← Halftime Report
Halftime Report
The Committee Reacts to the New Tariffs 9/26/25
00:49:59
Dom Chu and the Investment Committee debate the new tariffs Trump announced today. What will the tariffs mean for the market and your money. Plus, BMO’s Brian Belski joins us with a target raise on the S&P to $7,000, he’ll explain. And later, the energy sector leading the market this week, the desk discuss how to trade it now. Investment Committee Disclosures
Loading summary
Transcript132 lines
- [00:00]
Contessa Brewer
A rich life isn't a straight line to a destination on the horizon. Sometimes it takes an unexpected turn with 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 and now a.
- [00:32]
Dominic Chu
Next level moment from AT&T business.
- [00:34]
Jim Leventhal
Say you've sent out a gigantic shipment.
- [00:36]
Dominic Chu
Of pillows and they need to be there in time for International Sleep day. You've got AT and T5G so you're fully confident, but the vendor isn't responding. And International Sleep Day is tomorrow. Luckily, ATT 5G lets you deal with any issues with ease, so the pillows will get delivered and everyone can sleep soundly, especially you. AT&T5G requires a compatible plan and device. Coverage not available everywhere.
- [00:57]
Jim Leventhal
Learn more@att.com 5G Network.
- [01:02]
Dominic Chu
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. Thank you very much, Carl. Thank you very much, Sarah. Welcome to the Halftime Report. I'm Dominic Chu in for Scott Wapner. Today's investment committee consists of Steve Weiss, Jason Snipe and Jim Leventhal, all here at Post nine. Stocks are on pace right now to snap a three week winning streak. Investors are eyeing two big developing stories out of Washington at this hour. President Trump is launching a new wave of tariffs as the clock ticks closer to a government shutdown. We have full team coverage of both on these front. Emily Wilkins is tracking the latest on the shutdown dynamics. But first we will start with Eamon Jabbers and the new round of tariffs being announced. Eamon Tom that's right.
- [01:58]
Jim Leventhal
President Trump announced a slate of new tariffs leaked yesterday. They're focused on pharmaceuticals and trucks, among others, he said. The US is going to impose a 100% tariff on any branded or patented pharmaceutical product entering the country that will begin on October 1st. But that will not apply to companies that are building drug manufacturing plants in the US and it won't apply to projects where that construction has already begun, he said. Separately, the president said he's going to impose a 25% tariff on imported heavy trucks, also starting October 1st. And he also cited national security for new tariffs on key kitchen supplies and furniture, announcing a 50% tariff on all kitchen cabinets, bathroom vanities and associated products and a 30% tariff on upholstered furniture, both starting on October 1st. And the President also announced so called Section 232 investigations, he announced those on Wednesday into imports of robotics, industrial machinery and medical devices. Those investigations could be a precursor to tariffs on those products as well. So something to watch for there. The president acknowledging yesterday that his trade war has caused some fallout for American farmers who have seen a drop off in Chinese purchases of American soybeans. He said he's going to develop a mechanism to transfer some of the tariff dollars that he's taking from American importers, transfer those dollars to American farmers. The mechanism of all that, how much money is at stake? All that still TBD at this point. Don, back over to you.
- [03:28]
Dominic Chu
All right, variables and movement there. Eamon jabbers in Washington, D.C. thank you very much for that. Now let's get it over to Emily Wilkins as the clock ticks closer to a possible government shutdown. Emily, just how likely does it look right now?
- [03:41]
Contessa Brewer
I mean, Dom, every day that passes a shutdown is looking increasingly likely. And that's because both sides have really dug in on their positions. There just don't appear to be serious negotiations going on to try to get to some sort of agreement. That means we could be headed into the first full government shutdown since 2013. There's no part of the government that's funded at this point. Here's what to expect. There are many things, but first of all, no jobs data on Friday. If the shutdown begins Wednesday, goes to Friday, we're not going to have that there. Also, as the shutdown goes on, are going to be delays for things like company certifications. You'll see a slowdown in the process for companies to go public. And then, of course, no pay for federal workers and contractors while the shutdown goes on. And that can be huge. I mean, the last shutdown we had, a partial shutdown at that began in 2018. It delayed 18 billion for compensation for payments for purchasing of goods and other services that the government has through these contractors. And since the US national parks and monuments are also going to be shut, the U.S. travel association estimates that the travel industry is going to lose 1 billion each week of a shutdown. And of course, there's a new wrinkle this time with the White House threatening massive federal layoffs for employees that could impact hundreds of thousands of workers. Now, it's not clear exactly how many employees would be impacted. The guidance to the agencies is to not reduce workforce for programs that are in line with Trump's priorities, but it doesn't make it clear exactly which agencies that would be. It also does raise the stakes for what a shutdown is going to mean for industries and the economy. And Dom will be keeping a very close eye when lawmakers return on Monday as to what happens with the vote that we are expecting Monday afternoon.
- [05:29]
Dominic Chu
All right. Monday, we got to keep a close eye on that. Emily Wilkins in Washington, D.C. thank you very much for the update there. Let's now bring in the investment committee for some reaction to this. The headlines certainly haven't moved the market dramatically, the shutdown. We've seen some of these things in terms of a kind of showdown in the past. Markets do react, although maybe handicapping wise as they kind of see incremental developments. So, Steve, I'll start with you. Is this a worrisome development here, either and or tariffs and shutdown?
- [06:02]
Steve Weiss
Okay, so let's go through both of those. First of all, in terms of the government shutdown, I've been doing this show from day one, getting on 16 years, and maybe this is the 12th forecasted government shutdown. And guess what, the market's a lot higher than at any point during those last 12 years. So I'm not going to say it's not an issue. Of course it's an issue because in an environment that's somewhat challenging, despite where the indices are, this just adds to it. But overall, I'm not concerned this will resolve itself. I don't think either party really has the appetite to go back to their constituents, of which there are a number of public service employees and others that depend on public service employees to say we're responsible or point fingers and just, you know, not have them buy that it wasn't them. So that's one. So could happen. What's the first time seen where a president has been unwilling to meet with the leadership of the other party? So I'm not going to say that's not new, but I will say that's not surprising at all. Now in terms of tariffs, well, look at the look at the stocks and look at the drug stocks.
- [07:14]
Dominic Chu
They're up.
- [07:16]
Steve Weiss
So Trump's gone back and forth on tariffs, will continue to go back and forth. Mark at this point doesn't take his pronouncement seriously. And look, I think it's kind of business as usual. And then you've got the Supreme Court, which is out there, which may do away with all the tariffs. But I'll tell you, one of our robotics came up there, we're involved investing in a robotics company, it's fully automated, the warehouse, in other words, no people whatsoever. Nobody's even close to the technology. That's nimble AI. While we've taken all our supply chain from overseas, China, everywhere else and brought it here. It's not as if we're getting cheaper prices. So what every company here has done has used those tariff levels as a pricing umbrella to raise prices. So aluminum, for example, 50% tariff there. If you come here, you'll see prices have gone up 35 to 40%. So that's the, that's the canary in the coal mine. That's the troubling issue as we go forward as the Fed decides whether inflation is just temporary in a one off or if that, or if the Supreme Court allows you tariffs to take hold and continues through the presidency. If we're continuously price go up right now, the markets are, you know, ignoring it and there's vast complacency. And I wouldn't really call what happened over the last period time as a correction because we're still up meaningfully.
- [08:46]
Dominic Chu
It's not, Jason, that, that we don't believe it's important important or the market doesn't believe it's important. It's more the idea that this playbook has been in place with President Trump to a smaller degree in his first term and much more so now. So we've seen it now multiple times. The playbook happen.
- [09:01]
Contessa Brewer
Right.
- [09:02]
Dominic Chu
It's not to minimize the effects on the market, it's just to say that the market's gotten accustomed to it, to Steve's point.
- [09:08]
Steve Weiss
Sure.
- [09:08]
Dominic Chu
But it's also now identifying parts of certain industries that are having advantageous relative advantages. Right, right. To other parts. So he mentions drugs.
- [09:20]
Jason Snipe
Yeah.
- [09:21]
Dominic Chu
There are some drug companies that are up because they have relative exposure more so towards the US Than others do. Others that have less exposure are actually pretty decently down today. So how exactly as an investor do you play that? Do you have to really play the tariff fundamental game to pick stocks?
- [09:38]
Jason Snipe
Yeah. No, listen, we heard from Ken Griffin the other day about, you know, tariffs haven't hit the tape quite yet. And I would largely agree with that sentiment in this sense. I think there was a lot of inventory build prior in anticipation of the tariffs hitting the tape that happened. And so the consumer has not quite been exposed to those numbers yet. I think in the coming quarters you will not see enterprise continue to digest that pill because those numbers will be hitting their balance sheets. So I think it's clear to me that that hasn't happened yet. Do we know that that affects the lower end of the consumer base. Absolutely. 50% of spend comes from the higher end consumer.
- [10:24]
Dominic Chu
Right.
- [10:24]
Jason Snipe
So that is the folks that are continuing to uplift us and keep us higher and stronger and markets are obviously continuing to perform. But I do think that part of that story looms large for me going forward and seeing how enterprise deals with oncoming tariffs, it is at a consumption tax.
- [10:43]
Dominic Chu
Okay, Jason's got a point. Is that the reason, Jim, that we have seen relative outperformance in this economy given all of the headwinds? Because in a consumer economy, a GDP that's close to 70% tied to consumer spending and where 10% of the upper consumers spend 50% of the money, those people who have appreciated assets over the course of the last 5, 7, 10 years are able to keep up with any inflationary threat and they're still spending money. I don't know if that's a good thing or not, though.
- [11:15]
Jim Leventhal
No, I think you just explained it perfectly well. Thank you, Jason. I mean, there's two halves to the demographics of the population. And if you're in the upper half, you have enjoyed one heck of a market rally here. Your overall wealth effect makes you feel like going out and spending. If you're in the lower half, yes, inflation is hurting you, no question about it. But let's face it, you're employed. When you look at the most recent weekly jobless claims, again, this is two weeks after that spike because of Texas. We're not worried really about the job market. Yes, I know the revisions to the BLS report, I got it. But weekly jobless claims at 218,000 is indication of a strong labor market. So if you're in the bottom half, you're not feeling great, but you are employed, which means you are consuming and consumption is 70% of the economy. That's not the only reason that second quarter GDP was revised up to 3.8%, but it's a big reason. And let's also not lose sight of the fact that third quarter GDP as predicted by the Atlanta Fed forecast is now 3.9%. My point being is that this economy shows no sign of slowing down. And just to come back to where you started, Dom, it's almost certainly because of employment. Now, one last thing on this, of course, we should worry about, you know, when will companies say, hey, listen, we need to lay people off? It's hard to see that happening anytime soon because profit margins are high, notwithstanding tariff, profit margins are at record levels and profits are growing. This is an environment, this is an economy in which companies want to lean in and they actually want to hire people. If we can finalize the trade rules of the road. Steve, you made the point. You and I have discussed this over the past few weeks. We need November to come around. We need the Supreme Court to start hearing arguments and settle what they're going to do with tariffs.
- [12:53]
Dominic Chu
Now, Steve, the other interesting point that was made in this discussion so far is in the face of some negative economic data that largely is backward looking, right? We have still seen an economy and a market that hovers near record highs. The economy is still moving along at a pretty decent clip even with those revisions that Jim mentioned, the large downward revisions over the course of the past year. Does it not surprise anybody that even knowing in hindsight that we lost that many more jobs, that the economy was still intact and that the markets were still making record highs along the way?
- [13:32]
Steve Weiss
I don't think it should at this point. Over the last couple of years, more than that, we've seen a different cohort market which seems to be relatively immune to valuation and seems to appropriately take, appropriately take a long term view because every recovery has been a V shaped recovery since 2008. So if you've been a panic seller at the lows or anywhere along the way, you've missed out. So and with a large part the majority of the trading market being both passive and funds ETFs, then then you shouldn't be surprised. But it doesn't mean they'll continue ad infinitum. So at some point you get to a valuation level that just is unappetizing and you think about taking stuff off the table. Could the trigger for that. And point out one more thing. A lot of the buying over the last few months has actually been foreign buying that have come in to try and take advantage of the AI boom, which you really have to play in the U.S. is only selectively can you play it outside the U.S. so the question is, this goes to, to another topic that we're going to get to is are we in a bubble for AI spending? And I would say unquestionably, yes. Do I see the bubble popping in any point in time? I don't. Now let me give you a real example of a bubble. There's a robotic company out there that candidly I passed on investing in a $500 billion valuation. I passed on investing at a million, at a billion and a half valuation. And they just priced, and that's just over the last year and a half and they just priced around at 38 billion. Guess what? They have no commercial product, they have no revenue revenues. And you've seen others, perhaps not at that level, but Open Air is not immune from this.
- [15:27]
Jim Leventhal
Right.
- [15:28]
Steve Weiss
13 billion in revenue and they're looking to spend 60 billion a year just with Oracle. So you've got to see return. Now, I think over the long term you'll see that return on investments. For some, you'll see it sooner, such as a Meta or a Microsoft or an Alphabet. But for others, the bubble is really more acutely in the private markets than in the public markets. Without a doubt, Jim, I know where you're going.
- [15:56]
Jim Leventhal
We talked about this earlier.
- [15:57]
Dominic Chu
Yes, the valuation concerns are legitimate to Steve's point, but they're not out of the realm of reason for certain investors. And I look at you because everybody kind of knows through the years now that you're kind of a more value tilted investor, not a total growth investor, but maybe they call Garp, right, growth.
- [16:15]
Jim Leventhal
At a reasonable price, somebody who pays attention to valuation.
- [16:18]
Dominic Chu
So if you use this analogy that people are making this, this kind of, this, this link to the dot com era and whether or not we're going to see any kind of price action with a bursting type scenario, are we in 1999, 2000, given the kind of environment macro wise that Steve just laid out.
- [16:35]
Jim Leventhal
Yeah. My opinion, and it's an opinion, is that we're in 1997, not 1990.
- [16:40]
Dominic Chu
That implies there's more Runway.
- [16:42]
Jim Leventhal
That's exactly what I'm trying to say. Are we going to end in a bubble? Almost certainly. I mean we're all old enough and experienced enough. And you know, Steve, you've been doing this 16 years. I've been doing it 12 years. I've lost count of you, Jason. But Dom, I know you were here in the late 1990s.
- [16:55]
Dominic Chu
I was on the street.
- [16:57]
Jim Leventhal
You know, if I look at these valuations right now of pick the poster child in video and what's the forward multiple? 29, 30 times. Okay, it's not cheap, but it is justified by the growth rate in earnings. Will those earnings some point, will that growth rate dry up? Of course, but it's not in the next 2, 3, 4 quarters. And you can see that whether it's domestic spending from the hyperscalers, international demand, Saudi Arabia data centers, open air. And yes, at some point this funding will run out, but it feels much more like it's 1997. If you want to know what 1999 looks like, take a look at the multiple of Cisco, sort of 97 to 99. It's it started out at around 30 times, it shot up to 120 and guess where it round tripped back to 30. But that's not where we are right now. We're more in the 1997 time frame. And I'll give one more data point that there have been surveys out there that discuss or show the penetration of artificial intelligence into corporate America. And surveys show that the penetration in terms of who's actually using AI or planning to in the next six months is around 15%, which indicates there is a lot more room to use this than just, you know, the average consumer going on to chat GPT and figuring out how to respond to an email. All right, so 97, not 99.
- [18:11]
Dominic Chu
Gentlemen, I'm going to let's take a pause for a second. I want to bring in another voice to this discussion right now. That's BMO's Brian Belsky speaking of Runway. He's raising His S&P 500 targets to 7,000 from a prior 6,700. He joins us on the phone right now. Brian, you've been listening, listening to the discussion that we've been having over here about whether it's 1999 or 1997, whether in video at 30 to 31 times forward earnings is bubblicious or not. What exactly is your view in raising the S&P 500 target? I think I kind of know at this point.
- [18:45]
Brian Belsky
Thanks, Tom, and thank you so much for having us. We really, really appreciate the support. I think all the comments today have been excessively balanced. You know, I believe that bubble is probably the most overused term in our industry. I think to have a bubble, quite frankly, means that you have to have a lot more frivolous things going on. And to keep it really simple, you have to have everybody making money. And I don't think everybody's making money. And let's just say that back in 99, 2000 and I was a strategist at Piper Jeffrey during the, during those days, and that was when the man was making money. And who's the man in. In Wall street, it's Wall street firms. And if you take two steps back and take a look at the IPO activity, the secondary activity and the M and a activity, in 99, 2000, it was quote, unquote, frivolous. Companies were buying other companies with stock. IPOs were being, were being priced on no valuation and secondaries were done at very lofty values. Now, valuation, we know is concerning. We get that. Steve did a great job talking about this is a market that has been discounting valuation, meaning setting it aside. Why is it setting aside? Because the true secular momentum of AI, AI companies, tech companies right now, Dom, are very different than they were in 99, 2000. They have cash, some of them pay dividends, some of them have great cash flow. And oh, by the way, from an earnings perspective, the technology sector has become the most discernible consistent earner in the entire market. So with respect to our 7,000 number, that was our bull case all along. And that's why we said we've reached our bull case in terms of where we think markets are going. And that 7,000 number we first put out in November of 2024. So things are unraveling like we thought they would, and we think the bull market goes on. Lastly, on Jim's case, with respect to 1997, I think 2025 is setting the table for Goldilocks in the last real kind of consistent Goldilocks period we had, we had in 2019, but didn't last as long as it probably should have because of COVID I believe that 2025 could very well be the table setter for Goldilocks for the next two years. Very similar to 94 and how it set the table for 1995 and 1996.
- [21:15]
Dominic Chu
All right, so Brian, good thoughts. I want to bring in now, Jason to this discussion. We have some B of A fund flow data. All right. They've just logged what they say is their third highest ever inflow into equities globally in the past two weeks. Their private client base with $4.2 trillion under management is roughly 65% in the stock market right now, which is the highest level since March of 2022. They are roughly 18% in the bond market, which is the lowest since May of 2022. And they are holding 10 and a half percent cash, which is the lowest since September of 2018. I spoke with the Mark Smith portfolio manager at Wells Fargo Advisors this morning on Worldwide Exchange, and he cited Specifically the roughly $10 trillion in money market cash that is on the sidelines right now. Take all of that and tell me whether or not there is still fuel, whether that cash will be deployed.
- [22:17]
Jason Snipe
There's absolutely fuel, Dom, and I think it's a couple of things. One, you know, we talk about this time of year and we talk about seasonal Denali, which really hasn't happened as of yet. Right. So I think there's some animal spirits in terms of who has missed out on the rally thus far, who maybe had sold in April that maybe wanted to put capital to work. And then the chase goes on, you know, for year end, which I think is a real thing for people in investor psychology. So we're going into a cutting cycle now. You know, when we heard from Powell, it seemed like there's absolutely three cuts. That's what's going to happen into year end. Obviously there's been some divergence amongst fund governors and where they are as it relates to that. But if I speak to earnings just quickly, we got earnings starting in earnest in two weeks. 8%, 8.6% expectations in terms of growth. That has been one of the major calendars that has kept this market up. So I think for, for a lot of folks out there as we head into year end, and that's a major, a major story that will play a role. And I think that's why investors are where they are and deploying capital as they're looking to do so.
- [23:24]
Steve Weiss
You know, we constantly throw out these numbers from B of A, their flow show and all that, but we never follow up with what the correlation is to market direction. So it's, it's not worth having the conversation pointing out other than the wow factor. So I'd love to know what it is and, you know, if it, if okay, we've seen so much money come in, does that mean it's the end of the rally for this point in time or does it mean it's the beginning with more money coming in? So I don't know how to look.
- [23:59]
Dominic Chu
At it, Brian, to Steve's point here, it's a good one. But also if you look at the medium to longer term trend of all of this flow data coming in, the markets do keep going higher. So at the end of the day, we have seen a market that has moved solidly to the upside, whatever the flow show has dictated, or anything else. Is that right?
- [24:19]
Brian Belsky
It is right. And you know, the great Merrill lynch advisors, the Buddha I had the pleasure of working with for so many years at Merrill lynch during my past is, you know, they're great advisors, they've got great data. And remember too, so much of this money has gone into passive dom, where some of this is just portfolio diversification. If they own too many stocks or too many particular types of disciplines within stocks, they'll buy S and P or they'll buy value, or they'll buy bond, even index funds. And so remember too, over the, if memory serves me correct, over the last three or four weeks, we had actually outflows from these people. So these are numbers that we can take a look at for support. I think with respect to the money market and data number, that's a pretty big number. And Jason did a wonderful job talking about seasonality and typically historically when the s and P500 is up 10 to 20% the first three quarters of the year, you have an on average rally of something like 6% in the fourth quarter. That's not the reason why we upgraded to the bull case. We upgraded to the bull case because our fundamental work says that earnings are better than everybody thought. And that was the main reason why we remain bullish all year long in terms of revisions getting too negative. And now those revisions are reversing quite strongly to the point where I think earnings are going to be at double digits in 2026.
- [25:42]
Dominic Chu
Okay. Brian Belsky at BMO Capital Markets, thanks very much for joining us on the phone here. Have a nice weekend, sir. We'll talk to you later on. I want to go back to you, Jim. Given everything that we've heard with the price target upgrade, there are there still places that a value, value ish investor that that's looking for growth at a reasonable price is going to start looking at this in this market.
- [26:04]
Jim Leventhal
Thanks, Don. That's exactly where I wanted to go, which is that we always talk about the market as this juggernaut, this monolith. But there's, there's places within the market that maybe you should look. Now I want to start this off with a disclaimer. I'm by no means saying that the AI trade is done, but there are fundamental reasons, reasons why financials and industrials have done well so far and they're likely to continue with an economy that as I said earlier is growing. So those are places that you can still put your money into in terms of valuations and the fundamentals being there. There's other what I will call sort of sleeper areas. You know, we're not talking about it too much a little bit, but energy is actually showing some signs of life. Yes. Somebody mentioned West Texas Intermediate 66 handle on it and that's interesting. But prior to that we've seen the, the larger energy names start to move higher. So there's been some anticipation of this. I think you're going to see a little bit of a catch up trade in the materials and probably the biggest sleeper area, if you ask me, is health care. We've painted health care with this broad brushstroke of man. It's been a lousy sector all year. Yeah, it's been a lousy sector because the two largest names, UnitedHealthcare and Eli Lilly, haven't done well this year. Both are coming back, by the way. But regardless, companies, that's a quintessential stock picker sector. You can look and find all sorts of pharmaceuticals. We were talking about tariffs earlier. You can find pharmaceuticals. Some are going up or some are going down, but there are some great names in there to pick. So the overall point being is let's go from this discussion of the overall market to where you can put money. And we are a strong believer at Saturday Partners that this rally is going to continue to broaden.
- [27:34]
Dominic Chu
All right, health care and energy, some of the top picks there from Sarity. So Jason, listen, as you look across your hypothetical shopping list, what exactly comes to mind for you when you say, hey, maybe this is money to put to work here?
- [27:47]
Jason Snipe
Yeah, I like health care, Jimmy. I think health care is a very interesting play. I think energy is interesting as well. But you know, not every, to your point, Dom earlier, not every health care name is in the eye of the storm as from a tariff perspective, you know, so AbbVie, which I talk about a lot, is one of our favorite biopharma names. I think that's doing really well and I continue to own. UNH obviously was a firestorm early on. Hemsley is a known commodity. They're kind of managing the inflationary costs of the business. You know, Optum is a very profitable sector that I think will start to catch some steam going forward. So I think there are a few names, but health care would be the sector that I'm most interested.
- [28:25]
Dominic Chu
What do you think, Steve?
- [28:27]
Steve Weiss
Health care is kind of interesting.
- [28:28]
Dominic Chu
This is a pretty trifecta. Health care. Health care. Health care, yes.
- [28:32]
Steve Weiss
I mean, you know, this just troubling year for health care. So it's rolling out. I think United Health's had a great run and I'm participating. Overall, I still think it's technology. I think it's a big technology companies, the strong just keep getting stronger. More capital is going into them and they just control their own fate. They don't need the markets to raise money. They don't need regulators to prove, you know, price hikes or plans. They don't have to worry about the other side with medical loss ratios. They have to worry about commodity prices and what happens that's not in the control of the company management. So my strong preference is to invest in companies that control their own fate and that is the technology companies with the exception some nuisance, you know, lawsuits here and there from the U.K. you know, using them as an ATM, which Trump is trying to stop, and other factors, that's where I have my exposure. And then companies with that idiosyncratic risk, like an fta, for example.
- [29:34]
Dominic Chu
But is it technology at the mega cap level, at the hyperscaler type level, or are we looking further towards maybe those that are only, and I say that tongue in cheek, worth $200 billion or less.
- [29:46]
Steve Weiss
It's at the hyperscale level and I'll tell you why. There's no doubt in my mind that they're overvalued at this moment in time. But I think the others are as well. The difference being is that overvaluation, the companies I'm invested in is only a moment in time because even if they trade down because of that, they'll catch up to it as their numbers continue to grow.
- [30:08]
Dominic Chu
We talked about really quickly, I want to end this conversation with each of you asking the same question. Do we need lower interest rates to keep this going? Jim, you first.
- [30:19]
Jim Leventhal
Do we need them? No, of course not. We've got 3.9% GDP and 4.3% unemployment. I mean, come on. And by the way, 3% inflation, do we need them? No. Are we getting them? Yes. Sorry, that was a different question.
- [30:32]
Dominic Chu
There you go. Jason, what do we think?
- [30:34]
Jason Snipe
No, definitely not. I think, as I, as I alluded to earlier, the earnings growth story I think is really strong. The macro could be fuzzy in some places, but I don't think you're going to need rate to sustain growth.
- [30:45]
Steve Weiss
And what do you know, for me it's a question of do we need them or not need them. It's more a question of what's the.
- [30:50]
Dominic Chu
Neutral rate and moving target, by the.
- [30:53]
Steve Weiss
Way, it is a moving target. The neutral rate used to be substantially lower than what it's what people opine it should be today. So I think we're above the neutral rate. So I wouldn't mind seeing them come down. I do believe that regardless of where rates go, inflation is going to continue to pick up. You've shrinking the label the labor force with immigration. I'm not saying immigration policies are bad or good. We talk about the execution of them, but that's a different conversation. But you're tightening the labor pool now, on the other hand, you're decreasing the needed labor pool with AI that some of those jobs were going to. So that's really the balance. But overall I see that. I see that labor costs will continue to rise for a lot of companies, will continue to shrink for others that take advantage of AI and that's a big part of inflation because that leads to every other part. It leads to how much they could spend from their pocketbooks, you know, to buy goods and services.
- [31:52]
Dominic Chu
All right, so we have some more news coming in with regards to some trades being done. Stephanie Link just made some fresh ones. She joins us now on the CNBC Newsline. Stephanie, I know you've been listening to the conversation as well. Take us through the fundamental reasons why you've done what you've done.
- [32:07]
Contessa Brewer
Sure. And it's good to be here. So I sold out of Freeport McMoRan after they lowered guide following the mud rush at one of their Grasberg mines in Indonesia. And Grasberg, it's the second largest copper mine in the world. To put it into perspective, they lowered output by 35% percent and they're not going to restart until the first half of 2026 and they don't get back to normal output rates until 2027. So I really don't like selling when a stock is down a lot and it fell a lot this week. But I just think this is probably dead money now that being said, the closure tightens world copper balance by because you are going to get hit by 500,000 metrics tons of closures in 2025 and 2026. And so mine supply is only going to be up 1%. And so I think you want to own copper mainly for electric vehicles, grid repair, housing, etc. But I think Freeport is going to lag as a result. And so I bought Antofagasta which is a pure play on copper. They have a very strong management team, especially on excellent execution. They deliver on growth, they deliver on time projects on budget, which I can't say the same for Freeport. They have a solid balance sheet and it trades at 8.6 times EBITDA. So I want to own copper. I think Ana Fagasta has already had a good run, but I think there's more to come given the tightness in the, in the overall copper market.
- [33:36]
Dominic Chu
Stephanie, it's also a play a macro wise right on a growing economy, whether it be here in the US or around the world as well. How much more do you think there is in terms of Runway given the fact that you are now bullish on copper, still just kind of trading within it to get a better execution in your mind out of the copper trade.
- [33:56]
Contessa Brewer
If you believe in AI, which we do, you need data centers and we need a heck of a lot more data centers. We only have 11,000 globally, we probably have to get to something like 30,000 by 25. So I think that if you believe that, then you need a grid and you need to upgrade the grid. And we haven't upgraded the grid in over 50 years. And so to me it's really a play on the grid, but it's also a play on housing. Copper is the number one material that goes into housing. And as you know, I'm a very big bull on housing for this year. And we haven't yet even seen a cycle dom yet in housing. So I want to own copper, I want to own the housing plays, but I also want to own the pure plays in copper. And that's what this one is.
- [34:38]
Dominic Chu
I'd also like to bring attention right now to another kind of purchase that you've made and that is in Teradyne, the chip side of things. The tech side of things has been a focal point for this panel so far. Can you take us through the Teradyne trade?
- [34:53]
Contessa Brewer
Sure, yeah. And it's a twofold story and actually I've never owned it before, but it's the twofold story is it's a semiconductor testing company, but it's also a robotics company play. So on the semiconductor testing business, they benefit from the rise in new generations of chips like from Nvidia, AMD, Broadcom, Marvell, etc. They also have a lot of their businesses tied to cyclical businesses, end markets like auto, like industrial, like electronics and memory. And so I think about 75% of their revenues are at a trough and poised to recover with the tailwind from the semiconductor testing business. And then also robotics is only about 14% of total revenue. I think that could get into the low 20s over time. They are partnering with Amazon as Amazon goes from hand to hand production to automation. And I think 2026 is really going to see an acceleration from the Amazon business because they're building a new manufacturing plant. So I think they have $7 to $9 of earnings power in 2028. And the stock trades at about 21 times EBITDA but its long term history is about 29 times. So I think you can see that in multiple gap actually expand from here.
- [35:59]
Dominic Chu
All right, Stephanie Link, thank you very much for bringing us up to date on your trades. We appreciate it. Have a nice weekend, Steph. All right, we are just getting started, believe it or not. Up next, the trade on Costco following its earnings report. Jason is in this trade. We'll get his strategy. Halftime is back right after this break.
- [36:25]
Contessa Brewer
As a salesperson, the search for the right buyer or buying groups can feel like you're endlessly sifting through leads and hoping they're ready to buy. Thankfully, LinkedIn Sales Navigator is more than just a tool, it's your strategic sales partner. LinkedIn Sales Navigator is a sales intelligence platform that helps professionals effectively prospect and engage high value customers, drive higher revenue and increase sales performance. Sales Navigator helps you target the right buyers, surface key signals such as job changes or which accounts you should prioritize, and shows you hidden allies so you can find those buyers that are most likely to convert. Whether you're looking for new clients or strengthening relationships of current accounts, LinkedIn Sales Navigator has new AI features designed to help sellers find the right people and get right to the right conversations, all at scale. Fueled by LinkedIn's 1 billion-member platform, Sales Navigator gives you the most up to date first party data, enabling you to unlock conversations with the people that matter. Ready to get right to the right conversations? Try LinkedIn Sales Navigator now now with a 60 day free trial at LinkedIn.com halftime report that's LinkedIn.com halftime report for a 60 day free trial. Terms and conditions apply.
- [37:25]
Dominic Chu
And now a next level moment from ATT Business.
- [37:28]
Jim Leventhal
Say you've sent out a gigantic shipment.
- [37:29]
Dominic Chu
Of pillows and they need to be there in time for International Sleep day. You've got AT and T5G so you're fully confident, but the vendor isn't responding. And International Sleep Day is tomorrow. Luckily, AT&T 5G lets you deal with any issues with ease so the pillows will get delivered and everyone can sleep soundly, especially you.
- [37:46]
Jim Leventhal
ATT 5G requires a compatible plan and.
- [37:49]
Dominic Chu
Device coverage not available everywhere.
- [37:50]
Jim Leventhal
Learn more@att.com 5G Network.
- [38:09]
Contessa Brewer
We'Re back on Halftime. I'm Contessa Brewer with your CNBC News update. The nation will no longer get a report on future threats to the United States. That Global Trends Report, published every four years, has warned of various threats, including climate change, pandemics and new immigration patterns. But the Director of National Intelligence, Tulsi Gabbard, is shutting down the group that compiles the report because its conclusions have reportedly become a political problem. That's according to the New York Times. AT&T blamed widespread 911 outages in three Southern states on cuts to fiber lines made by third parties. The network provider contradicted local authorities who had said the outages were statewide. AT&T says they weren't. But yesterday afternoon, Mississippi, Louisiana and Alabama started getting outage reports. Service was restored within hours and Delta signed a deal with YouTube to bring its content to the seatback of video screenshots. The partnership will also provide free trials of YouTube Premium for Delta Sky Miles members. We're about to be bombarded by cute cat videos on the airplane.
- [39:16]
Dominic Chu
All right, Contessa Brewer, I maybe will not watch those, but thank you very much for the news update there. All right, let's get to some stocks on the move today. You know, I'm going to call an audible right now because since we just ended on a Delta Airlines story, let's talk a little bit about Delta Airlines right now because we do have a little bit of ownership. Delta was reiterated a buy with a $72 price target over UBS. They're saying leverage to the improvement in corporate travel and continuing resilience and premium economy and premium seats is a positive for Delta. We could see some of those happening. Jim, you own Delta.
- [39:49]
Jim Leventhal
I do own Delta. There's a lot of things to like about Delta and I think I spoke about it earlier this week and one of the things I didn't point out is the balance sheet. So Delta and the rest of the, the airlines have been operating at a profit for several years now. And what they've done is clean up their balance sheet so that the debt levels is getting, are getting low enough that pretty soon I think they're going to start buying back shares in size. And as that debt level comes down, that will afford room for the multiple on the stock to go higher. The stock multiple right now is about nine times forward earnings. Frankly, I think those estimates themselves have room to go higher because they haven't yet recovered to the pre liberation day levels. They will. And if you add to that a multiple expansion on top of it, I think it's a good time to own the stock. The only thing that would really worry me, we all know this is if you see a recession in the offing, but man, it's, you know, apropos of what we were talking at the top of the hour, it's hard to see a recession anytime soon.
- [40:40]
Dominic Chu
All right, let's, how would you get.
- [40:41]
Steve Weiss
Multiple expansion, like what's the case for.
- [40:43]
Dominic Chu
It out of Delta?
- [40:44]
Steve Weiss
You mean out of Delta, out of any airline?
- [40:46]
Jim Leventhal
Well, I think, I think I said it, but I'll say it again, is the balance sheet improvement. So you and I both, you and I both know the capital intensive businesses, things where you've got to have a lot of things like airplanes, right? They're not going to sell at the same multiple as a software stock. However, when you, when you finance that more with equity as opposed to debt, which is what's happening. They're just using their free cash flow to really put down the debt. You're going to have more of a. This is true. You know this. As you pay down debt multiple.
- [41:13]
Steve Weiss
I understand that. But not in an industry that is so well known to be capital intensive where the balance sheet improvements tend to be cyclical.
- [41:22]
Jim Leventhal
Let me phrase it another way. Free cash flow yield to the equity.
- [41:26]
Steve Weiss
But that's also cyclical.
- [41:28]
Jim Leventhal
Okay. Yes. And I was getting a multiple expense to my point that I was closing on and actually like your response to this is I would worry about that if I see a recession brewing anytime soon. I mean that's where the free cash flow declines and you're in trouble. I just don't see it anymore. Time.
- [41:42]
Dominic Chu
All right, let's talk about the recession dynamic here because one place we are not really seeing that so far play out is on the consumer side of things. At least with regard to Costco, which came out now and reported an earnings and revenue beat comp. Store sales decelerated though, but it posted double digit gains in membership income and its E Commerce business. Jason, you are a Costco owner. What do we think about the stock now?
- [42:04]
Jason Snipe
Yeah, to your point, Dom is a double B, obviously on the top and the bottom. Comp sales were up only up six and a half percent roughly. And e commerce was up a little over 13 and a half. The stronger membership fee income comes from the price.
- [42:18]
Dominic Chu
Higher prices.
- [42:19]
Jason Snipe
You got it. So it was up 14% year over year. Transaction sizes climbed a little over two and a half percent worldwide. And what I really like about Costco is they're diversifying their consumer. More than half of new members are below 40. I think that will definitely be accretive to the stock. I think one of the concerns I have going forward is a third of their goods are being imported.
- [42:41]
Contessa Brewer
Right.
- [42:41]
Jason Snipe
So let's see how the tariff hits. Kind of filter through this stock and that is obviously some appreciation for the Kirkland blend. So it's just going to be how they continue to manage through that. But they have a really strong execution.
- [42:52]
Dominic Chu
And what the exposure for the grocery side is. It's a big part of the business right down to the tariff argument as well. Steve, I'm going to end with you. Netflix, really quick, quickly. They're going to stream Yankees, Giants opening day in 2026 for baseball, part of a new three year agreement. Amazon is in baseball now. Netflix is in a baseball, Amazon's in a football. This is a big deal.
- [43:11]
Steve Weiss
And this is one of the levers that we identified, you know, anybody who owns Netflix has identified is that they've still got lots of capital, still have great balance sheet to fund, you know, for debt to fund these forays into extending their, their reach with other product. And natural is football. So the tiptoeing in their baseball is obviously next up. But, but they can be competitive with any major league in some minor leagues as well. So it just adds another lever to the story.
- [43:44]
Dominic Chu
All right, big deals there. Straight ahead on the show, the big business of the Ryder cup, one of the premier golf events of the season is underway. Right now, as we speak, the president is there. We're going to talk about what's at stake with the CEO of TaylorMade Golf, one of the biggest equipment manufacturers in the game. He's going to join us live right here at post nine. Coming up next, halftime is back in two.
- [44:10]
David Abeles
I'm no tech genius, but I knew if I wanted my business to crush.
- [44:14]
Jim Leventhal
It, I needed a website. Now, thankfully, bluehost made it easy.
- [44:18]
David Abeles
I customized, optimized and monetized everything exactly how I wanted with AI. In minutes, my site was up. I couldn't believe it.
- [44:26]
Dominic Chu
The search engine tools even helped me.
- [44:28]
David Abeles
Get more site visitors. Whatever your passion project is, you can.
- [44:32]
Dominic Chu
Set it up with Bluehost with their.
- [44:33]
David Abeles
30 day money back guarantee. What have you got to lose? Head to bluehost.com to start now.
- [44:40]
Dominic Chu
And now a next level moment from ATT Business.
- [44:43]
Jim Leventhal
Say you've sent out a gigantic shipment.
- [44:44]
Dominic Chu
Of pillows and they need to be there in time for International Sleep day. You've got AT and T5G so you're fully confident. But the vendor isn't responding. And International Sleep Day is tomorrow. Luckily, AT&T. AT&T 5G lets you deal with any issues with ease. So the pillows will get delivered and everyone can sleep soundly, especially you. AT&T 5G requires a compatible plan and device coverage not available everywhere.
- [45:05]
Jim Leventhal
Learn more@att.com 5G Network.
- [45:24]
Contessa Brewer
All right.
- [45:24]
Dominic Chu
Welcome back. The energy trade is on pace for its eighth positive month out of the last nine. Believe it or not, it's the best performing sector so far this week on the energy sector. Jim, you are an owner of Exxon, which is up 4% this week. Energy is a value type sector. So how do you feel about the trade so far?
- [45:42]
Jim Leventhal
So it is a value type sector. I want to start by saying I'm kind of agnostic to which direction oil prices go and I really want to make my plays within the energy sector. With that in mind, mid-60s on West Texas Intermediate. Fine. I can't really make a case that it's going to go much higher. That's why I start off with something like ExxonMobil or Chevron, which I don't own, but I find them very similar super major integrated oils. They're up and down the production and exploration pipeline and they make money basically in all environments. That's why, you know, I'm looking at ExxonMobil right now, the first five year annualized return 33%. And I will grant you, somebody will say, okay, well that's off of, you know, 2020 when they absolutely got crushed. Nonetheless, if you stepped into energy and if you stepped into ExxonMobil as one of the super majors right then and there, you've made a pretty good return along the way. There are other ways to play now. I see you, Steve. We'll get to you in a second. There's other ways to play. You can be in the middle of the what I'll call the value spectrum, something like a refiner. I know Joe Terranova is been in those a lot. I happen to like a pipeline company like a Cheniere that's specifically on liquefied natural gas. Or you can be really risky, go to one of the higher beta plays like an offshore driller.
- [46:54]
Dominic Chu
All right, guys, we're going to leave it there. All right. Coming up next, the big money is on the green right now, literally out at Bethpage Black. TaylorMade CEO David Abeles joins us now for an exclusive interview coming up on the Halftime Report. Keep it right here. All right. As you've no doubt heard, the Ryder cup is officially under way now with Team USA and Team Europe battling for golf's ultimate prize. Joining us now on CNBC is TaylorMade Garbage Golf CEO David Abeles to break down the stakes on and off the course. David, you're here, like many of the golf community, because of the Ryder cup at Bethpage Black in New York. What exactly does the Ryder cup mean in terms of your business in the golf industry overall?
- [47:50]
David Abeles
Yeah, I am dom and very excited to be back in New York. I started my career ironically here in the Met section, used to call on Beth Page right out of college. So this is a sentimental journey for me as well. But the Ryder cup is one of the great events in all of sports every two years and we alternate soil between European soil and American soil. And here we are at Bethpage, Americans trying to win the cup back, the Europeans trying to defend the Cup Tough morning session, as we all know, for the Americans. We'll see what happens this afternoon. But it's a wonderful event. It's a global event. So it really inspires Western markets, certainly the uk, Continental Europe and the United States to embrace the game, get into the game. And we see a meaningful bump in our business during this week, for sure. We have products that are built around the Ryder cup, both for our tailor made brands and our Sunday Red brands. Exclusive products that are unique and differentiated that you only get every two years. So that's nice for us. We see traffic flow on the golf course, off the golf course, to our websites, at retail, in and around a week like this. So it's always very exciting to see, you know, a true, true championship like this.
- [48:57]
Dominic Chu
I was at the merchandise pavilion at the Ryder cup on Wednesday. That was a practice round.
- [49:02]
David Abeles
Yeah.
- [49:02]
Dominic Chu
And it was an absolute mob scene. The line was anywhere from 15 to 30 minutes to get out of that place with the merchandise. Are you seeing that same kind of strength across your tailor made and Sunday Red clothing portfolios? Which, by the way, you work with Tiger Wood Song?
- [49:18]
David Abeles
We do, Dom. We've been extremely fortunate. It's been a tremendous year, 2025 for us. Our tailor made business has launched some incredible technologies. Qi 35, our continued momentum in our golf ball franchises, TP5.5 and X. We've had arguably the greatest performance at the professional level for our brand. The history of our company. We won three major championships here, a career grand slam with Rory McIlroy, Scotty Scheffler, member of the TaylorMade team, Tommy Fleetwood winning the FedEx Cup. So the energy around our products, the energy around our athletes in 2025 has been extraordinary. And then on course, as it relates to our Sunday Red business, which is our first 12 months in partnership with Tiger woods, launching an apparel and footwear brand, a golf inspired, technical lifestyle brand, has been fantastic. In fact, we are in the tent at Bethpage right now and almost sold out literally in a couple of days, which has been extraordinary. So it's been wonderful to work with him and bring this brand to life. And we're just getting started.
- [50:15]
Dominic Chu
What exactly does that say in your mind about the strength of the consumer across the income spectrum, across the spend spectrum? You have goods out there that target just about every price point in the market. What do you see as a CEO of a golf company right now?
- [50:31]
David Abeles
Well, we do, Dom. You know, we compete in the mid premium to premium market markets. We are seeing strong consumption, continued strength at the consumer level, compounded by the strength and momentum we've built in our brands. Right. And we have always believed that if we build great products, differentiated products that enhance golfer performance, that consumers will lean in and continue to lend their wallet into our business. And thankfully they have, and I thank all of them for that. We've had tremendous sales and momentum, as I said, both for Tailor and Made Sunday Red this year. So the consumer segment is strong for us. The two primary metrics in golf that we measure our participation, right. How frequently golfers are playing in total participants. And we're seeing both of those on the rise in 2025. And that's been strong for us. Consumer spending is very good in golf right now.
- [51:17]
Dominic Chu
All right, I'm asking a tough one. Are you pulling for Team USA or Europe this weekend?
- [51:21]
David Abeles
Well, it's an interesting question because I to some degree, I feel like I've already won. Right. We've got Colin and Scotty on the US team, both TaylorMade athletes, and Rory and Tommy playing together on the European team. So either team that wins, TaylorMade wins this week, which is great. And then we're winning with Sunday Red in the merchandise tent with great products. So it'll be interesting to see what happens over the course of the next couple of days. It will be wonderful for golf, wonderful for sport, and certainly for the metro New York area.
- [51:48]
Dominic Chu
We're going to see you, I'm sure, out at Bethpage Black this weekend. David Abeley, CEO, TaylorMade Golf thank you. Thank you very much.
- [51:53]
David Abeles
Well, thanks, Don. Great to be here.
- [51:54]
Dominic Chu
All right, so don't miss full coverage, by the way, of all the Ryder cup action across all the weekend across all NBC Universal platforms. NBC, USA Network, Peacock. It all starts up tomorrow. Stay with us. We got final trades coming up. Keep it right here. All right, quickly around the horn with our final trades. Let's start with you. Jim Leventhal, ExxonMobil.
- [52:20]
Jim Leventhal
I know I spoke about it earlier earlier. There's a stealth trade going on in energy.
- [52:24]
Jason Snipe
All right, Jason, Amazon, I think will.
- [52:27]
Dominic Chu
Reaccelerate this quarter and Weiss that I'm.
- [52:30]
Steve Weiss
Going with the winner. And stocks down from the highs. I think it goes up.
- [52:33]
Dominic Chu
All right, two mag seven stocks. I like that. All right, that does it for the Halftime Report. The exchange begins right now. Have a great weekend. Go you Team USA. You've been listening to CNBC's Halftime Report, the podcast. You can always catch us live weekdays at 12 Eastern only on CNBC.
- [52:53]
Contessa Brewer
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 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 is it time to reimagine your future? The right business skills may make a.
- [53:37]
Dominic Chu
Difference in your career.
- [53:38]
Contessa Brewer
At Capella University, we offer a relevant education that's designed to focus on what you need to know in the business world. We'll teach professional skills to help you pursue your goals like business management, strategic planning, and effective communication, and you can apply these skills right away. A different future is closer than you think with Capella University. Learn more at Capella Eduardo.