five months to be synergistic right away from day one. I mean, they just closed their biggest transaction, Cyber ARC, on February 11th. So give it some time. But at the same time, they're building the platform, they're building products so that the customers that they sell into don't have to use as many vendors. And that is exactly what chief technology officers say all the time. It's too complex, it's too expensive. So that's why Palo Alto is doing what they, they're doing. And in the meantime, total revenues grew 15%. Product revenues grew 22% RPO. Screw. 22% guidance was actually pretty good, not including synergies. So to me, it's not, it's not getting rewarded today. Okay, but 11 times price to sales when CrowdStrike is trading at 25 times price to sales, I think that that's a disconnect and I think it's an opportunity and I think it's a, it really, truly is a buy here.

Dominic Scheer (18:05)

Brin, you've been speaking constructively over the course of the last few weeks about the cybersecurity trade. Do you feel as though your thesis needs to change at all given what you've seen so far in the last couple of weeks around some of these names?

Bryn Talkington (18:19)

No, I mean, I think technically going back to the 200 day, you know, Palo Alto is way underneath that. I mean, I'll be looking to add tactically more to the bug. I like, I like that basket of names I will say is around the AI trade. You know, Anthropic has like using Anthropic, a private company that's obviously at front and center of one of the most innovative private companies. They do a lot of their own cybersecurity but they also use Zscaler, they also use CrowdStrike. And so I do think the narrative, which is just a story that all of a sudden somehow we're going to have these like AI bots I guess to steps point like that's not going to happen. And so I think long term these companies, this will be a buying opportunity. But I will say you have to be tactical about it because under the 200 day, I don't think you're going to have this V shaped recovery. So like a DCA into these names to me is the more proper way I'm going to approach this.

Dominic Scheer (19:14)

All right, speaking of dollar cost averaging, Malcolm Zscaler is a name that you've been in and it seems as though you are buying more of. Talk to us about this chart because it does not look good in the last three to five months and why you are catching what some would call a falling knife here. Others would say it's a deep value play. Why Zscaler with that kind of a chart?

Malcolm Etheridge (19:35)

Yeah, so broadly I think there's a huge opportunity building up in software, period. You ask the question where does it stop? Where does the bleeding stop? I don't know the answer to that question. I used to be a little more confident in the answer to that question than I am now. But I think that there are a number of quality companies that have been thrown out with the, with the bathwater, so to speak and Zscaler being one of them. You just heard from Stephanie and Brent about why you would want to own cybersecurity names. But more specifically Zscaler, I think as we're talking about moving into a world where agentic AI runs companies. Right. So we talked about agents who are going to be acting on your behalf inside of your companies with your actual credentials. That speaks to me for reasons why the budget for cybersecurity is going to be going through the roof for a lot of these companies not getting cut. And so for a company that's cloud native like Zscaler and also is on a flex model where you can add and remove modules as often as you need as your company grows and ebbs and flows, let's say, I think it's a great company to be in and it's down roughly 50% from its all time high back in October, that looks to me like a good entry point for a company that's growing its annually recurring revenue like 27% year over year at for last earnings.

Dominic Scheer (20:49)

All right, so we've now addressed the AI software Weakness and whether or not there are value plays to be had. We've also gotten today we have a number of market narratives but two in particular that are shaping possibly what could be the market narrative over the coming weeks. The number one I guess from a company specific standpoint is Wal Mart. Those those earnings were out generally a very good quarter and maybe some people were somewhat disappointed with the guidance that they had. But they had strong again holiday growth earnings outlook fall short of estimates. The holiday quarter sales rose nearly 6%. E commerce still represents a strong part of that business. Yes. And Wal Mart if you look at that, that's the 24 hour chart. But if you look on a one year chart, this thing has been in fuego over the course of the last three months. At one point I was looking at the charts, 50 day moving average was basically for the last two two weeks trading at roughly two standard deviations above its 50 day moving average for the better part of two weeks.

Malcolm Etheridge (21:48)

Yeah.

Dominic Scheer (21:49)

So maybe not surprising that it's a muted move today, but you own it, Joe. And is this a quarter that you've seen in Wal Mart where you feel like you can continue to own it or is some of the consumer sentiment data scaring you a bit?

Joe Terranova (22:02)

So maybe we could pull the lens back on that chart to 2024. We established the position in October of 24 at $82. I've said recently I would not chase this stock here. To your point in the relationship between the 50 day moving average and current price, the 50 day moving average sits at 119 now. E commerce was incredibly strong, up 20%, 27% and understand that's now 23% of overall US sales. The guidance tepid new CEO John Furnham. Maybe the new CEO wants to tamper expectations for the upcoming quarter. I understand that most companies do that when a new CEO comes in. They're utilizing AI for sure. They have the relationship with Google and Gemini. But the stock has benefited here I think from an overall flow into consumer staples over the last several weeks. If you take cost of Costco and you take Wal Mart combined, you're talking about nearly 21% of the XLP. So it's benefited in that regard. The valuation is a little bit hot, is a little bit high here. Costco is going to report on March 5. I would not be chasing it here and I do think it's indicative of what Steph before said before, rather the K shaped economy. The economy that's really right now. No higher, no fire. Well at some point the no hire is ultimately going to matter to Wal Mart and to Costco.

Dominic Scheer (23:33)

All right, so that's the Costco story I mentioned. There's a couple of ones that may shape the narrative. The other one, and I'm going to turn to Brin for this one, here is what's happening now with private credit and some of these business development companies. A story that's gotten a lot of chatter, at least in my circles, that the traders and investors who messaged me and email.

Joe Terranova (23:53)

It's in all our circles.

Dominic Scheer (23:54)

All of. It's all of our circles right now. You know what I'm talking about. This is about Blue Owl. This is about that Financial Times story with regard to Blue Owl curbing investor liquidity following an asset sale. It's gotten some investors a little bit scared. You can see there the private equity sponsors, many of them are down on the day they have exposure to this. It's stoking some broader private credit concerns about whether or not there could be something of a risk, risk aversion trade developing in those credit markets on the private side. Brent, I will turn to you for this one because you are involved in some of these private capital type sponsor names and I wonder if this at all has frightened you about maybe what's happening with private credit and private equity in general about some of these types of liquidity issues.

Bryn Talkington (24:41)

Frightening would not be the right adjective. We own otf. And so just to give some backstory of what actually is occurring, so OBDC 2 is a private BDC. I think the yield is around 9 to 10% annually paid quarterly. Originally last year they were going to roll it into obdc, which is publicly traded. But as we all know, the, the publicly traded BDCs are 15 to 20% below fair value or book value. And so certain people balked to say, well, if you roll it into it, we're all of a sudden down 15%. So they said we're not going to do that. So what Blue Owl did, and I know the team Blue Owl, they do very good underwriting. They have excellent analysts which no one's talking about, like their underwriting caliber or the quality is they went to an institutional investor who actually buy in $1.4 billion worth of loans at 99.75% of par. And so, so what will happen with those OBT OBDC2 investors, from my understanding is there'll be a vote is that around 30% of capital will be returned. And so those investors will have that capital returned and they can go buy a 10 year treasury yielding 4% if they want daily liquidity or what have you. And so I do think this is a good lesson for investors. These private, semi liquid private investments, they're doing private loans. They don't have Q sips and they have these 5% redemptions because they're private loans and they're trying to protect all investors. And so I think this is a good example of, you know, when someone yells fire, there actually is no fire and everyone wants to exit. Then all of a sudden this comes under fire. But I do think Blue Owl is looking to do the right thing for all investors to create this liquidity of I believe it's 30 to 34% and then let that OBDC to wind down and repay those loans back to investors, which is once again so far at par.

Dominic Scheer (26:35)

All right, Joe, interesting commentary from Brin. Let's, let's kind of frame this around as well. Some of the other parts of the market that may or may not be reacting to some of the private credit concerns. I look at a handful of these publicly traded funds that invest in private credit, private credit, clothes, private, that sort of thing. And they are not showing any of the same kind of downside that some of these private credit companies and business development companies are showing today. So it's a bit of a divergence. Right, or which is right, I guess in your mind, Joe, there are certain funds that invest in private credit clos that are not reacting at all to what's happening right now. Yet some of these companies are. What should investors take away from that divergence in price action from these private credit instruments?

Joe Terranova (27:20)

Yeah, I said at the beginning of the show, maybe it's a moment to sit on your hands. And I think as it relates to this headline, I think that's exactly the case. From my perspective, I don't think there's a specific answer that, you know, in the moment. I think over the course of time we will resolve which one is actually ultimately right. You look at a company like blackstone down 6% today off of this news. You look at Carlyle down, down 5% off of this news. And to your point, well, that's either going to be a tremendous opportunity when we look back over the next six months, or we are at the beginning precipice of something that needs to re rate lower. I don't have that answer for you today.

Dominic Scheer (28:00)

All right, we've hit a software, we've hit Wal Mart, we've hit business development corporations and private credit, and there's still a lot coming up. So we've got more on the jump in oil prices on worries of a potential US Iran conflict. We're following this developing story that's coming up next. Plus, Stephanie has some new moves in the financials. Those bank stocks to tell you about, keep it right here. Halftime is back in two minutes.

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Contessa Brewer (30:26)

We're back on halftime. I'm Contessa Brewer with your CNBC news update. The Supreme Court is rescheduling a crucial closing closed door conference involving the civil verdict that found President Trump liable for sexual abuse and defamation. Justices were supposed to decide tomorrow whether to take up President Trump's petition for a review of the case involving writer E. Jean Carroll. No reason was given for the change in plans. United Airlines announced it's overhauling its mileage plus frequent flyer program specifically to reward travelers who have one of the airline's crew credit cards. This is the biggest change to the program since 2010 when United began rewarding customers for how much they spend in addition to how much they fly. And Formula One is coming to IMAX theaters across the U.S. iMAX announced a partnership today with Apple TV, the official U.S. broadcaster of the sport. It will bring the five most iconic Grand Prix in F1 to about 50 participating IMAX theaters starting in May with a Miami Grand Prix. So you can watch it without smelling the exhaust.

Dominic Scheer (31:32)

Dom all right, Contessa Brewer, thank you very much for the news update there. Well, let's talk about what drives some of those smells and odors. Oil and fossil fuels. Oil prices are jumping again today as tensions rise between the US And Iran. Our Pippa Stevens has the details on what's going on in the oil markets right now and just what we should be worried about. Pippa.

Pippa Stevens (31:53)

Hey, Dom, While the geopolitical risk premium is pushing oil to a six month high as Wall street increasingly believes there will be a US Military strike on Iran with Eurasia Group putting the probability at 65%. President Trump saying today, quote, we may have to take it a step further or we may not. You are going to be finding out over the next probably 10 days now. Until then, there is more clarity on escalation versus resolution. Traders do not want to be bearish with positioning pointing to more concern about a price spike than a decline. CIBC Private Welsh, Rebecca Babin saying 5 to $10 moves in WTI over the next week remain very possible. Now the street is closely watching oil, but take a look at European Natural gas jumping 12% here on fears that LNG cargoes could be impacted if there is a wider conflict. The Strait of Hormuz is the sole export route for Qatar and the UAE, which together make up about 20% of global LNG supply.

Dominic Scheer (32:50)

Dom all right, Pippa, thank you very much for the state of play there on the oil and gas markets. We appreciate it. Joe, I'm going to turn to you for this one first. The oil and gas trade overall is one that you had mentioned at the top of the show is one we should be focusing a little bit more on. Where exactly are you going to look for that kind of relative value in a market where the oil prices are heading higher and maybe the oil stock stocks are heading higher as well?

Joe Terranova (33:13)

Well, if you're looking at energy equities, I think the oil field service names are ones that you could own, whether that's Baker Hughes and Slumber J. We have both of those in the Jyoti etf. Personally, I own the OIH Halliburton I'm seeing very strong momentum recently. And then you look at the majors like Exxon, which is performing very well also. I also believe what's going on in energy is unwinding what has been been a long period of short positioning. And I think we're getting to the moment where that is now balancing out. You also had today the oil inventory report, which was very interesting because you're looking at crude stockpiles that are at their lowest level since July. You have the biggest plunge in those inventories since September and distillates are running at the lowest level since October as well. Well, so it's kind of the perfect storm of headlines combining with the concerns that we have related to Iran. But coming into the year, the story really was about rebuilding positioning in energy. I think that's been the right thing to do.

Stephanie Link (34:17)

Still only 3% of the S&P 500

Dominic Scheer (34:20)

waiting smaller so people.

Stephanie Link (34:22)

So portfolio managers could ignore even owning in this sector for years. But to try to create alpha it is by actually going against the grain and making it a bigger bet. I'm actually double weight, but it's still only 6% compared to technology, which is 30%.

Dominic Scheer (34:37)

Brin, let's talk to you about this. What are you doing in oil and gas?

Bryn Talkington (34:42)

Well, I'm a long term owner. I mean, if you think oil is going to stay higher and you want to do an etf, XRP is a great way to play at the expiration and production. Those names have really been hampered the past couple of years. Not this year. But if you don't own energy, understand there's going to be a lot of tensions going into the weekend. That would be purely speculative. I didn't own it. I definitely would not buy it today because if something doesn't happen, and hopefully it doesn't with Iran, if something doesn't happen, then all of a sudden you're going to get some air out of a tire. And so just like be mindful of your positioning. If you're like going into the weekend and don't own energy of what could or could not happen, obviously with with the US And Iran.

Dominic Scheer (35:22)

All right, we got more on this and other moves. We got committee moves coming up next. Stephanie Links ready with two new buys and we have those trades coming up. Keep it right here.

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Dominic Scheer (37:03)

Welcome back to the Halftime Report. Stephanie Link has a number of new moves today. We're going to start with what's happening with the financials. We mentioned them earlier in the show. You bought shares of Truist and added to your position in bank of America. Take us through. Why?

Stephanie Link (37:16)

Yeah, I mean, this group has been disappointing year to date, yet estimates continue to go higher. And these stocks are very cheap. So big picture, the fundamentals are improving for the industry with regards to loan growth, with regards to M and A fee growth with regards to equity, equity capital markets and debt capital markets. So that's why the numbers have been going higher, higher. But the catalyst for me was that the deregulation piece I think is misunderstood. So right now the big banks have about 175 billion in excess capital. When we get Basel 3 endgame and when we get G said regulation rules that are relaxing the capital levels that number 175 billion can get to as high as 250 to 275 billion. And what are they going to do with this excess capital? We're going to return it to shareholders and buybacks and dividends. But they're also going to continue to see loan growth. Loan growth I think is positioned to grow about 5%. I think you could see something like 7, 8%. I know that doesn't sound exciting. That's exciting to Me and it's exciting for the bank companies as well. So on truist, the stock trades at 1.1 times book and I think they're on pace to see ROTC which is profitability of 15% in 2027, 16% in 2028. And that's because the big businesses are getting better. Same thing with bank of America. They have a goal to get to 16 to 18% ROTC. These are great numbers. These are reasons why I think you're going to see multiple expansion. And in addition to truist, I actually do think that they've done a lot of good things in terms of new management changing the strategy. And talk about excess capital. They've got 14.6 billion in excess capital over the required amount that they're expected. So that to me means more buybacks, more loan growth and that's going to be I think good for earnings.

Dominic Scheer (38:58)

All right, we'll see if those return on tangible common equity numbers start to back up some of the valuation gains that you are anticipating. I also want to turn to one industrial name. That's a new one for you. Take us through why Dover?

Stephanie Link (39:12)

I know and this is kind of a boring industrial, sorry, Dover management, but this is all about short cycle. We have been talking about short cycle stories within industrials. Really not doing well over the last several years. But that's because isms and pmis haven't done well. We're now starting to see expansion in the manufacturing parts of the economy and these guys will and gals will actually benefit. So they make like components, they make pumps, they make consumables, everything that goes into energy, chemicals, consumer etc. They have 33% recurring revenue. Their bookings last quarter grew 10% percent. They have 2.7 billion in cash. I just think the short cycle stocks within industrials are the are the places where they may outperform the long cycle ones. And so I wanted to have some exposure there.

Dominic Scheer (39:57)

All right, some interesting trades there for sure. Stephanie. Thanks for bringing those to us. Now coming up on the show, we've got Mike Santoli joining us with his midday word. Markets now again holding steady right around a half of 1% decline for the Dow industrials. We'll be right back after this. All right, we're back on the halftime report. Senior markets commentator Michael Santoli, he's also the overtime co anchor now. I got to put that in there. So he joins us with the midday word. It is fancy. Let's look for some fancy commentary in your mind. We are now fractionally Lower. It's not out of the realm of reason given what we kind of saw yesterday and earlier this week. It's just this gyration.

Malcolm Etheridge (40:38)

Yeah.

Dominic Scheer (40:38)

Have there been any developments today or yesterday that have made you feel as though the market narrative is in a transition or change phase?

Michael Santoli (40:48)

I think there's the potential for it and mostly it's about the internal tension that you can just observe. We have this flat S and P500 on a year to date basis, on a multi month basis, yet very unsettled underneath. Now it's kind of good unsettled in a way because 60% of stocks are outperforming the S&P 500, 57% of active managers are outperforming the S&P500. Historically, what you call a market where 60% of stocks are outperforming is a down market. I mean, honestly, that's usually the way it goes. So I think the market's doing an amazing job given all the excuses for it to break down further of hanging in there. If you told me Staples are ripping year to date, if you told me that we're having some hiccups, maybe perception wise and private credit, all of these things you would say I wouldn't expect we. If you told me Mag 7 is down six and a half percent year to date, you would have thought the overall index was suffering. And we're not. We're sort of in this 3% range of the old highs.

Dominic Scheer (41:42)

I know that you can't encapsulate this in the amount of time I'm going to give you, but the private credit stuff, do you feel as though this Blue Owl story is symptomatic of broader issues?

Michael Santoli (41:52)

It's broader issues in the sense of concern about fraying in credit quality in some subsegment of private credit and a mismatch between the liquid vehicles that own illiquid assets and people wanting the money out. It's analogous to me the Blackstone issues in the beret a few years ago where it was kind of a mismatch as opposed to the commercial real estate sector melting down.

Dominic Scheer (42:15)

Gotcha.

Michael Santoli (42:16)

I think that's the way the market is trying to treat it.

Dominic Scheer (42:18)

I think a lot of folks are spending a lot of time going through some of those blue L headlines today to figure out whether it's symptomatic of something broader. So Michael Santoli, thank you very much. We'll see you on overtime later on this afternoon. Coming up on the show, more committee stocks on the move and earnings pop and a drop for Two of Joe's names. Plus we're going to debate our top calls of the day. Halftime is back into The Dow's down 300 right now. All right, welcome back to the halftime Report. Let's hit a few calls of the day. Carvana shares right now plunging by about 20%. Although right now I'm looking at the Carvana chart. It's down 12% on the day so far. Post earnings down about 7%. Joe, you own the Carvana stock in the Jyoti ETF. Take us through your talks.

Joe Terranova (43:14)

Pull the lens back six month on that chart if we could. I believe the high was 486 in January. We bought the stock in October at 306. So how do you think that feels to see the stock go from 306 to 486, down to 317? I bet you think I'm going to defend it. I'm not.

Dominic Scheer (43:35)

Okay.

Joe Terranova (43:35)

I am not going to defend it. Okay. The depreciation concern with this company is real. The depreciation on inventory, that leads to higher costs in the coming quarters. I think it is a real issue. I would not be sitting here right now and saying, okay, let's buy the correction.

Dominic Scheer (43:54)

Okay, let's go to you, Brian, for this one here. Palantir. Those shares have been removed from bank of America's US1, aka their conviction buy list. You own Palantir. What do you think? And now.

Bryn Talkington (44:06)

Yeah, I mean, the chart doesn't look good. I bought the stock in 2020 for around $25. I sold it 50, 70, 100. And I have a little bit left. It's still an expensive stock. And once again, it is a software stock. So it's kind of at that intersection of software and AI. The chart doesn't look good. It could easily go to 100, by the way. It's still very expensive. So I think that's a good call, especially technically. Still an expensive stock.

Dominic Scheer (44:29)

All right. And Jyoti, for you, this one, DoorDash issued some disappointing fourth quarter quarter results and guidance. Those shares right now you can see actually up three and a half percent. So DoorDash, one you like to stay with.

Joe Terranova (44:40)

All right, let's pull the chart back one year. We established a position last April at 192. We're now down on the position. So how do I feel about that? I do think this earnings report was comforting. It was comforting from the standpoint of the company giving the assurance that they are integrating the acquisition of Deliveroo. They are specific. Spending more. They're spending more. On grocery and retail, you want that? There's the international expansion. So I think they're very strong in the positioning of market share. This is a company from a fundamental perspective that I think it has tailwinds behind it, despite what we're seeing in terms of momentum, which that score does not look good.

Dominic Scheer (45:19)

All right. Well, coming up, we're going to talk metals with a D and metals with a T. The big money in going for gold at this year's Olympics.

Stephanie Link (45:26)

Olympics.

Dominic Scheer (45:26)

We're back after this. Welcome back. Surging precious metals prices are just boosting investor bottom lines. They're also increasing the value of this year's Olympic medals. Now in Milan Cortina, a gold medal is currently worth nearly 20$400 in melt value. That's more than double from the Paris Games just two years ago. Meanwhile, silver medals are nearly triple the 2024 levels. Joe, you're in this trade with Newmont. Take us through what you in the

Joe Terranova (45:56)

trade with Newmont to a certain extent. In the trade with Freeport McMoRan, you get some gold there as well. But look, we've had a significant sell off. The sell off was attributable to excessive speculation. I don't think it was attributable to any form of the shift in the fundamentals. I think the fundamentals and the tailwinds of this debasement trade are still in place. And the global central banks all over the world are acquirers of gold for the first time in many years. And I think you want to have some ownership.

Dominic Scheer (46:25)

All right, we've got final trades coming up, so keep it right here. All right, it's time for those final trades. Let's start with Brin. You first,

Bryn Talkington (46:34)

XLI Industrials. They should rename it Link after Stephanie Link. She owns a bunch of these names. I think it continues to go higher.

Dominic Scheer (46:42)

All right, Malcolm, I'm going.

Malcolm Etheridge (46:44)

Microsoft close to putting in a new 52 week low.

Dominic Scheer (46:47)

Microsoft. Interesting.

Stephanie Link (46:48)

All right, Steph, I think Quanta services should be up much more than just 5%. Outstanding Beaton raise.

Dominic Scheer (46:54)

All right.

Joe Terranova (46:54)

And Joe Utility name Edison International.

Dominic Scheer (46:57)

All right, great picks. Thank you guys very much. Pleasure sharing the field of battle with you guys. That does it for the Halftime Report. The exchange with Kelly Evans starts right now. You've been listening to CNBC's Halftime Report, the pilot podcast. You can always catch us live weekdays at 12 Eastern only on CNBC.

Narrator/Commercial Voice (47:17)

All opinions expressed by the Halftime Report participants are solely their opinions and do not reflect the opinions of CNBC or its 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 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 lifelock how can I help?

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