Halftime Report Summary: "The Fed, the Banks and the Market" | July 16, 2025
Hosted by Scott Wapner and Featuring Investment Experts Joe Terranova, Steve Weiss, and Sarat Sethi
1. President Trump's Potential Firing of Fed Chair Jerome Powell
The episode opens with a major headline: President Trump is reportedly considering the dismissal of Federal Reserve Chair Jerome Powell. Initially, a White House official indicated that Powell might be fired soon following discussions with Republican lawmakers (Frank Holland, 00:32). However, President Trump later downplayed these reports, stating that while he is highly critical of Powell’s handling of interest rates, outright termination is "highly unlikely unless he has to leave for fraud" (Frank Holland, 02:00).
Notable Quote:
"I don't rule out anything, but I think it's highly unlikely unless he has to leave for fraud." — President Trump (Frank Holland, 02:00)
2. Market Reactions to the Powell Firing Reports
Following the initial reports, markets experienced volatility. The S&P 500 dipped but has since recovered, while the Dow and Nasdaq saw minor fluctuations (Scott Wapner, 03:26). The dollar showed significant movements, reflecting investor uncertainty.
3. Investment Committee Insights
Participants: Joe Terranova, Steve Weiss, Sarat Sethi
a. Impact on the Dollar and Bond Yields
Joe Terranova highlighted two primary concerns if Powell gets fired:
- US Dollar Decline: Year-to-date down 9%.
- Long-End Curve Volatility: The 30-year bond yield spiked to 5.07%, the highest in 52 weeks (Joe Terranova, 04:20).
b. Fed Policy and Interest Rate Cuts
Terranova maintains that despite the turmoil, the Federal Reserve is likely to cut interest rates by September 17th, citing current inflation data not supporting a rate hike (Joe Terranova, 05:20).
Notable Quote:
"I believe they will [cut rates on September 17th]." — Joe Terranova (05:20)
Weiss echoes the sentiment, emphasizing Powell’s track record and expressing skepticism about immediate rate cuts (Steve Weiss, 07:10).
c. Financial Sector: Money Center Banks vs. Regional Banks
The committee discussed the resilience and potential of money center banks (e.g., Goldman Sachs, Morgan Stanley) compared to regional banks. Money centers are favored due to their diversified operations and strong earnings, while regional banks face uncertainty from economic slowdowns and tariff impacts.
Notable Insights:
- Steve Weiss: Advocates for maintaining positions in money center banks, citing their strategic importance and robust performance (Steve Weiss, 07:10).
- Sarat Sethi: Highlights concerns over regional banks’ balance sheets and the impact of economic activity on their performance (Sarat Sethi, 16:42).
4. Sector and Stock Highlights
a. Financials: Goldman Sachs, Morgan Stanley, Bank of America
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Goldman Sachs: Despite a robust earnings report with a 36% jump in equity trading, shares dipped slightly post-report. Analysts predict continued strong performance but advise caution due to potential sector corrections (Joe Terranova, 13:04).
Notable Quote:
"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." — Steve Weiss (07:54)
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Morgan Stanley: Viewed favorably for its wealth management and trading revenue growth. Sarat Sethi prefers adding to Morgan Stanley over Bank of America due to its strong secular growth stories (Sarat Sethi, 18:10).
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Bank of America: While showing strong performance, lacks the growth catalysts present in its money center counterparts, making it a secondary choice for investment (Sarat Sethi, 18:41).
b. Healthcare: Johnson & Johnson (JNJ)
Johnson & Johnson reported a strong Q2 earnings beat, raising its full-year outlook. Shares surged over 6%, driven by organic growth in both pharma and MedTech segments. The stock remains under-owned, presenting a prime investment opportunity despite tariff concerns.
Notable Quote:
"I think this is under owned the sector, especially when the administration came in, you know, the clarity, the transparency wasn't there." — Sarat Sethi (26:09)
c. Cryptocurrency: Circle and iShares Bitcoin Trust (IBIT)
Cryptocurrency-related stocks faced pressure due to stalled legislation in the House. However, Circle shares rose over 14%, reflecting optimism about regulatory developments.
d. Spirits and Beverage: Diageo
Diageo’s CEO Deborah Crew is stepping down amid a 40% decline in stock value. Despite a strong brand portfolio, execution issues and tariff impacts have weighed heavily on performance. The new management team may explore spinoffs to unlock value.
e. Electric Vehicles: Tesla
Tesla is undergoing executive changes with Troy Jones exiting as Elon Musk takes a more hands-on role. Despite losing top executives, Tesla shares remain up 3.3% year-to-date, though the stock is still down over 20%. The company faces stiff competition from Waymo and Apollo Go in the autonomous driving space.
5. Headlines
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Health and Human Services Shakeup: Robert F. Kennedy Jr. fired his top two aides amid leadership concerns.
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Natural Disaster Grant Program Lawsuit: Twenty states sued to block the Trump administration from terminating FEMA's grant program aimed at infrastructure upgrades.
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Iceland Volcano Eruption: A volcano near Reykjavik erupted, leading to evacuations due to seismic activity.
6. Calls of the Day
a. Palantir Technologies (PLTR)
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Upgrade: Palantir was upgraded to "Neutral" from "Underperform" by Mizuho, citing concerns over potential multiple reversions despite strong momentum.
Notable Quote:
"You have to have the temperament and fortitude to ride through what I believe is going to be elevated volatility." — Joe Terranova (33:04)
b. QXO (QXO)
- Initiation: Citi initiated coverage on QXO with a buy rating at $33, highlighting its potential to consolidate the building products industry under disciplined leadership.
c. United Airlines (UAL)
- Earnings Report: United is set to report earnings, with expectations mirroring Delta’s strong performance. The stock is cautiously optimistic, up 0.75% pre-announcement (Joe Terranova, 41:23).
7. 401(k) and Private Markets Integration
A significant policy shift may allow 401(k) plans to invest in private markets, presenting a major opportunity for private equity firms like KKR, Apollo, Blackstone, and Carlyle. This integration could unlock vast amounts of capital, with potential benefits for both PE firms and retirement savers.
Notable Quote:
"Locking up for 10 years now. They need more liquidity. So it's more in public markets." — Steve Weiss (40:17)
8. Sports Segment: PGA Tour at the Open Championship
The podcast briefly covers the PGA Tour's Open Championship in Northern Ireland, highlighting key players Rory McIlroy and Scottie Scheffler. McIlroy aims to overcome past challenges, while Scheffler seeks to add an Open title to his achievements, potentially completing the career Grand Slam.
9. Final Trades and Closing Remarks
As the episode concludes, the hosts discuss final stock movements and provide last-minute insights:
- Johnson & Johnson (JNJ): Sarat Sethi recommends holding JNJ for its under-owned status and strong fundamentals.
- iShares Bitcoin Trust (IBIT): Steve Weiss remains bullish on cryptocurrency, citing potential use-case developments.
- Cubic Inc. (CUB): Sarat Sethi and Steve Weiss show interest, anticipating future growth.
Market Overview: Despite initial declines due to the Powell firing reports, markets have generally recovered, with slight improvements across major indices.
Closing Quote:
"The stock is cheap, but it's cheap for a reason." — Sarat Sethi on Diageo (28:36)
Conclusion
This episode of Halftime Report delves deep into the intertwined dynamics of federal policy, financial markets, and individual stock performances. The potential firing of Fed Chair Jerome Powell by President Trump has catalyzed significant market reactions, prompting expert analysis on future rate cuts and the resilience of major financial institutions. Additionally, sector-specific insights highlight opportunities and risks across healthcare, cryptocurrency, and more. Investors are advised to stay vigilant, maintain a diversified portfolio, and consider both macroeconomic factors and individual stock fundamentals when making decisions.
For more detailed discussions and updates, tune into CNBC’s Halftime Report weekdays from 12-1 PM ET on CNBC TV.
Timestamp References:
- 00:32 - Introduction to the Powell firing report
- 02:00 - President Trump's statement on Powell
- 03:26 - Market reactions overview
- 04:20 - Joe Terranova on dollar and bond yields
- 05:20 - Interest rate cut expectations
- 07:10 - Steve Weiss on financial checks and balances
- 16:42 - Sarat Sethi on regional banks
- 26:09 - Sarat Sethi on Johnson & Johnson
- 33:04 - Joe Terranova on Palantir
- 40:17 - Steve Weiss on 401(k) and private equity
- 41:23 - Sarat Sethi on United Airlines
- 28:36 - Sarat Sethi on Diageo