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Halftime Report
The Fed, the Banks and the Market 7/16/25
00:39:47
Frank Holland and the Investment Committee debate the new White House Drama coming out of Washinton and what it means for the market. Plus, the desk discuss the latest Calls of the Day. And later, we get to the Earnings Setup on United Airlines, reporting after the bell today.
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- [00:00]
Frank Holland
A rich life isn't a straight line to a destination on the horizon. Sometimes it takes an unexpected turn with detours, new possibilities, and even another passenger or three. And with 100 years of navigating ups and downs, you can count on Edward Jones to help guide you through it all. Because life is a winding path made rich by the people you walk it with. Let's find your rich together. EDWARD Jones, Member, SIPC how will you.
- [00:32]
Scott Wapner
Shape the future of the technology sector with confidence? Tech is at an AI powered inflection point, facing innovation cycles that accelerate every day. EY brings a full spectrum of services that help enterprise giants manage fragmented data, telcos minimize disruption, and media companies monetize connected experiences. In a world where every company is a tech company, EY delivers real outcomes to those that build the systems on which enterprises run EY shape the future with confidence. I'm Scott Wapner and you're listening to.
- [01:04]
Joe Terranova
CNBC's Halftime Report, the podcast the most.
- [01:07]
Scott Wapner
Profitable hour of the trading day. We record this live weekdays at 12 Eastern.
- [01:13]
Joe Terranova
Listen in.
- [01:16]
Scott Wapner
You're now watching the Halftime Report that was just video of the president at the White House taking questions after a report crossed that saying that Trump will likely fire Fed chair Jerome Powell, quote, unquote, soon. According to a White House official, the president now saying that is highly unlikely when he get over to our Megan casella live in D.C. with much more on this story. Megan.
- [01:34]
Frank Holland
Hey, Frank, a very fast moving story here, but first, I did confirm with a senior White House official just in the last hour that the president was indicating he was likely to fire Jerome Powell soon. The backstory there was he had been meeting in the Oval Office with a dozen Republican lawmakers late yesterday. He asked them, he floated the idea about firing Powell. He said now nearly all of them approved it. And the senior White House official said the president then said he was indicating he was likely to do it soon. Now, there was always a caution around that, that nothing was the decision could always change. It might not happen and it might not necessarily be imminent. But then just there, Frank, we were listening to the president sort of downplay this reporting. He was saying that, yes, he's very concerned about Powell and he thinks that he's too late on interest rates. But he said, quote, no, we're not planning on doing anything with regards to firing him. He was then asked whether he was completely ruling out the idea of firing the Fed chair. And the president replied, quote, I don't rule out anything, but but I think it's highly unlikely unless he has to leave for fraud. He went on to say he thinks it's possible there's fraud involved in that ongoing renovation of the Federal Reserve building downtown. So here we have it, Frank, at the latest is that while we did have this reporting from a senior White House official saying the president was likely to go through with the firing, now the president saying he's not thinking about doing it, though he's not also completely ruling it out. The final thing I would say is that no official comment from the Federal Reserve on this. But Frank, as you know, Chair Powell has been very consistent for the last six or eight months or so that he is planning to finish out his term no matter what happens. Just as a reminder to our viewers, he was asked in November by a reporter whether he would step down if President Trump asked him to. Powell replied no. And he was asked in that same press conference whether he felt that the president had the legal authority to either fire or demote him. And at the time, Powell replied, not permitted under the law. Frank.
- [03:26]
Scott Wapner
Megan Casella live in D.C. great reporting on this in the last hour. Just some wild swings when it came to the reporting. Again, Megan Casella, thank you very much. Again, you are watching the halftime report. Let's get to our investment committee. Joining us for this hour, we have Joe Terranova, Steve Weiss and Sarat Sethi. Want to show you a chart right here. Markets are well off their lows now after hearing from the president. But you kind of see the chart of the S and P right there. Took a bit of a dip and now recovered. Right now taking a look at the state of affairs. The Dow up fractionally right now. That's the chart I was telling you about. The S and P down fractionally. Similar story for the Nasdaq, just very sl the red with some pretty sharp moves after those reports came out again that the president was likely to fire Jerome Powell soon, according to a White House official. Now, the president saying that is highly unlikely. Joe Terranova, I want to come over to you. One of the things that you were watching was the dollar chart. A lot of movement in the dollar, the dollar also rebounding. But walk us through what you think the dollar chart was signaling or dollar investors or currency investors were saying in response to these reports if the president.
- [04:20]
Joe Terranova
Were to fire the Federal Reserve chairman, the two trouble spots that you would look towards would be, number one, the US Dollar as we show that chart, the decline that we've seen so far year to date, down 9%. Then the other trouble spot would be in the long end of the Curve. You watch the 30 year, 30 year spiked up to 5.07 during the news that potentially he was going to fire him. 515 is the high over the last 52 weeks. Those would be the two trouble spots. However, I will say this, I have said this over the last four weeks consistently. September 17th, my expectation, my expectation is that the Federal Reserve will cut interest rates. The President doesn't have to do this. He's going to get what he wants in September 17th. In the congressional testimony, Chairman Powell identified two months worth of inflation data that was important to him. We've got one month already. It's not showing up to the degree of which would require him not to cut rates. September 17th. I believe they will.
- [05:21]
Scott Wapner
Let's talk this thesis for a second, Joe. And I want to get to surround Weiss in just a second. So you're saying in the July meeting there's a dovish tone that leads us to that cut coming in September?
- [05:28]
Joe Terranova
I don't know. I don't know.
- [05:29]
Scott Wapner
Well, just in all fairness, the President not only does he want cuts, he wants the short term borrowing rate to go down. That could also be achieved somewhat by some signaling from the Fed that they're on the path to cutting rates as soon as September.
- [05:39]
Joe Terranova
They could, they could do that signaling. I'm not sure that you're going to get that signaling because you still want the July CPI reading, which will be reported in August, that the Chairman is going to want the benefit of that data as well. But I believe after that it is going to show that the inflation is not spiking to the degree at which the Chairman feared that it would. And I think on September 17th they will be cutting rates.
- [06:03]
Scott Wapner
All right, Weiss around to come over to you guys. We know that the White House does respond to big movements in the bond market. We've heard Treasury, Treasury Secretary Bess and just mention that, that they are very mindful the bond market looking at the 30 year, it is above 5%. It has been all day, in all fairness. Steve, I want to come to you first. Your reaction just to that move in the bond market, bond investors reacting to the possibility of JVA being fired.
- [06:25]
Steve Weiss
Look, I think it's like anything else. The, the market has sort of taken a wait and see attitude. We've heard so much come out going one way, then quickly reverse and going the other way. We just saw it now where White House sources are saying he's going to fire him and then he downplays it. So to position based upon that is sort of a mistake. But you know, let's be clear. He said that he wants to, I think that that has been sacred ground and you need the checks and balances in government and that's one of the critical ones. So somebody who just wants to cut rates, number one, to support their tax bill and number two, to help all their friends around the country.
- [07:10]
Joe Terranova
Right.
- [07:11]
Steve Weiss
Similar to what's being done with private equity, is just a mistake. And I'd correct one thing the President said, he said, I don't know how he put Powell in that position when it was Trump that put Powell in the position. So he does know. So bottom line is I don't think it would be a good thing for the market has it. You know, he's, he's obviously smart, obviously knows his way around economics, but he's also a sycophant. So the pledge any of these people can have to make are to cut rates regardless of what the market's telling you. What Powell has done, he's made mistakes, but I think he's overall done a great job is that you can't move too soon on these because otherwise if you go back the other way, you lose credibility.
- [07:55]
Scott Wapner
So. Right.
- [07:56]
Steve Weiss
It's a wait and see attitude, but to me it's clear that he's going to try and do something.
- [08:00]
Scott Wapner
All right, so I want to come over to you as well. Again, markets took a dip. They've recovered for the most part, kind of pretty much where they were before this report crossed the wires. I want to talk to you just about how equity investors should respond to even just the possibility of Jay Powell being fired. By the way, we heard from Jamie Dimon and also David Solomon sitting right here at post 9 talking about the importance of Fed independence.
- [08:18]
Sarat Sethi
And Steve's absolutely right. You have a checks and balances in place. So I think right now where the market is, you know, at first, if you talk about Liberation Day and all that, it was, oh, we got a hint something was going to happen. The market reacted, it kind of reacted a mini reaction. But until we see some action, I don't think the market's going to do anything. But it will do something if that does happen, because I do believe the uncertainty caused by that and knowing, you know, the unknown as to who's going to take place, what is that person going to do, how low are rates going to go and really what does that do to the market in terms of the 10 year and the long bond? Because that's where a lot of the financing really happens. That's where valuations happen. For equities. So I think that's going to be where people are going to be focused on. And the Fed does not control that part. They control the short term part, which you're not. The more you refinance short term, the higher the rates are going to go long term. So where, who's going to win?
- [09:11]
Joe Terranova
Yeah, let me, let me just take control once again dictating where risk, asset prices, pricing goes. And that's not a good environment.
- [09:18]
Steve Weiss
Yeah, let me just add to that. So the market could very well, if he's putting in one of the people that have pledged to cut rates, it could rally in the short term and say great, rates are coming down, let's party while the partying is good and then retribution. That's the equity market. The bond market will be a different situation as Joe points out. So you see de linking, it seems.
- [09:41]
Scott Wapner
Like you're kind of spelling out what Jamie Dimon was saying on the earnings call yesterday. Basically saying, in short, I think that the independence of the Fed is absolutely critical.
- [09:47]
Steve Weiss
Yep.
- [09:47]
Scott Wapner
Playing around with the Fed can have adverse consequences. The absolute opposite of what you might be hoping for. And if you're the President who's very mindful of the equity markets which you're talking about the bond market kind of leading the pricing. Also very important to note the two year, I believe that yields actually lower than it was before this announcement.
- [10:02]
Joe Terranova
It should be the two year fell to 385. That's exactly what should happen based on this news. But what's interesting about this, let's pretend that we didn't hear any of these reports this morning and we came in and we were talking about expectation for Fed policy. Was there anything in PPE or CPI that you saw that you said to yourself oh wait a second, the chairman is right and we should not be lowering rates. I don't think any of that showed up.
- [10:29]
Scott Wapner
I think not even core ticking up to 2.9 year over year.
- [10:32]
Joe Terranova
No, I don't think there was enough evidence. I don't think there was enough evidence not to cut rates at some point in the next three to six.
- [10:40]
Steve Weiss
I think, I don't think there's enough evidence to cut rates because we've seen the date for tariffs keep getting pushed back. So while Powell said need to see two months of data at that point the drop dead date on agreements was supposed to have occurred. So we did see also in CPI some tick up in the goods services is weak. Right, right. So. So look, I don't think there's enough of a Convincing case. The pressure Trump supplying, which I think Powell is immune from, to cut rates. I think the PPI economy is doing fine.
- [11:13]
Scott Wapner
I think I don't in fact, Morgan Stanley out with a note earlier today talking about tariffs. Their baseline scenario saying in part we continue to expect the strongest inflation push from tariffs is going to be in August. And they say that June is the end of the beginning, not the beginning of the end. They go on to talk about immigration and some other things, but they don't see any cuts this year.
- [11:31]
Frank Holland
Year.
- [11:32]
Steve Weiss
Okay, that's, I'm not far off their case either. I don't think that September's slam dunk at all.
- [11:38]
Scott Wapner
All right, so right. Your take.
- [11:40]
Sarat Sethi
No, I mean I do think it'll be interesting to see with the tariff issue coming in because the Fed is going to be in a complete quandary. Prices higher, employment going, you know, getting worse. What do you do? And then you want to ignite inflation or how do you help the economy? So the tariff issues, this uncertain kick the can down the road. If that kind of gets resolved before the next number, then I think you could have a case to say, well, our expectations are going to be lower and employment is hard, but it gets further complicated.
- [12:09]
Scott Wapner
Right. I think it's going to be permanently complicated. If you talk to anybody who's an administration official or used to be, I think a fair word for the president's mercurial. So it might be highly unlikely today. We're not quite sure what it could be tomorrow on Truth Social or maybe overnight. So why don't we move on to what we do.
- [12:24]
Steve Weiss
Let me just give this one final comments very quick, which is that you could see employment come down, but still wages go up because of the scarcity, because employment's gone down because of all the labor that's been deported or is afraid to come out of wherever they're living.
- [12:40]
Scott Wapner
All right with that, why don't we move on? Goldman Sachs, just speaking of, we were just talking about David Solomon. David Solomon right Here at post 9 following earnings, shares of Goldman moving a bit lower after a lot of people really thought was a blowout earnings report. Joe, I'm going to come over to you. Equity trading jumped 36%. Investment banking fees jumped 26%. Mike Mayo calling it just a kind of a banner report, also believes that buybacks are coming. His price target 785.
- [13:05]
Joe Terranova
So what's interesting is that the fundamentals for money center banks are very strong and they delivered on what your expectations should have been after witnessing the extreme volatility in the quarter trading revenue was remarkably strong. It wasn't just Goldman Sachs. Morgan Stanley's trading revenue was up 23%. But there is in the environment of speculative trading a moment where you have to have an awareness about a degree of exhaustion in price action and leading up to earnings. There was very strong price action in the money center banks. And I think what we're seeing is a reflection of good news and bad price action where it is a blowout quarter and you're really not getting the response in price. So, so what do you do with that as an investor? There's several things you could do. You could cut back on your positions if you're long, you could sit back and say to yourself, okay, maybe the market's going to come to me if I've missed the trade. I don't want to step forward and do some buying right here. But I think most importantly you just over the next several days have to really look at the way that they are going to trade these money center banks universally. JP Morgan, Morgan Stanley, bank of America, all of them collectively, even how Wells Fargo and Citi are going to trade. You're going to see analysts, they're going to raise price targets on individual names like Goldman Sachs and Citi and Morgan Stanley. You're going to see if that gives it a lift. But I think the next several days are really critical. I think you have to be patient. I don't think you want to jump in and do any buying. And if this good news price action, it kind of intensifies and it's accelerates, you might have a little bit of an unfolding of a financial sector correction which candidly is a little bit overdue.
- [14:45]
Scott Wapner
All right. By the way, we're just showing the chart, the three month chart, all the banks basically since that April low, big bounce ups. I believe Goldman Sachs was up about 40% since then. So a big run up. Why you also own Goldman, your view on the quarter and also is this maybe some a spot to take profits on Goldman, especially with, you know, perhaps a lack of clarity and we're going to get those cuts. You say you don't even see, see any cuts this year?
- [15:05]
Steve Weiss
I say, I mean I wouldn't be, I wouldn't be surprised. I'm not declaring, I have no idea what the Fed's going to do frankly. And it doesn't matter in terms of the companies I own, including Goldman Sachs, I look at gold, Goldman Sachs. If you look at a long term chart, it's a long term compound. It's a permanent compounder and that's what's going to continue. So we had a couple of downgrades. I think you talked about them on, on Monday last week we had had one or two. It just doesn't matter. This is a cycle now. If we had enough market today, the stock would be doing quite well. I mean phenomenal quarter. If you pick apart the quarter, you take a look at asset management and say, well maybe that didn't grow like I would have thought it grown and maybe the market's not going to pay for for trading revenues but that would be a mistake with Goldman. That's one thing they do great. So I don't Goldman Sachs is just not one of those companies that I look at day to day and say what's going on here? I've got a lot of confidence.
- [16:01]
Scott Wapner
Goldman Sachs fraction lower when we want a Bank of America shares down more than 1% earnings beat revenue. Ms. I think the real headline here is the net interest income. Ms. Here, so right, you own this one. Your view on the quarter and just also the stock.
- [16:14]
Sarat Sethi
I mean I think out of all the banks that I own, this is the one that I'm kind of thinking about what I'm going to do for the next year. I think that they've kind of everybody else, The Morgan Stanley's, JP's have really good secular stories in there. This one's a well diversified bank. It's done everything I wanted to do. It's up over 20% for the year but it's kind of like a jack of all trades. And I think, you know, net interest income if rates do go lower, this one could get hurt more than some of the others. So I kind of have this one on my watch list.
- [16:42]
Scott Wapner
Is this a bigger deal? Sorry to cut you off Joe. Is it a bigger deal because it's a big consumer bank? When we're talking about net interest income.
- [16:48]
Sarat Sethi
You got that you have lending, you have, you know, a lot of other things that if the economy kind of slows down or you see a slowdown in the business activity, this could affect them a lot more when it comes to real estate and the consumer.
- [17:01]
Steve Weiss
Yeah, look, I agree, I own it as well. I mean if you there's no real story to grab on. It's a nice steady performer, it's got great management, but it's not, you know, you look at Goldman Sachs say that's the Margot Robbie. You look at this and say it's Madea, you know, so it's a completely different story.
- [17:19]
Joe Terranova
Let's let's highlight for a second the really strong trading revenue quarter for most of these banks. And then you say to yourself, you have a couple of companies that are about to report Thursday, Interactive Brokers Friday, Charles Schwab. At the end of the month, you have Robinhood and Virtu Financial. I would think in each one of those four instances, you're going to hear really strong earnings reports and it's based off off of significant volatility and robust trading activity. Now you, you want to watch what's the response. What's the response to, to price after you hear those earnings. But I think each of those stocks are in a position where you could see further appreciation. Maybe Robinhood is the one name that's a little bit rich in valuation and is somewhat extended.
- [18:01]
Scott Wapner
I just want to button up on bank of America. So. Right. You said you don't know what to do. By the way, Brian Moynihan is coming up on the exchange later today. When you say you know what to do, are you thinking about maybe some position?
- [18:10]
Sarat Sethi
I would say this way, if you get a pullback in financials, I'm not going to be adding to bank of America. What I am going to be adding is to what we like is Morgan Stanley. So you know there's a Goldman Sachs is a Morgan Stanley. Morgan Stanley's over two thirds of their business is wealth management. It was up 14%. They just increased their dividend 7%. It's got a solid balance sheet, you know, reasonable multiple. So I think that's where I want to go. I think bank of America has done very well. But the catalyst there or kind of going forward are more difficult to find than when you look at a Morgan Stanley or a Goldman Sachs.
- [18:41]
Scott Wapner
By the way, Wolf out with a note saying that tailwinds are in place for financials to keep on with leadership. So some different points of view there. I want to go to the regionals as well. We have some regionals report PNC earnings revenue and beat M and T bank earnings beat. These are kind of Northeast corridor banks mostly. I guess if you count Pittsburgh as Northeast corridor. I don't know if you do or you don't want to kind of hit this one. Joe, you own M and T. Your view on this company and also the idea what's more attractive, money center banks regionals at this point.
- [19:09]
Joe Terranova
Well, first let me just address your comment there on the financial sector overall and tell you where the investment actually is in the ETF, the Jyoti ETF. It's 30% exposure to financials, it's a significant overweight and it's been that way for the better part of the last 15 months. So yes, I think there's a lot of positive momentum in financials. The positive momentum in the near term has been in money center banks, not regional banks. Regional banks ultimately have to prove themselves at some point. You look inside the earnings that you got today, net interest income was strong for PNC, 8% growth, a lot of commercial loan growth that was favorable. Net charge offs were down 24%. The expectation was that was actually going to be unchanged for M and T. It's a little bit of a different story which kind of frustrated frustrate you rather when you say to yourself okay, I'm going to be universally allocating towards the regional banks because M and T net interest income actually missed. So the loan growth really isn't there. It seems to be idiosyncratic. And I don't know other than if you told me over the next three months we're going to get mean reversion money center banks relative to regionals, I could see that. But in terms of fundamental tailwinds, I still think the money center banks owns the advantage over the regionals.
- [20:20]
Scott Wapner
When it comes to the regionals, are they also, you know, economic growth and tariff sensitive in your mind? I mean the idea that we don't know what the tariff picture is and the tariffs could impact a lot more. Their customer base we're seeing to be small and medium sized businesses and also directly with the consumer.
- [20:33]
Joe Terranova
To your point and add upon that if we have elevated bond volatility surrounding potential potential if the president actually does fire Chairman Powell, see the back up in yields, you see the dollar move lower, I don't think that's good.
- [20:46]
Scott Wapner
I don't think that's good. Surat and Joe, I want to come, I mean Steve, I want to come over to you as well. Any thoughts on the regionals versus the money center banks? Do one side of that equation seem more attractive than the other to you?
- [20:57]
Steve Weiss
To me, I'm not in the regionals and I've looked at them in the past and it's why stray from, from what's working, what will work and what has the ability to navigate tougher economic environments. And the tariffs versus the point you made, the regionals don't always have that. And frankly we also don't know, still don't know what the real estate situation is there, you know, because those, I think we've all been surprised by, by the lack of, of you know, of, of an increase in non performers due to real estate. They don't own a lot of it. But I just think everything in local community really depends where they're positioned.
- [21:37]
Sarat Sethi
Yeah. And I think to that point point, the regional balance sheets are the ones that I would have concern for going forward because if you're getting a cut in rates or a slowdown in economic activity that's going to affect them in a couple of ways. One is what's the transparency of the balance sheet? Do you have any surprises? And you know we saw what happened a couple of years ago and we had a couple of regionals take it to the chin, Silicon Valley, etc. First Republic. And then the other one is, you know, if you're thinking about more economic growth and maybe more economic activity activity, I'd rather play the M and A activity that has not been built into some of the big banks. So that's going to give them a big pop along with the wealth management and the trading revenue. So I think those things will give you the catalyst for improved earnings and multiple expansion as opposed to kind of.
- [22:20]
Steve Weiss
Just higher margin revenues. What are you saying?
- [22:24]
Joe Terranova
Benefit from regulatory relief?
- [22:26]
Sarat Sethi
I think M and A activity could pick up. Capital market picks up.
- [22:30]
Scott Wapner
We did see a pickup this week with Honey and they acquired a bank in Texas.
- [22:33]
Joe Terranova
Yeah.
- [22:33]
Sarat Sethi
But you see more of that in terms of more economic activity amongst M and A cross border. That's where the big banks do really well and they can use their balance sheets to support that. So I think that the trading revenue all the. But that will also go to the Schwabs and everything else. A tailwind for all that as well.
- [22:50]
Joe Terranova
So you, you don't actually have to trade down on the balance sheet quality to go to the regionals because you're going to get the benefit in other places. The bulls on regionals will take tell you the regulatory relief specifically is going to benefit smaller regionals.
- [23:02]
Scott Wapner
We have to wait and see. But we were just showing the KRE chart intraday. I believe Carry was higher for part of the day until the report crossed the the tape that the President may look to fire Jay Powell. You can see that green right there. Then it takes a bit of a dip right now down about a quarter of 1%. All right, coming up next on halftime, more committee stocks on the move, including a pop for Johnson and Johnson on earnings. It is actually leading the Dow right now. Halftime's back in just two minutes.
- [23:30]
Frank Holland
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- [25:33]
Scott Wapner
And welcome back to the Halftime Report. We got some committee stocks on the move today starting with Johnson and Johnson moving higher after beating Q2 earnings and raising itself full year outlook. Searat, you own this one shares up more than 6% right now and you.
- [25:46]
Sarat Sethi
Know I'm not even close taking a victory lap on this one. This one has not really kept up with the market for the last three years. What happened here was 65% of J&J's business is pharma 35% MedTech both had organic growth Both see a better future for the next couple of years. The dividend is very safe. It's a solid balance sheet. I think when you're going to play in this area which is very under owned and also hasn't done well, this is one of the premier players.
- [26:10]
Joe Terranova
I love this that under owned because that's exactly what the scenario is. When you think about positioning and sentiment for health care and there are winners in the health care pace space rather. We have VIVA Systems, we have Syncore, Boston Scientific all working well. Eli Lilly looks like it's beginning to build some positive momentum again. Amgen working well. Abbvie working well. Insulet, which is pod. So there are places that you can go in the health care sector that have been underappreciated so far. You're to going.
- [26:37]
Scott Wapner
Yeah, I hate to bring this back full circle, but what about tariffs? The President floating tariffs as high as 200%. Johnson Johnson and most other pharmaceutical companies say Merck.
- [26:45]
Joe Terranova
I didn't say Pfizer, did I?
- [26:46]
Scott Wapner
Fair enough. So your view on the tariff threat when it comes to Johnson and Johnson?
- [26:50]
Sarat Sethi
Yeah, look, I think it's there but the stocks reflected it for the last year. You got a bump today because again you probably had people on the other side of this because they do have new drugs coming, you know, coming on. But I think this is under owned the sector, especially when the administration came in, you know, the clarity, the transparency wasn't there. So Joe's right, there's opportunity here and if you're a patient investor, I think you can make money here.
- [27:15]
Scott Wapner
All right, JNJ up over 6% right now. Also look, some crypto stocks under pressure after several major cryptocurrency related bills. They stalled in the House yesterday. Why is she on the iShares Bitcoin Trust, the iBit, taking a look at that actually we're looking at Circle right now. Circle shares up over 14%. The ibit up about two and a third percent right now.
- [27:33]
Steve Weiss
Now look, you know, follow the path, right? And Trump said that he's got the votes and will pass and when he said that you had to believe him. So I continue to believe that crypto is going to do well for momentum from scarcity and eventually they'll find a use case for it.
- [27:52]
Scott Wapner
Yeah, clearly Circle moving higher. Big stablecoin player on the idea that the President does have the votes to get it through. All right, I want to move on to the spirits and beverage space. Gagio CEO Deborah Crew is stepping down. Surat, you own this name?
- [28:04]
Sarat Sethi
Yeah. And this one's been terrible. I mean, since she was CEO. Stocks down 40%. Diageo is a great selection of brands. I mean from Guinness to Johnnie Walker. Execution hasn't been there. They really did well during COVID because as we know, everybody kind of sat at home and had drinks. But premiumization has kind of been taken out of favor and also the tariff issue. So you've got a combination of all those going on, a new management team coming in. I could see value in spinning off some of their groups and actually seeing more value there. The stock is cheap, but it's cheap for a reason.
- [28:37]
Scott Wapner
Yeah, a number of really well known brands you mentioned some of them. Captain Morgan Casamigos, another popular brand there, Bullet Bourbon. So a bunch of names there for Diageo also. Also move on to the EV space. Tesla losing another top executive this time is Troy Jones in the wake of Elon Musk full time return. Joe, you own Tesla shares of Tesla up just about three and a third percent right now.
- [28:58]
Joe Terranova
We do. And at the end of the month we will rebalance and reconstitute and see what we do. With the position in Tesla. There's, there's no question the fundamentals of this company are challenged. Revenue growth continues to decelerate. It seems as though Elon Musk has a little bit more of a focus on the company introducing new vehicles in China and India. But more than anything else, I think what's unfolded here is you've just had a technical bounce off of July 4th weekend. We came in that Monday morning, the stock was lower trading to 88. A lot of people thought that was the breakdown. The complete opposite is actually unfolded. You've got a 10% bounce the other way. And I just identify that more as a technical bounce, but it's a very strong one.
- [29:40]
Scott Wapner
Is it concerning that they're losing executives while they're trying to compete and automatically drive? Waymo has a lead. A lot of people think show me's Apollo Go has the lead as well.
- [29:48]
Sarat Sethi
For sure.
- [29:49]
Joe Terranova
I think Waymo technologically does have a significant advantage or certainly several steps ahead of the others. There's no question that they need to reverse some of the fundamental deterioration for this company. But remember this stock trades a lot around momentum and momentum is a powerful force. And I think that's what we are witnessing here over the last 10 days. Bullish momentum driving the stock up 10%. Really nothing more than that. All right.
- [30:16]
Scott Wapner
Tesla shares up over 3% year to date. Still down more than 20%. With that, let's get to Our headlines with Silvana Hanow back at CNBC hq. Hey, Silvana.
- [30:25]
Frank Holland
Hey, Frank. Good afternoon. Health and Human Services Secretary Robert F. Kennedy, Jr. Reportedly fired his top two aides in a shakeup of the agency. According to multiple reports, Kennedy ousted his chief of staff, Heather Flick Mellinson and deputy chief of staff for policy, Hannah Anderson. CNN reports Kennedy lost confidence in them as part of his leadership team. Meanwhile, A group of 20 states sued today to block the Trump administration from terminating a natural disaster grant program run by fema. The administration canceled the multibillion dollar program in April after it was approved and funded by Congress. The grant fund infrastructure upgrades to protect against natural disasters And A volcano near Iceland's capital erupted today for the 12th time since 2021. The overnight spectacle forced the evacuation of around 100 people from a nearby town and tourists from a campsite at the Blue Lagoon. The volcano had been lying dormant for hundreds of years before recently becoming active as a result of seismic activity in the region.
- [31:35]
Scott Wapner
Frank, wow, really? Just dramatic pictures we're looking at right there. Sivana now back at cnbchq. Silvana, thank you very much. All right. Coming up next, we got our calls today, including a price target hike for one committee stock coming up ahead of earnings, plus an upgrade for this year's best performing S and P stock. We're going to be right back after this.
- [31:56]
Frank Holland
At Capella University, learning the right skills could make a difference. That's why our business programs teach you relevant skills you can take from the courseroom to the workplace. A different future is closer than you think with Capella University. Learn more at capella.edu on WhatsApp, no one can see or hear your personal messages. Whether it's a voice call message or sending a password to WhatsApp, it's all just this. So whether you're sharing the streaming password in the family chat or trading those late night voice messages that could basically become a podcast, your personal messages stay between you, your friends and your family. No one else, not even us. WhatsApp message privately.
- [32:46]
Scott Wapner
And welcome back to the halftime report. Let's get to our call of the day. We teased it. We might as well start here. Palantir upgraded to neutral from underperform at Mizuho. They go on to say while we continue to worry the shares could suddenly be subject to material multiple reversions at some point over the next few quarter. Palantir's uniqueness demands a great deal of credit. Joe, you on this one.
- [33:04]
Joe Terranova
They went to neutral from underperform.
- [33:07]
Scott Wapner
Underperform. Yeah.
- [33:08]
Joe Terranova
Okay.
- [33:08]
Scott Wapner
That's all we started here.
- [33:09]
Joe Terranova
Yeah, the stock is up, I think 400 plus percent year to date. I have to be careful in this segment because we're two weeks away from 400% and reconstitution where we're very close. In the last year, we're up 400%.
- [33:22]
Scott Wapner
Okay.
- [33:22]
Joe Terranova
Last year, last year 400%. I'm close to the rebalance of reconstitutions. I got to be a little bit careful the way I frame all this. But for sure you are talking about a name that has remarkable strong momentum behind it. And when you have that significant momentum, you have to expect that you are going to see elevated volatility that potentially leads to, to a precipitous decline. And you have to have the temperament and fortitude to ride through those moments. And one of the advantages of the strategy that I'm implementing is that it's rules based so I don't get in the way of it. We are long this stock $16 from the end of January in 2024. You could do the math on that. If I had discretion over this, I don't know that I would have stayed anchored into the position. So I think most important for the viewers to understand is that the temperament surrounding these high flying momentum names is critically important. And you have to identify where you're going to say to yourself the exit door is going to open for me and where in fact you need to ride the patients through what I believe is going to be elevated volatility. We could easily see the stock down 25 30% at some point.
- [34:32]
Scott Wapner
Down 25, 35, 30% from here over the next six months due to valuation or something. I mean, because the structural setup with the EU spending more defense, that story.
- [34:41]
Steve Weiss
Just crossing, it's got nothing to do with your identify.
- [34:44]
Joe Terranova
You're identifying all the fundamental tailwinds that yeah, we know about the company. But what has happened now is this stock has taken the mantle as arguably the number one identifiable momentum stock in the market. And that is really what they fueling the significant 400 plus gain over the last 52 weeks. So you have to understand that. You have to understand how momentum trades.
- [35:09]
Scott Wapner
All right, Joe, I'm going to come over to you. Sorry, Steve, I keep calling you Joe. I apologize.
- [35:13]
Steve Weiss
Yeah, please don't.
- [35:14]
Scott Wapner
QXO initiated with a buy at 33 bucks by Citi.
- [35:18]
Steve Weiss
And the story is that they view QXO is uniquely positioned to be able to consolidate the building products industry. And that's what the story is is. And Brad Jacobs, who's done this in multiple industries, is doing it again. They're being very, as you saw in the recent potential acquisition, they're being very, very disciplined. So to me, this is another compounder that he's putting up, you know, for the others, for others to participate in.
- [35:45]
Scott Wapner
Cubic so shares essentially flat right now. All right. Coming up on halftime, the big changes that could be coming to your 401k and why it may be a major win for the PE firms, we're going to explain. And then later, we're trading three committee stocks ahead of earnings. Halftime is back in just two minutes. Stay with us. And we're back on halftime. Our friends at the Golf Channel are following the PGA Tour stop this week at the Open Championship in Northern Ireland. GOLF Channel's Todd Lewis joins us live on site with what with what we should expect. Todd, take it away.
- [36:17]
Joe Terranova
Yeah, Frankie. Is the final major championship of 2025. And two players will get most of the attention heading into the opening round tomorrow. Number one, Roy McIlroy. McElroy grew up not too far from Royal Port Rush here at Northern Ireland in Hollywood, Northern Ireland. Now, he played in the Open here in Northern Ireland at port rush in 2019. He approached that championship by saying, I'm going to treat this just like any other major championship. Well, when he got to the first tee, it was overwhelming for him. He hit his first tee shot out of bounds, ultimately missed the cut. This year, a different attitude for McIlroy. He is embracing the moment, feeling like he is playing for more than just himself, his fellow countrymen and women here in Northern Ireland. So we will see how he plays with that attitude starting tomorrow. The other player that's getting a lot of attention, of course, is Scottie scheffler. The last 11 major championship starts. How about this? Nine top 10s, including two major championship wins. One of those top tens coming at Royal Truant at the Open last year. He's obviously playing very, very well and he would love to add an Open to his already impressive resume.
- [37:22]
Scott Wapner
If he wins here this week, he.
- [37:24]
Joe Terranova
Will need just the US Open to complete the career Grand Slam, something that Roy did by winning the Masters earlier this year. By the way, lots of fans expected here. More than a quarter million fans will be on property to enjoy the Open, making this the largest sporting event ever in Northern Ireland. And Frank, it's sunny right now. This is a tease because the next four days, rain and wind as it should be at the Open.
- [37:49]
Scott Wapner
All right, Todd, thank you so much. Live from Northern Ireland. And you can follow Coverage of the Open beginning tomorrow with round one at 1:00am Eastern on Peacock and at 4:00am eastern on the USA Network. Coming up here on halftime, the big changes that may be coming to your nest egg and the stocks that could actually benefit from it. The debate is next, coming up after this break. And welcome back to halftime. The president is reportedly ready to open up your 401k to the private markets. The move would be a major win for the private equity industry. Shares of some key players like KKR and Apollo, you can see right here, they're higher today. Joe, you actually own these in the.
- [38:24]
Joe Terranova
Jyoti would like to see a little bit of M and A activity intensifying. You did have an uptick in the month of May, which benefits them kind of to reignite some of the bullish momentum. Overall, I think there's been this universal attempt to bring private equity products that can be utilized by the retail community. I know financial advisors that I speak to are very interested in doing this. We're seeing ETFs that are being introduced accordingly. And it seems to make sense that we would have this now availability in 401ks.
- [38:55]
Scott Wapner
Does it just change the overall outlook? I mean, we're talking 401ks and other defined contribution plans, about $12 trillion. I mean, just 1% of that would just be a game changer, I would think, for all these firms.
- [39:06]
Sarat Sethi
And I think the way to play it and we own Blackstone, and that is if you find the players that get access to it. As an investor in a Blackstone, you're not really concerned about how these are going to perform. You're going to say can they get the right products? The right, I would call illiquid products in the 401k plan, which are growing. And remember, this money for the most part keeps adding to itself. So maybe the investors in these 401k plans, especially the younger ones, can have that duration. It'll be a tougher thing to see of those people who are retiring in five to 10 years, how much of that they'll take. Because when you do hit 73 and you got to start taking money out. So you'll have to play with that. But the growth there in the 401ks as we've more we've moved away from pension plans, I think will be great for all these players, whether it's Blackstone, Aries, Apollo, I think our lives or J.P. morgan.
- [39:54]
Scott Wapner
J.P. morgan wants to get this business as well. Even though Jamie Dimon just said we might be at peak private credit still the company's dump. Well, there are a couple of billion into the business.
- [40:01]
Sarat Sethi
Look at BlackRock. Right? Look, they've been buying, you know, firms and spending billions of dollars on getting into infrastructure, into credit. So I think there are a lot of players.
- [40:09]
Steve Weiss
Yeah, there are a couple of issues here. Endowments are pulling back on private equity because funding from the government has decreased.
- [40:16]
Joe Terranova
In favor of what?
- [40:17]
Steve Weiss
In favor of more liquid investments, public equity, and funding their endowments and their costs because the government has stopped funding for a lot of them, they've cut back on funding on others. So you need to fund your operations somehow. So locking up for 10 years now. They need more liquidity. So it's more in public markets. I'm not so sure investors don't do better just buying the indices, buying the S and P and buying the Qs because performance there is good. But additionally, as you grow private equity, because I spend a lot of time in the private world, sourcing deals is so, so tough. And when there are more and more dollars looking for deals to do, the returns tend to come down. Remember, size is the enemy of performance. So for some, it's great.
- [41:02]
Scott Wapner
A lot of the markets about the possibility. Take a look at areas up over 1%. Blackrock up over 2% as well. Carlyle up over 1% as well.
- [41:10]
Joe Terranova
So.
- [41:10]
Scott Wapner
So seeing some movement when it comes to those names. All right, the setup is coming up next. Stay with us. Much more halftime after this break. And we are back with the setup on United Airlines. It will report in overtime today. Joe, you own this one in the Jyoti.
- [41:23]
Joe Terranova
I think UAL is hoping that we get an earnings report very similar to what Delta delivered last week. It's very clear that you have this bifurcation in terms of what's being delivered in the airlines. A lot of the discount airlines lines obviously not performing well. Delta, United with a distinct advantage catering to a little bit more of an affluent flyer.
- [41:44]
Scott Wapner
Do we ever clear up the guidance situation? They said there was one set of guidance for this scenario, different set of guidance for this other scenario.
- [41:51]
Joe Terranova
I would think that you'll learn more about that tonight.
- [41:53]
Sarat Sethi
Yeah, and I think Delta had that too, by the way. So when the tariffs came into place, even Delta came back and said, hey, we're not sure.
- [42:00]
Scott Wapner
So United after the, after the bell, up about three quarters of 1% right now. Final trades coming up on halftime. Stay with us. We're back on halftime with final trades. Surat, you're up first.
- [42:12]
Sarat Sethi
I'd stick with J.J. i think, you know, you got some momentum behind this you got positive earnings and people want to own this under owned stock.
- [42:18]
Scott Wapner
Weiss I'm going with Ibid.
- [42:21]
Steve Weiss
I mean, you've got some psychological resistance and we're going to get through that pretty easily and go past 125.
- [42:26]
Scott Wapner
Jyoti.
- [42:26]
Joe Terranova
We're sitting in its living room. But the ICE exchange trading revenue strong. CME ICE. I like all these exchanges.
- [42:33]
Scott Wapner
All right, we're going to leave it there. By the way, markets, they dipped after that report. The president was looking to fire Jay Powell. Now look at this. They're all in the green across the board. Fractional improvement, but in the green. That does it for halftime. The exchange, it starts right now. You've been listening to CNBC's Halftime Report, the podcast. You can always catch us live weekdays.
- [42:55]
Joe Terranova
At 12 Eastern only on CNBC.
- [42:59]
Frank Holland
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 halftimereportdisclaimer Is it time to reimagine your future? The right business skills may make a difference in your career. At Capella University, we offer a relevant education that's designed to focus on what you need to know in the business world. We'll teach professional skills to help you pursue your goals like business management, strategic planning and effective communication, and you can apply these skills right away. A different future is closer than you think with Capella University. Learn more at Capella Eduardo.