The Future of the Rally 7/18/25

Summary

Halftime Report: The Future of the Rally (Released July 18, 2025)

Hosted by CNBC's Scott Wapner, "Halftime Report" delves into the intricacies of the current market landscape with insights from top investors Jenny Harrington, Steve Weiss, and Kevin Simpson. This episode, recorded live on July 18, 2025, tackles the sustainability of the ongoing market rally, impending earnings reports, valuation concerns, and strategic trading moves amidst geopolitical tensions.

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Market Overview

Scott Wapner opens the discussion by providing a snapshot of the current market performance. Both the S&P 500 and Nasdaq reached record highs earlier in the day, albeit with fractional gains towards the close. In contrast, the Dow Jones Industrial Average witnessed a slight pullback of approximately 0.3%.

"First quick check of the market, the S&P and Nasdaq hitting record highs earlier today. Right now, fractional gains for both the S&P and the Nasdaq. Take a look at the Dow though, pulling back about a third of 1%."
— Scott Wapner [02:07]

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Sustainability of the Rally

Jenny Harrington shares a cautious outlook on the rally's longevity amidst potential headwinds.

"There’s just too much that's potentially weighing on the broader market. Tariff uncertainty, valuations that are already stretched, consumers showing signs of cracks."
— Jenny Harrington [02:29]

She believes that while individual companies may experience significant volatility during earnings season, the overall market rally is likely to plateau, potentially ending the year with a 6-7% gain, a moderate expectation compared to previous years' substantial increases.

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Valuation Concerns and AI Influence

Scott probes into the elevated valuations of major indices compared to their five-year averages.

"S&P right now trading about 22 times its five-year average, NASDAQ at about 27.5, five-year average around 25.5."
— Scott Wapner [03:36]

Steve Weiss attributes the market's tolerance for high valuations to a new generation of investors accustomed to continuous market growth, partially fueled by advancements in artificial intelligence (AI).

"It’s not AI; it's that a new cohort of investors are used to markets only going up."
— Steve Weiss [05:30]

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Earnings Season and Potential Market Impact

With approximately 20% of the S&P 500 set to report earnings in the following week, the panel discusses the potential impacts on the market. Steve Weiss emphasizes that the anticipated tariff extensions could pose downside risks, though he remains optimistic due to the market's valuation insensitivity.

"The market's been valuation insensitive. I don’t see how we end up up 14% on the year. I don't think we have another 7% in the second half."
— Jenny Harrington [03:36]

Furthermore, the panel examines opinions from UBS and Bank of America, highlighting the need for earnings growth to underpin future market gains rather than mere valuation expansions.

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Assessing the Bubble Risk

Addressing concerns about a potential market bubble, Kevin Simpson downplays the notion, citing broader participation from sectors beyond mega-tech and AI, including industrials and financials.

"I don’t see it as a bubble. 2023 had seven stocks with no breadth, but now it’s more diversified."
— Kevin Simpson [07:29]

However, Jenny Harrington acknowledges pockets of froth within specific high-growth stocks like Palantir, trading at 175 times earnings, emphasizing disciplined stock picking to navigate these areas.

"There are pockets of froth out there. That's why I like being a stock picker right now because you can avoid the pockets of froth."
— Jenny Harrington [13:32]

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Strategic Trading Moves

The panel shares their approaches to managing high-growth, high-volatility stocks amidst earnings season:

1. Covered Calls on Netflix:

   • Kevin Simpson explains writing a covered call on Netflix ahead of earnings to hedge against potential declines despite the company beating revenue and earnings expectations.

   "We wrote a covered call for a 12, 40, 45 strike with one week expiration, netting a $45 profit in a few hours despite the stock dropping 5.9%."
   — Kevin Simpson [32:45]

2. Repositioning Apple Holdings:

   • Steve Weiss discusses liquidating Apple shares at $247.50 due to perceived overvaluation and reinvesting once the price dipped to $209, achieving a 20% real return through option premiums and dividends.

   "We liquidated Apple at 247.5 when it was too pricey and rebought at 209, netting a 20% real profit."
   — Steve Weiss [26:55]

3. Home Depot Covered Calls:

   • Kevin Simpson shares writing another covered call on Home Depot after being called away at a premium, adjusting the position to 3% weighting in the portfolio to manage rate concerns.

   "We replaced a 5% position with a 3% weighting, believing rates are still a bit high and anticipating a longer-term recovery."
   — Kevin Simpson [37:50]

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Geopolitical Tensions: Tariffs on EU Goods

A significant portion of the discussion centers around the potential imposition of 15-20% tariffs on all European Union (EU) goods by President Trump, as reported by the Financial Times.

"President Trump is pushing for a 15-20% tariff on all EU goods, with car tariffs remaining at 25% despite EU's push for reductions."
— Megan Casella [43:48]

The panel assesses the market's reaction to these developments, noting a downturn across all major indices as investor sentiment remains cautious amid escalating trade tensions.

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Sector and Stock-Specific Insights

1. Meta (Facebook):

   • Jenny raises concerns about Meta’s potential overspending despite increased cash flows from the "Big Beautiful Bill."

   "The key is whether Meta remains financially disciplined while leveraging incoming cash flows for growth, especially in AI investments."
   — Jenny Harrington [20:33]

2. Tesla:

   • The panel discusses Tesla’s competitive edge in the EV and autonomous driving sectors, considering challenges from Waymo and regulatory uncertainties in China.

   "Tesla has a different risk profile, and while we’re not expecting monumental gains imminently, it remains a pivotal stock in our portfolio."
   — Kevin Simpson [19:25]

3. American Express:

   • Despite reporting record cardholder spending, Amex's stock dipped 3%, prompting Jenny to highlight the broader consumer income disparities impacting the stock’s performance.

   "High-end consumers are still thriving, but mid-tier consumers are experiencing financial strain, reflecting in mixed stock performance."
   — Jenny Harrington [39:34]

4. Verizon and IBM:

   • Verizon is viewed as a stable, income-generating asset with a 6.5% dividend yield, while IBM is lauded for its integration of Red Hat and expected earnings growth.

   "Verizon serves as a bond equivalent with steady dividends, while IBM’s Red Hat integration is yielding impressive EPS growth."
   — Jenny Harrington [46:03]

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Headlines and Regulatory Updates

Silvana Hanau from CNBC HQ briefs listeners on notable headlines impacting the market:

1. January 6 Lawsuit:

   • A federal judge dismissed a lawsuit aimed at revealing FBI agents' identities involved in the January 6 cases, citing lack of retaliation intent from the DOJ.

2. El Salvador-Venezuela Prisoner Exchange:

   • Negotiations are underway for El Salvador to release over 200 Venezuelans in exchange for U.S. citizens and permanent residents, though the Trump administration has yet to comment.

3. House Republican Probe:

   • A House Oversight Committee probe investigated alleged lies by Biden administration aides, with testimonies invoking Fifth Amendment rights.

"House Chairman James Comer accused former President Biden's deputy chief of staff Annie Tomasini and others of lying to protect themselves."
— Silvana Hanau [35:15]

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Conclusion and Final Trades

As the episode wraps up, the panel discusses final strategic trades:

1. Raytheon Technologies (RTX):

   • Steve Weiss sees a bullish outlook driven by robust demand in aerospace repairs and a significant backlog.

2. McMoRan Copper:

   • Jenny highlights McMoRan Copper's strong free cash flow yield of 15%, anticipating continued production growth.

3. Sarepta Therapeutics:

   • Angelica Peebles reports a 26% decline in Sarepta's shares following FDA scrutiny over its gene therapy's safety profile, impacting investor sentiment negatively.

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Key Takeaways

• Market Caution: Despite record highs, concerns over stretched valuations, tariff uncertainties, and uneven consumer strength suggest a tempered outlook.

• Strategic Hedging: Active portfolio management through covered calls and disciplined stock picking helps mitigate risks in a volatile market.

• Geopolitical Risks: Escalating tariffs on EU goods pose significant risks to market stability and investor confidence.

• Earnings Focus: The impending earnings season, with a substantial portion of the S&P 500 reporting, will be pivotal in shaping market trajectories.

• Sector Diversification: Balancing high-growth tech stocks with stable dividend-paying securities like Verizon ensures portfolio resilience.

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Notable Quotes:

• "There’s just too much that's potentially weighing on the broader market." — Jenny Harrington [02:29]

• "It's not AI; it's that a new cohort of investors are used to markets only going up." — Steve Weiss [05:30]

• "There are pockets of froth out there. That's why I like being a stock picker right now because you can avoid the pockets of froth." — Jenny Harrington [13:32]

• "We liquidated Apple at 247.5 when it was too pricey and rebought at 209, netting a 20% real profit." — Steve Weiss [26:55]

• "President Trump is pushing for a 15-20% tariff on all EU goods, with car tariffs remaining at 25% despite EU's push for reductions." — Megan Casella [43:48]

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Conclusion

In this episode of Halftime Report, the discussion underscores a cautiously optimistic stance amidst a complex market environment. Investors are encouraged to remain vigilant, leveraging strategic hedging and disciplined investing to navigate potential headwinds. As geopolitical tensions and earnings season unfold, the panel advocates for a balanced and informed approach to sustain growth in the second half of the year.

Transcript

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[Scott Wapner]

I'm Scott Wapner and you're listening to CNBC's Halftime Report, the podcast the most profitable hour of the trading day. We record this live weekdays at 12 Eastern. Listen in. Thanks, Carl and Sarah. Welcome to the Halftime Report. I am Frank Holland in for Scott Wachner, front and center at this hour, a critical week for your money investors. They're bracing for more key economic data and quarterly earnings from nearly 20% of the S&P 500. The investment committee is here to break the entire thing down. Joining me for the hour, Jenny Harrington, Steve Weiss and Kevin Simpson. First quick check of the market, the S and P. Nasdaq hitting record highs earlier today. Right now, fractional gains for both the S and P and the nasdaq. Take a look at the Dow though, pulling back about a third of 1%. I think this is where we got to start. Jenny, what is the future of this rally? Is today perhaps the sign of things to come as we go into earnings season, a kind of a muted market, or do we see more big gains? Again, 20% of the S and P reports next week.

[Jenny Harrington]

Yeah, I don't see how we have big gains. But you know, I've been on that platform for a long time. To me there's just too much that's, that's potentially weighing on, on the, on the broader market. It's things like tariff uncertainty, valuations that are already stretched, the consumers starting to show little signs of cracks. There's a lot out there. I also don't see anything that wildly derails it. So I think within earnings season we're probably going to have some big booms, some, some big busts in the individual company level. But I'll bet you that colle collectively we kind of come out with a map. So when we think about this rally, you know, what are we up right now on the year? 6%, 7% for the 7 percentage year to date. What if we end there? How wonderful would that be after years of plus 20% in 24 and 23? So I'd be wonderful. So I kind of think of the rally as let's just hope it sustains to this point and that nothing knocks the wind out of sales. But I don't see, I just don't see how with 9 percentage expected earnings growth at the 22 times multiple with all the uncertainties out there, I don't see how we end up up 14% on the year. I don't think we have another 7% in the second half.

[Scott Wapner]

I want to touch on your first point about the market being valuations being a bit stressed. S and P right now trading about 22 times five year average is 20. NASDAQ at about 27 and a half. Five year average is about 25 and a half. Weiss, I'm coming over to you. Do you see something derailing this rally? Do you see the markets just moving sideways? Does something lead us to moving lower again? We have that August 1st tariff deadline that Jenny was just alluding to. Is that potentially a catalyst for a downside move?

[Steve Weiss]

Potentially, but we've seen that that will get extended. My bet is it does get extended.

[Scott Wapner]

Taco trades in play.

[Steve Weiss]

Yeah, but, but it's also look, as I mentioned I spent a lot of time private markets and deals never close when you want to. I think the mistake they made the administration was advertising we're going to get this done quickly. Trade deals take a lot, they take years. So I think you'll see some groups agreements in principle. I think the positive that could be you get a major deal with India. There is word that that could be coming the eu you hear that also, but that's less likely because so many, so many head of cattle herd. But that'll, that'll push the market up. It is a risk, though, if, if the administration draws a line in the sand with August 1, then those tariffs come into effect and I think, I think you see the market take some gas. But look, overall, you're coming to a seasonally slow period in September. You know, that tends to get discounted earlier and people just don't want to put new capital risk. I'm a bit more optimistic on the market only because I think the market's been valuation insensitive. You know, when you and I grew up in the market as well, valuations mattered. Valuation matter. Now the good old days, it doesn't matter at all.

[Scott Wapner]

So because of AI, are you saying that investors don't think it matters or is there some other factor leading to valuations being less relevant there?

[Steve Weiss]

It's just, it's not AI. It just is just you have a new cohort of investors that are used to markets only going up and that may be the right thing to do. I mean, you want to stay invested, you don't want to trade markets. I'm happy to trade them because I'm doing for so long. But the point is, what could derail the market to your point is I don't see the Fed easing in September. Yeah, I don't, you know, I don't see that happening.

[Scott Wapner]

So it's certainly not July then, like Christopher Waller is calling for the Fed to do. Chris Waller, you know, kind of highlighting his feeling that a cut should already happen, possibly in July. Do you make anything out of that? Well, that Waller, who may also be a candidate to replace and coming out and saying this.

[Jenny Harrington]

Consider the motivation, right? You always need to consider the motivation.

[Steve Weiss]

Motivations like canceling Colbert. Yeah, it's. It's most watched show, but it's economic. Look, while everybody's auditioning now, so everybody's going to be talking about that's a reasonable prospect. And even some, some underdogs were all about, yeah, let's cut, let's cut. But the numbers don't give you the opportunity. We are seeing cracks, inflation meaning going higher, so without the tariffs coming in. So I really think the Fed's on hold right now and I think what Trump's actually done is he's put Powell back on his heels a little bit and he's probably more resistant to cutting so he can keep the independence of the Fed. That's his interest. I think he's altruistic in that. So we'll see. But in the meantime, yeah, tariffs can hurt, worsening economic data can hurt and we'll see from there.

[Scott Wapner]

All right, Kevin, they got the softballs. I'm going to come over to you. Are we at the risk of a bubble? Michael Hartnett from Bank of America out with a note, a couple of data points. He's, he's kind of spreading equal weight. S and p versus the regular s and p at a 22 year low. Small caps versus the s and p at 25 year lows, value versus growth at a 30 year low. In his mind, all signals US economy is slowing and or US equities are bubbling and we might be in a bubble. Your take?

[Kevin Simpson]

Yeah, I don't see it as a bubble. 2023 was a better example of that micro chasm where we really had seven stocks and there was no breadth. Nothing else was doing any part of the heavy lifting. At least here it's not just mega tech, it's not just AI. We've got industrials, we've got financials weighing in. Well, I don't care about small caps.

[Scott Wapner]

To your point though, the Mag 7, they're about half of the earnings growth for this quarter. So it's like seven stocks doing a whole lot of the lifting.

[Kevin Simpson]

And we need them to because if they don't deliver on earnings then you can forget the markets being higher on a broader index basis because they're delivering so much of the earnings. But I think that the bubble story is probably a little bit stretched at this point because I think the earnings will deliver. Frank.

[Scott Wapner]

Can I just point out.

[Steve Weiss]

Sure.

[Scott Wapner]

The Netflix chart right now. I mean, let's take a look at the Netflix chart. Shares are down more than four and a half percent. They beat on the top and bottom line, improve their outlook for the second half of the year and this stock is still going low. Are we at risk as we see some of these mega cap tech names? And Jenny, feel free to jump in that we could see the same setup that a Microsoft, a Meta and Amazon, they could beat expectations, give good guidance and still move lower because it's just simply not good enough. Because to your point, valuation, even though we have this, what you call a.

[Jenny Harrington]

New cohort, but I think that's the thing. What's Netflix down right now? 2%.

[Steve Weiss]

It was down 5%.

[Jenny Harrington]

Yeah, but then I thought I saw it last. Whatever, down four point. Just not that much. Right. So. And I think when we think about the valuations of the MAG7 overall right now, I'll Call them stretched a little, you know, they're not stretched a lot. In the past, I've kind of freaked out by how stretched the valuations are and that's just not the case. So for us, right, we have our discipline growth strategy where it needs a 5% or better free cash flow yield to get in there. Like Apple's on the short list, Google's kind of on the short list.

[Steve Weiss]

Meaning short it.

[Jenny Harrington]

No, no, on the short list of potential things that we could buy. But the reason being the cash flows there, the valuations are reasonable. So when we look at the Mag 7, my thought collectively is maybe they plateau, right? But I don't see, I don't see them. I don't see that in frothy.

[Steve Weiss]

Look at it this way. The stocks doubled over the last year.

[Jenny Harrington]

Which one?

[Steve Weiss]

Netflix.

[Scott Wapner]

We'll talk about it later. I'm just saying is this an example of some of the risk that comes in earnings season where a company does better than expected, they raise their guidance generally that makes the stock move higher.

[Steve Weiss]

This is idiosyncratic, right? This is a story like no other story out there. Now take that, take your, your question a little further. If you see Google Alphabet, if they miss because of cloud and then Microsoft misses cause of cloud, those factors, that's more of a, of a market story, that growth because that feeds into so many other elements of the market. But no, I don't think you. I think people are reasonable. And by the way, Netflix has sold off so many times on earnings that if you sold because of that, then you made a mistake. The 5% here is nothing, it's bupkis. It don't even focus on. But here's what I'd say. If you take a look at a number of the firms that came out, raised their price target in advance of it and the money that piled in and now to sell the news from the traders that got in, they're getting out.

[Scott Wapner]

So everybody's feeling good. You're not worried about any froth in the market. In fact, I'm not feeling good.

[Jenny Harrington]

I never feel neither.

[Steve Weiss]

I always have concern.

[Scott Wapner]

You look good like your pockets where.

[Steve Weiss]

You don't have concern and worry about risk in the market as professionals, if that's not your primary concern, then you shouldn't be in the business.

[Scott Wapner]

Let's touch on something really quick. This is an ETF I wasn't that familiar with before today, the Next generation US Sentiment Leader Index. The ticker's buzz note from Bit Krinsky saying you see more and more signs of short term froth in the market. He's pointing to this, this ETF up 45% in the last couple of weeks, 29% above its 200 day moving average. And some of the top holdings are some of your holdings, Kevin, Robinhood and Palantir. Are you worried that there's a risk of unwind in a lot of these names and that the momentum may be slowing down and possibly moving in the other direction? In all fairness though, big gainers, similar to Weiss's point, these are stocks that have big run ups, but worried about some of that momentum unwinding itself.

[Kevin Simpson]

It would be very difficult if you think of a coiled spring for these, not to give up something at some point. Because if you look at Robinhood in particular, which is one of our favorite stocks, stocks in the growth portfolio, Frank, in early April this thing was trading in the low 30s and now I don't know where the chart is, but probably close to $110 a share. That is an incredible run, but I'm not ready to bet against it because they control the ecosystem of the young person. Roblox, American Express, Robinhood, we love these because of where they're embedded. Palantir, a little bit different. But if you look at how they're expanding away from just being purely dedicated to government contracts, how they're getting to the private sector, I'm not going to be the person that's shorting these. Are betting against them? Not yet.

[Scott Wapner]

Can I go to Pounds here for a second? I'm just looking at the data. Palantir has been trading under its 30 day moving average for like the last 10 trading days. Is that a sign of something that you would pay attention to? The fact that it seems the enthusiasm at least is a little bit less than it was. The stocks obviously still moving higher over the last week, up over seven and a half percent.

[Kevin Simpson]

Usually not that short term on a momentum basis on something like this, but. But literally the year over year earnings for the first quarter were up 39%. So they've got a big bar to leap over on the second quarter numbers. So maybe some people are thinking maybe they can't achieve it forever to perpetuity. So if you're taking profits here, you've made a fortune. You never lose money taking a profit. I'm just not ready to get out of it. But remember, Frank, I can also write calls against these names so it's a little bit easier for me to hold something that may be a little bit extended.

[Steve Weiss]

And you did a great job writing Calls against Netflix in front of the earnings.

[Jenny Harrington]

But here's, here's another thing when we talk about froth, you know, and I started to say, well like I don't think the market overall is frothy, but I think there are elements of froth. And so when you say earnings are up 39%, that's lovely. But for the fact that I believe unless these numbers here on the CNBC app are wrong, it's what like $0.60 ish or less of earnings?

[Kevin Simpson]

Well, if you look at multiples and you care about valuation, we've had palantir.

[Jenny Harrington]

So 39% sounds great other than the fact that it's trading at 175 times earnings.

[Kevin Simpson]

Crazy.

[Jenny Harrington]

It's crazy. And so I see pockets of froth and this is why I like being a stock picker right now because you can avoid the pockets of froth. You know, you don't need to buy everything by sector or by etf. You can, you can be more nimble. But I think to answer your question, there are pockets of froth out there.

[Scott Wapner]

All right, so pockets for this for sure. Earnings season next week as we mentioned, 20% of the S and P reporting a lot of notes out here UBS one of them saying investor tech enthusiasm is running high in the earnings season. The recent rally in large cap tech and stocks mainly fueled by price to earnings multiple expansion and they go on to say while we remain structurally bullish on we prefer to see further gains underpinned by upward earnings per share revisions rather than valuation expansion. The loan kind of speaking to what you guys are Talking about again, 50% of the earnings are coming from the MAG7. Is this a time as you're talking about maybe taking some chips off the table? Weiss, is this a time to be a little skeptical about this year round, this year to date rally and these stocks in particular, Jenny, I mean you tell me what's that, what's the view here? Because it seems like there is a lot of risk coming up next week.

[Steve Weiss]

I own those stocks. So. So no. So I'm glad they're such a. I'd love to be 75% of the s and P bottoms.

[Jenny Harrington]

That's an bottoms up.

[Steve Weiss]

I don't manage against a benchmark. I just manage for absolute return. And so I they have fortress balance sheets. They have very strong business models in most of these cases that they are the primary, they own the market and where they don't own the market, there are markets that only the three or four or five of them can own. So sure. Do you have concern with stocks have done that? Well, you have to be a fool not to have concerns. But the fact we keep citing all these numbers like the 30 years since you had this kind of spread and valuation. Who cares? He was probably saying the same. You just said you care about valuation.

[Scott Wapner]

You say these the next generation.

[Steve Weiss]

I care about valuation on my stocks. I care about the. But not the whole care about the fundamentals. What goes into valuation are. Does this deserve premiums in the market? All those names? Absolutely. Is management a great management team? All those names? Absolutely. Do they have a great balance sheet etc. Etc. It's not just the P is not the price to ebitda. That's what makes up valuation. In terms of Palantir. It's not trading on valuation whatsoever. That's the least of it. If you bought a valuation then you're making a mistake. But if you buy it because of where positioning and where they are and I wouldn't buy it. I just can't buy a stock at 75 times earnings.

[Jenny Harrington]

You know what? There's a great. Sorry, there's a great Howard Marks quote that says it's not what you own, it's what you pay. And that's the thing like we own all know Palantir is a great story. We'd all love to invest in a company like that. But you know, if you do care about valuation, it's what you pay. You know, you pay 153, you may not have a 200% return in the next 12 months.

[Steve Weiss]

That. That's a value investors quote and a great value.

[Jenny Harrington]

It's a credit kind of like bond investor value leaning right.

[Steve Weiss]

Which, which is a lot of what they do. But he also would have missed out on a stock that's gone up Eightfold in, in a short, short period of time.

[Jenny Harrington]

But I think it's when you say. When you say. But when you say look, I can't buy it at this price. That's why. Because you actually care about price.

[Steve Weiss]

They've got to be grounded in a discipline. Discipline can't go back and forth depending on the shiny new objects are right.

[Jenny Harrington]

Frank, can I say one more thing on your question about the 50% of earnings?

[Steve Weiss]

Yeah, of course.

[Jenny Harrington]

Okay, so there's. There's an interesting chart in the JP Morgan guide to the markets that shows the MAG7's earnings growth growth over the last several years. And looking forward versus the rest of the market. What you see is MAG7 earnings growth outpaced the other 493 by over 35% in 23 and 24 going forward. And this is earnings growth. It's not the absolute number going forward this year it's expected to outpace by 9% next year by 2%. And so I think as we see to Kevin's point earlier, the market broadening out, that's why because these growth differentials are narrowing. So when we say look, it made up for 50% of the growth in the S and P, that's today and backward looking going forward. The growth rates are moderate. The growth rate differential is moderate.

[Scott Wapner]

Yes. The EPS forecast I think is 14% for the max 7 this quarter. Forward quarter is going to be like 9 to 11%.

[Jenny Harrington]

But while we're looking something like that.

[Scott Wapner]

Let'S look ahead to some of the earnings next week. Oscar, go to some of your holdings, Kevin. Alphabet's one of them. Price Target raised from 200 to 210 by bank of America. Also want to talk valuation. We're talking Alphabet trading at a discount to the broader market. 20 times forward earnings. What's your take on earnings coming up? Weiss mentioned it. You know the hyperscaler business is really kind of the key when it comes to these, these big three, Amazon, Microsoft and Alphabet. What are your expectations?

[Kevin Simpson]

Alphabet trades at a little bit of a discount, Frank, because we know that they're losing the monopoly search and that's a given. But what we're seeing is that the statistics versus Chachi for example is that people are still staying within the Google ecosystem and utilizing that free AI as opposed to going outside into open air maybe as quickly as people overview.

[Scott Wapner]

When you search at the top I.

[Kevin Simpson]

Think 70% of the people are still using Google and using the AI overview. I'm about 50, 50 between ChatGPT and Google. It's YouTube TV, it's Waymo. There's so many other things behind it. Some of the parts credible between how, how they're diversifying away from just a pure search. But the search is the golden egg. The, the ad revenue off of that is going to dwindle, it's going to erode and that's why it's trading at a little bit of a discount. But I would expect it to be very, very impressive on earnings as I expect the bar to be high for all of these companies.

[Scott Wapner]

Frank, let's get to one of your other holdings, Tesla. Other side of the coin, you know Ford P 168 totally different story and a lot of concerns about the EV business, about the self driving business. Can they stay competitive? Not only With Waymo, but Apollo go over in China, maybe even the brand may have suffered some damage. We don't know if it's repairable or not. With Elon Musk dipping his toes into.

[Kevin Simpson]

Dc, to Jenny's point, it's about what we paid. And with Palantir I think we paid 118. I know for sure in Tesla it's well under 300. But you've got to look at this and hope that the robotics and that the autonomous driving and all of the other things outside of the car manufacturer, what you're, what you're hoping will produce returns over time. And if you own Tesla, I don't know that I'd be buying it ahead of the print for sure, Frank. But again, this is a call writer's dream. So it gives you the ability to generate some income and get paid while you wait. But this is a stock that has a completely different risk profile. I'm not expecting a big number out of Tesla by any means.

[Scott Wapner]

Let's get to another company you all own. Meta note from Wells Fargo talking about the passage of the one big beautiful bill and the impact on some of these names. They say in part Amazon's the largest Internet beneficiary from their one big beautiful bill. Tax changes adding about 36% to free cash flow, followed by metta at 23% and then Alphabet afterwards at 9% gain on free cash flow. Jenny, let me go with go to you. Do you see Metta having low long term benefits from the win big beautiful bill and that free cash flow being invested in a way that improves the stock and improves its position?

[Jenny Harrington]

Well, okay, yes, so far so good. Where, where I start to get a little sketched and worried about matter. It's just on these huge hires. And so if we think about what's happened to Metta over the past, what's it been about five years? It was trading at 79, 80 bucks back in 2020. Why? Because there was no fiscal discipline when the share price got so low. All of a sudden it was is the world of efficiency. And now that there's lots of cash flow, right, and maybe growing cash flow, will that efficiency and financial discipline remain? And we really need it to. So I think that that the juicy cash flow coming their way could cut both ways. As long as they take it and remain disciplined, that's great. If they take it and start to feel a little like loosey goosey and we're going to spend here, we're going to pay this person 200 million and that person 300 million. That's when we start to get concerned. So there's a lot of. To be, you know, to be said.

[Scott Wapner]

Do you think we might be in a cycle where they're spending too much money, even though it's not infrastructure this time?

[Jenny Harrington]

I don't actually people. Yeah. I don't know.

[Scott Wapner]

Was that what you're.

[Jenny Harrington]

You're basically saying it's just, will they take the cash flow and be as responsible with it as they've been for the last five years? So the hope is yes. I don't think I'm the right one to say they're spending too much on AI. It seems like right now you can't spend too much on AI, but you need that combination of yes, we're doing well and we're still remaining efficient and.

[Steve Weiss]

Disciplined with nobody has the competence, whether it's us sitting here or whether it's the analysts that follow in the street to determine where they're spending too much on AI?

[Jenny Harrington]

Yeah.

[Steve Weiss]

So if you don't have faith in management, in Zuckerberg, which I think has done a stellar job, that every time he's been hit with an issue, he's quickly overcome it. Going back, you know, almost a decade ago, they had no presence on mobile. Now they are the presence on mobile through Instagram, others. But AI, let's just go over it. It's the fastest adoption of any technology in history and that includes the Internet. And the Internet is basically free for everybody, whereas you've got to pay for their services. So to me, yeah, of course you can overspend on. But right now I'm glad they're spending. And what we went through last year. Oh, they're spending so much. Capex is so much. You've got to invest in the future.

[Jenny Harrington]

Right.

[Steve Weiss]

And that's what they're doing. And you can't catch up to the future. You've got to get in front of it.

[Jenny Harrington]

So only time will tell if it was overspent or spent appropriately.

[Steve Weiss]

Wake up a day and say, who am I going to spend $100 million on? First of all, we don't. Those are confirmed on you. Number two, I guarantee you they're not in cash. All that payment.

[Scott Wapner]

Seeing a lot of IT stock.

[Steve Weiss]

Yeah, I do.

[Scott Wapner]

And deferred. Kind of stretched out a little bit. Kind of like showing you. Tani, you're kind of stressing it out. Kevin, I want to come to you. Any quick thought on matter and also I want to go to your Covert Call and Nvidia, kind of walk us through that Trade.

[Kevin Simpson]

I mean, just real briefly, you guys covered it perfectly. It was our top pick coming into the year. It remains that way. Time will tell from an AI standpoint, but don't forget the hardware. Don't forget what they're doing with advertising, how they're monetizing AI in advertising specifically. Margins are just going higher. I think the numbers are going to be fantastic. But let's pivot to Nvidia because I think this goes back to the opening of the show. If things are frothy, what do you do? Because many people, many viewers are lucky enough to own in video and it's gone up a lot. The last time we bought it in mid April, I think was under $90 a share. And it's in the 170s right now. We now have a 12.6% weighting in our growth strategy in the Q Devo Frank. And that's a lot for one name. This isn't a hedge against a stock going down. It's a hedge against position risk. So we wrote a one month covered call for $180 strike. We brought in $3.50. It expires in a month. If we're called out of it, we're called out at 183 and a half, which is over $10 more than 6% from where it is now in a month. And that's on half the position. So it's just risk management. Not, not a critique against name by any means.

[Scott Wapner]

Right. When you're doing a cover call like this on Nvidia of all names, I mean, actually, why on a video? I mean especially with some of the news that we had. Did you do this before the news earlier this week with the H20 chip?

[Kevin Simpson]

No, we did this yesterday because the position size and we're running a portfolio with a risk lens being very, very important for our investors. And any time you have too much in one stock and it's great that it's going up, I mean, don't get me wrong, it's really wonderful. But things don't always go up forever. And when they, when they roll over, we want to. If not, and I am not suggesting that this one's going to, but when things happen, we want to make sure that we, we've got the position sized properly. So this is professional risk management was.

[Steve Weiss]

An intentional one month because I believe not looking at calendar, they would expire before the earnings come out.

[Kevin Simpson]

Yeah, absolutely. 100%.

[Steve Weiss]

Right.

[Kevin Simpson]

So Nvidia reports later than everyone else August 27th.

[Steve Weiss]

So are you going to be naked in protection. In other words, when the quarter goes, you don't make that decision now.

[Kevin Simpson]

That would be our expectation. Right.

[Steve Weiss]

Because Sacros 200 I manage in Vancouver of the earnings, I imagine I have a different view.

[Kevin Simpson]

We will. If it's a 200 at the end of next month, a week before earnings will be called out. But if it's not, our option will expire on the 25th, I think. And then we'll. We'll just remain long into earnings.

[Scott Wapner]

Right.

[Kevin Simpson]

Because we're expecting earnings to be good.

[Scott Wapner]

Why you and video as well. So I mean, what do you think of his trade? And also you just your outlook from now until earnings. Obviously we're going to get reports from the hyperscalers number of other players, so we'll have a sense, some sense of demand.

[Steve Weiss]

You know, I think it's generally a smart strategy. It's. It's not necessarily what I do. I'll do it in some, in some instances not here. Because this stock could be up or down for no reason. Six bucks, you know, on a day. I'm just picking a number and you pick that number because it would take them to 183.

[Scott Wapner]

So.

[Steve Weiss]

So I think it's a good trade. Look, it's all how you manage your portfolio manager risk and what you've told your investors you're going to do. So he's abiding by his discipline. That's communicated to investors. That's what he's doing. Guess what? It's worked marvelously for him over, over the years. So why wouldn't he keep doing it?

[Jenny Harrington]

That's why I'd pay him $100 million if I could.

[Kevin Simpson]

Well, where do I sign?

[Scott Wapner]

I want to get to one of your other trades. You actually bought some more Apple. We actually have Bill Baruch on the show. He also bought some more Apple. What's the motivation? Buy behind buying.

[Steve Weiss]

I got to take a break. I'm just being too nice today. It's so out of character.

[Jenny Harrington]

No, it's just surrounded by like you.

[Scott Wapner]

Got to go to water right there.

[Kevin Simpson]

I feel like it's a Friday in the summer. We're all out of character.

[Scott Wapner]

Why buy more Apple here? A lot of concerns about Apple's ability to compete in AI. Also some talk about buying perplexity. You're trying to get in front of the idea that they might make an acquisition that would juice this stock or some other reason.

[Kevin Simpson]

I don't want to pretend to know what they're going to do when it comes to artificial intelligence or Apple AI. But I do believe that they're going to do something. I feel like this device will be a great catalyst for us to be able to interface with artificial intelligence. How they decide to do it, I don't know. But remember, we're an active portfolio. So I sold out of the position, Frank, just to go back in time back in December. So we liquidated Apple at 247 and a half. @ that point we thought it was a little bit too pricey at 250. At 200, we, we feel the stock is very attractive and it's a longer term investment. We know we're going to get paid while we wait. But think about it. If you're just an investor, you're an index. Stock was at 209. It went to 260. It's back to 209. Nothing really happened. You collected a dividend, we sold it, we netted a 20% real profit in the position and we started buying it again. Maybe we started early. The first position was at 234 and we bought finally our last position this week at 209. So, so we now have a 5% full position again with an average cost of 209. So we delivered a 20% real return net on the position. We collected the option premiums that we've been writing against it and we collected a small dividend. So I feel comfortable here as an investor again at 200, where I didn't at 250.

[Scott Wapner]

All right. Apple shares right now up just about a half a percent. Coming up on halftime. More on the Netflix earnings download. Shares are pulling back big after some big gains there this year. We're going to get to Kevin's move on it coming up next. Much more Halftime right after this.

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[Scott Wapner]

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[Kevin Simpson]

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[Scott Wapner]

Change your filter today with Filtreat brand and walk back to halftime Netflix shares They are lower despite beats on the top and the bottom lines. The streaming giant warning on lower operating margins in the second half of this year. Let's bring in our Julia Boorstin with much much more in the quarter. Julia.

[Jenny Harrington]

Hey, that's right Frank. Netflix at top earnings expectations and it raises full year revenue outlook which was expected and that was bolstered as expected by foreign exchange. But today the stock is down nearly 5%. One factor perhaps weighing on the stock is the company's operating margin forecast.

[Fidelity Representative]

Though ahead of expectations, the company did.

[Jenny Harrington]

Say they see a decline in operating margins in the second half due to higher content, amortization and sales and marketing costs associated with their Larger second half slate of content. Now even with today's declines, the stock is still up over 87% over the past year. But with no major surprises in yesterday's report, more analysts are on the sidelines now. A third of analysts have a hold.

[Fidelity Representative]

Rating on the stock while 65% have a buy.

[Jenny Harrington]

JP Morgan with a neutral saying we.

[Fidelity Representative]

Continue to think shares need a breather, remain neutral with a thirteen hundred dollar price target.

[Jenny Harrington]

Goldman Sachs saying we maintain our neutral rating as we still see a balanced risk reward on the shares as recent stock price outperformance already reflects much of this potential upside.

[Fidelity Representative]

Now there is one bullish area for.

[Jenny Harrington]

Analysts and for the company, the potential.

[Fidelity Representative]

For generative AI for the likes of lowering visual effects costs and improving advertising.

[Scott Wapner]

Back over to you our Joy of Boris and Julia. Thank you very much. Kevin, want to come over to you. You actually made a covered call ahead of the Netflix results. Walk us through that trade if you.

[Kevin Simpson]

Thought the Apple trade was cool. How about this one? So we wrote a covered call yesterday on half of our Netflix position in advance of the earnings report thinking that there might be a little bit of a drag, but maybe they weren't going to just crush it to the top. But the neat thing about Nvidia, the neat thing about Netflix, most of these Mag 7 names. Steve, you touched on it earlier. The implied volatility going into earnings is something that as a covered call seller you almost can't resist. So we wrote a covered call for 12, 40, 45 strike Frank, one week expiration and we brought in $57. Now we closed that out this morning at the Open for $12. So we netted a $45 profit just in a few short hours of trading. Now I know the stock's down 59, but we hedged $45 of that writing a covered call into earnings. So I feel like that's something that you can do as a viewer at home when you see a stock going into earnings. And option premiums are just that juicy. Also longer term, we love the name. There's absolutely no reason to have a sell on it. This is a stock you can own forever. We love it and we'll continue to look at this thing as a great, great long term hold.

[Scott Wapner]

Jenny, you own Disney. Just want to get your take on what we see with Netflix. Is that a read on anything when it comes to. No, not at all.

[Jenny Harrington]

No. And I think it's funny because they always pair me up on Disney and Netflix and they're just completely different businesses, completely different valuations, completely different growth profiles. So, you know, with Disney, it's 19 times. It's too cheap for a high quality consumer business. The movie business is doing really well. Theme parks have been shockingly resilient. Like, it's up 9% this year. It's just. I don't even know what a good analogy for the not great comparison is. It's just not really a great comparison.

[Kevin Simpson]

Well, content is king. I just watched andor it's a great show.

[Jenny Harrington]

Okay, fine, content's king. But you know that like the balance sheets and earnings growth, like earnings growth, dry drivers of these two businesses are just too different to say why do you own this?

[Steve Weiss]

So what you're saying is, Frank, why the hell did you ask me that?

[Jenny Harrington]

No, I should say to the producers because it's every time, every time we went to night comes up, they're like, you know, they're like, hey, Jenny, why Disney?

[Scott Wapner]

Jenny. Jenny. Taking the weiss roll today. Who saw that? All right, time now for the headlines with our Silvana Hanau back at CNBC hq. Sylvana.

[Jenny Harrington]

Hey, Frank.

[WhatsApp Representative]

Good afternoon. A federal judge has disappointed dismissed a.

[Jenny Harrington]

Lawsuit that sought to block the release.

[WhatsApp Representative]

Of the identities of the FBI agents.

[Jenny Harrington]

Who worked on the January 6 cases.

[WhatsApp Representative]

In her ruling, the judge expressed sympathy.

[Jenny Harrington]

For the agents who filed the suit, but said the DOJ did not appear to be looking to release the agents.

[WhatsApp Representative]

Identities as an act of retaliation.

[Jenny Harrington]

Two US government officials tell Reuters that El Salvador will soon Release more than 200 Venezuelans currently held in the maximum security Sea Cop prison. And in return, Venezuela will release five.

[WhatsApp Representative]

U.S. citizens and five permanent residents to.

[Jenny Harrington]

The U.S. the Trump administration has yet.

[WhatsApp Representative]

To comment and a third witness has invoked her fifth amendment rights today at.

[Jenny Harrington]

A deposition with House Republicans who are conducting a probe of the Biden White House.

[WhatsApp Representative]

In a post on X, House oversight.

[Jenny Harrington]

Chairman James Comer accused former President Biden's deputy chief of staff Annie Tomasini and.

[WhatsApp Representative]

Other aides of lying to protect themselves in the quote, historic scandal. Frank, I'll send it back to you.

[Scott Wapner]

Our Silvana now back at cnbchq. Silvana, thank you very much. All right, coming up next, Kevin's ready with one more trade for you. Halftime's gonna be back right after this.

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[Scott Wapner]

And welcome back to Halftime. Quick checking the markets right now you can see all three indices in the red taking a downturn. A factor here. A new report from the FTSE just a few minutes ago that President Trump is now pushing for a 15 to 20% tariff on all EU goods. Right now we're looking at the Dow down about a half a percent. The S and P and the Nasdaq both down fractionally just under a quarter of 1%. Also you can see here this an ETF we follow often here on CNBC. The IE you are the iShares core Europe moving negative. You can see a downside move just a minutes few ago on that ETF as well. All right, want to get back to some of the trades. Kevin, we teased it. You got one more move for us. Give us your other trade. This one is in consumer discretionary.

[Kevin Simpson]

Working hard this summer, Frank. We had we had a covered call written on Home Depot and this was a situation last Friday, Steve, where it actually did got called away. We were called at 370. We had a $4 premium. So effectively we're out of Home Depot at 374. This week the markets eased a little bit. So we wanted to be participants in the name. So we've been able to get in in 360 and below. So we bought more Home Depot around 359 to replace some of the shares that were called away. But an important caveat is we had a 5% position called. We've only replaced it with a 3% weighting. We think rates are still a little bit high. We think it's going to be a little bit of a longer term recovery turnaround. Call what you will with Home Depot. So we're back in the name for 3%. We made a few bucks on the rate.

[Scott Wapner]

Just curious, you said rates are a bit high and anybody feel free to jump in here. Right now they're about 6.8 for a 30 year fix. When is this one of the mortgage rates get to a level that you see this stock recovering because it seems to trade on the mortgage rates and the idea that people are Moving and you know, doing things like that.

[Kevin Simpson]

Yeah, it's not like a mortgage number. You want to see a 5.99 and people just rush in or a 6.99. It's more if the Fed gives us a rate cut and they see rates come down. I think people are holding off major renovations for that. We did a lot of that during COVID It's been five years. There needs to be a refresh. People aren't moving as much. Home Depot is poised to take advantage of it. But I think it's more of a Q4, Q1 next year story.

[Steve Weiss]

It's also consumer stock. You know, I mean that's how you look at consumers go there. It's some discretionary income.

[Scott Wapner]

Of course. Right.

[Steve Weiss]

Excuse me. So if you look at the whole retail sector, you see, you know, see it across.

[Scott Wapner]

Speaking of consumer stocks, let's go to some stocks are on the move. American Express. Yes, those shares are lower despite a beat. Jenny, you own this one Very important to note, the CEO said this was a record spending quarter for cardholders and still we're seeing the stock move lower about 3%.

[Jenny Harrington]

Right. And so it's, so it's such an interesting insight from Amex when you hear record quarter for cardholders. And don't forget earlier I said there are some cracks in the consumer. And so you see things at the consumer level like real wages getting impacted. You see delinquency rates up. There is a huge bifurcation in the pain that the consumers out there are starting to feel. Right. The high end consumers which are American Express's customers are still doing really well and I suspect they will. And that's why in a quarter like this you have great numbers. Their delinquency rates 1.3%. That is best in class by a long shot. This trades at 18 times earnings, has 14% consensus earnings growth ahead. This echoes back to the conversation about the Magic 7 growth and all the rest. Right. If you've got mid teens earnings growth at Amex and you've got mid teens earnings growth for the Mag 7 and you've got 18 times on Amex, why wouldn't you want to own that? This is a terrific company, you know, and it's down a little bit today I think because it was up so much. Nothing wrong with this report.

[Scott Wapner]

Yeah. Make sure is down just about 3%. Coming up next on halftime, we have our calls of the day. Halftime is going to be back right after this. Welcome back to halftime. We're going to go to our Angelica Peebles with A news alert on Sarepta Therapeutics. Angelica.

[Jenny Harrington]

Hey, Frank. Sarepta shares are moving even lower today. Look at your screens.

[WhatsApp Representative]

About down about 26% right now.

[Jenny Harrington]

And that is after Bloomberg News is reporting that the FDA commissioner Marty Makary has said that he's taking a hard look at whether Surrepta's gene therapy levitis.

[WhatsApp Representative]

Should stay on the market.

[Jenny Harrington]

Now of course this comes after some safety concerns about this gene therapy. We know that two patients who received this gene therapy have died.

[WhatsApp Representative]

And then also this week we learned.

[Jenny Harrington]

That a third patient who received a similar but different gene therapy has been also died from these liver issues, raising concerns about the safety of these treatments. And so the company is telling me in a statement that the FDA was aware of this event, this third death when we discussed the black box warning with the fda. So basically they're saying that the FDA was already aware of this, they knew it was a risk and therefore they.

[WhatsApp Representative]

Don'T see a risk that this drug.

[Jenny Harrington]

Will come off the market. But again, we have this from Bloomberg that the FDA commissioner directly saying that they are indeed taking a look at this issue. Back over to you, Frank.

[Scott Wapner]

Angelica Peoples looking to disrupt the shares pulling back just about 26% I believe. Thank you very much for that. All right, time now to get some of our calls. The day why don't we start with Eli Lilly added to a catalyst driven idea listed Morgan Stanley. Kevin, you own this one. Shares up just about 1% right now.

[Kevin Simpson]

Yeah, well the catalyst, Frank, is if they can deliver an oral drug, and I believe that they will, this, this orfo would be a game changer. 100%. If their orals are as effective or almost as effective as the injectables, then this is a catalyst. And I couldn't agree more with the call.

[Scott Wapner]

All right, moving on. Materion upgraded to overweight at KeyBank. Jenny, you own this one?

[Jenny Harrington]

Yeah. Here's one that we never ever talk about. And this is in our discipline growth strategy. So what they do is they make really high performance engineered materials for tech, automotive, consumer electronics, aerospace. And it's mostly based on beryllium. They actually have 50% of the world's beryllium production. And this is an expensive, very technical, really cool material that can like withstand huge temperature changes. So it's in things like the James Webb Space telescope. Stock's down 5% year to date, but it's up a lot before that, which is why we continue to hold it. It trades at 16 times earnings, has double digit growth for the foreseeable Future. Again, it's down 6% this year, but that's largely because of slowdown in auto and tech demand, and we expect that to rebound next year. So, interesting. Unique company. It's small. It's a $1.8 billion market cap. So if you're going to buy it, put a limit on it because things move quickly.

[Steve Weiss]

I'm sorry, what stock are you talking about?

[Jenny Harrington]

Material. You mean to say it again so you can remember. Material.

[Scott Wapner]

We got to move on, guys. Going to D.C. we have our Megan Casella in Washington with some more news on this potential tariff that could be placed on the eu. Meg?

[WhatsApp Representative]

Hey, Frank. That's right. The Financial Times is now reporting that President Trump has been pushing for a minimum tariff on all goods coming in from the EU of between 15 and 20%. They say that's according to three people who have been briefed on the talks. The FTSE is also reporting that those people familiar with the negotiations say President Trump is also not willing to lower those sectoral tariffs that are currently in place on all cars and car parts at 25%. The EU was pushing for those to be lowered as part of this deal. They say President Trump does not have much appetite for that. That's according to the Financial Times, Frank. And it does come after the EU's lead trade negotiator was just in Washington for a few days of meetings. We know he was meeting with the Commerce Secretary, the US Trade Representative, as well as Kevin Hassett, the White House economic adviser. And in trying to run this out, Frank, I was told one that the president certainly does not have a lot of appetite for these lowering car tariffs. So I would expect those to remain in place as part of any deal. And then on the 15 to 20% piece overall, that fits with everything we've been hearing from the president so far. If you think about the deals we know about 20% tariffs remaining in place on Vietnam, 19% on Indonesia, those are the ones we have so far. So I would expect that any country or trading partner that makes a deal we already knew was looking at a minimum 10% tariff. Now, the president saying to the EU it will be 15 or 20%, according to that Financial Times. Frank, the last thing I'll say is the last time we heard from the president himself on the EU was just Wednesday night of this week, when he said, quote, we could possibly still make a deal with the eu, but of course, that still means tariffs are likely to stay in place. Frank.

[Scott Wapner]

Yeah, we're seeing the investor reaction to that possibility of 15 to 20% markets moving lower on that report are making Costello live in dc. Meghan, great to see you. The earnings set up on halftime is coming up next. We'll be right back after this break. And we are back on halftime with the setup. Verizon starts the week with results on Monday. Jenny, you own this one?

[Jenny Harrington]

Yes, Verizon. So people are always like, oh, I've owned Verizon for so long, I've never made any money in it.

[Fidelity Representative]

Blah, blah, blah.

[Jenny Harrington]

To me, it's always about the starting point being today. And it's about what you own and why you own it. And I've had Verizon in the portfolio for a long time, and I own it as kind of a bond equivalent that I can count on for a very, very steady dividend yield.

[Scott Wapner]

Six and a half percent, right?

[Jenny Harrington]

Just about, yeah. So we went back and we looked at the very first time we bought it, and you know what? My Compounded annualized return is 7%.

[Steve Weiss]

What's your compound annual?

[Jenny Harrington]

Thank you for asking, Steve Weiss. It's 7% annualized over time for the purpose of this holding in this portfolio, which is better than a bond. Better tax advantage income stream. It's been great. What I expect from earnings is a snore fest. That's what it should be. That's hopefully what it will be. It's cheap. It cranks out the income. Don't expect any fireworks for the right reason.

[Scott Wapner]

Sorry to cut you off. IBM also reporting its earnings on Wednesday. Kevin, you own this name.

[Kevin Simpson]

Speaking of traditional snore fish fest, IBM is a sleeping giant and I expect the numbers to be fantastic. Analysts are expecting a 9% jump in EPS. The stock's up 33%. The Red Hat integration is working. Watson, I go IBM.

[Scott Wapner]

All right, there we go. Shares about 1% right now. Final trades are coming up on halftime. Stay with us. Welcome back to Halftime. A quick update on Surreptit Therapeutic. Shares have been halted after the FDA requested the company stop all, all shipments of its gene therapy drug. Right now, again, shares are halted on Sarepta. All right, moving on. We have final trades. Kevin, you're up first.

[Kevin Simpson]

I think you can look at Raytheon RTX heading into Tuesday's earnings, incredible demand for repair of aerospace. And the backlog that they have is massive.

[Scott Wapner]

Weiss, Netflix.

[Steve Weiss]

Look, I think you get an opportunity to buy this. If you bought it as early or after earnings came out and stock trade down, you've done quite well.

[Scott Wapner]

Jenny Freeport.

[Jenny Harrington]

McMoRan Copper stays at $5. They should produce 9 billion in free cash flow, which gives it a 15% free cash flow yield.

[Scott Wapner]

All right, let's go do a perfect time really quick. We're going to show you that the markets very quickly took a downturn after the report came out. The president considering 10 to 15% tariffs on the EU right now, all three indices in the red. That's going to do it for halftime. The exchange starts right now. You've been listening to CNBC's Halftime Report, the podcast.

[Kevin Simpson]

You can always catch a us live.

[Scott Wapner]

Weekdays at 12 Eastern only on CNBC.

[Fidelity Representative]

All opinions expressed by the Halftime Report participants are solely their opinions and do not reflect the opinions of CNBC, NBCUniversal, their parent company or affiliates, and may have been previously disseminated by them on television, radio, Internet or another medium. You should not treat any opinion expressed on this podcast as a specific inducement to make a particular investment or follow a particular strategy, but only as an expression of an opinion. Such opinions are based upon information the Halftime Report participants consider reliable, but neither CNBC nor its affiliates and or subsidiaries warrant its completeness or accuracy, and it should not be relied upon as such. To view the full Halftime Report disclaimer, please visit cnbc.com halftime reportdisclaimer trading@schwab is.

[Kevin Simpson]

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