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Halftime Report
The Bull Run for Stocks 7/29/25
00:48:39
Scott Wapner and the Investment Committee debate the bull run for stocks and whether the market is heading for a shakeout. Plus, some committee stocks are on the move to the downside, the desk share their strategy. And later, Josh Brown is adding a group of names to his “Best Stocks in the Market.”
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- [00:00]
Stephanie Link
A rich life isn't a straight line.
- [00:03]
Joe Terranova
To a destination on the horizon.
- [00:05]
Stephanie Link
Sometimes it takes an unexpected turn with.
- [00:08]
Joe Terranova
Detours, new possibilities and even another passenger or three. And with 100 years of navigating ups and downs, you can count on Edward Jones to help guide you through it all. Because life is a winding path made rich by the people you walk it with. Let's find your rich together. Edward Jones, Member, SIPC on WhatsApp, your personal messages stay private between you and whoever you send them to. So things like the passport numbers for your honeymoon stay between you and your fiance. And that video call for your gran's 80th stays in the family. Even your streaming password stays between you and your college roommates, who still ask for it every week in your group chat. Because on WhatsApp, your personal messages are yours. No one else can see or hear them, not even us. WhatsApp message privately.
- [01:03]
Scott Wapner
I'm Scott Wapner, and you're listening to CNBC's Halftime Report, the podcast the most profitable hour of the trading day. We record this live weekdays at 12 Eastern. Listen in. We'll continue to follow those headlines, of course, on news that those talks have wrapped, as we were just hearing as well. We'll hear from the treasury secretary coming up sometime this afternoon as well. We'll show you the market picture here. We did start out by extending those records for both the S and P and the nasdaq. The Dow is trying to get to that point. That's where we currently stand. We do have some red across the board today. We'll trade all of that, of course, we're anticipating mega cap earnings, the Fed decision, the jobs report in what is an especially big week for your money. Joining me for the hour today, Josh Brown, Joe Terranova, Stephanie Link and Kevin Simpson. So, Joe, we're about within 1% of a record high for the Dow, the first since December. Jonathan Krinsky says the clock is ticking for a shakeout and that's how we were going to enter our program today, debating that fact. You determined that the rally was, in your word, yesterday, exhausted. Some are suggesting that that is a sign, among others, that we are approaching some kind of shakeout for stocks potentially in the near term when the seasonals get a little more tough.
- [02:25]
Josh Brown
Agreed.
- [02:26]
Kevin Simpson
I don't know if there is much that is actionable, though, about trying to understand that you've got ahead of you a potential correction of call it whatever you want. Jimmy said you say 5 or 7%. I don't know if we get to that level I think it's a classic example for me really, of buy high, take a pause, sell higher later. Just understand that if you own a lot of equity names that have worked really well and the momentum factor has been phenomenal so far, year to date, I don't think you want to be aggressively buying more here. I just think you want to be prudent. I think you want to be cautious and understand looking forward that you're entering a seasonally challenging period. And there are some things, some things about earnings that are troubling me in particular when we see companies, companies with really, really good earnings and somewhat muted.
- [03:10]
Scott Wapner
Response, such as who, Alphabet. So you're going to still, you're still focusing on that.
- [03:15]
Kevin Simpson
Alphabet was up 30% from the May 7 low. It was blessed with a tremendous amount of skepticism, myself included. Many people at that time moved away from the stock. They believed that there were troubles ahead. And then that 30% rip. You had a lot of people that didn't participate. They waited for earnings. You had really strong digital ad sales. You had really cloud the stock got up to one. Where are we? 19795 Thursday morning quickly retreated. We went into earnings trading around $190. That's not good follow through. There should have been good follow through because you're not talking about an equity name, a very popular equity name that had overweight positioning and extreme bullishness.
- [03:58]
Scott Wapner
I get you. But we did run a lot into the number. I mean, that's a problem, Josh, coming into this week, if you want to use that word, problem relative to the mega caps, given the fact that over the last three months they've all ripped into what is now going to be earnings prints. I mean, Alphabet was up 20% into theirs. So you didn't get a big jump on the backside of that. Nvidia is up 61% in three months. Microsoft's 31, as is Metta and Amazon's 25. We're going to get all of those reports this week. Not in video, of course. We're going to have to wait a little bit for that. But is that a sign of exhaustion that you did not get a big move from Alphabet on what was a good number, on what was a beat in search, which has caused so much agita among shareholders and watchers of this whole trade?
- [04:46]
Josh Brown
You know what, Scott? I think you hit the nail on the head. And actually the, the, the thing that's happening right now that I think is most notable is that the beats are being somewhat rewarded, but the misses or the just okay. Are getting absolutely hammered. Spotify is a really interesting case in point today. So is PayPal. So it's like this is the, this is the problem with having an incredible rally leading into an earnings quarter, which is exactly what's just taken place now. It's like, all right, you had a good report. Better be good report. If not, we're going to take away 30, 40% of the gain. So if you're up 12%, you're losing 6% or you're losing 5% right off the bat if it wasn't better than expected. So the beats are being rewarded. That's fine. They usually are. For companies beating though, we're not talking to Joe's point, we're not talking about huge upside. The average one day price reaction for companies that have beaten is plus 1.1%. Not, not bad. That's an average, but like not amazing compared to what the downside is. And if you have a portfolio of individual stocks, that's what you're feeling right now. And actually technology stocks that beat are seeing an average of negative 1.1% one day reaction. A one day reaction is not that big of a deal for most people. But I'm just adding on to what you're saying that's symptomatic of a market that maybe got ahead of itself. For companies missing this is really the key. The average one day price reaction is negative 5.2%. That is the worst that we have in our data going back to Q1 2017. These are big beat downs. So yes, earnings are coming in solid. 82% of companies are beating so far this quarter. But the misses are getting absolutely crushed. And I think that's really the fault of a lot of big expectations coming in. The last thing I want to say that I think is equally important is we haven't really gotten the bulk of the reports from the most tariff exposed sectors and that could set up another wave of these types of beatings. And I think if you're long a portfolio of names right now you're looking at which of your names haven't reported yet that are absolutely susceptible to tariffs. You're not feeling as good as you did two weeks ago.
- [07:16]
Scott Wapner
Yeah, I mean there are two questions related to tariffs, Steph. It's one, the inflationary impact, which so far has been more talk than actual result. But there is also the economic fallout that we're going have to wait for to what Josh was talking about. Our latest CNBC Fed survey points to higher stocks with more risk. They've increased the respondents in our survey have increased their outlook for the S and P this year and next. By the way, with less uncertainty about the tariff outlook and more confidence, they'll result in only one time price hikes. Of course there is concern in the market too about stock valuations which are on a historical basis richer than they've been. You're at 22 times plus on the S&P, that 10 year historical is 18.5. So you have, stocks are expensive. The economic outlook is reasonably uncertain relative to tariffs. And now we've got some big earnings coming down the pike too. We don't know where rate cuts are coming and we'll get a jobs report at the end of the week as well. Makes sense of all that.
- [08:19]
Stephanie Link
That's a lot.
- [08:20]
Scott Wapner
There's a lot that's, that's what's in front of us this week.
- [08:23]
Stephanie Link
Ask Whirlpool and Stanley Black and Decker about tariffs. Look what they're doing today. So I think we have a good sense. They're not good. It's not. But that's not the whole market, Scott. Look, we're up 28.8% from the April lows. I went back and I looked at 10 years and what the average return is in August and September because of the two weakest months of the year. And August it's flat and In September it's down 2%. October, which has the bad reputation, it's actually up on average 2%. So yeah, we could see volatility, especially given the run that we have had. And I think Jackson Hole might also bring out a lot of volatility. We don't know what Fed Powell is going to say at that meeting, but the economy's growing at two and a half percent in the, in the face of all these tariffs. Earnings are coming in okay, 35% of report reported. You know, Josh, talking about the beat rate, but I'm looking at the absolute numbers, 5% revenue growth and 8.5% earnings growth. That's not bad. And I view earnings not to be afraid of the reactions at all. If you get strong fundamentals, you're getting a chance. You're getting a look. And I bought IBM, ge, I'll buy more Boeing if it comes down even more. That that's a crazy reaction. Wells Fargo fell 5%. Now it's actually above where it was when it fell. So I'm glad I bought. Then I look for opportunities, especially where I'm reading and listening to the company. Then the fundamentals are sound.
- [09:43]
Scott Wapner
I hear you. But when you when you talk about earnings and you say quote, that's not bad, that's actually good.
- [09:50]
Stephanie Link
Is it good and a half?
- [09:52]
Scott Wapner
Is it good enough to justify 22 and a half times? That's the key question in this market.
- [09:57]
Stephanie Link
Okay, so financials are not trading at 22 and a half times. They're trading at 12 or 13 times times. Earnings are trading at one and a half times. Book value Discretionary. There's a whole ton of discretionary stocks that are cheap. I know housing is dead. I got it. But those stocks are trading at eight times what I think is trough earnings. And then the industrials, they're not cheap. But you have this mass, massive secular tailwind in this electrification theme that we've been talking about for two and a half years that of those stocks come down, you want to be all over those stocks. No, they're not cheap. But. But the backlogs and the book to bills are very, very strong and the visibility is very, very strong. And if you can see a pullback of 5, 7%, I'll be all over that too.
- [10:38]
Scott Wapner
I mean, the whirlpool slashes. The guide P and G says today their CFO does. They're seeing signs of slowing spending across the product categories. We know there's going to be some impact from the, the tariffs. You're talking about taxes. Their taxes, okay, on somebody. Somebody is paying it. You're either going to get it passed on, so the consumer's going to pay it. You're either going to have it eaten so the margins compress. It's not like you're just going to put these tariffs on all of these countries and all these companies, Kev, have to deal with that. And there's going to be no impact whatsoever.
- [11:18]
Kevin Simpson
Well, there's going to be a lot less impact than what the markets were fearing in early April. So from the standpoint of tariffs you mentioned Procter and Gamble, they're talking about $1 billion hit next year. I mean, that's not small potatoes.
- [11:29]
It's better than expected, though.
- [11:30]
It's so much better than expected. Apple last quarter was talking about 900 million just for a quarter. Now they're different. I mean, scale wise, it's different companies, but these are far better than feared. So when you look at the Procter and Gamble number today, I was pleasantly surprised. And as a shareholder who had very tepid except expectations. To everyone's point, if you miss, I mean there is zero tolerance for a miss. And if you succeed and you beat earnings, I think it's all priced in for the most part.
- [11:57]
Scott Wapner
So when we see the mega caps, you do think, you think it's all priced in because of the numbers that I said earlier.
- [12:02]
Kevin Simpson
So let's talk about meta, Amazon, all these high expectations that we have this week, later in the month. With respect to Nvidia, I think a lot of it's built in. So I'll be surprised if trade they much better than Amazon. Excuse me, much better than Alphabet did. But if they don't look out and we're going to get an opportunity. And to Stephanie's point, you look at IBM, I mean those numbers were very, very solid. The stock sold off far below where I think it should have. And this is a buying opportunity.
- [12:30]
Scott Wapner
Stocks had a huge run into the, into the print like a lot of these did.
- [12:34]
Kevin Simpson
I think that's, I think that's consistent what we're going to see this earnings season.
- [12:36]
And that's what takes you exactly towards what the expectations are. Because exhaustion works both ways. Exhaustion in the case of Procter and Gamble is a company that's down 6%. You and I both know that's a quality company. Now they're saying today, okay, guess what? To your point, now we have to think about raising prices. We're going to do what Mondelez did earlier in the year. We're going to raise prices. It's going to maybe be mid single digits, but we acknowledge we have to do it. So I think it's a good example of all of the bad news is priced in. We understand what their tariff cost is a billion dollars better than expected. There's an example of it working the other way where you have an opportunity to buy it.
- [13:10]
Scott Wapner
Institutional investors, by the way, are selling some tech and comm services. Josh? Yeah, go ahead. That's according to bank of America's equity client, which at least gives you insight into positioning ahead of what is a very big week for these companies.
- [13:22]
Josh Brown
Yeah, look, this is one of the things that I wanted to get to Scott, which is that until we, until we get through the major company earnings, we've had some. But until we get through the trillion multitrillion dollar market cap companies, it's, it's really wait and see. Just in terms of like, what is the overall tone going to be like we're talking about earnings reactions. No Microsoft, no matter, you know, no Amazon, no Apple, no obviously no Nvidia. They're a late reporter. But I think the key thing here is that companies are set up for the impact of these tariffs better than you could possibly ask for in terms of their current profit margins. Right now in this quarter, the blended net profit margin for the s and P500 is 12.3%. When I say blended, I mean the companies where we have actual results and then adding back in the estimated results for the companies that we haven't yet heard heard from, it's below last quarter's net profit margin of 12.7% but above last year is 12.2 and obviously way above the five year average of 11.8. And to Stephanie's point, when you get a company come in with an earnings report, that's good but not good enough. But the fundamentals are there and the guidance is intact and they're going to whack that stock 7, 8, 9%. I mean if you're, unless you're 110% invested, it's kind of what you want. You just had almost a 30% rally in the S and P and the market had been trending to such an extent, I think like 80% of stocks were above their 50 day. Like you can't even think straight when stocks are all going up like that and trending higher. And you don't, the market doesn't let you in. So if you do this for a living, you want that opportunity. And when you talk about profit margins to this extent, like companies are going to absorb these tariffs and life will go on. Some of it will hit the consumer, some of it the companies will eat. My best guess is what we'll end up seeing is some combination of those two. Not either or. And then there'll be some sneakflation where companies basically say look, our raw cost for this particular product is much higher now however, we have room across our portfolio to kind of aggregate that that cost that we're incurring across everything and make it feel less bad and we'll muddle through because to Kevin's point, this is so much less bad than what we have been contemplating. Those are the words like six weeks ago.
- [16:12]
Scott Wapner
Those are the words that are most important, less bad. If, if the market was overly concerned about the trade war and these tariffs, you wouldn't have the S and P and the Nasdaq extending their highs every day. You would not have the Dow Jones Industrial Average within 170, 580 or whatever points from its own first new high since December. You're going to end up in a less bad scenario. Remember, as we even wait for more details from these discussions that took place in Sweden with the Chinese, the worst that was threatened from the President has not been the outcome on any case whatsoever. We're going to hear from the treasury secretary a little bit later, Scott Bessen, of course, coming up in a CNBC exclusive. But we already know that and that's what, what the market is banking on.
- [16:58]
Stephanie Link
Yeah, but once we get through tariffs, we'll talk about the lower taxes and deregulation. And we already are seeing deregulation. Look at all the M and A that we're starting to see. Some of the IPOs we're starting to see the financials are acting much, much better because of deregulation. They're directly impacted as well. And we are seeing better pipelines and better activity. And so I, I think that we just got to get through this period of the unknown. We're getting closer and closer and closer. And then we can really start focusing on the other parts of the growth agenda from this administration, which should keep growth above Trend. Is it two and a half? Is it 3%? I don't know. But inflation is coming down and I don't think it's going to go skyrocketing back to 9% even if it stays here. I'm okay with that. I would much rather have better growth and a little bit more inflation because that is the key and the recipe for better earnings growth going forward.
- [17:56]
Josh Brown
Yeah.
- [17:56]
Scott Wapner
Like I said at the top, though, you also have to hope that if you're going to get better growth from all of the other things like taxes and deregulation, you're not going to get growth stunted by the tariffs and we're not going to know that. Maybe they cancel each other out. Maybe the power of growth from the tax cuts being extended and deregulation overpowered whatever hit to the economy that these tariffs end up taking.
- [18:16]
Stephanie Link
What about the revenues that we're going to get from these tariffs? That's going to help. Maybe we'll lower the deficits and the debt. We've been talking about that. We've been obsessed about that for years.
- [18:25]
Scott Wapner
Yeah, but somebody's paying that, Scott.
- [18:28]
Stephanie Link
It's not all or nothing. It's like there can be puts and takes. Never, nothing is ever going to be perfect. But I'm going to, I'm telling you that you get through this concern of tariffs and what it means and the unknown and we'll get some numbers and we'll put, we'll be able to analyze it. But at the same time, we have this other, this other stuff that's coming.
- [18:46]
Scott Wapner
No, I hear that's why, that's why the IMF today took up their global growth forecast in part because you got some more clarity around the whole tariff issue.
- [18:56]
Stephanie Link
And There are like 10 different companies that we'll talk about at some point that talked about China being better during earnings reports. Actually the best growth that they've seen in a while. I mean look at Nike, look at Starbucks, look at Estee lauder, look at LVs. I mean we're starting to see a little bit of activity there and excitement there and those stocks act so much better.
- [19:17]
Kevin Simpson
Joseph so hearing this conversation, look, I don't know that it is required, I don't know that it will help but I still believe that the bulls have one card in their pocket for this quarter and I think that's the rate cut in September and I don't know that it's priced into to the market yet. I think it's going to be telegraphed at some point. Maybe it's at Jackson Hole. I think you get the rate cut with global growth accelerating and I think that is going to benefit the potential opportunity for other areas of the market where last fall it looked like they were making their move. Financials, industrials, a lot of the cyclic, cyclically oriented businesses. I think that rate cut maybe reignites some of the bullish momentum that look like it was there coming into 2020.
- [20:00]
Scott Wapner
That's why we don't expect anything to happen tomorrow at the Fed decision. But the news conference is going to be interesting because you get to hear from the chair himself on the state of affairs on what the outlook is. I want to touch on the move that we've seen in the so called low quality high beta stocks. If you look at things like the ARK Innovation Fund looking for its fourth positive month, best streak since August of 20. It's just an indication of the kinds of stocks that have ripped the high beta ETF more volatile obviously the kind of stocks we're talking about coming off the sixth week of gains that's the longest streak in a year. High beta hit another record high today. Speaking of ark, one of the top holdings roadblocks today the Target raised to 133 from 103 reiterated by a B of they you own the stock of.
- [20:51]
Kevin Simpson
Yeah, I love it. You know it's not going to be a profitable scenario but what we're talking about here is this infrastructure. That's why I love Robinhood American Express roadblocks. They control the younger demographic and what we're seeing here is just a company that's embracing AI, bringing in more users and if you believe in the long term thesis of who Controls the eyeballs. You can't not have this on your plate, on your playlist.
- [21:12]
Scott Wapner
Josh, we've talked a lot about these stocks lately. I'd love to get your take in a day in which B of A, their trading desk says you've got the green light now to press low quality shorts that the retail speculative bid, which is what this has been all about. This meme stocks and the like, is now showing signs of fading coupled with systematic short covering in being in the late innings. Are we on the cusp of a rollover here that we need to pay attention to?
- [21:43]
Josh Brown
You know, it depends on what your portfolio looks like, whether or not you have to pay attention to it. I think most people watching the show, even if they're professionals, but I would say most retail people over the last couple of months have probably taken a few flyers. They've probably added some lower quality stuff to their portfolio. And I hate to say this out loud, but we all know it's true. Mostly for the recreational aspect of it. We got into a moment over the last couple of weeks where like guys were doing bitcoin treasuries with publicly traded shell companies that literally had tiny floats and you could just say, hey, look, we're going to buy eth, we're going to buy bitcoin, we're going to buy this, we're going to buy that. And instant reward because people just get so excited. It's at the possibility of 10xing or 100xing an investment. And I wouldn't say that that's a death knell for the overall stock market, but it's definitely like one of the things that you want to watch for. And we got into that moment and that's just one example of a lot of things that we've seen. We're now seeing people talking about meme stocks is a deliberate investment strategy. Again, it's been a while. Professionals too. And even if you just look at like high beta within large cap stocks, like away from the freak show in the micro caps, SPHB, which is the S&P high beta factory ETF is up 18% year to date. The year to date return for MSCI US high quality is only up 5%. So we know pressing high beta has been successful. The thing is about any momentum trade, whether it's commodities or stocks or anything really is that when it ends, it really ends. And this looks like one of those moments where the people who took flyers on a lot of low quality stuff that they didn't really care that much about. They're probably saying to themselves, all right, that was fun. This game looks like it's over. And that's when those things start to roll. And they can roll really hard depending on how low quality you've gone. So I think for the most part, most people aren't putting serious money into that part of the market, or if they are, they have a very, very quick trigger finger. So I wouldn't worry too much about it from a macro level. But, yeah, if you've been someone who's been having a little bit too much fun checking your app a little bit too often, today is not your favorite day.
- [24:13]
Scott Wapner
I just want to mention we show shares of Palo Alto, please, because we do have some movement within the cybersecurity space. There's a story moving right now from Bloomberg, I believe is reporting that Palo Alto Networks is nearing a $20 billion deal for the cybersecurity firm Cyber Arc. It would be the latest move in consolidation within what has been one of the red hot sectors of this market, Palo Alto shares. As you would usually, I think, expect, the. The suitor is the one who usually sees their stock decline on word of a potential deal. Josh, I'll come back to you real quick and I will work it to, to, to Joe and to Steph. So be brief, if you could. This just shows you where the action continues to be in many respects within the software space that's been red hot.
- [25:05]
Josh Brown
Yeah. It's so funny because we talked about the rumors that were on the tape last week where the story was that Palo Alto was looking at Sentinel One. Sentinel One obviously down big because they are not the one. And it's, it looks like it might be Cyber Arc. There's too many names in this space. So there's, there's two different ETFs that track the cyber sector, Scott.
- [25:30]
Scott Wapner
Yeah.
- [25:30]
Josh Brown
And they both just have too many companies. And so I think to activity.
- [25:35]
Scott Wapner
Sorry for interrupting you, but you see that the Journal's got this as well. 20 billion apparently is what the number is. Sorry to cut you off there, Josh. Just finish up. And I want to hear from these guys, too.
- [25:46]
Josh Brown
Yeah, I think when you talk to Fortune 500 companies, they're not looking for 10 different vendors. Most companies, even small businesses, they want one solution. They don't want patches, they don't want API connections. They want to call one company like Apollo Outdoor a crowdstrike and say, please secure our business. And so there are too many vendors. And this is super rational activity. I like to see it.
- [26:10]
Scott Wapner
Yeah. Steph, what do you think, well, if.
- [26:12]
Stephanie Link
It'S true, their annual recurring revenue is going to skyrocket because that is the cyber arc story for the second half of this year. And everyone knows that's what you want in these companies because it's more secure, stable revenues. Right. So I think it would be positive. Obviously I'm not happy that the stock is down because I own Palo Alto. But I think what they're doing for the long run is very important. We have 4,000 companies in this space and we're going to see massive consolidation and the big five are going to get bigger and bigger. I've been saying it for two years. We're seeing it and I, and I applaud it because they're going to be able to offer more to their customers, which is what their customers want.
- [26:48]
Kevin Simpson
This would be an absolutely phenomenal acquisition. Acquisition for Palo Alto. Israel is the second leading exporter of technology in the world. They to do technology just as well as we do it here in the United States. Cyber Israeli based company. The other Israeli based company which I own is Check Point Software. Keep your eye on that one. Both Cyberwok and Check Point have a market cap of around 20 to 25 billion.
- [27:11]
Scott Wapner
Kev, you own it too, don't you?
- [27:12]
Kevin Simpson
Yeah, we own Palo Alto. We were talking with Josh last week about the Sentinel. One possibility. I think the, the cyber arc is fantastic. It's going to be accretive almost immediately. There's synergy there. Do we wish Palo Alto was up today? Absolutely. Maybe it's an opportunity to buy it.
- [27:25]
Scott Wapner
No, but I mean as I mentioned, this is the typical move in a stock. You usually see the buyer is the one who stock typically goes down in the knee jerk 100% and then you let things settle out and then you see how the market really assesses what the deal is going to be. So what follow that. A couple of headlines there regarding a potential transaction in the red hot cybersecurity space. You see the stocks are both moving on it. Up next, a bunch of committee stocks are on the move today. Big drops and several marquee names that this committee owns. I'll tell you what they are next.
- [27:58]
Stephanie Link
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Joe Terranova
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Stephanie Link
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Scott Wapner
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- [29:31]
Scott Wapner
We're going to talk about some committee stocks today that are falling and falling pretty sharply. I've got a number in front of me. We're going to start with UnitedHealth. They missed. They say their earnings are going to be worse than expected. Stephanie Link owns the stock. What do you think?
- [29:48]
Stephanie Link
It wasn't about the quarter, it was about the guidance. 2025 at $16 was lower than kind of worst case scenario. I thought it was going to be something like $18. So that's obviously disappointing. But you have a new CEO and I think he's kitchen sinking the numbers for this year and then the recovery in to next year. But I think the realization that this is a 2026 turnaround story is the reality at this point. Always expected 2026 to be the turn, not 2025. We already knew all this bad news. That's the reason the stock's down 40%.
- [30:18]
Scott Wapner
They've been kitchen sinking garbage disposaling dishwasher.
- [30:22]
Stephanie Link
Well yeah, it's not been pretty for sure. It's not good. This is not one of the reports where I say it's a buying opportunity right today. I do think for the long term but you have to have a two year time horizon at this point. You have a, you have a CEO who is a new CEO who's proven who was behind Optum and the success of Optum for 10 years is this company. He left, he's the executive chairman. New guy comes in, was a disaster. Now he's back and it's just going to take time. They've got to reprice Medicare Advantage. That's the whole key. And that happens next year.
- [30:55]
Scott Wapner
You say it's not a buying opportunity today, but you had been buying when the stock had pulled back on other news. So what's the difference between then and now?
- [31:02]
Stephanie Link
Well, I just think that it's going to take a little more time and I'll look for better opportunities or maybe this is the opportunity, Scott. I don't know. But there's no rush is my point. Because it is. You have a CEO who is being extremely conservative, rightfully so. But it's going to at least take another quarter or two for that to prove itself out.
- [31:22]
Scott Wapner
Okay, show me Merck, please. Because they missed they planned $3 billion in cost cuts by the end of 27. They narrowed their full year outlook. The stock is down three and a third percent. Kevin Simpson owns the name. Do talk to me.
- [31:37]
Kevin Simpson
Also not as bad as feared. I mean this could have been far worse. We rotated out of UnitedHealthcare into Merck. So this is our name with along with Amgen in the health care space. I love the proactivity of the $3 billion in price cuts or savings or whatever you want to call it because we know what's going to happen with Keytruda and the patent cliff in 2028. They were up 9% still on Keytruda this quarter. But they're not relying on it. They've made acquisitions, they're doing cost cutting. There's other sectors that I think make this a long term buy for us. But again, I would not be running into this name just on this earnings report today by any means.
- [32:11]
Scott Wapner
Show me Royal Caribbean, please. Because the stock was lower as well, Joe. They beat the Rebs. Ms. You own the name which is down about 5%.
- [32:20]
Kevin Simpson
What's going on wasn't perfect and it needed to be perfect just to kind of highlight how much this has appreciated. The stock right now is 11% above its 50 day moving average. That is a lot of room for it to fall. It's had a dramatic recovery in terms of its balance sheet itself improved remarkably. But when you guide lower that is not perfection. And what is required right now for some of these stocks that are momentum oriented oriented rather is perfection.
- [32:50]
Scott Wapner
What about Spotify that they forecast their profit below estimates.
- [32:54]
Kevin Simpson
All right. So first I'll begin my remarks by saying the stock probably will fall further. The reason that it will probably fall further is because it is owned. It is overweight in terms of positioning. The bullish sentiment is there. However, when you look at the fundamentals of what this quarter was, this was actually a good quarter. The challenge was they had higher expenses related to employee compensation. That's short term oriented. You want to look at premium subscribers and monthly active users. In each one of those instances there was was growth. The guide to each one of those suggest that there will be further growth in the future. There's also now the suggestion that they are going to try and somewhat compete with YouTube. They're going to deliver more videos. So this is a company that fundamentally I think has multiple tailwinds. That doesn't mean the stock can't fall further because of how aggressively it's owned right now. But I think the long term vision is what's required here on this stock because at some point 12 months from now you'll certainly be rewarded.
- [34:01]
Scott Wapner
All right. We'll get the headlines now with Savannah now. Hi, Silvana.
- [34:04]
H
Good afternoon. British Prime Minister Keir Starmer said today that the UK Will recognize Palestinian statehood in September unless Israel takes steps to end what he calls the appalling situation in Gaza. Those steps include reaching a cease fire, stopping any annexation in the west bank and committing to a long term peace process that delivers a two state solution. The EPA on Tuesday proposed revoking the 2009 endangerment finding, which is the legal underpinning for a host of regulations under the Clean Air Act. Administrator Lee Zeldin called it the largest.
- [34:42]
Stephanie Link
Deregulatory action in American history.
- [34:45]
H
Critics call it a breach of the government's responsibility to protect Americans from pollution. And JetBlue and United said today that their partnership has been cleared by the Department of Transportation. Back in May, the airlines unveiled a partnership called Blue sky that allows people to book flights on both carriers websites and use points from both frequent flyer programs.
- [35:09]
Stephanie Link
Scott?
- [35:10]
Scott Wapner
All righty, Silvana. Thank you, Savannah. Now coming up next, Josh Brown his best stocks in the market. Is there a new name on the list? Tell you next.
- [35:18]
Joe Terranova
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Kevin Simpson
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Josh Brown
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Scott Wapner
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- [35:51]
Scott Wapner
Welcome back. Josh Brown's best Stocks in the market. We have an update from Josh Brown.
- [35:58]
Josh Brown
We do, and we're not going to get to Corning today, but this has been a long term name on the list. I know it's the number one performing stock in the S&P 500. I had traded it before. I wish I were still in it. But that's a perfect example of when things go right but maybe take longer than usual. But that was a beneficiary of the AI play that not a lot of people really had connected those dots a year ago. We talked about it last summer. Utilities are a different story. By now everyone has figured out that there's no way to do any of the AI spend or capex or ongoing business without significantly improved utility infrastructure. And the companies that we wrote up this week are I got four of them on the best stocks list. And these are names that we don't really talk very often about on CNBC. According to Citigroup, by 2030, data centers will be responsible for as much as 11% of all of the electricity data demand in America. And if that happens, that'll be up from 4.5% today. So that's how significant what's happening is of the names that we spotlit, CenterPoint Energy is in Texas, Amerens in Missouri and Illinois. We see owns two utilities in Wisconsin. But my favorite is DTE Electric. DTE Energy is the parent company and the ticker is dt. They won a rate case in January. The Michigan Public Service Commission awarded them another $217 million because they were able to make the case that infrastructure spending necessitated higher rates. You're seeing a stock breaking out right now. The other three also look pretty good. I would be focused on these names for the trade also. They have a very defensive characteristic with their dividend payouts.
- [37:52]
Scott Wapner
All right, we're going to move to some breaking news with Megan Casella. What's the update here? Meghan?
- [37:57]
H
Hey, Scott. So now that those US And China talks have concluded in Stockholm, the Treasury secretary, Scott Bessant and the U.S. trade Rep, Jamison Greer are briefing reporters in Stockholm. So this is coming from our Eamon Javors who's in the room now with those two officials getting a bit of a readout on how the talks went over the last two days. And the biggest chunk of this really hinges on whether that Aug. 12 deadline for tariffs to ratchet back up to high levels will be extended. And what the treasury secretary says is that he needs to meet with the president, with President Trump before confirming the status of that August 12th deadline. So while they did discuss it and a Chinese official earlier this hour said that they were pushing to extend it, it can't be finalized that they will extend it until President Trump is briefed on these talks. Besant says that small issues still need to be resolved. And Jamison Greer said that a 90 day extension of that deadline is one option that President Trump could approve. If it's not extended again, tariffs will go back to that April level, they say they call it boomeranging. And again it's 145% for the US side and a similar level for the Chinese side if that deadline is not extended. A couple of other things here. Besant says that overall talks are getting more refined. They're more in a single lane. Good personal interaction is being built up as well as mutual respect. He spoke about the fentanyl tariffs, which are 20% of that larger 145% level if we get there. Bessen says the Chinese want the US to drop the fentanyl tariffs before they make significant progress on the issue, while the US Side, of course, wants to see progress before they drop them. He says that seems to be a sequencing problem. Bessen also says there will probably be another meeting within 90 days between these two sides. He says one thing that's not that he's not pleased with is the Chinese buying Iranian oil. He spoke a little bit about some frictions that remain, that being one of them. He says TikTok was excluded from this conversation. We had thought that might come up in these discussions. And Greer says there's no agreement now on U.S. export controls. So some of these are still coming in. Scott One new one from Amen saying Bessant saying that the Chinese believe their economy is in good shape. They believe they have a robust consumer economy and they do not believe they have a manufacturing surplus, which is something Bassett disagrees with. And we know that's been a friction there as well. So more of these will keep coming. I'll also flag. We do expect a press conference on camera in the next few minutes, next hour or so. So we'll get more from that once we have it.
- [40:20]
Scott Wapner
Scott okay. Meghan, thank you. Megan Casella for us in D.C. we're waiting for that news conference which appears to be imminent. And we'll certainly bring that to you as soon as we see the participants. And yet another reminder, reminder, the Treasury Secretary himself, Scott Bessen, will be a CNBC exclusive interview at some point here forward this afternoon, which given these new developments, just gives it even more urgency and immediacy as to why we need to listen to his commentary. And the market certainly will closely as well. The point being, Joe, you can't go back to 145% on China. I mean, you can, but the S and P is not going to look like it does. The S and P is not going to continue to extend its record highs with the notion that that is back on the table because the market didn't like it the first time and it's not going to like it after the rally that it's seen since.
- [41:13]
Kevin Simpson
A couple of months ago, I suggested to you that the market is becoming desensitized to a lot of the tariff headlines. And I think that works both ways. I think yesterday the market yawned at the news with the eu And I think the market, market is somewhat yawning.
- [41:26]
Scott Wapner
Yawning at this too, because it doesn't believe that that's going to be the number.
- [41:29]
Kevin Simpson
Well, so I think, I think we're kind of becoming desensitized to all of this. But to your point, 145%, if that was ever reintroduced again. No, I think the S and P would not be trading at 6375.
- [41:43]
Scott Wapner
Right. Steph, we've learned our lesson on all this. The market just doesn't believe that we're going back to 145% because if it truly did, you still wouldn't have a chart that looked down a fifth of a percent. You'd have it a lot, a lot more red than it looks now, don't you think?
- [41:58]
Stephanie Link
100%. He's a negotiator. We know that by now. And I think Joe's right. We aren't as sensitive to the headlines as much, but I think we're coming to an end. I think we're in like the 8th inning on all this tariff stuff. And once we get done with China, which we will at some point, then we can move past it like we talked about, about earlier, Jeff, I mean.
- [42:20]
Scott Wapner
You know, I thought the point too, that Megan was bringing us of the Chinese saying, well, that their economy is doing well. The whole point at the beginning of this was who can outweigh whom. The Chinese are not going to run to the table. And take what they think is a bad deal. We don't. And you have to believe that our negotiators aren't going to make a bad deal. So does that prolong whatever truce was put in place beyond the 12th? Maybe. We'll get some answers coming up in the next few hours with both the news conference and the secretary himself speaking to our network.
- [42:53]
Kevin Simpson
So we're going to position our portfolio with the expectation that the extension will be for another 90 days and that they'll meet again. We'll see if that holds true. But at least as far as the emails we're sending back and forth with my team, that's how we're playing it.
- [43:05]
Scott Wapner
All right. So we are waiting on the newser, as Megan suggested. We'll take a quick break. We'll come back and we have some fresh committee moves to tell you about. We have some more news. Mackenzie Sagalos has it in San Francisco. What are we learning here?
- [43:18]
H
Hey, Scott.
- [43:19]
Stephanie Link
So Anthropic is in talks to raise as much as $5 billion in a new funding round.
- [43:23]
H
The values the company at 170 billion. That's according to Bloomberg. They've got iconic capital leading the round now.
- [43:31]
Stephanie Link
This follows an FTSE report Friday that.
- [43:33]
H
You and I talked about the peg.
- [43:34]
Stephanie Link
The startups next valuation closer to $150 billion, which really underscores how quickly investor expectations for that Claude Chatbot maker are climbing. Now this latest set of talks comes.
- [43:48]
H
Just months after Anthropic closed that three.
- [43:50]
Stephanie Link
And a half billion dollar round back in March. At that point, its valuation was closer to $61.5 billion. Scott.
- [43:58]
Scott Wapner
Growing by the week, it would seem. Mackenzie. Thank you. Mackenzie Segalus, Joe, has to be new buys in the energy patch and your focus on the refiners.
- [44:06]
Kevin Simpson
Yes, I'm just trying to find some opportunities in a market where I currently don't have exposure. We're coming into a seasonally strong period. You're coming into the hurricane season and there's also been a very strong outperformance. When you look at the spread between reformulated gasoline heating oil relative to crude oil, crude oil is down 5% year to date. But get reformulated gasoline and heating oil are both higher. So I added extra exposure through three refiner names. The reason I picked three is I just didn't want to isolate to one refiner name. I basically took what I would put one refiner name, spread it out through three names. That's Phillips psx, Marathon Petroleum, MPC and Valero Vlo.
- [44:44]
Scott Wapner
Okay. We did have Baker Hughes by The way in the news, the target got raised at Morgan Stanley by 10 bucks to 55 from 45. You own that too. You just got a quick thought there.
- [44:52]
Kevin Simpson
Up 11% year to, to date. It's the one energy name that we own. They just did a very nice acquisition with Chart Industries that allows them to get more exposure to data centers, more exposure to LNG that are diversifying away from oil. They're moving into where they believe the energy industry is going. Electricity.
- [45:10]
Scott Wapner
All right, let's talk Chipotle. So the Chart, if we could please. New 52 week low today. It's been in the news of late. It was removed today by B of a from the US 1 list. The target was cut by 5 bucks to 55 from 60 at Wolf. I just wanted to hear from you, Steph, because I think I asked you the last time we discussed this stock on the day that it had its really big slide if you were going to make a move in it either direction. You said not yet. Now what?
- [45:33]
Stephanie Link
Well, not yet. I'm still there, honestly, because there are pros and there are cons and I think you have to wait till next quarter for the cons to reverse themselves, meaning same store sales being negative to turn positive. And I think you will. They have very easy comparisons. It's the best in breed in the industry, great management team. They've easy comps as I mentioned, good product lineup, good digital growth. But April and May really hurt this company. I think it hurt the industry though, because sentiment was so incredibly poor in April and May. So I'm still torn. Scott, it's best in class. It's on sale. You know, that's my style. I like to buy that versus sell it.
- [46:10]
Scott Wapner
Is it still best in class?
- [46:11]
Stephanie Link
I do. I think it's best in class for sure. Absolutely. That's not a question in my mind at all, which is why I'm torn.
- [46:16]
Scott Wapner
What class is that, by the way?
- [46:18]
Stephanie Link
That's their number one in the industry in fast casual.
- [46:21]
Scott Wapner
Quick, quick service that we're talking about.
- [46:23]
Stephanie Link
Yeah, quick serve.
- [46:25]
Scott Wapner
I think the market's still debating whether it's still number one.
- [46:28]
Stephanie Link
Well, that's what the thing is. If they're having a struggle, just imagine what some of the lesser companies are going to put up in terms of same stores. I think everybody like what Shake Shack.
- [46:37]
Scott Wapner
I mean, we've seen what they're making.
- [46:38]
Stephanie Link
But I think that you have had April and May for the industry at large. I think that that was really challenging for the fast casual industry.
- [46:47]
Scott Wapner
We'll take a Quick break. Santol is next. Welcome back. Our senior markets commentator Mike Santol is here at post nine for his midday word as we wait for more details about these talks with the Chinese.
- [46:59]
Josh Brown
Yes, and you know, it feels as if we're kind of operating on the premise that we're going to get some kind of deferral. There's not going to be a big swing factor. What I find interesting is you guys were talking about it market is priced itself for some benign outcomes. We're getting them. And so if it's finding nothing new in that to, to generate a reason to go too much higher in a hurry, obviously it's been a net negative reaction to earnings results because of the setup because markets ran into these reports and everyone had a very rational expectation that you'd have massive beat rates and we are getting those. So I think that that all builds toward this idea of this rally getting towards stall speed and we've kind of culminated a lot of these inputs that got us to this point. We've cleared out the shorts. You're seeing the meme stuff roll over. So all the stuff that was sort of out there is providing a little bit of an energy to the move. It is, it's stalled out and I don't think that's a, that's a bad thing. I think you wouldn't want to get too negative ahead of mega cap tech earnings because you just never know how that could just basically change the entire equation for the whole index.
- [48:04]
Scott Wapner
Well, I'm wondering if in some respects we are raising some cash from the more speculative areas to be able to deploy it to some of these mega cap names if you get confirmation that this run continues.
- [48:16]
Josh Brown
Yeah, I mean I think in aggregate that might be going on. I am a little bit dubious that you have literally the same portfolios are like, you know, we ran open door up to 480 last week and now we're selling bucks so we can buy later this week. But in aggregate it does seem like that's good scope. By the way, people buying bonds today to the softer Jolts report has got yields down a little bit. I don't think. Again, it's a big game changer in terms of the data but it just turns the dial on the expectations for the macro a little bit.
- [48:47]
Scott Wapner
Well, I was reading something today and I can't remember who put it out. Maybe you saw the same thing about August being an expected really good month for bonds, not equities.
- [48:54]
Josh Brown
Some of the sell side firms are pointing that out that it tends to Be you get rewarded for doing some rebalancing ahead of August. I think that's all, you know, makes sense. It's all in the mix. We're going to get the gdp. What's the GDP going to tell us? It grew better in the second quarter, but netting out to one half of the year being like one one and a half percent, it's all manageable stuff. But again, you get the market up to these, to these levels and you have to have to do it. By the way, a lot of hay made about the equal weighted S and P making a new high. It's. If you look at it right now, it's down again and it's not out of the woods being a double top from eight months ago. So I think you have to just be aware of the market being due for some kind of a rest.
- [49:33]
Scott Wapner
Yeah, well, we'll see. Again, we await this news conference following the talks with the Chinese which have wrapped. Then you're going to hear from from the Treasury Secretary himself in a CNBC exclusive. Both of those events could very well be market moving, which is why we'll be so focused on them. Mike, I'll see on the closing bell in a couple of hours. Time, 3 o' clock Eastern. Josh Brown, you have a final trade you want to give me, please think.
- [49:56]
Josh Brown
Spotify is getting overdone. I may enter no position yet, but this is too much.
- [50:01]
Scott Wapner
Okay, keep an eye on that stock which is getting hammered today. Down near 12%. Kevin Simpson and what you got?
- [50:07]
Kevin Simpson
IBM, it's down post earnings. They raised full year free cash flow. Reaffirm revenue, reasonable multiple and almost a 4% dividend.
- [50:14]
Scott Wapner
All right.
- [50:14]
Stephanie Link
The Linkster Vertive electrification. That's the theme I continue to like in industrials are taking market share. They're outgrowing the market by 3 to 5%. I think you're going to get a great quarter from this company. On any weird action, you buy it.
- [50:29]
Scott Wapner
Jyoti.
- [50:30]
Kevin Simpson
Jyoti ETF holds four REITs. One of them, Welltower reported this morning excellent earnings. This is a company that focuses on senior housing and acute care with presence in Canada, the United Kingdom and the.
- [50:43]
Scott Wapner
US we got a stacked deck at three. Adam Parker, Marco Kada, Rich Saperstein, Malcolm Methridge and Brian Levitt. We'll see what this market does as we await more news from Stockholm. You've been listening to CNBC's Halftime Report, the podcast you can always catch us on live weekdays at 12 Eastern only on CNBC.
- [51:04]
Joe Terranova
All opinions expressed by the Halftime Report participants are solely their opinions and do not reflect the opinions of CNBC, NBCUniversal, their parent company, or affiliates, and may have been previously disseminated by them on television, radio, Internet, or another medium. You should not treat any opinion expressed on this podcast as a specific inducement to make a particular investment or follow a particular strategy, but only as an expression of an opinion. Such opinions are based upon information the Halftime Report participants consider reliable, but neither CNBC nor its affiliates and or subsidiaries warrant its completeness or accuracy, and it should not be relied upon as such. To view the full Halftime Report disclaimer, please visit cnbc.com halftime reportdisclaimer@ Capella University, learning the right skills could make a difference. That's why our business programs teach you relevant skills you can take from the course room to the workplace. A different future is closer than you think with Capella University. Learn more at Capella. Eduardo.