Leslie Picker (3:04)

Right.

Jim Leventhal (3:05)

It just doesn't. We can see it in profit growth. We can see it in economic growth in the labor market. So I think we're okay. However that turns out that's the other

Leslie Picker (3:13)

side of the coin. And to your point, consensus is increasingly important there. Let's get to Steve Liesman with more on this story. Hi, Steve.

Steve Liesman (3:21)

Hey, Leslie. The U.S. attorney for the District of Columbia announcing she has dropped her probe into Fed Chair J. Pal. Criminal probe and cost overruns at the Federal surrounding a Federal Reserve building renovation, apparently clearing the way for Kevin Warsh to be voted on by the Senate in a nomination. Pirro saying in a tweet, quote, I have directed my office to close our investigation as the IG undertakes this inquiry. Note well, however, that I will not hesitate to restart a criminal investigation should the facts warrant doing so. It's worth noting, however, that Fed Chair Powell asked the IG to do this back in July 2025 and the IG confirming in a statement, of course, that investigation is ongoing. Warsh's nomination vote has been held up, of course, by Senator Tillis. Senator Thom Tillis said he would not vote to confirm Warsh until Pirro dropped the investigation. We have yet to hear from Tillis on this issue, but a White House spokesperson saying in a statement the White House remains as confident before that the Senate will swiftly confirm Kevin Warsh as the next Fed Chair. Now take a look at the two year yield. It dropped a few basis points on the news apparently on the belief that Wash will be a little bit more, what would you say, dovish than Fed Chair Powell. But it hasn't retreated back, you can see there to the before the Iran conflict, before the US Attacked Iran. So it still has some ways to go to really confirm this idea. And when I look, guys, Leslie, at the Fed Fund's probabilities, it continues to show less than a 50% probability of a rate cut between now and July 2027. So right now the market thinking maybe along the lines of Jim Leventhal that a rate cut is not needed or that because of the lingering inflation from this event that a rate cut, the Fed cannot cut rates.

Pippa Stevens (5:21)

Right.

Leslie Picker (5:21)

Yeah, I was just going to say. We were just talking about that. Go ahead, Jim.

Jim Leventhal (5:24)

Hey, Steve, I didn't know you were going to be on, but since you are and we can get a little wonky, our star, you know, there's two schools of thoughts here. Kevin Warsh is of the idea that AI led productivity will lower. Our star, Ed Yardeni is an example of the other school of thought, that the economy is going to run hot because of AI and that our star is going up. Do you have an opinion on it?

Steve Liesman (5:47)

You know, I'm going to answer you, Jim, in a not wonky way, which is I'm going to tell people to look at the Wall Street Journal which talks about the tremendous needs for funding for aig. I'm talking to people that are talking like billions a week are needed to invest in AI. And now use your Econ101 hat, which again is not wonky or nerdy, and say what happens when the demand for something, in this case capital goes up? In that case, at least on the front end of this huge AI investment boom, it puts upward pressure on interest rates. Now, maybe somewhere down the road, Jim, you and I are facsimiles of ourselves and we're AI agents on TV and we don't have to be there. And the productivity of our news reporting goes up tremendously and there's downward pressure. That's in years to come, Jim. But on the front end of this, there's a really good argument that it puts upward pressure on capital up upward pressure on interest rates and the Fed needs to basically do nothing along those lines or at least not cut rates in the face of it. So I know for sure WASH is going to get some pushback from other members of the FOMC that are going to adopt that kind of thinking.

Leslie Picker (7:00)

All right, Steve Liesman, thank you. Not too wonky at all. I thought that was a good discussion. Appreciate your time this Friday. So, Jenny, we saw a little bit of a reaction on the two year yield here. What do you think ultimately happens with regard to getting that consensus to lower interest rates? The market doesn't think it's going to happen until mid next year. Do you think there's a case to be made whereby the economy deteriorates and it becomes necessary and they get that

Jenny Harrington (7:27)

consensus Well, I think there's a case to be made that the economy deteriorates and it's for all the wrong reasons. And maybe, Leslie, maybe they even need to hike rates. And I'm surprised that in our six minutes so far, we haven't started talking about this yet because. Because the Strait of Hormuz and the reverberations and aftershocks that are coming, that may come, may come to the supply chains from that have really high potential to be wildly inflationary. And this is like a total unknown, but it's also a reasonably high probability that we need to think about. So the way I see it is here we sit in mid April, ships left just before the war started two months ago. They're just reaching their destinations now. There is no real global, like, you know, yes, we can say there's diesel issues in the Philippines, that's real. There's diesel issues in Egypt, that's real. But collectively, like, we haven't even begun to see the problem of a thousand ships still being stuck there. We haven't even begun to see what the problems are from nothing getting out of the Strait of Hormuz for the last two months because, again, from a supply chain issue, ships left and they're just arriving at their destinations on time now. And so what's going to happen is a huge if. But what if, what if it doesn't open anytime soon? What if once it does open, we find that there is enormous infrastructure damage to aluminum smelters and, and more to, like, Sorry, what am I trying to say? Fertilizer and helium. What if this all becomes real? What if there is real damage to LNG supply chains? And what if that triggers inflation? And I think at the root of it, I think we need to, to give Warsh credit for being a proper professional economist. And he's going to deal with this intelligently. So he might have, he might have real inflation coming. He might not. Right. But he might. And so we're in this funny time where, where you just don't know. And it could be extreme on either side. And I also think that with respect to AI and efficiency, that's legit and that's real. But that is a longer way off than potential inflation from supply chain reverberations and, and all that from coming out of this Strait of Hormuz.

Leslie Picker (9:36)

What do you think, Kevin? Do you feel like it's as binary as. As long as the strait remains impassable, the Fed cannot lower interest rates? That's something that Wells Fargo CEO Charlie Scharf insinuated earlier this week that basically, as long as this war goes on, there may not be a case to be made to lower those interest rates until you have a little bit more clarity around the future implications on inflation.

Kevin Simpson (10:00)

Yeah, that may oversimplify it a little bit, but I agree with the thesis. I don't think we're in a position where we can be thinking about rate cuts at this point. I'm happy that Jenny's worst case scenario isn't playing out at the moment. And we were almost there. I mean, if we saw energy prices or oil between 150 and 200, then everything that you just laid out would be happening and it would be a rate hike conversation. Fortunately, that worst case came off the, you know, off the plate collectively. So if we're 70 to $90 a barrel, I think the market is assuming it can absorb that for a while now. Do we want to have rate cuts? Sure. What stock investor doesn't want that? But I think the reality is that that's probably, to Jimmy's point, not something that we should be considering specifically because we don't need it. Can we down the road, can housing come in and bring inflation down because of a massive lag effect? Possibly. Can energy come back to. To where it was before the invasion of Iran? Probably not in the short term. So I would think it's more about just kind of holding the line and making sure that inflation is staying level. And if we can avoid either of the extremes, that's probably a best case scenario.

Leslie Picker (11:02)

All right, we've got a news alert on Alphabet shares trading near the highs of the day. Mackenzie Seagalas has those details. Kenzie.

Mackenzie Seagalas (11:09)

Hey, Leslie. So Google shares popping on a report that it could invest as much as $40 billion into anthropic. Bloomberg reporting that it will start with an initial $10 billion investment with potentially $30 billion to follow if certain performance targets are met. Notably, this is reportedly at a $350 billion valuation. That's what Anthropic was valued at back in February. There's been talk in the secondary markets of looking at an $800 billion valuation. So certainly a discount there. It also comes the same week that Amazon upped its equity stake in anthropic investing. $5 billion with the potential to inject another $20 billion over time. One other piece of this Alphabet deal that I want to point to, reportedly it involves 5 gigawatts of computing capacity that they'll be providing to Anthropic. That's an expansion of an existing relationship Potentially adding several more gigawatts over time. So this is the latest example of one of these chips for equity deals. Anthropic has been a big buyer of Google's in house Nvidia rival, the tpu. So we're seeing that relationship grow as well. One other note here. All this comes as Anthropic is potentially looking to hit the public markets as soon as October.

Leslie Picker (12:20)

Mac, I'm curious how we should think about this in the context of Gemini. Is it as much of a competitor? Will there be some sort of wall there? How should we be thinking about that?

Mackenzie Seagalas (12:31)

So Google and Anthropic are competitors in the sense that they're both going after enterprise customers. It was just Wednesday that we were talking about Google's big event. They were debuting all of these new agentic applications specifically for enterprise customers, which is where Anthropic has found its bread and butter. A lot of their core consumer bases there, but where they differ is that you don't see Google going after the quad code community. So they haven't been as big. They don't have, I mean OpenAI has the Codex which is their answer to Anthropic, but they aren't as much of a rival there. And so this $40 billion investment really just shows how big symbiotic they think that relationship is. I will say that Anthropic CEO Dario Amade spent some of his formative years in this industry at Google. So long standing relationship there and we

Leslie Picker (13:19)

don't know the post Money valuation, they haven't announced kind of how this or if it does change the valuation for Anthropic.

Mackenzie Seagalas (13:27)

So what's being reported by Bloomberg right now is that they're getting that February number, that $350 billion valuation for that $40 billion investment. And it comes at a time that Anthropic is looking to raise a fresh round. And there is talk that that could be in the range of $800 billion. So that's notably to get in at that February number is seems like a win for Alphabet and part of, I mean maybe why you're seeing those shares pop.

Leslie Picker (13:52)

Yeah, that, that would absolutely make sense. Mac, thank you so much. Mackenzie Seagal is there. Jim and Kevin, you both own Alphabet. You're smiling, Jim. Well, I guess this is good.

Jim Leventhal (14:03)

Look, the three of us are stock pickers and frankly the show and the channel is about picking stocks. When I went to business school there was this thesis called the efficient theory of the stock market. Yeah, exactly. You're laughing. Well, yeah, that's Part of it, too. But the efficient theory, Leslie, was that every piece of information that is knowable about a stock or the market market is priced in. Now, I don't want to sound sanctimonious, and I apologize if I do. Go back a year ago, just one year ago, this stock was being looked at as having an existential threat from AI and people were talking about like, at $150, people were talking about it going lower.

Jenny Harrington (14:43)

Okay?

Market Analyst (possibly Leslie Picker or another analyst) (14:43)

Now it's.

Jenny Harrington (14:44)

I was talking about it, okay? We had totally different opinions and that.

Jim Leventhal (14:47)

And you know, look, it's not, it's not a trite phrase for you and I to address this and say that's what makes a market. Okay? Now, you know, since that time, we've seen Gemini climb up the ranks. That was a good question you asked about, you know, how does this work for Gemini? And we'll see. Gemini climbed up the ranks. Maybe Anthropic will replace it. But now Google Alphabet is in the position of not really caring.

Steve Liesman (15:10)

Right.

Jim Leventhal (15:10)

They're going to make money on either side and they're doing their TPUs and they're building out more of their web services and they've got all these other things, things that are working, like YouTube, like Waymo. I know Waymo is not profitable right now, but ultimately, what I say here is to Anyone who's maybe 30, 35 years old, fresh out of business school, don't believe the efficient theory. It's just not true.

Leslie Picker (15:30)

Yeah, yeah. I graduated in 2014 from business school. And even then it was kind of like, I don't know if this is. This thing's legit or not. Kevin, I'm curious. 40 billion. Is this the best use of capital for Alphabet right now, especially as it leans into to AI, is would you like to see that 40 billion spent investing in existing companies or somewhere else in the supply chain or the AI build out?

Kevin Simpson (15:55)

You asked the right question. Because I was kind of thinking that as we were listening to the report. But if they're getting in at a 450 valuation versus what is now 800, I can't think of a better use of capital. So as an Alphabet shareholder like Jimmy, I'm smiling inside and optimistic. They have earnings next week. I think they're going to be fantastic. They have so much free cash flow. There's so much money going through this company. When you talk about an investment of that magnitude, it's eye popping, but not so much on a percentage basis. They're not borrowing, they're not leveraging. They've got free cash flow to support it. So I'm excited to see what happens. It's fascinating when you think about where Gemini ranks in the that they're making this kind of investment, what we would consider a competitor. So I'm anxious to see how it plays out as well.

Leslie Picker (16:36)

Yeah, next week's going to be a big week. We've got five of the mag seven reporting only the ones that start with A or M. So that makes it easy to remember Jim and Kevin own Alphabet. It was reiterated outperform at Oppenheimer specifically on those results. Jim, what do you think is going to, you know, make for a more bullish case? What are you looking for? Is it that confidence in search? Are you expecting a higher operating leverage?

Jim Leventhal (17:02)

Okay, so since you brought up A and M being Microsoft mama. Yeah, okay, I like that. But you know, as you were saying that, I was thinking about Microsoft's quarter last time where they had, I believe it was 38% growth in Azure. And the street was wildly disappointed. I mean it spent most of the last three months underneath where it closed the day prior. And the issue was people wanted 41% but Microsoft said, listen, we didn't have enough supply, we couldn't bring on enough compute to meet the demand that is there. So there's two questions for all of these companies as they start to report what is the supply chain doing? Jenny, you just made a very good case about the strait of formulas. Guess what? We had supply chain issues in the semiconductor space prior to that. It's only going to be getting worse. So what are the supply chain issues? What does it mean for margins? The demand we believe is there? Can these companies meet it?

Leslie Picker (17:51)

Jenny, what are you looking for?

Jenny Harrington (17:54)

I think, you know, I think we know they're all going to report really strong earnings. And so that's not what I'm looking for. We expect that that's normal. I think I'll look for how people react. Right. Is it going to be like Netflix and like Tesla where the numbers are good but everybody wanted better but then also just the bigger macro landscape? I read an interesting article this morning. Actually I read the headline for it, but it was a headline from an article from Science Daily and it says a breakthrough in brain inspired computing could make today's energy hungry AI systems more efficient. I want to hear what they say about things like that because that could really change the landscape. You know, we know Google is getting into more chips. It would impact, it would impact energy, it would impact Nvidia. So I want to hear what they're starting to say as they look forward more and I'll bet this is a moment where they, where they're able to start to share more because they are spending so much on, on capex and people want to know how is that going to be profitable? You know, Met is reporting too and one of the interesting things there is they just laid off 10% of their workforce. And one of the things that we've been worrying about is now that share price is back to 6$700 a share, are they going to be lean and be efficient? So I like that preemptively but really the efficiency and the, and the return on this capex spending is going to need to start to be visible.

Leslie Picker (19:12)

Yeah. What do you make Kevin, of some of these announcements regarding the labor force? Because as Jenny mentioned, you have metal laying off 8,000 people, not filling the roles of 6,000. So that's a huge number right there. Microsoft offering buyouts for its first time in its, in that company's history. Does that to you suggest that, you know, there may be issues accessing the markets for what they want to do and therefore they have to get lean internally in order to do that or does that just suggest, hey, we're in a whole new world right now in these thousands of employees workforce doesn't make sense for the types of businesses that they're going to be.

Kevin Simpson (19:51)

Yeah, I mean there's two different ways to look at it. One is where do you put these disassociated workers if they're not retiring but they're being laid off and then just the natural evolution of what artificial intelligence is doing that allows these companies to lay off and improve efficiency. So on one hand, as the shareholder, I'm very excited about the fact that we can reduce capital spend but as far as the economic impact of that, we don't want to see people unemployed, especially with the labor market that's still resilient, incredibly resilient. But that could be a very big issue moving forward for the economy if we were to start to see a crack there. So I think guidance is going to be really important this course order. I like the M's over the A's. Excuse me, the A's, over the ends. But the layoffs I think are something that are very specific and germane to each company.

Leslie Picker (20:37)

Yeah, and you bring up a good point too that that could have a broader implication for, for the broader economy if that were to be more of a trend. Let's stick with tech and hit our

Pippa Stevens (20:47)

chart of the day.

Leslie Picker (20:49)

No surprise here. It is Intel. That stock is absolutely surging up about 22% to a new record high on earnings. Could have its best day in decades. Christina Parts Nevillis has the details behind that move. Christina?

Christina Parts Nevillis (21:03)

Yeah, it's also up 122% just this year, surpassing all the chip names just after yesterday's massive quarter. So the US government also bought a 10% stake in the company just last August at 20 bucks a share. So that bet has more than quadrupled. Only it's on paper, it's not cash. The fundamentals though for intel did show up the biggest revenue beat in 5 years. Server CPU demand is so strong that supply constraints held back more than a billion in revenue. Citi upgraded to buy. Multiple firms raised their targets. I was able to catch up with the CFO Dave Zisner just yesterday and he said part of the beat came from inventory they had previously written off product they thought was essentially end of life. But customers needed it so desperately. There's so supply constraint right now in servers. They're now shifting PC capacity over to meet data center demand on Terrafab, that deal with Elon Musk, the CFO told me there are quote many other customers behind Elon, but yet there's no deal finalized. No details, no timeline, no money, etc. But the stock is trading well north of 100 times forward earnings. Stifel warns margin improvement won't necessarily be linear because of the advanced chip processes that are going to be hitting margins. Morgan Stanley sees better risk reward elsewhere in memory or amd. And the Foundry is still unprofitable with no new customers announced, although they did give some breadcrumbs just yesterday that there's going to be some announcements that later on in the year. Bottom line, intel definitely hit every talking point it needed to keep this train moving, which is why shares are up over 20%. The question is whether the business can catch up to a stock that's already priced for a comeback.

Leslie Picker (22:37)

I was going to say going into the print it was already at a pretty eye popping multiple after that run and here we are up 22% right now. Christina, thank you. So Kevin, little victory lap here. I don't think a lot of people, people saw a doubling of intel stock but you own it, you got into it in December, right? What made you even think about investing in intel at that time?

Kevin Simpson (23:02)

We didn't expect this kind of earnings report. I mean this is incredible validation. They didn't just beat it, they crushed it. Christina gave you all the statistics, but if we go back in time, we were looking at a stock that was trading almost for a year between 20 to $25 a share. For years it couldn't get out of its own way. I think between the three of us, none of us owned it for quite a few years prior. But we looked at this after the government got involved. This is in December. So we're talking, Leslie, of like $40 a share at an entry point on a stock that has just doubled. So we were a little skeptical about it, a little bit nervous. But we wanted diversification in the space. We didn't just want to own in video. So we looked at intel as a turnaround story that might work. When we saw these numbers last night, I mean, we about fell off our chair. And this is a story that I think can continue. But I would not be a buyer here, wouldn't be rushing in to get into this name. It's not profitable yet. There's still lots of variables and oftentimes when you see a stock make a move of this magnitude, there's a little bit of an air pocket, there's a breather. I think if anything over the weekend we may trim a little bit of it. We have a position that's pretty sizable and I think that taking a look, little bit of a profit here might be prudent. It's not a change of conviction. We're not going to sell the stock, but I envision that we'll trim it and use those proceeds elsewhere.

Leslie Picker (24:14)

You answered my question, which was are you comfortable with these valuations? And it looks like, Jenny, Jim, I mean, is this something that when you potentially hit that air pocket that you would be an investor in or do you feel like it would have to come down, I mean, a lot more.

Jim Leventhal (24:27)

I'll go first, but I'll leave plenty of time for Jenny.

Jenny Harrington (24:29)

So excited to talk about.

Jim Leventhal (24:30)

Well, first off, congratulations. Congratulations to everybody who's made money on it. I mean, I sold it six years ago and I'm actually very happy to see this pop. I don't regret the decision to leave, but I think what the movement today shows, it validates the idea of being a long term investor, of having an investment thesis and sticking it out. Now, six years ago, I mean, this was before they even made the pivot to the fab construction. So it was a different company and it was certainly before any idea that the government, government would take a stake which in turn has helped promote their fab business. And it's all wonderful, but the overarching message that I would make is that if you are invested in a stock and you have an investment thesis and the market goes against you, but you still have the conviction that your thesis is right, then stick with it. It's just a matter of time. I actually wrote about this in my book. Just be patient.

Leslie Picker (25:18)

Jenny.

Jim Leventhal (25:18)

Jenny.

Mackenzie Seagalas (25:19)

All right.

Jenny Harrington (25:20)

So no one's taken more abuse on the.

Jim Leventhal (25:23)

Sorry, sorry. That's true.

Leslie Picker (25:25)

It's okay.

Jenny Harrington (25:26)

And nobody at this point hates intel probably more than I do because of all the abuse and then having this happen. But here's the thing. We held it for a long time and we held it when it was still profitable, when it still had tremendous free cash flow, and then it didn't. And because our discipline growth strategy that held it has this like 5% or better free cash flow yield discipline to it. Once it became unprofitable, we couldn't hold it anymore. So we sold it right after Pat Gelsinger was stepped down and it had popped up. I can't remember is like high 20s, low 30s. Then it drifted back down, you know, and now you get this. But I think there is a disconnect here. So right now you're sitting at this moment in time where it's like the greatest semiconductor boom in history. Nvidia is making 200 billion. Taiwan Semi is making 76 billion. Micron's making 66, on and on. And intel is going to make or made a billion and a half. Like, that's great. But it's still really lackluster compared to their peers. And it doesn't really do justice to their history as an extraordinary leader in the semi space. I think they are still behind and to your point, like, you know, the cash flow is still not there. The earnings still aren't there. It's a long ways to go. So, no, I absolutely wouldn't buy it on the air Pocket. To me, it's more of a speculative trade. And a trade. It's not an investment for us because they're. There is no. There are no functional earnings. There is no free cash flow yield. Well, if you want to speculate, have at it.

Kevin Simpson (26:46)

I mean, could there be a short squeeze here?

Jenny Harrington (26:49)

That's a good question.

Jim Leventhal (26:50)

You know, I know. I honestly think what it is is the government's involvement in it. And we saw that when Jensen Wong and Nvidia started giving business there. I mean, we'll see what happens in the midterm elections. And I don't mean to be political. I never come on this show talking about politics. There's an opportunity election coming up. There's a prediction that the winds are going to change from the right to the left, and we'll see if companies still want to kowtow to the current administration's investment mantra. After that, I don't know. But I do think that once the government got involved, other companies said we better get involved as well. I mean, Jensen Huang and Nvidia were at the time trying to get approval to sell chips into China. Seems like an actually pretty smart political move.

Leslie Picker (27:31)

Well, we've seen 18 straight days of gains in the stocks. It's up another 5% today. Intel's about 4%. But there are a lot of other semiconductor companies that have benefited this year as well. Coming up, committee moves. Kevin Simpson has a bunch of new trades to tell you about. Halftime is back in two minutes.

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Leslie Picker (29:36)

We're back with the check on transports on pace to snap a five week winning streak, one name in particular is dragging it down its Avis budget. This is a fascinating story. Shares rocketed over 600% from March 20 through Tuesday to become the highest priced name in the index amid a Massive short squeeze. Since Tuesday, however, Avis shares have crashed about 70%. But Kevin is finding value in the transports and has some moves. You bought more Norfolk Southern?

Kevin Simpson (30:07)

I did. We bought more Norfolk Southern because we're looking at things that are not going to be disintermediated by the Strait of Vermouth. We're looking for things that aren't necessarily tied completely to oil, although they're a transport company and absolutely they are. But what we're looking at at here is a story where they had earnings that were tepid this morning, but the stock's trading up near all time highs. We've been slowly accumulating the position. I like the name. It's conservative. We're looking for things outside of the mag 7. If the breadth and broadening trade comes back into the picture, you'll see that as a theme of some of the things that we've been adding to the portfolio this week.

Leslie Picker (30:41)

And you also like FedEx.

Kevin Simpson (30:43)

Same story again. Higher transport costs is the only thing holding us back there. But this was a truck turnaround story that I think has turned around. You've got a CEO in place that's done a phenomenal job. We still like the multiples. There was a time when we wouldn't look at FedEx. It was UPS or nothing. And we've completely done a 180 on that.

Leslie Picker (30:59)

And Jenny, you own UPS and XPO Logistics.

Kevin Simpson (31:03)

I didn't know that when I said that.

Leslie Picker (31:07)

Both of those report next week.

Jenny Harrington (31:08)

Yeah. And two wildly different companies. But. But I think the reminder here in between these too, and Kevin's also is. I don't think you paint transports with a broad brush. So xpo is up 70% year to date. You know, it's basically transportation logistics. Also here. We actually trimmed it recently. Not a lot. And that about. About where it's trading now. It just became a very overweight position. The free cash flow yield isn't what it is. The. The multiple is pretty stretched. But it's a wildly successful company that's executing you. P.S. this is. It's just different, you know. And it goes into my comfort than XP or any of the others. And it goes into the comments about worrying about the reverberations and aftershocks from the Strait of Hormuz because energy is an enormous part of their input. Right. And if we see $90 sustained oil for a long time, even if things start to flow like that's bad for ups. What happens with AI and job loss and if people are, you know, are spending more on their gasoline each week and they have less to spend discretionarily. Like that's tough for ups. Meanwhile, if this trade opens up and we see energy costs come down more quickly and things get back on track, that's positive for UPS because the shares have already traded down with the expectation of kind of a worst case energy cost input, input scenarios. So it's a tough one, Leslie. But you know what I like? I like my dividend yield and I like their commitment to it and I like that they got the earnings and the cash flow to cover it. So I just, I sit back and I try to, from an investment perspective, tune out the short term noise, focus on the long term. And in the long term, you know, it settles out. In the long term, you know, you've got a company at a decent valuation. So you've got a deep margin safety. You know, you've got a, well, a very well managed company and you've got this dividend to float you through it. So, you know, short term, long term battle here. So much fun.

Leslie Picker (32:55)

So much fun. All right, now to Pippa Stevens with a CNBC news update. Hey, Pippa.

Pippa Stevens (33:00)

Hey, Leslie. Israeli Prime Minister Benjamin Netanyahu revealed today that he was diagnosed and treated for early stage prostate cancer back in December. Netanyahu wrote in a social media post that he requested a delay in revealing the diagnosis to prevent Iran from using it as propaganda during the war. Netanyahu had surgery in December and says the treatment has left no trace of the cancer. Massive tornadoes tore through northern Oklahoma yesterday. Storm chasers reported damage around the Enid area in Garfield county near Vance Air Force Base. Authorities say at least 10 people were injured while several homes and structures were destroyed. And Jim Furyk is reportedly returning to captain the US Ryder cup team for the 2027 matches in Ireland. The Associated Press reports that the Rider cup cup committee chose Fury once Tiger woods removed himself from the competition after his arrest in March on the suspicion of driving under the influence. Europe has won 11 of the last 15 cups. Leslie, back to you.

Leslie Picker (34:01)

All right, Pippa, thank you. Up next, more of the day's biggest earnings movers. Plus, Wolf calling one group of stocks quote, vulnerable. We'll debate the trade in our calls of the day.

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Jenny Harrington (35:56)

Welcome back.

Leslie Picker (35:57)

Let's hit some committee. Stocks on the move. SLB posts a profit decline on Iran Disruptions Kevin, this was formerly Schlumberger. You own the stock up 2.3% right now.

Kevin Simpson (36:09)

Yeah, I don't think anyone was disappointed with the numbers, Leslie. We expected that to happen, but they had 8.7 billion revenue which was on the high end. Stocks trading up against a 52 week high. And even if pressure internationally in oil is is affecting some of these quarterly numbers, I think this is still a name you can hide out in. And energy isn't going anywhere. We still like some SLB quite a bit here.

Leslie Picker (36:31)

Western Union also posting lower profit. That stock down about 4.7%. Jenny, you own Western Union. How much should we read into this being a consumer issue versus an idiosyncratic execution issue by Western Union?

Jenny Harrington (36:46)

Yeah, I don't, I don't know that it's either actually. And I think it's interesting frankly how well earnings held up. So they still post net income of 64 and a half million dollars. It was 20 cents a share. That compares to 36 cents a share last year. So lower with all of the deportations this year. Like I really have struggled all year. Like is this going to show up as a major negative? But I would say it's not really because what you have at the bottom of it is the following. You've got a company that's that they just Just reiterated earnings and they're still expected to earn A$75 to A$85. That gives them a nearly 11% dividend yield. Actually that's on where it opened this morning. It opened down 14%. So it's probably a 10% dividend yield right now trading at 5 times earnings. And you know, it's been under pressure from like, oh, financial services came under pressure for a while. Oh software came under pressure. But as I've thought through both of those, the thing about West Western Union and the reason it's so indelible is because they have the pipes. And it is not easy to set up the pipes to send money from here to Nepal or here to Guatemala. Those are hard structural things to do that cannot be easily replaced. One of the weaknesses during this quarter was really in the Americas and they're acquiring a company called Intermex. That should close in the second quarter and when that closes, that'll really bump their Americas back up. So I think you've got a company that's dirt cheap. I mean, I joke this morning with my team, oh no, I can just sit on the stock and double my money in seven years just from collecting the very, very well covered dividend. I think you're okay to buy it here. I don't think it's a broader read. I would like, I would like it if it offered us that broader read, but I don't think it does.

Leslie Picker (38:22)

Wolf is cautious on defense names after pullbacks this week. Jim, you own Lockheed Martin, which is riding a nine day losing streak.

Jim Leventhal (38:32)

Yeah.

Leslie Picker (38:32)

You feel like they can turn it around?

Steve Liesman (38:34)

I do.

Jim Leventhal (38:34)

But for everybody watching, you have to understand that investing in defense stocks gives you these scattered earnings reports. And because the scattered of the earnings reports are scattered, they get a lower multiple. So if we're looking at Lockheed Martin right Now roughly a 17 times forward earnings multiple, or rather this year forward is a little less PEG ratio, which everybody knows I like to focus in on, of 1.1. That's very low. And that's the market's way of saying, look, in the end these earnings are likely to come through. You're likely to see well above 10%, probably 15% earnings per share growth over the coming years. As we know the budget is increasing and we know it's increasing in the areas that Lockheed Martin excels, missiles, the golden dome, things like that. But it doesn't matter whether it's Raytheon or whether it's Northrop Grumman. There's always something that happens. A classic classified program takes a hit, the B21 program falls behind and then catches up. So it's just the nature of the beast. You got to stick with these things through the ups and downs.

Jenny Harrington (39:34)

Yeah.

Leslie Picker (39:34)

There's no shortage of headlines surrounding that space these days. Jim, thank you. Up next, Mike Santoli joins us with his MIDDAY word. We're back after this. We're back with breaking news from Washington. Let's get to Eamon Javers at the White House. Hi. Amen.

Eamon Javers (40:08)

Hey there, Leslie. The White House not confirming this report just yet, so take it with an asterisk for just now. But CNN is reporting that the president is going to send his negotiating team to Pakistan for talks with the foreign minister of Iran, that is Jerry Jared Kushner and Steve Witkoff will be sent, according to cnn, to Pakistan to have those negotiations. As I say, White House not confirming that right now, not responding to questions about it. So we'll wait for their official confirmation if that's the case, Leslie, it matches what we heard earlier in the morning from the Iranian side that the Iranian foreign minister would be traveling to Pakistan for those negotiations. And over the course of the week, what you've seen is press President Trump moving closer and closer to the Iranian negotiating position. The Iranians said they didn't want to negotiate with a gun to their head and they didn't want to negotiate while there was an ongoing conflict between Israel and Lebanon. And what you've seen so far is the president extend that cease fire and take that military threat off at least for now. And now yesterday we saw a cease fire from the Israelis in Lebanon, both of those sort of meeting the Iranian criteria for negotiations. Now we see this potential logjam breaking up here where the Iranians do seem to be willing to participate in a round of talks. We'll wait and see if the White House confirms it. But for now, it looks like we might be looking at talks on over the weekend, Leslie.

Leslie Picker (41:31)

Yeah. And those headlines sending crude down a little bit. We'll see what happens. Eamonn, thank you.

Eamon Javers (41:38)

You bet.

Leslie Picker (41:38)

Senior markets commentator and open overtime co anchor Mike Santoli joins us with his midday word. It's so remarkable, Mike, how much tech has played a role in this comeback rally, semis in particular, momentum in particular that we've seen over the last few.

Market Analyst (possibly Leslie Picker or another analyst) (41:53)

Yeah, it's, I mean, it's a dated reference, but it's the MCDLT market, the hot side hot, the cold side cold. And right now, if I'm looking for places where the market is registering the fact that there is not Resolution and oil is actually up on a week to date basis. I can look at consumer discretionary equal weighted down 3% this week. Obviously airlines within that down a lot more banks have given back 1%. So there's evidence that the market is aware that we don't have any kind of an all clear. But semiconductors are kind of this self reinforcing source of strength within the market. Don't know exactly how stretched they can get before you have a little bit of a, of a gut check at a a reckoning there. It's obviously very well supported by all of the capex activity, by all the earnings revisions and everything else. But it is interesting how the risk appetites have come back pretty good. I wouldn't say all the way. And yet, you know, the market's aware that at the precipice of the real heart of earnings season, you know, we're hovering around the highs and we're kind of trying to figure out if it's going to be substantiated.

Leslie Picker (42:54)

Yeah, that sounds like what JP Morgan said with the US and growth, growth led rebound being overbought but showing little to suggest rally exhaustion.

Steve Liesman (43:02)

There you go.

Market Analyst (possibly Leslie Picker or another analyst) (43:03)

I mean it's you know, the growth versus value and mega cap versus equal weight that's completely unwound. Like basically it's all the way back from when we were all celebrating a broadening market and a value revival.

Leslie Picker (43:14)

Yeah, all right, I see if that

Market Analyst (possibly Leslie Picker or another analyst) (43:16)

continues but right now that's where we are.

Leslie Picker (43:17)

Exactly. All right, Mike Santoli, thanks so much. Straight ahead, more committee moves. Kevin Simpson is ready with a few more trades to tell you about. Busy Friday. Halftime is back after this.

Pippa Stevens (43:44)

Welcome back.

Leslie Picker (43:45)

Let's get to some more moves. Kevin, you trimmed Meadows Medtronic.

Kevin Simpson (43:49)

Yeah. We're so proud of intel and how well that worked earlier. But Medtronic has not worked out perfectly for us. We initiated this position at $98 a share, really banking on the baby boomer market. Medical devices, lots of things to like about the company. The street didn't agree with us. The stocks pulled back. We were down about 12% of the position. So we had a stop loss that was deployed on most of it. I think it's a great company, a great name. We just, our timing was that wasn't that great, Leslie.

Leslie Picker (44:16)

And you also have two new buys. You bought Robinhood and adm Archer Daniels Midland.

Kevin Simpson (44:21)

Yeah, a little bit different sectors but Robinhood was a stock we've made a fortune on over the past two years and the stock got up to about 130 pulled back into the 60s. We had been stopped out probably 150. Kind of watched it, watched it, watched it. We reentered it here in the low 80s. I think this company is just continuing to mature. Really. They have have an amazing customer base with the Millennials. This isn't a stock that just trades on crypto. This is an excellent investment in a stock that everyone should take a look at.

Leslie Picker (44:48)

And adm, just real quick.

Kevin Simpson (44:49)

This is a company completely outside of the tech space. We wanted something that had close to a 3% dividend. Very low multiple. This is in our dividend portfolio. Slow and steady. I think this is a stock that's approaching newer highs and a company that will continue from an investment thesis to do so over time.

Leslie Picker (45:07)

All right, stay with us. Final trades coming up on halftime.

Jim Leventhal (45:13)

Are you following the Halftime Report podcast? What are you waiting for? Look for us in your favorite podcasting app. Follow the Halftime podcast.

Kevin Simpson (45:22)

Now.

Leslie Picker (45:29)

Let's get to a quick earnings set up on ebay. Reporting next Wednesday. Jimmy recently bought it down about 1 1/2% today.

Jim Leventhal (45:36)

I did just recently buy it. So this will be my first earnings report as an investor. Many of us on the show have bought it. It's become recently popular. Honestly, just want to see a nice beat here. There's been good retail sales so you would expect that to flow through to a second hand market like ebay.

Leslie Picker (45:52)

I learned today it has a $46 billion market cap.

Jenny Harrington (45:55)

Who knew?

Leslie Picker (45:56)

Final trades, Jim?

Jim Leventhal (45:58)

Yes, Cisco Systems. You know, we've been talking about how the Mag 7 have come back. Don't fall asleep on this name. Yes, it's value Tech, but it's killing it and for the same reasons I built out Jenny.

Jenny Harrington (46:09)

Okay. Hercules Capital, it's an internally managed BTC. They've got 35% in software, but they are one of the OGs. So unlike the the newcomer peers, they know what they're doing. It's got a 12% yield. It's down 18% year to date. So you've got an opportunity. When the dust settles, I think they'll come out a clear winner.

Leslie Picker (46:25)

And Kevin, Amazon, Amazon.

Kevin Simpson (46:27)

I mentioned earlier, I love the A's reporting next week will deliver again. And oh by the way, their retail margins are improving.

Leslie Picker (46:34)

A's over M. That's what we heard. That does it for halftime. The exchange starts right now.

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