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Halftime Report
The Fate of the Record Rally 9/23/25
00:35:50
Frank Holland and the Investment Committee debate the fate of the record rally with the S&P, Dow and Russell 2000 all at record highs. Plus, Josh Brown explains why he’s spotlighting energy names in his “Best Stocks in the Market.” And later, we bring you live comments from Fed Chair Jerome Powell. Investment Committee Disclosures
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- [00:00]
Narrator/Commercial Announcer
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Frank Holland
I'm Scott Wapner and you're listening to CNBC's Halftime Report.
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Josh Brown
The podcast the most profitable hour of the trading day. We record this live weekdays at 12 Eastern. Listen in.
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Frank Holland
Thank you, Carl and Courtney. Welcome to the Halftime Report. I am Frank Holland in for the judge. Scott Wapner front and center at this hour, the fate of the record rally as we await Fed Chair Jerome Powell. He is speaking at the bottom of this hour. We're going to bring you his comments live. And our investment committee is right ready to go. Join us for the hour. We got Josh Brown, Joe Terranova and Jim Laventhal. Before we get the conversation started, quick check on the markets. Remember, we had record highs yesterday for the S and P and the nasdaq. Bit of a pullback today. The Dow is fractionally higher, the S and P pulling back fractionally. The NASDAQ the hardest hit, pulling back just about a third of 1%. And really, Joe, that's where we got to start. One ETF. I know you follow very close to the Momentum ETF. It also hit a record high yesterday. So we've seen a lot of momentum in this market. What is this pullback today about? This very slight pullback again from a couple dozens of record highs this year.
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Joe Terranova
I'm seeing a little bit differently. I'm seeing it from the perspective of it seems as though we're vacillating from day to day, back and forth between the Mag 10 and the 490 plus. So if you look at today's tape, okay, the participation from in video and some of the other Mac 10 names. It's not present, but guess what? We have our fin five back again. All of the five money center banks making new 52 week highs. So it goes back today to talking about it's almost like the odd and even day. I don't know that either of you remember, but back in the 70s you had the odd and even day when you could get gas. That's what it feels like. It's like one day it's the Mac 10, the other day it's the 490 Plus. And I think if we continue to have that type of pattern, the calendar works in your favor as we move towards the end of the year. If you're thinking we're at some inflection point for the market, you don't want to push up against that, you don't want to fight it because the trend right now is in the direction of continuing to move higher.
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Frank Holland
I want to pull on this odd even day thread. So you're saying this is I guess the O day, the even day, maybe the big tech day. Is that why? And Nvidia is pulling back about 3%. A bistro pulling back more than 3%. There was a downgrade as well. I just want to factor that in. A super micro pulling back about four and a half percent. You're just saying it's just the rotation of investors right now. That's why we see the S and P equal weight. Actually positive energy leading is just a rotation.
- [03:27]
Joe Terranova
Yeah, we've had that pattern now in place for the last several weeks and we had a very strong day yesterday related to the news which we broke on air here regarding Nvidia and Open Air and the entirety the AI halo benefited from that. Certainly the utility names that you mentioned, Constellation Energy, Vistra, even some industrials like Eden, they participated as well. So you're just getting a little bit of mean reversion off of what was a really strong performance day yesterday.
- [03:56]
Frank Holland
Josh, you see into the same way simply mean reversion kind of pulling on Joe's thesis here. Odd even day like he saw back in the 70s when it was during the gas crisis. I'm assuming that's what I was talking about. And it's just simply investors are rotating out I guess on emotion, a little bit of animal spirits in the market as it trades a record higher. Another thing I want to point out, we see the S and P high beta ETF also very close to its all time high along with the momentum etf. So investors are clearly looking they're looking for some opportunity for gains and a market trading very close to highs.
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Josh Brown
Yeah, so Joe's right. That's, that's a good encapsulation of the day to day. But our message as wealth management firm to investors over the last 12 years has always been to ignore the day to day. There's not always a news story to tell. There's not always a rotation. There's not always some change worthy of chasing. If you pull back the lens and look at the big picture of the bull market we've been in for large cap tech, you recognize that not every moment has been a great moment to be there, but you've had to be there overall. You can't not be in these stocks. Nvidia and Apple are now 14% of the S&P 500. That is their highest combined weighting ever. People look at that and think it's unprecedented because they haven't seen A chart of GE&AT and T A few decades back. People think that it's some bizarre anomaly that the Mag 7 is 35% of the S&P 500 because they don't understand the history. Every bull market has had concentrated winners at the top. It's almost a hallmark of how you know you're in a bull market when there's leadership. It's not that bizarre. It might be more pronounced than ever in history, but we're always setting new records for this thing or that thing. The point that people need to understand is this is being driven by earnings. The information technology sector has the largest percentage increase in estimated earnings for Q4 of all sectors since June. And that's why these stocks are ripping the year over year. Expected earnings rate is 20.4% for these stocks. Why wouldn't they be the biggest? Why wouldn't there be concentration in video? Apple and Microsoft, your three biggest names are also. Drumroll. The largest contributors to the increase in expected earnings for the last quarter of the year. And second place is communications. So look, that's why these stocks are working. It's why they've been working. They're anomalous throughout history only in the sense that we have never had companies this large be able to sustain double digit growth rates for this long at massive, almost unprecedented profit margins year after year after year. This starts in 2016. It's nine years of this. This year will be 10. So that's what's going on with this segment of the market now. You want to tell me? Yeah, but tomorrow is going to be, you know, a value rotate okay, fine. Have fun. Chase the value rotation. You must have these names in your portfolio. Thank God. Most people listening to me do.
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Frank Holland
All right, fair enough.
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Jim Laventhal
I agree.
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Joe Terranova
I agree with you, Josh. And what I'm not saying is you're making a binary choice. What I'm actually doing is I'm just providing the evidence for those that believe the market is rich or at some point, inflection point for the market. The run up yesterday in video takes you to an extreme level. What I'm saying is when you have that continued daily rotation between one sector and another, that's not a sign, that's not evidence of an inflection point. I completely agree with your assessment of technology. Technology is mandatory to have in your portfolio right now. But what I'm speaking towards really is let's not make this a binary choice, one or the other. Let's have it be.
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Josh Brown
Totally agree.
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Joe Terranova
The fact that it supports the premise that this is a strong bull market.
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Frank Holland
All right, so we seem to have a widespread sense. And Jim, I want to get in. We're always asking to be patient, but you're never rewarded for that patience here on halftime.
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Jim Laventhal
In all fairness, talented people here giving us gospel.
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Joe Terranova
We have.
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Jim Laventhal
I want to synthesize what they're saying. I know you're going to ask me a question. I do want to ask you a question.
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Frank Holland
Go ahead and ask and say what you.
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Jim Laventhal
Look, I'm listening to what. Listen to what you said, Joe and Josh, what you just said. What if for the foreseeable future, it's no longer the 493 versus the 7? Because I think that's really what we're saying here. What if it's not the 490 versus the 10? What if it's the whole market? What if you've got fundamental reasons, as Joshua just laid out, for the technology trade, but that also extends to the rest of the market. I mean, we've got GDP that's growing at 3.3%. We've got margins, corporate margins that are very high and going higher. The fears of the tariffs, crushing margins, it just isn't showing up. The fear of the tariffs, crushing consumption, it just isn't showing up in retail sales. So, you know, if I take a look at a segment of the market and Josh, I hear you, let's not do this thing where every day, hey, now we're going to talk about small caps, but give me just a moment to talk about small caps because from a fundamental point of view, what I'm seeing here is The S&P 600 earnings per share growth is projected in the fourth quarter to match that of the S&P 500 and even more going into 2026. The S&P 600 small caps is expected to exceed earnings growth of the S&P 500. My point being here is that there is fundamental reasons, as you were saying, Joe, for the market overall to continue higher and you don't have to. Josh, your point is excellently made. You don't have to do this game of today I'm going to be in Palantir, and tomorrow I'm going to be in ExxonMobil. It is a broad market rally. It is continuing. Yes, the S&P 500, the market cap has exceeded the equal weight so far this year, but they're both working right now. Just be in it and enjoy it.
- [09:47]
Frank Holland
All right, Jimmy, making a passion play for the small caps. I think you were actually making a point I was going to make. There might be some reasons for the broadening. In fact, again, we're waiting for Jay Powell to speak in just about a half an hour from now. So the tone that he sets may lead more investors to think there's at least those two cuts coming or maintain the conviction there's at least those two cuts coming and could spur some more broading. But we want to focus them.
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Joe Terranova
I don't think we need the cuts.
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Jim Laventhal
Exactly.
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Joe Terranova
I think exactly. Point this is about profit margin expansion. This is about strong earnings. I mean, tell me if we see deterioration in the earnings and then, okay, the market has a problem, then for those that are pushing up against an extreme valuation and the fact that we haven't had a big correction. Okay, now you've got some evidence.
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Frank Holland
I don't think it's just been the catalyst for some of these record highs we've seen over just the last couple of days. I mean, markets hitting highs days after days. That hasn't been at all a catalyst.
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Joe Terranova
I think more than anything else, what the rate cut in September did is it. It kind of pushed against the narrative that historically September is a weak month. I think it allowed for a little bit of an awakening from small caps, for sure. Some areas of the market that appeared to be unappealing earlier in 2025, they got a lift from that. I think that's more sentiment than anything else. But I don't think it's a requirement that you get two more rate cuts for the rally to keep going.
- [11:00]
Frank Holland
All right, well, we're going to take this conversation just a minute. Want to go back to Tech Nvidia Coming off its best day since July after announcing plans to invest up to $100 billion in open air as part of the data center build out. Mackenzie Segala has just caught up with OpenAI CFO and joins us now with more Mac.
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Narrator/Commercial Announcer
Frank, I'm here in Abilene, Texas at the epicenter of OpenAI's ambitious Stargate project. CFO Sarah Fryer telling me in an exclusive interview a short time ago that the bottleneck it's not money, it is power. OpenAI has reviewed upwards of 800 potential sites across North America weighing land substations and transmissions. She said that they she said equity is too expensive. The company is looking to debt to finance this expansion and even nuclear. It is on the table here to meet demand alongside renewables like all the wind and solar power that you see behind me now. I also asked Sarah how the financing really works when it comes to partners like Oracle and Nvidia. Folks like Oracle are putting their balance sheets to work to create these incredible data centers you see behind us. And once those are online, we will pay for those as opex. In Nvidia's case, they're putting together some equity to get it jump started but importantly they will get paid for all those chips as those chips get deployed. Now Fryer also stressing to me that OpenAI will not just be relying on partners like Oracle, the company will build its own first party infrastructure because with that they get to gain pricing leverage and protect valuable intellectual property. She compared this to when Amazon decided to build out US instead of relying on IBM servers.
- [12:43]
Frank Holland
Frank, Mackenzie Segalos live in Abilene, Texas. Mac, thank you very much. Taking a look at Oracle and Nvidia shares moving lower right now. For more on Nvidia's open air investment, head over to CNBC Pro with a look at how some investors are worried. The news is raising some red flags and it could be a bubble. You see the headline right there. Josh, I'm going to come to you with this one. JP Morgan in fact out with a note about this Nvidia OpenAI announcement saying in part it's rarely a good thing when a company funds purchases of its goods by direct customers. And some are going so far as to say we're at the end of the build out phase when companies have to quote unquote, pay people to buy their stuff. How are you seeing this and how are you seeing some of the commentary from Sarah Fryer? We just heard from Mackenzie Segalos.
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Josh Brown
So it's a great question, Frank. Thank you. And Joe and Jim both have a similar tenure than I do. And we were all around for this thing that went on in 1999 and 2000, which was vendor financed technology purchases. And in fact, when that became basically the way companies were hitting their numbers or selling their IPOs on Wall street, it did not end well. So it's a, it's a legitimate concern. Basically we had this investing with telecom and technology and we had vendor financed sales of equipment. We had these competitive local exchange carriers or selects or collects we used to call them. There was a new one coming public every week. Basically each one of these thought they were going to build their own version of AT&T, but with fiber optics and a lot of the way that servers were being sold and routers and switches into that environment was basically like, here, here's the money. Buy X amount of equipment, we'll do the financing for you and then like we'll kind of round trip it when your earnings are due, etc. It was like, it was like the tail end of that particular boom. I don't think that that's a perfect comparison. And the thing about, when you're, when you, when you need your customers to buy, that doesn't really sound like it's the same thing as what I just described as is taking place right now. These investments are going to be made anyway. These data centers are going to be built out, built out anyway. And whether one player wants to have a bigger investment than another player, it's not, oh, we need to do this in order to make our numbers. It's like, no, strategically we want to be part of this project. In the case of Nvidia, you're talking about a 4,4 trillion dollars and change company making $100 billion investment over multiple years with an obvious ROI attached to an investment like that. If it leads to GPU sales and services revenue, it's a, it's a little bit different than what we've seen in prior Capex boom. So I won't say it's totally unfounded concern. I would just say it's not quite as, as dire as that that rhetoric makes it sound.
- [15:44]
Frank Holland
I want to go to the back end of that headline we just showed whether or not this is a bubble. There was a Bain report out today saying by 2030 there's going to be $800 billion of a revenue shortfall for these companies, you know, based on the investments that they're making right now. Jimmy, you're wincing a little bit. Is that potentially one of the reasons you think we may see an Nvidia pulling back today and Oracle pulling back today. This report, report again from Bain. $800 billion revenue shortfall. In all fairness, it's in 2030. I do want to point out that.
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Jim Laventhal
2030, you know, I want to be careful about the parable of the grasshopper and the ant. But 2030 is a long way away.
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Frank Holland
Well, it's a long way and a short way away.
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Jim Laventhal
No, it's a long way away. I mean, it just, it just is. I think maybe a different way of answering your question or rephrasing your question is will there come a point in time where the AI trade is a bubble? Almost certainly. Is it now? Almost certainly not. I don't know what inning we're in. Third, Sixth. But we're not in the ninth inning here. You know, Josh pointed out what was going on in the tech telecom boom of the late 1990s. But as he points out, and as I'm going to repeat slightly differently, there's a question about whether this money being spent is being spent on productive return on investment types of projects, or if we're just laying down dike dark fiber optics as we were doing in the lower end of Manhattan. I saw it all day long. You dig up the street, lay fiber optics, pave it over and do it the next day. I mean, literally the next day, and you end up with a lot of unproductive capacity. That's just not where we are in this trade right now. So to the other side of this, I look at the announcement between Open Air and Nvidia yesterday and I said to myself, great, Nvidia is enjoying exorbitant profit. Yeah, I'll call it it that. But I don't mean it in an accusatory fashion. It's enjoying exorbitant profit and it's recycling it back into the ecosystem, which is the means by which Oracle is going to get paid for what it's doing with open air. It's a virtuous cycle now. Will it at some point become unvirtuous? Yes. If that's 2030, I'm sorry if this makes me the grasshopper. I'm not usually like this, but I'm not going to worry about it in 2025.
- [17:48]
Joe Terranova
Yeah, I think we take psychologically, in the financial services industry, we take things to an extreme. We immediately say it's a bubble or it's, you know, it's a, it's a, it's a raging bull market. Bubbles are built upon leverage. I'm not sure what we're doing right now is building upon leverage as it relates to infrastructure surrounding AI. In the 90s, we were building that innovation upon leverage. I think this is something different and I think you have to be honest with yourself and say, look, would you be surprised if you woke up six months from now and Nvidia is trading 1:45 or $150? I don't think any of us here would be surprised by that. I think that's a natural correction or a natural moderation in the market. That's not necessarily a reason to move away from the position. All that's really doing is setting an expectation and saying to yourself, this in fact could happen in the future. It doesn't defeat the premise that we have a very strong thematic investing, thematic investing AI story that's currently unfolding. I think it's more just about, okay, set your expectation. Understand this could go either way in the next six to nine months. But overall the 30,000 foot view is a very compelling and strong one.
- [19:07]
Frank Holland
All right, Jimmy, you want to throw a tag?
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Jim Laventhal
I think Joe just made a great point point. When you use the word leverage. It made me think about. I am, I am a bit of a disciple of Ed Yardeni. I think he gets it right when he says where do recessions occur? When does the economy go awry? He points out that it's not because the Fed raises rates. It's not the condition we're in right now, obviously, but it's when the banking sector gets into trouble. It's when the banking sector gets into trouble, perhaps because the Fed raised rates and they can no longer lend. We are clearly to your point, point about the Fin5, Joe, we are clearly very far from any difficulties in the banking sector. And that would indicate to me that this AI cycle that we're going through and this overall economic cycle has legs.
- [19:47]
Frank Holland
Wait, wait, you know, the overall economic. So we got to dig into that for a second. A lot of this economic cycle has been held up by the AI boom. Jay Powell said it. A lot of notes out today saying it included Deutsche bank talking about Nvidia and the capex boom. They say in part currently carrying the weight of U.S. economic growth. The bad news is that in order for the tech cycle to continue and contribute to GDP growth, capital investment needs to remain parabolic. And that's highly unlikely. So it doesn't have to be a bubble. But if it slows down, doesn't that slow down the economy? Doesn't that slow down the ability of these companies?
- [20:15]
Joe Terranova
It's natural though.
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Frank Holland
Well, I agree, but Like I said, their estimate, it has to be parabolic. I think all of you are saying.
- [20:21]
Jim Laventhal
I don't think you, Joe, there's room.
- [20:23]
Frank Holland
Between a raging bull market in a bubble. But where in that, that continuum does this trade slow down significantly and become an issue when investors are really paying up for a lot of these names?
- [20:34]
Joe Terranova
Where's the inflection point I think is what you might be searching for. And I don't think anyone, I think the truth, I've been doing this a long time. I don't think anyone can identify the inflection point. You only really see the inflection point after it occurs. And unfortunately that's just the reality of what we do in this business. I think what's important is how do you react to the appearance of the influence inflection point. That's where a lot of people get into trouble because they remain skeptical that it could be some inflection point. But I don't think any of us know that. I don't see any compelling evidence in the near term to, to suggest that's where we're at.
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Jim Laventhal
If one wants you to match the comment, go ahead, Josh.
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Josh Brown
I'm sorry, very quickly, like, respectfully, could you imagine any of the three of us thinking we know better than Jensen Wang about whether or not there's an inflection point point in AI Capex? Think about the audacity of that idea. It's like, oh no, no, no. Jensen Wang is going to make this huge investment. And we're like, you probably shouldn't do that, dude. Here's my, Let me, let me vomit up some AI knowledge that you might not be familiar with. It's, it's almost like on its face is absurd. The thing that we have to guard against this investors is when everybody gets too bullish all at the same time. You could have a bear market within a bull market. Like you could get killed in one of these stocks. And so what's that? What's the right answer to Joe's earlier point? This is not a binary business. Sometimes the answer is just position, size. It's like, all right, I agree that the AI revolution is abcd, all these superlatives, but like my own own risk level is higher than it's ever been because the stock has 20x. So like, let me do something intelligent here with my own risk taking. It's not, it's not about, let me try to predict the end of the Capex cycle. What are you insane?
- [22:27]
Jim Laventhal
Hey, John, let me, let me, yeah, great points, but you know this overall comment of hinge point. Are we, are we at an inflection point? Are we in a bubble? You know, think about what a bubble looks like. It looks like price to earnings multiples rocketing higher. I am looking right now at a chart of Cisco's price to earnings multiple back in the 90s and it went from roughly 28 times to 120 times and then came back down to 28 times. If you look at the Mag 7 and obviously not all of them, I'm not going to include Tesla in this as an example, but if you look at taking Value Video as The poster child, three years ago it was around 50 times forward earnings and now it's around 30 times forward earnings. That's not what happens in a bubble. You don't see the multiple contract like that. Now somebody will say, and probably is saying to the TV screen right now, yeah, but what about the earnings estimates? Maybe they're going to come down. Maybe they're too high. Yeah, maybe they will at some point. But I got news for you. I don't think it's next quarter or the next few quarters. I just don't see that happening. With the demand we're seeing, seeing from hyperscalers and others and not even talking about the international expansion of data centers.
- [23:34]
Frank Holland
A lot of bullishness here on the desk. Meanwhile, Nvidia Share is pulling back just about 2% right now. Coming up next on Halftime, Josh Brown's back with his best stocks in the market. He says this energy name has an A plus chart. Find out who's at the head of the class. Coming up, more. Halftime's back in just two minutes.
- [23:54]
Josh Brown
Foreign.
- [24:00]
Joe Terranova
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- [24:02]
Josh Brown
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Frank Holland
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Joe Terranova
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Josh Brown
Whatever your passion project is, you can set it up with Bluehost. With their 30 day money back guarantee.
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Joe Terranova
What have you got to lose? Head to bluehost.com to start now.
- [24:30]
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- [25:33]
Frank Holland
And we are back on halftime with Josh Brown's best stocks in the market. Josh, tossing it over to you.
- [25:38]
Josh Brown
All right, guys, as you all well know, rooting for the energy sector. Being overweight energy in the modern era, it's a little bit like being a Jets jets fan. Every once in a while, like they'll win a big game and everyone will look at each other and be like, are the jets for real? And then the next week, oh, wait, no, they're not. And that's been the story with the sector. I don't like the sector right now, but there are some really interesting moves happening within the sector and yesterday we wrote some of them up. So I want to roll through these with you guys very quickly. These are the five best stocks in the energy sector. Valero is number one. I call this an A plus chart. Let's go ahead and put up a one year. This thing is already broken out. So for people who like to anticipate breakouts, this is not the chart for you. For those that are comfortable buying breakouts and are willing to allow for a low volume pullback here in the stock to get long, I would keep it on your screen. This one, the risk management is obvious. I'd use 136 as a pivot point. You can see that is the 200 day. We had a golden cross here in the chart a couple of weeks back. If it breaks below 136, 140, something's changed. We don't want to be long. Marathon is also an A. Not quite an A plus, but getting there. There are no sellers here, as you can see. All the sellers have been cleared out. The 200 day moving average is flat. It'll. It'll be turning up very soon like a smile. That's your own off ramp. I'd use the the 200 day as my risk management. I have Baker hughes as a B +BKR. We've talked about this stock before. It was on the best stocks list prior to Liberation Day. Look at that sell off in April. It scratched and clawed all the way back this is the best of the oil field service names. This thing's breaking out. RSI in the 60s, not yet overbought. The August lows at 42 is your stop. So that's your risk reward here. I know it's higher than where it was when I wrote it up yesterday. I wasn't on the show Yesterday. My apologies. Two more very quickly. Frank Phillips, 66, also a refiner. PSX. This is a C, but it could become a B. So I don't want people to get discouraged. It's on the best stocks list. Not because of any like defined uptrend here. It just happens to be hanging high. And it's been hanging in there for so long that by default it's become one of the better names in the group. Keep it on your screen. I don't love this one. And then there's Chevron cbx. I personally own. I bought it terribly right before that huge sell off this spring. I got long. That false breakout was totally wrong and had no discipline. I wrote it down and I averaged down. It ended up being the right thing. But that is not what we do with best stocks typically. That said big dividend, huge buyback. This is not quite a B yet. It's also a C, but it's a chart that could set up. This is the one that I'm hoping because I'm long becomes the next big breakout. But as you can see, you got a lot of resistance in the high 160s if you're conservative. I would almost let that fight happen before pulling the trigger on a long. I don't quite trust it yet from these levels. So those are your best oil energy stocks in the market right now?
- [28:59]
Frank Holland
Yeah, energy also the best performing sector today. So Joe, for the audience that can't see, you had your glasses on. For Valero, we gave it an A. You got the Baker Hughes with the B. You took the glasses off. So why don't we start there?
- [29:09]
Joe Terranova
Listen, I don't know if this is the process nowadays, but when I was in school, you had parent teacher night. You had to go to school with your parent and the teacher would sit there and review all your subjects in front of you. And I feel like Josh did that with all of my energy positions right now. Baker Hughes is something that we've had in the Jyoti since January. It has clearly been one of the leading oil field services companies and they've managed the business. Josh is right. They've managed the business incredibly well in what has been a difficult environment for energy. The Refiners really have stood out out over the last six to eight weeks and I think the, the foundation of their outperformance is built upon a low stable energy price. Oil in the low 60s is good for these three names. The problem that I had personally is I basically got over levered in my position. I bought all three. I bought Phillips, I bought Marathon, I bought Valero. What I decided to do is sell out of Marathon which looks like a bad idea right now. And the reason I did that was, was Josh is right. Valero is broken out, Marathon has broken out, Phillips is yet to break out and Philips has the potential to do so. They have some activism, activism there as well with Elliott Management. So I think the refiner trade in energy is right now probably where you have the strongest momentum in terms of price and in terms of earnings growth.
- [30:33]
Frank Holland
All right, Josh Brown's best stocks in the market. Also looking ahead, you can catch Josh and myself at our next CNBC Pro Live event right here at the New York Stock Exchange. It's coming up on January 15th. We're going to have a series of interactive clinics to help you invest, chart and trade just like a pro. The tickets are on sale now. We got a few tickets left. They're pretty limited. You can scan the QR code on the screen and visit cnbc events.comprolive for more info. Josh, I was here last time we had such an enthusiastic group of people. We got the UN in town right now. I'm telling you, the last time we had this group in here at New York Stock Exchange we had people from out of the country on the west coast, the Southwest, people from Hawaii, from all over the place. From what I'm hearing this time we have people from Europe, Asia coming in this time. It's going to be exciting.
- [31:19]
Josh Brown
Very cool.
- [31:22]
Frank Holland
Nothing. Josh Brown, thank you very much for that. We're still waiting comments from Fed Chair Jerome Bell. We're going to take you there live as soon as that begins. Halftime is going to be back right after this.
- [31:35]
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- [32:06]
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- [32:52]
Narrator/Commercial Announcer
Welcome back to Happy. Hi, I'm Silvana Hannell with your CNBC News Update. U.S. secret Service agents say they dismantled a network of electronic devices around New York City that could be used to disable the city's cell phone network. Authorities are investigating whether the people who created the network plan to use it to disrupt the United Nations General assembly, which is underway in New York now. They say the system was used to anonymously convey assassination threats against senior US Officials and for other criminal activity. Naito warned Russia today it will use all necessary military and non military tools to defend itself from airspace breaches. It comes after Estonia reported an intrusion of fighter jets last week and after Naito shot down drones in Polish airspace earlier this month. And attorneys for Sean Diddy Combs are requesting he serve no more than 14 months in prison for his conviction on two prosecution prostitution related charges. That would mean he would go free almost immediately if the judge agreed because it would include his 13 months already served. Each of his charges carries a maximum of 10 years in prison. Frank, I'll send it back to you.
- [34:02]
Frank Holland
All right, Silvana now back at CNBC hq. Silvana, thank you very much. We now want to get to Eamon Jabbers in Washington with breaking headlines from Fed Chair Jerome Powell. Amen, Frank.
- [34:12]
Joe Terranova
That's right.
- [34:13]
Eamon Jabbers
The Fed chair is set to speak now in Rhode island in a short time. And what he's going to say is that downside risks to employment have shifted the balance of risks. He's also going to talk about near term risks to inflation now which are tilted to the upside. And risks to the employment are now tilted, he says, to the downside. He says that last week's cut quote leaves us well positioned to respond to economic developments and that there's no risk free path here going forward. Current policy stance, he says, is modestly restrictive and the overall effect of policy changes remains to be seen. The public trust in economic and political institutions, he says, has been challenged since the COVID era and the great financial crisis. And as a result he says public servants, quote, need to focus tightly on carrying out critical missions in the midst of stormy seas. That seems to be an allusion at least to the political pressure that the Fed is under on the labor market. Powell says unemployment rate is low, but it has edged up and that there's market slowing in both supply and demand for workers. The pace of job creation appears to be running below break even rate. And on inflation, he says inflation remains somewhat elevated and the data suggests price increases reflect higher tariffs, not broader price pressures. Frank. So we'll wait for those remarks from the Fed chair here in just a couple of minutes in rode on.
- [35:37]
Frank Holland
Yeah, we're certainly waiting for our Fed Chair Jerome Powell to speak any minute in Rhode Island. Amen. Jabbers live in D.C. thank you very much for those headlines. Joe, I want to come over to you first and foremost, the unemployment issue here or the topic, I should say very interesting, in January this year, unemployment at 4%. Last read. Sitting at about 4.3% and Jerome Powell highlighting that. Still relatively historically low, but certainly an increase.
- [35:59]
Joe Terranova
Well, yes, and it's I think it's at its highest levels since The July of 2024 employment report Jeffrey Gundlach highlighted with Scott Wapner last week. Something that I think is really important when you're thinking about these labor statistics. The unemployment rate is what you should be focusing on, not job creation. No, no. I think there's going to be tremendous distortion because of what's going on right now with immigration. So you can't look at these figures and expect you're going to get gains of 150, 175,000. You might see 10, 15,000. You have to look at the unemployment rate. And just as we had that uptick In July of 24, the response at that time was to do what? You got a 50 basis point rate cut in September. You got a similar uptick this time around. The Fed is responding to that, rightfully so with a quarter point rate cut. Let's see where that rate goes because last time, what happened with the rate, obviously we saw an improvement, a welcomed improvement in the unemployment rate. That 4.33 was your highest level.
- [36:55]
Frank Holland
Very important. Keep in mind we have a jolts report coming up next week and also of course the monthly jobs report coming up next week. So two very important data points. Jim, just your reaction to Fed Chair Jerome Powell saying that the labor market looks like it's moving below break even, obviously signaling that he sees some weakening, maybe significant weakening.
- [37:11]
Jim Laventhal
Yeah. Well, and I think the question here is whether the Fed is going to be proactive or not. And let's face it, generally speaking, history says they are not proactive. Active. They wait too late to make moves. There are many things you can look into in the labor market and say the labor market is just fine. Initial weekly jobless claims. On the other hand, the direction, Joe, to your point about the direction of the unemployment rate is clearly higher and continuing claims are high. It shows clearly that companies, while they're not firing, are not hiring either. So will the Fed be prophylactic in taking one or two more rate cuts this year? It's probably the right move, but I think it's an open question. I don't think it's decided yet. I think that's what Chairman Powell is going to say. He's going to wait on the data. It is unlike the Fed to do things in advance of bad news. Hopefully they'll get it right this time.
- [37:57]
Frank Holland
Josh, coming over to you. The Fed chair saying that tariff related price increases look like they're going to be spread over several quarters. The estimate for core PC coming up just this week, 2.9%. Now a month ago, the Fed chairs seem to think that was okay. Do you think that's still okay for Fed? Well, Josh, I'm sorry to cut you off. We actually want to go to Fed Chair Jerome Powell speaking live in Rhode island 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.
- [38:31]
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- [38:55]
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- [39:06]
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