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Halftime Report
The Edgy Markets 6/17/25
00:44:03
Scott Wapner and the Investment Committee discuss the edgy markets with weaker retails sales, the VIX rising, and tensions in the Middle East affect stocks. Plus, the Committee reveal their strategies so some of their stocks on the move. And later, Josh Brown gives us an update on some of his “Best Stocks in the Market” list. Investment Committee Disclosures
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- [00:01]
Scott Wapner
Still jumping from tab to tab. To create trades.
- [00:03]
Josh Brown
With Fidelity Trading Dashboard, you can easily.
- [00:05]
Scott Wapner
Access live data, advanced charting, portfolio insights and automated alerts, all on one screen.
- [00:11]
Stephanie Link
Our streamlined view lets you quickly create.
- [00:13]
Scott Wapner
And execute your trading strategies to help keep up with the markets. Because better trading starts with finding what you need fast. Your Fidelity Trading Dashboard is ready now.
- [00:21]
Josh Brown
For free, visit fidelity.com tradingdashboard Investing involves.
- [00:26]
Scott Wapner
Risk, including risk of loss. Fidelity Brokerage Services, LLC. Member NYSE SIPC Heather is a nurse practitioner from UnitedHealthcare.
- [00:34]
Shannon Sokotia
We meet patients wherever they live.
- [00:36]
Stephanie Link
During a house call, she found Jack had an issue.
- [00:39]
Scott Wapner
Jack's blood pressure was dangerously high. It was 217 over 110.
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Stephanie Link
So they got Jack to the hospital and got him the help he needed.
- [00:48]
Brian Belsky
He had had a stamp placed in.
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Shannon Sokotia
His heart preventing a massive heart attack.
- [00:52]
Scott Wapner
If it wasn't for my guardian angel, I wouldn't be here.
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Stephanie Link
Hear more stories like Jack's at unitedhealthcare.com benefits, features and or devices vary by plan, area limitation and exclusions apply.
- [01:03]
Scott Wapner
I'm Scott Wapner and you're listening to CNBC's Halftime Report, the podcast the most profitable hour of the trading day. We record this live weekdays at 12 Eastern. Listen in. Carl, thanks so much. Welcome to the Halftime Report. I'm Scott Wapner. Front and center this hour, the edgy markets. Retail sales weaker. The VIX rising. Tensions high, of course, in the Middle East. We're trading all of it with the investment committee this hour. Joining me, Josh Brown, Stephanie Link, Shannon Sokotia, Brian Belsky. We will go to the markets and have a look at where the trade is at noon in the East. And we are modestly red across the board. Steph. Retail was weaker than expected. Biggest monthly drop since March of 23. Figured it probably would because the big pull forward going into the trade war and the tariffs and Roth Capital today says the bull trend though, is underway. There's plenty of support. Breadth continues to improve. Last week, the percent of Russell 3,000 names above their 50 day reached 80%. That's a key characteristic, they say, of a bull market.
- [02:06]
Brian Belsky
Yep, the consumer is just fine. We did see pull forward because of the tariffs, but the average number year over year was 3.13% and that's still pretty healthy. The average for the full for the year so far, every month, five months actually it's been 4.4%. So you're down a little bit, but you're not down a lot. The consumer is still just fine given the labor market, given that inflation is coming down and oh by the way, the control group actually was pretty decent. So the GDP number is going to strong which bodes well for earnings. So I still come back to the facts that we got a couple of weeks ago. Personal income and personal savings and personal income at point 8% was three times what people were expecting. And personal savings, excuse me, spending was.2%. So a little soft, but that means your savings rate is actually much higher than the normal and that's a good thing in case we do slow down. I think the consumer is in better shape at this go round in the cycle.
- [03:04]
Scott Wapner
The other point we brought up yesterday I'm just reminded of is that Goldman report people having like 48 or 49% of their financial assets in equities in the stock market. And if you're 2% from a new high, you're feeling pretty good. I think through all the trials and tribulations of where we've been already this year. Josh the bank of America global fund manager survey calls sentiment at a Goldilocks bull level. They say the trade war and recession fears have abated. The cash levels have dropped to 4.2%, was 4.8 in April. Maybe there's a little more into this story feeling like it's gotten a little better.
- [03:44]
Christina Partsinevelos
The thing to understand about the global portfolio survey is that these are people whose livelihoods depend on them not missing out on massive rallies. So it's okay to have more cash when the President the United States lifts up a piece of cardboard and says we're going to tariff the rest of the world 100% or whatever the number is on their goods. But once that piece of cardboard comes down and the real numbers start to surface, you can't just sit there and be like, no, actually I think he was serious. And we're going to wait until the actual tariff news. Once the market figures out, hey, this is not going to be a worst case scenario. This is not going to wipe out two quarters worth of earnings. This is not going to crush the US consumer which is the most important engine of global growth. Then, then you have to decide, okay, maybe I don't want to be 70% cash, maybe, maybe I want to be 30% cash and I'll find some stuff to buy. So that's exactly what's playing out in the end. Global portfolio managers are portfolio managers professionally. And if they sit completely in cash, completely risk off and the market tells them they're wrong, the clock is ticking, they've got to ratchet up. So I don't look at them as a contrarian signal. I don't worry too much about this. Not one of these people who sees other people being bullish and instinctively has this knee jerk reaction where it's like, well that said, time to take profits. Everyone else is long. I just don't look at it that way. The way that I look at it, the stocks that matter are delivering magnificent. Seven stocks are part of the formula that saved this market from a full blown bear market when they reported earnings in late April and early May. 27.7% growth for that group. That's versus 9.4% growth for the rest of the S&P 500. And most importantly of that group is what Nvidia did. Nvidia is 26% of the S&P 500 total return year to date stock price and It'll be about 17% of this year's earnings growth. If you understand that the AI story and the US consumer are the only things that matter, you could stop wasting your time reading a lot of other data and focusing on a lot of other reports. And those two things, to Stephanie's point, the consumer is fine and the Mag 7 AI theme is intact. If I told you nothing else, that would be enough to understand why we're on the verge of a new record high mean.
- [06:16]
Scott Wapner
Brian, 50% off the April low is in video. The other MAG7 stocks aren't quite that big, but they're big. Met at 37 and a half percent off the April low. Microsoft 35, Amazon, Alphabet are 27 and 22 respectively. You know, Apple's been lackluster relative to a lot of other names in this group, but even that stock's up 15% from the April low. Are you poised to believe Roth Capital and say there's plenty of support that the bull trend is indeed underway?
- [06:46]
Steve Liesman
Well, I think the bull trend is underway. We're very lucky to remain bullish through all of this. But I would say that there seems to us on a very short term basis you're going to be surprised at this. I think there's a lot of bulls out there and one of the guideposts that we've been looking for is kind of more company guidance going forward and guidance is falling off a map still. So we're a little bit worried near term on that. Do I think stocks are higher at year end? Yes. Do I think they're significant higher a year from now? Yeah, but I think you Even within the Mag 7, I think you have to be even more stock picking. So like we would be adding to Apple here because we think Apple's going to have a big catch up trade and we've maintained our overweight stance in Microsoft and Amazon. So that's what's helped our portfolios, April, May, June to significantly outperform Shannon.
- [07:28]
Scott Wapner
It's time to just lean in to this market and you know, institutional investors and hedge fund managers and you know, I like what Adam Parker delivers when he shows up because he meets with and he has dinners with and these idea dinners and whatnot. And there was a lot of pessimism among the professional crowd. Now if you look at the fund manager survey and you think about where the narrative has come to, is it time to just be less fearful and cautious and just lean in with stocks 2% from a new high?
- [07:58]
Stephanie Link
Well, I think the pessimism was likely warranted because it felt like the uncertainty that was being created was really outside of the control of any of the portfolio managers of which you speak. I think the other thing that's happening, Scott, is that we have a, you know, we have a tax bill that's weaving its way through Congress that has some very specific and explicit and potentially transform transformational changes in terms of at least tax over the next four years or so for businesses. And so if you're looking at, and I would say it's somewhat tangential even to the AI trade, if you look at being able to expense capital expenditure on software over the course of the next four years, 100% in the, in the year of, of your purchase, well, that, that actually could create some of this monetization of the trade outside of the Mag 7. I think the other thing that's happened is that, you know, we have seen tariffs and we've seen that that expected tariff rate continue to come down week over week over week over week. And as that continues, what we're getting is to Brian's point, we're going to start to get some real guidance in terms of, okay, we think the tariff rate is going to be 12% or 13% or 11%, maybe 10. But now I can start to price that in. And so I think that this season is going to, this earnings season is going to be very critical in terms of getting the guidance in the hands of investors and that that could allow professional investors who are more discerning around the fundamentals. I think that's why they're getting more optimistic.
- [09:24]
Scott Wapner
Well, the big part of the story is that no one truly knows how the Trump tariffs are going to fully play out. Will deportations that we've seen hurt the economy. There is a story today, new from the Washington Post, that says Trump officials reverse guidance exempting farms, hotels from immigration raids. ICE agents have been told to continue conducting enforcement operations at ag businesses despite concerns about negative effects on the food industry. I wonder if we morph our concerns from what was the trade war and tariffs to just messing up a bunch of industries because you have this policy in place and you don't appear to want to waiver from it at all.
- [10:07]
Brian Belsky
Right. We're not out of the woods on tariffs at all, but we are getting more certainty, we think. I mean, it looks like Trump wants to get stuff done quicker than expected, but it's probably going to take longer than expected. But in the face of all that, I'm just so amazed that the GDP numbers at 3.8% are 3.8%.
- [10:23]
Steve Liesman
Yeah.
- [10:24]
Brian Belsky
And I know it's directional and I know we have to average first quarter and second quarter. That's to two and a half percent GDP growth. And by the way, I don't talk about it enough. I know you guys do. But the, but the weak dollar, that's really good for us Multinational companies. So that's going to be another tailwind for earnings. I just can't.
- [10:43]
Scott Wapner
But there's, there are two sides to that. I feel like, first of all, I feel like you didn't answer my question. So I'm going to come back to you on that because you didn't answer my question. So let me just go to the dollar since you went there. It is the largest underweight right now in 20 years. The dollar's lost 10% of its value since President Trump took office. Now, you can go one of two ways on that. You can say, well, that's good for multinationals like you did, or you could look at it and say, say, well, there is a direct line of evidence to a lackluster belief in the American exceptionalism trade. You guys are nodding your head like.
- [11:21]
Steve Liesman
Yeah, I think there's two, I think there's.
- [11:22]
Brian Belsky
Wait a second. Let me answer your question on the whole messing up industries in the face of this happening. We aren't messing up industries.
- [11:29]
Scott Wapner
How do you know that?
- [11:29]
Brian Belsky
Because earnings just grew 12% last quarter.
- [11:31]
Scott Wapner
In the face of this year. Did you get a bunch of farm earnings reports and hotel and restaurants here?
- [11:36]
Brian Belsky
Did you see Caterpillar? Did you see Chipotle? Did you see, I mean, there's a lot, there's a lot of companies that have done it the best that they can. Either they are giving very conservative guidance. Sometimes they're not giving guidance. A lot of my companies did. And I was shocked that they just reiterated how about the whole financial services industry? Every single bank reiterated guidance, not one of them lowered. And that is really quite impressive because they're at the forefront of what's going on on the tariff side.
- [12:04]
Scott Wapner
Now, the, the dollar thing is a legit part of the story. Falling dollar may be good for multinationals because it traditionally has been. But if you think it's falling for the wrong reason, then you sit back and you take a look at the whole big picture of where we are.
- [12:20]
Steve Liesman
You know, in our view, it was at first falling for the wrong reason with respect to international investors losing faith in the United States. That's clearly why you had Europe massively outperform. But from. And why industrials, by the way, are the most eclectic sector in the US Market have also been one of the best performing sectors. And obviously there's a big international component of that. However, one could say that the majority of the dollar's weakness is beginning to slow down. I mean, the trend is beginning to change pretty dramatically.
- [12:51]
Scott Wapner
10% is a big move.
- [12:54]
Steve Liesman
Well, if you look from where it was, but now we're starting to solidification. Also in the global fund manager survey, we had the good fund fortune of being in France and in England to see our great institutional accounts in April. And a lot of those clients have massively overweight Europe.
- [13:07]
Scott Wapner
Scott, you know what they've said since you went back to the survey, that international stocks are going to be the best performing asset over the next five years?
- [13:14]
Steve Liesman
Yeah, they're talking, first of all, they're talking their book, number one. Number two. Number two, that they don't have the fundamental attributes to be able to match what's gone on in terms of stock price. They don't have the economic growth, they don't have the stock or earnings growth. And so many of the people that we talk to are actually becoming, dare I say, reluctant buyers of US Stocks. Again, Scott, because they have to people.
- [13:36]
Scott Wapner
For talking their book. You talk your book all the time. So does every single person who comes on the network. Otherwise, do you have any belief in your book? What are you going to come on and get your book?
- [13:45]
Steve Liesman
I talk my process and my discipline in terms of publishing.
- [13:48]
Scott Wapner
Why you think your view, the stocks you have are going to work when.
- [13:51]
Steve Liesman
You'Re talking about in your book, when you're talking to an institutional client that has been for all intents and purposes a reluctant buyer of U.S. stocks for 20 years. And they finally were right on Europe for the first time in 15 years, Scott, of course, they're taking a victory lap. So, yeah, they're going to continue to be on with that because they do have an overall hatred for the United States. And yeah, I would call that talk in their book and being emotional about.
- [14:16]
Stephanie Link
It mean reversion in the dollar. Everybody came into the this year saying the dollar was overvalued. Nobody said that was even before the inauguration. It was before the tariffs. It's before this tax bill and the court and the deficit. So, you know, to talk about the fact that all of a sudden just what's happened politically in the last three months is why people are rotating, rotating away from the dollar, I think that's, that's somewhat shortsighted. But the point is, is that this crisis in terms of fiscal sustainability has been building for some time now. To Brian's point, people latched on to the German fiscal stimulus as rationale to get excited about Europe. And there's likely some legs to that. There's a tail to that, there's a transmission to the rest of the continent. But I think, you know, in terms of, it's not a binary decision to move out of the dollar just because of what's happening in politics.
- [15:03]
Scott Wapner
ECB, there's other alternatives. ECB is cut like 10 times versus the US cutting zero. So if you look at, you know, they went into recession first, they're coming out first, and then you have the stimulus of rate cuts.
- [15:16]
Stephanie Link
Right.
- [15:16]
Scott Wapner
Don't, don't fight the ecb. I mean, I don't know what to tell you, but why would you only.
- [15:20]
Stephanie Link
Not fight the Fed in an economy that's much more interest rate sensitive than the US Economy? Absolutely. There's a, there are multiple tailwinds here, but to Brian's point, what they don't have is the transformational aspect of innovation.
- [15:31]
Scott Wapner
Well, speaking of rate cuts, we do not expect anything tomorrow other than some commentary that's going to be closely watched, watched as it always is. Steve Liesman joins us now with more, our senior economics reporter. I read one bit of commentary today of this Fed tomorrow saying, quote, they're going to sit back and see what worsens first, the labor market or inflation. And once they see that, then they'll know which way of the mandate they need to react to more.
- [15:59]
Megan Casella
Yeah, that's a very easy way to think about it, Scott. That's pretty much boiling down. What Chair Powell has said, he essentially said, look, we're going to watch which one ends up being further from our mandated level and which one will take longer to get back to that mandate level and address that one? In our CNBC Fed survey today, Scott, which you can read online, we asked people how does the Fed essentially I'll boil down the question, which side of the stagflation does the Fed address first, the stag or the flation? 54% say, you know, it pretty much is going to address the employment side but that's down from 65. So the market not quite so sure, especially because jobs have held up and it looks like to the extent that we are going to have a problem, it may end up being the inflation part of it where most economists are convinced that the impact of the tariffs in the CPI are yet to come.
- [16:52]
Scott Wapner
Do you let me ask you a simple question. I mean do you think if not for the President's trade war and the tariffs that the Fed would be cutting tomorrow?
- [17:02]
Megan Casella
No doubt in my mind these nice inflation reports we've had do clear the way for the Fed to take off a little bit more, maybe a quarter, maybe a half, considering that half to be the restrictive part of policy here. And I think it's important, Scott, I think the Fed still wants to take that half point of restrictiveness off of the top line. It just does not want to be cutting into either a temporary or worse yet permanent rise in the inflation rate or more broader, more broad rise in the inflation rate that could be caused by tariffs. Talking to some CFOs this morning, as we do in our normal Fed day call, Scott, what we hear is that people are charging what they call the weighted average price or some are anyway, which is, you know, you don't take the, the tariff good and immediately raise all prices to that because you have an inventory of stuff. What we saw in retail sales was interesting this morning. It's kind of like the end of the front running sale that was out there for the consumer. They spent a lot of time and money front running the tariffs and now things came off in May. Doesn't mean the consumer is giving it up. It's just likely not as strong as they were before before and then come the summer they'll likely confront higher prices. Evidence from the import prices is that we are not getting discounts essentially. So those tariffs are being passed on to us importers. Whether they make their way down to the consumer, that's going to be a matter of time.
- [18:30]
Scott Wapner
Right, right. It's a tax on somebody. I mean whether it gets to the consumer level is that is, is the great question. Respondents in your survey also predict Two rate cuts. That's equal with what the market is hoping happens. I want to read you something that David Rosenberg said on social media regarding the outlook from the Fed and why he views it being so flawed. I have some advice for the Fed. He wrote, ditch the dots. In fact, do what many CEOs have been doing in general and pull out of the guidance in the context of the supremely high level of economic uncertainty, any numbers this group purchases publishes, excuse me, will be completely meaningless. That sounds like kind of a reasonable perspective from him because how could they possibly have an idea of the outlook where the CEOs of this great country don't?
- [19:24]
Megan Casella
I think the trouble is you get into a consistency issue here, Scott. I think there are sort of, I guess I call the procedural problems with, with the Fed saying, oh, now we're not going to do dots. And I would remind you of the history here because we're a little spoiled by even having the dots. The dots were what everyone wanted back 10 or 15 years ago before they started publishing them. We were like, okay, tell us where you think policy is going. It really is a luxury. You can criticize them, they can be wrong. But just like doing a survey, Scott, the survey numbers don't mean that they, they'll be right in the future. They are a 100% correct average of where people think they're going now. It is the current view that is what's informing us about where things are going, and it's accurate in that regard. So the dots tell us where the average or the median Fed officials believe things are going right now. And that is actually an input. And David Rosenberg in his very commentary gives a solution to the problem, which is that if there's all this uncertainty and the Fed chair and other Fed officials characterize it as that will take them with the massive grain of salt. Grain of salt that's implied.
- [20:35]
Scott Wapner
I was going to, I was going to literally say those words right after you mentioned Rosenberg again. Steve, thanks. We'll see you down in D.C. yeah, good stuff. Steve Leeson's going to be in the room. He's going to question. He always does. And when Chair Powell is done, just like we always do, we're going to speak to Jeffrey Gundlach of Double Line exclusively right after that news conference ends. Let's go back. Circle Back to the Mag 7s for a moment before we take a break, because the MAG7 ETF is coming off its third positive week. That's the best streak of the year. Josh highlighted Nvidia, 50% off of its low, the target raised to 200 today. Amazon is going to extend its prime day. Everybody on the desk owns Amazon. So how are we thinking about this idea that they are trying to take on Nvidia with a chip? Christina Parts and Evolos. Is she ready for us? She's down in Austin today at a event and could give us more details on this growing competition. And then we're going to follow with a story about another mega cap tech company. Speaking of competition, that could be in a little bit of a situation. But what about AWS and what's happening where you are?
- [21:51]
Shannon Sokotia
Okay, so I am in the lab where chips are born for Amazon Web Services. It's called Annapurna Labs. And just an example, this young man behind me, he's looking at a wafer right now. This is literally 30% of the thickness of a human hair. So he's just testing this for clients. And the news today is that they've updated their CPU chip to increase the networking bandwidth. It's going to be the, the fastest in the public cloud. Timeline is still, we're still waiting to hear about that. But this is just a step up in terms of technology and really shows how the custom chip strategy is really competing with the likes of intel and amd. But the real battle, the real battle, like you mentioned, Scott, lies with Nvidia. And that's why just recently announced a project, Project Rainier, where they're going to be offering hundreds of thousands of chips to build the largest AI supercomputer for Anthropic. And Anthropic will run its latest model on these chips. This is just an example of the Trainium 2 chips that compete directly with Nvidia. The bread and butter of these chips though, of course is obviously performance and all that. But we know Nvidia charges a lot more for those scarce chips. The secret weapon for AWS here is really the price performance. And they're offering these on the market with training three soon just around the corner. Scott so that's the difference in why we came here because normally this lab is top secret. You know, it's very hard to get in. And they're slowly opening it up as they open up everything. And you can see the lovely employees all around me.
- [23:19]
Scott Wapner
All right, great stuff, Christina. Thank you. Christina partzonevelo so that's one part of the big tech story. The other part of the AI story today is what appears to be, according to reporting anyway, a boiling points worth of tension between OpenAI and Microsoft. They sure seem like friends at the beginning, but I don't know what, what's going on. Maybe they shouldn't have tied the knot. Steve Kobach they seem headed to a separation of sorts. What's going on here?
- [23:51]
Josh Brown
It's like a slow motion divorce happening right now. SCOTT no one expects this partnership to last the way it originally was for the long term. So what's happening here? The Journal reported yesterday, as OpenAI is making this transition to a for profit company, it has to renegotiate everything with Microsoft. Remember, Microsoft owns about 49% of the company and on top of that, it gets access exclusively to a lot of the latest and greatest technology coming out of OpenAI. And in this case, the quibbling seems to be over this company called windsurf. It's an AI coding startup that OpenAI wants to buy for $3 billion. Of course, windsurf would also help copilot GitHub, which is a coding product that has 15 million subscribers that Microsoft offers. So the two sides seems to be arguing over that a little bit. It seems like Microsoft, though, Scott, has all of the leverage here because of the way the agreement was originally designed. At the same time though, you're seeing the slow separation of the two companies. Earlier this year they negotiated a new deal where Microsoft is no longer the exclusive cloud provider for Open Air. They get the right of first refusal. And we're already seeing companies like Google and Oracle take advantage of that, plus that big Stargate thing. And then at the same time, Microsoft needs that technology to inform its co pilot product. And that is super important too because they are very slow to make their own frontier models. I want to play a quick clip here. I interviewed the CEO of AI over at Microsoft a couple of months ago talking about why they still rely on OpenAI's technology so much. Listen to this. I'll get you back on the other side.
- [25:26]
Christina Partsinevelos
It's very important to us that, you.
- [25:28]
Shannon Sokotia
Know, maybe we don't develop the absolute frontier, the best model in the world first. That's very, very expensive to do and unnecessary to cause that duplication. Once you've waited for the first three or six months for the frontier to go first, we call that off frontier.
- [25:43]
Scott Wapner
That's actually our strategy.
- [25:44]
Josh Brown
So Scott, basically they're saying we don't want to make our own technology right now because it's just cheaper to do. And at the same, Microsoft's Azure cloud service is just making most of its revenue from OpenAI there on a $13 billion a year run rate for that AI business. A lot of that's cloud stuff going on and we're seeing Microsoft open up to other AI models. That includes matters Llama model and most recently Elon Musk's X AI model Grox. So Microsoft is definitely playing all parts of the field here, but they have all the leverage in this and if they can't work this out, OpenAI could miss out on $20 billion in funding from SoftBank if they don't switch to that for profit model. Scott?
- [26:25]
Scott Wapner
Yeah, I'm sure they could find the funding elsewhere. Yeah, no problem very much. Which is kind of to the point here. Brian Belsky, the Microsoft shareholder. Microsoft, as Steve said, may have all the leverage. Now in my mind they have by far the most to lose in this relationship. You know, they do, couldn't they?
- [26:44]
Steve Liesman
They do. Especially given given the visibility and what, what so many people are banking on. OpenAI but again, Microsoft with all that cash and the way that it has become really the consumer staple of of tech. This isn't going to, this, this decision or what's going to happen with this supposed breakup is not going to change our view on the stock owning it longer term.
- [27:06]
Scott Wapner
All right, we have some breaking news when we get to Megan Casella out of Washington. Megan, what do we know?
- [27:12]
Shannon Sokotia
Hey Scott, we have just gotten a series of posts from the President about Iran giving us a little bit more insight into his latest thinking on how to proceed in this conflict. The President posting just in the last few moments on Truth Social that we know exactly he says where the so called supreme Leader is hiding. He is an easy target but it is safe there. We are not going to take him out kill, at least not for now. But we don't want missiles shot at civilians or American soldiers. Our patience is wearing thin. Thank you for your attention. He went on in a second post to post unconditional surrender in all caps. Scott, both of those coming just a few minutes after he had earlier said something along similar lines, saying that we now have complete and total control of the skies over Iran, that Iran had good sky trackers and other defensive equipment and plenty of it. But it didn't compare to American made, conceived and manufactured stuff. Nobody does it better, he said than the good old usa. A couple of things to notice in that post, the foremost one being in all of those posts the use of we. The biggest question today, Scott, has been whether and just how far the US Might be willing to go to help the Israelis in this conflict, whether they were willing to wade in to more fully support those attacks against the Iranians using we in both of these posts raising a lot more questions about the U.S. s involvement. Here in the initial post talking about the use of American military equipment, he had already praised the Israelis late last week for doing that. So not as much new there but a lot going on in both of these saying now that we assume presumably both the US And Israel now know exactly where the Iranian supreme leader is hiding.
- [28:48]
Scott Wapner
Scott, it's still pretty extraordinary when you just consider it in total that you know, conducting this level of foreign policy by social media post. I mean especially when you're talking about the leader of another nation, friend or foe. That's not even my my point. It's more so conducting this wide out in the open on social media.
- [29:12]
Shannon Sokotia
Absolutely. A huge question there about what's the point of telegraphing it? Is this to give Iran a heads up? Why would he want to give them a heads up about what is coming? Is it more about making the threats publicly so that they viewed them as a message and started to responding, respond accordingly? Is this all about getting the Iranians to the negotiating table? We just don't know that yet. What we do know is that this is a huge break from what we normally see in US Foreign policy which is much operated much more closely behind closed doors. We expect, Scott, that the president is in the situation room will be later today holding a meeting with his national security team. This these posts are may be coming before that meeting. We don't know the timing exactly but a huge, huge question as to why so much of this as you say is playing out out in the open.
- [29:57]
Scott Wapner
Yeah, he let everybody know about that meeting as well. Megan, thanks for keeping us up to date. It's Megan casella at the G7 more committee. Stocks on the move coming up next. Plus Josh is ready with his best stocks in the market once again. We have an update for you. We'll do it after this break. Are you still quoting 30 year old movies? Have you said cool beans in the past 90 days? Do you think Discover isn't widely accepted? If this sounds like you, you're stuck in the past. Discover is accepted at 99 of places that take credit cards nationwide. And every time you make a purchase with your card, you automatically earn cash back. Welcome to the now it pays to Discover.
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Christina Partsinevelos
Learn more@discover.com credit card based on the.
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Scott Wapner
February 2024 Nelson Report.
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Shannon Sokotia
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Scott Wapner
Our Flexpath format is available in select.
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- [31:00]
Josh Brown
Edu Ryan Reynolds here from Mint Mobile. With the price of just about everything going up, we thought we'd bring our prices down.
- [31:08]
Scott Wapner
So to help us we brought in.
- [31:09]
Josh Brown
A reverse auctioneer which is apparently a thing.
- [31:12]
Scott Wapner
Mint Mobile Unlimited Premium wireless. Better get 30, 30.
- [31:15]
Shannon Sokotia
Better get 30.
- [31:15]
Megan Casella
Better get 20, 20, 20. Better get 20, 20. Everybody get 15, 15, 15, 15.
- [31:19]
Christina Partsinevelos
Just 15 bucks a month.
- [31:20]
Megan Casella
Sold.
- [31:21]
Josh Brown
Give it a try@mintmobile.com Switch upfront payment.
- [31:25]
Brian Belsky
Of 45 dollars for a three month plan equivalent to 15 dollars per month required new customer offer for first three months only.
- [31:28]
Shannon Sokotia
Speed slow after 35 gigabytes of network's busy.
- [31:30]
Brian Belsky
Taxes and fees extra. See mintmobile.com.
- [31:36]
Scott Wapner
Got a lot of stocks on the move today that the committee needs to discuss starting with live nation targets. A162 from one Josh at Goldman Sachs.
- [31:46]
Christina Partsinevelos
Yeah, this is part of my forever portfolio. Michael Rapinoe has really done an incredible job threading this needle. You've got a really strong consumer that wants live entertainment. They're willing to pay up for it. But then you've also got all these issues with bots, buying the tickets, crashing the sites. You've got stuff going on in Congress about how strong this company is and he is just persevering and you see that in the result. This thing has just been rallying for three years straight. I don't know what other superlative to attach to it. Great company. Even better stock, Brian.
- [32:21]
Scott Wapner
Nike Target cut to 61 from 70. Reiterated equal at Morgan Stanley. You own the stock. Your verbal reaction to the name sort of tells the whole story other than why you're saying, why are you still in it?
- [32:37]
Steve Liesman
Well, we bought it around $56 and we bought it in our value portfolio. A big part of a value discipline, quite frankly, is to be contrarian, to think differently. I think from an operational perspective they have a lot of work ahead of them. So that's why I bought it. So we'll see how long it lasts.
- [32:54]
Scott Wapner
Unh. Cutting commissions on some Medicare Advantage plans according to reports. Stephanie on the stock.
- [33:00]
Brian Belsky
Yeah, it's not surprising. Medicare Advantage plan what got them in trouble in the first place. So it's going to be volatile until we get guidance. We are going to get guidance by the way, in next month. I think if you assume a 1% Medicare Advantage margin, I get you $20 a share this year and I think you can actually see expansion next year. Small and that gets you to $25 in earnings power. And that makes the stock at 13 times earnings. And I think it's just too cheap for the number one player in the industry.
- [33:26]
Scott Wapner
Let's go to Spotify because the target goes to a street high of 900 bucks today from the prior 800. It is reiterated a buy at pivotal record high today as well for that stock. Guys maybe want to show like a longer thing. Yeah, that tells a good story there, Belsky.
- [33:45]
Steve Liesman
Oh, I love this company. I love this company. I used to own it in my mid cap and then it graduated to my large cap. I've owned it for seven years. Who would have ever thought I'd like a company better than Apple on a particular product? Spotify has got a better music product, better everything. I think this is a fantastic company. And because it's not listed in the US and it's not in the in the index, you can actually increase your tracking year in your portfolio. And that's why we like names like this.
- [34:10]
Scott Wapner
Yeah. 60 plus percent year to date. Up next, an update to Josh's best stocks in the market. But first, the headlines this hour with Courtney Reagan. Hi, Court.
- [34:18]
Shannon Sokotia
Hi, Scott. Well, federal appeals court will hear arguments today on President Trump's departure deployment of Marines and members of the National Guard to Los Angeles in response to protests against his immigration crackdown. The court put on hold a lower court's order to return control of California's National Guard to Governor Gavin Newsom. The district judge ruled last week that the president's National Guard deployment was unlawful. A federal jury on Monday found MyPillow founder Mike Lindell defamed a former voting equipment company employee after the 2020 presidential election. The employees sued after Lindell called the Dominion voting Systems director a traitor and streamed accusations of him stealing the election on social media. And General Motors unveiled a new high performance hybrid version of its signature sports car. The automaker said today the 2026 Chevrolet Corvette ZR1X hypercar is a souped up version of the Corvette hybrid that went on sale in 2023 with a Z0 to 60 time of less than 2 seconds. The company said the model is the most advanced Corvette ever produced. Halftime report. We'll be right back.
- [35:23]
Scott Wapner
CNBC News Update is sponsored by Morgan.
- [35:26]
Christina Partsinevelos
Stanley, where old school hard work means bold new thinking. With a strong economy, a resilient job.
- [35:36]
Scott Wapner
Market, but potential tariff impacts.
- [35:38]
Christina Partsinevelos
The president wants a rate cut. What's the Fed's next move? Chair Powell's message to investors.
- [35:43]
Scott Wapner
Power lunch tomorrow, 2 Eastern and streaming on CNBC. We are back with an update to Josh's best stocks in the market. I'll send it to you for that. What do you want to talk about?
- [36:12]
Christina Partsinevelos
I think obviously the thing that we have to talk about is the defense sector. We've got a bunch of these names on the best stocks list. We've been talking about them and last week of course they broke out on the heels of the conflagration in the Middle east getting hotter. We talked about Exxon and we talked about RTX on May 19th. From that date, RTX is up about 8 and a half percent. Exxon's up 5 bolt stocks were breakouts in progress and they have broken out. So that's the update I wanted to give people in the column at CNBC Pro. I'm talking about moving up stops and what to do when you've got a winning trade on your hands, depending on whether you're a trader or you're a little bit of a longer term investor. But those rallies are significantly greater than the qs which are up 2% in that time. Spy is up a bit about 1%. I think it's important to just acknowledge the fact that the market sniffs these things out before they happen. In many cases, the median return judge for an aerospace and defense sector stock year to date is 17%. The median year to date return for every other stock in The S&P 500 is just.7%, not even 1%. Every single aerospace and defense stock is above its 50 day moving average and only two of them are below their 200 day meaning not yet rallying. Those would be TXT and LMT Lockheed. So when you're looking for like where is the strength in the market? What stocks am I supposed to be in? This is a really smart way I think to just say okay, I'm not going to be ahead of the curve on everything. What is the market already figuring out? These are two, just two examples of many where the market has already figured out. Things are heating up in some of these conflicts. Orders are coming in and these stocks are going to work. And lo and behold, something happens, a catalyst, you get that breakout and now you're playing with the house's money.
- [38:11]
Scott Wapner
Belsky, you own Lockheed, you own Northrop, Grumman and Honeywell. So you believe in the aerospace and defense trade.
- [38:18]
Steve Liesman
We do. We look at these as the OG defense contractors. Plus you know, we're aligned obviously with Josh. But I think you also have to think about cybersecurity along with, with defense contractors. But these companies are amazing because of the cash flow and the dividends and the consistent earnings, guaranteed revenue from the US government. So that's why we've owned them for a long time.
- [38:36]
Scott Wapner
GE Aerospace for you.
- [38:39]
Brian Belsky
Yeah, but it's small Defense. It's only about 25% of total revenue. But they delayed their analyst day this week because of the Air India crash tragedy. I do expect them to have another one soon in the next month or two. And I think they're going to increase their EBIT growth rate from 10 billion to 13 billion by 2028. Free cash flow and mid 20s margins as well. So I still want to be long the stock. But I have to say I do prefer Boeing. It's cheaper and it's more of a turnaround story. Georgia, it's already turned itself around.
- [39:13]
Scott Wapner
All right. Santoli is next with his midday word right after this break. Senior markets commentator Mike Santoli at the desk Post nine here for his midday word. Feels like a wait around see what happens with Middle east. See what Powell says tomorrow for sure.
- [39:55]
Megan Casella
I mean, you know, and in doing so, the market is kind of hanging around the goal, you know, kind of implicitly betting it's not going to have to sprint back on defense. Usually before Fed meeting, before some other widely anticipated paid a potential catalyst, market wants to, we say this, get into.
- [40:09]
Scott Wapner
Some kind of a neutral footing. That kind of means 6000 on the.
- [40:12]
Megan Casella
S and P, give or take. I do think you can observe that.
- [40:17]
Scott Wapner
The rally has held together pretty well.
- [40:19]
Megan Casella
But also slowed and narrowed and you have these kind of tighter ranges day to day.
- [40:23]
Scott Wapner
We're up 1% in the last month.
- [40:25]
Megan Casella
Got like 5970 pretty much this time last month.
- [40:29]
Scott Wapner
So it's incrementally positive.
- [40:31]
Megan Casella
But I do think you have to assume that the market is building in the prospect of some upside risk and some good things happening, whether that means on trade, whether it means, you know, this, you know, this conflict is going.
- [40:44]
Scott Wapner
To be kind of fleeting and not.
- [40:45]
Megan Casella
Something that really causes some kind of stress. Vix at 20 definitely means like you're.
- [40:51]
Scott Wapner
On alert but you're not super worried. Yeah, oil at 72 at least WTI, you know, it's obviously had a decline yesterday and it's even as uncertain as the situation is there. It's not like it's moving right back up into the perceived danger zone. It's really not a scary level.
- [41:09]
Megan Casella
I mean even Friday's highs in mid-70s.
- [41:11]
Scott Wapner
I mean that's something this economy has.
- [41:13]
Megan Casella
Has been able to handle without trouble. So I do think you can look at Friday's levels, the lows and the equity indexes, the highs in oil where we were in the VIX and say okay, if we're not breaching those levels it means that we are, you know.
- [41:29]
Scott Wapner
We have nothing new to be further concerned about. All right, we'll see you later. On the bell, that's Mike Santole. Up next, the energy trade, oil prices. We just talked about what they have been doing. See where the committee stands. We do have some specific names to lay out as part of Josh's best stock spotlight too.
- [42:06]
Megan Casella
Welcome back.
- [42:07]
Scott Wapner
Oil up again today after that decline yesterday. So 7380 is where it currently is. Energy is the best sector today and the top performing sector this month in particular. Probably not surprised by that. Josh Brown, you looked at some of these stocks and your best stocks in the market you do have 4 equity 52 week high today. Expand Energy. Talk to Belsky about that in a minute because he owns it. Kinder Morgan and the Williams companies.
- [42:34]
Christina Partsinevelos
Yeah, so Kinder Morgan and the Williams companies, let's start with those. Those are lower beta. These are midstream firms. They're not as sensitive to the price of crude and they're really more pass through of income vehicles. The ones that are sensitive to the price of crude that are on my best stocks list, Equity is up 27% year to date. Expand Exe is up 19%. Doesn't sound crazy until you consider the rest of the sector is flat to down. So these are the best stocks in the market in the oil segment they've both obviously reacted to. Well to the fact that WTI crude entered the month of June at $60 a barrel. It's up substantially from that level remaining elevated. I have no edge on geopolitics. I don't know if we're doing a bunker buster or if Iran's going to surrender or I have no idea. I'm just telling you most of the stocks are not in my best stocks list. But I think the longer we see WTI fruit in the 70s the more of those stocks start to join the list because you'll see buyers come into them looking for opportunity. So I would be very alert in the oil names right now for the next leg of this rally.
- [43:47]
Scott Wapner
How about that Brian, I mentioned you own xc.
- [43:50]
Steve Liesman
Yeah, we've owned it for about a year. We like the stock because it's primarily natural gas and we've been worrying about WTI for a while. And remember when WTI is negative on a year over year basis typically portents of the sector underperforming. Now obviously we have geopolitical events that are driving energy stocks higher but I think exe, which is a combination of the former Chesapeake and Southwestern, has a lot of play in terms of a pure play with respect to natural gas.
- [44:13]
Scott Wapner
Yeah. Shan, what about energy here?
- [44:15]
Stephanie Link
It's the most undervalued sector in the S&P 500. And to Brian's point, I mean, you don't necessarily have to love oil. You can just really like natural gas, which is where a lot of this electrification and transformation is coming from.
- [44:26]
Scott Wapner
Diamondback and SLB, still your best way.
- [44:29]
Brian Belsky
To play trim SLB, it's up 13% from its lows. It is very cheap. But lower oil prices means lower activity. And I know we've seen a bounce in crude, but it's still down 22% from two years ago.
- [44:40]
Scott Wapner
We'll do finals after this. Josh Brown, your final trade is what?
- [44:53]
Christina Partsinevelos
Oh, so I'm just. I'm just changing my. Now I actually want to lead with ieo. These are the energy stocks that I think have the best potential to break out from here. The whole space, it's ready to go.
- [45:05]
Scott Wapner
All right, so crowdstrikes, the substitution you get.
- [45:08]
Christina Partsinevelos
Yeah, that's working, but yeah.
- [45:10]
Scott Wapner
All right. All right.
- [45:12]
Steve Liesman
Belsky, Southern Comfort. So play on traditional utilities.
- [45:16]
Scott Wapner
Southern Comfort. Is that what you said?
- [45:17]
Steve Liesman
Southern Comfort Company. Well, I mean, I could use some Southern copper. Let's be honest.
- [45:22]
Scott Wapner
I thought you had so called on the brain.
- [45:26]
Shannon Sokotia
Materials.
- [45:27]
Stephanie Link
Benefit from inflation, but also an inflection higher in economic and industrial activity.
- [45:31]
Scott Wapner
All right, step uber.
- [45:33]
Brian Belsky
It's down 10%. Industry leader, dominant market share.
- [45:36]
Scott Wapner
All right, we will watch this market, see if we get out of the red dows. Down about 140 as it looks. There's the S&P, about one half of 1%. The exchange begins right now. You've been listening to CNBC's Halftime Report, the podcast. You can always catch us live weekdays at 12 Eastern only on CNBC.
- [45:57]
Shannon Sokotia
All opinions expressed by the Halftime Report participants are solely their opinions and do not reflect the opinions of CNBC, NBCUniversal, their parent company, or affiliates, and may have been previously disseminated by them on television, radio, Internet, or another medium. You should not treat any opinion expressed on this podcast as a specific inducement to make a particular investment or follow a particular strategy, but only as an expression of an opinion. Such opinions are based upon information the Halftime Report participants consider reliable, but neither CNBC nor its affiliates and or subsidiaries warrant its completeness or accuracy, and it should not be relied upon as such. To view the full Halftime Report disclaimer, please visit cnbc.com halftime reportdisclaimer with a.
- [46:37]
Scott Wapner
Strong economy, a resilient job market, but potential tariff impacts.
- [46:41]
Christina Partsinevelos
The president wants a rate cut. What's the Fed's next move? Chair Powell's message to investors.
- [46:47]
Scott Wapner
Power lunch tomorrow, 2 Eastern and streaming on CNBC.