The Great Reassessment Trade 3/28/25

Summary

Podcast Summary: Halftime Report – "The Great Reassessment Trade" (3/28/25)

Overview In the March 28, 2025 episode of CNBC’s Halftime Report, host Scott Wapner engages with top investors Stephanie Link, Jim Cramer, Kevin Simpson, and Malcolm Etheridge to dissect the current turbulent state of the markets. Titled "The Great Reassessment Trade," the episode delves into the ongoing market downturn, economic indicators, policy uncertainties, and strategic investment moves amidst a shifting financial landscape.

---

1. Market Overview

Scott Wapner opens the discussion by highlighting the persistent decline in the stock markets, emphasizing that NASDAQ is leading to the downside. He notes the looming significance of April 2nd and its potential impact on market sentiment.

Scott Wapner [00:59]: "Front and center this hour, stocks down again. Investors continuing to reassess where the markets and this economy are heading."

Jim Cramer adds his perspective on the market's trajectory, suggesting that the current correction might be deeper than initially anticipated.

Jim Cramer [02:10]: "It may be dipping into bear market territory. It’s everyone trying to get in front of where it's going, but it's already obvious now."

---

2. Economic Indicators and Consumer Sentiment

The panel discusses various economic indicators, including consumer sentiment, which is reported as the lowest since November 2022. This decline is pivotal in potentially signaling a recession, though opinions vary among the panelists.

Malcolm Etheridge [13:27]: "My concern is that it could be a self-fulfilling prophecy because we still have GDP growth, a great labor market, and corporate earnings. But if consumer sentiment leads to decreased spending, it could trigger a recession."

---

3. Investment Committee's Perspectives

Stephanie Link questions whether the recent downgrade of equity targets by several financial institutions signals a need for investors to react impulsively. Scott Wapner counters by advocating for strategic portfolio adjustments rather than knee-jerk reactions.

Stephanie Link [02:44]: "Is it time for all investors to do that, to just react?"

Scott Wapner [03:18]: "Now is the time to actually get your pencils out and make a list of high-quality companies where you can upgrade your portfolios."

---

4. Sector Analysis: Financials and Big Tech

The discussion pivots to the financial sector, where despite recent downgrades, some banks like Wells Fargo and Bank of America remain attractive due to their strong performance year-to-date.

Stephanie Link [06:13]: "Financials are down 5% this month, but still up 3% for the year."

Jim Cramer expresses skepticism about the anticipated surge in deal-making within the financial sector, suggesting delays may continue.

Jim Cramer [20:27]: "We've lost confidence that we are going to see that in the first half of this year. Like I would have been willing to bet back in January, but I just think that there’s going to be a delay."

In Big Tech, Scott Wapner and other panelists discuss the undervaluation of giants like Microsoft and Amazon, viewing current pullbacks as buying opportunities.

Scott Wapner [19:21]: "I couldn’t believe where a company like Target is trading at 11 times earnings. Those numbers have not even come down."

---

5. Tariffs and Policy Uncertainty

A significant portion of the episode revolves around the impact of tariffs and Washington's policy uncertainty on the markets. The panelists debate whether the current administration's stance will alleviate or exacerbate market tensions.

Scott Wapner [04:26]: "We have to get through tariffs. There’s a pretty good chance once we find out the news next week we actually could rally because we're so depressed and obsessed about this whole thing."

Kevin Simpson underscores the need for reducing uncertainty as the primary solution to stabilizing the markets.

Kevin Simpson [22:57]: "If that uncertainty comes down, Stephanie’s going to be right. There’s only one cure, which is to lower that uncertainty."

---

6. Federal Reserve's Dilemma

Steve Liesman joins the conversation to shed light on the Federal Reserve’s challenging position, balancing between controlling inflation and supporting economic growth.

Steve Liesman [14:51]: "We have been waiting to see if the soft data would meet the hard data and it has. Goods inflation now exceeds service inflation, complicating the Fed’s actions."

He highlights that rising goods inflation, partly due to recent tariffs, limits the Fed’s ability to consider rate cuts without addressing inflation first.

---

7. IPO Spotlight: Core Weave

The panel provides insights into the anticipated Core Weave IPO, discussing its valuation challenges and strategic positioning in the AI sector.

Christina Partsinevelos [24:23]: "The offering price is $40, which is much lower than the original range. They expected to raise about $1.5 billion valuing the company at $23 billion."

Jim Cramer advises caution, questioning the sustainability of Core Weave’s business model.

Jim Cramer [38:23]: "It's a reseller of Nvidia GPUs. Not really a business model I want to be throwing."

---

8. Notable Trades and Investment Moves

The panelists share their current investment strategies amidst the market reassessment:

• Jim Cramer discusses increasing positions in Cybersecurity stocks like CrowdStrike and Palo Alto, viewing them as defensive against market volatility.

  Jim Cramer [36:34]: "Cybersecurity is a sector within the software space that is defensive against a lot of what we're talking about."

• Scott Wapner mentions adding to positions in Home Depot and Metta, citing attractive valuations and growth opportunities.

  Scott Wapner [22:22]: "Home Depot is down 8% YTD, but with a valuation of 23 times, it’s interesting. They have great operating margins and growth potential."

• Kevin Simpson highlights his investments in Nvidia and Amgen, leveraging their strong fundamentals despite market downturns.

  Kevin Simpson [26:00]: "Growing earnings per share at 50%, that's to me a bargain."

• Malcolm Etheridge shares his tactical moves, including trimming positions in Tesla and increasing stakes in PayPal and Aerospace stocks.

  Malcolm Etheridge [32:06]: "Investing is easy by great companies that have improved profits. That's what we're trying to do."

---

9. Conclusion and Outlook

As the episode wraps up, the panel reflects on the "Great Reassessment Trade," emphasizing the need for strategic investment in high-quality companies amidst economic uncertainty. They express cautious optimism, suggesting that while the markets are undergoing significant adjustments, opportunities exist for disciplined investors to capitalize on undervalued stocks.

Malcolm Etheridge [31:39]: "If it goes down another 10%, buy more. These are great names and you ride through."

Scott Wapner concludes by reinforcing the theme of strategic reassessment and the importance of adjusting portfolios to navigate the evolving market dynamics.

Scott Wapner [46:38]: "All opinions expressed by the Halftime Report participants are solely their opinions and do not reflect the opinions of CNBC..."

---

Key Takeaways:

• Market Downturn: Persistent decline with NASDAQ leading; potential bear market territory.
• Economic Indicators: Low consumer sentiment; mixed signals on GDP growth and inflation.
• Policy Uncertainty: Tariffs and Washington's stance are central to market instability.
• Investment Strategy: Focus on high-quality, undervalued companies; defensive sectors like Cybersecurity.
• Federal Reserve: Balancing act between controlling inflation and supporting growth.
• IPO Insights: Core Weave faces valuation and strategic challenges in the AI space.

For listeners seeking to navigate these turbulent times, the episode underscores the importance of strategic reassessment, informed investment choices, and staying informed on economic indicators to make resilient portfolio decisions.

Transcript

[Eduardo]

Mizzen and Main is the pioneer of re engineering classic American styles with performance fabrics, all with the goal of making it easier for guys to achieve and enjoy their version of success. They're the brands you can turn to. A machine, washable and wrinkle resistant dress shirt you can wear every day and high stretch pants that are as comfortable in the office as they are on the golf course. Go to mizzeninmain.com and use code POD20 to get 20% off your first purchase.

[Scott Wapner]

Is it time to reimagine your future?

[Eduardo]

The right business skills may make a.

[Stephanie Link]

Difference in your career.

[Eduardo]

At Capella University, we offer a relevant.

[Scott Wapner]

Education that's designed to focus on what.

[Stephanie Link]

You need to know in the business world.

[Scott Wapner]

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.

[Stephanie Link]

Think with Capella University.

[Scott Wapner]

Learn more at Capella.

[Eduardo]

Eduardo.

[Stephanie Link]

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. All right, Carl, thank you very much. Welcome to the Halftime Report. I'm Scott Wapner. Front and center this hour, stocks down again. Investors continuing to reassess where the markets and this economy are heading. We will trade it with the investment committee. Joining me for the hour today, Stephanie Link, Jim Lay, Kevin Simpson and Malcolm Etheridge. We'll take you to the markets. We are falling and falling hard yet again. You can see it right on your screen. NASDAQ is leading to the downside. PC was hotter. We have the tariff issue. We know April 2nd still looms consumer sentiment the lowest since November of 2022. Yields are down. Gold is up yet again. And Malcolm, another S&P 500 target cut today, this time by CLSA, who goes to 5,800 from their prior 66, 60. We came into the year they say price for perfection. What has come to pass has been far from it. Your thoughts?

[Jim Cramer]

Yeah. I don't know that the reratings that are going to pour in now that it's obvious. Right. We're starting to capitulate around this idea that maybe we're talking about more than just a little bit of a correction and potentially dipping into bear market territory. I don't know that the reratings that are going to come should be seen as anything more than a reversion to that, a race to revert to the mean. Right. It's everyone trying to get in front of where it's going. But it's already obvious now, right? April seconds on the calendar. We know what that likely brings for the markets. And so now it's just everyone trying to get their pencils out to make those numbers look a little better.

[Stephanie Link]

Yes, Steph. I mean we've had whether numbers come down in terms of targets. We've had views come down on the stock market, a number of them in fact, since January. Truist really got the whole thing started. They cut equities to neutral back then early March BCA did, then HSBC did, then Citi did, then Goldman did. Yardeni cut his target, then Lori Calvert did, then Barclays did. Is it time for all investors to do that, to just react?

[Scott Wapner]

Absolutely not. Now is the time to actually get your pencils out and make a list of high quality companies where you can actually upgrade your, your portfolios. You don't have to own the number three or number four player in any given industry. You can now get number one or number two on sale. We have been talking about a slowdown in the economy since January. We all expected it, but we're not headed into a recession. Yes, I've been talking about this. I have been talking about this in January.

[Stephanie Link]

I don't think people expected it on January 1st.

[Scott Wapner]

I think I have been talking about a slowdown in the economy since the beginning of January because the fiscal stimulus that have been put in place over the last several years is just not going to happen this year. That was a huge tailwind. We put $7 trillion of fiscal policies in place into this economy. We had to because of COVID but we overstayed our welcome. That led to higher inflation. Fast forward to this year. And this administration isn't about fiscal stimulus. It's about lower taxes and deregulation. And now we have to get through tariffs.

[Stephanie Link]

Where's that? Where is that?

[Scott Wapner]

What?

[Jim Cramer]

Yeah, do we even.

[Stephanie Link]

Where's the lower taxes?

[Scott Wapner]

Oh, it's absolutely coming. It's absolutely coming. They have to get, we have to get through the tariff situation. And I would argue that there's a pretty good chance once we find out the news next week we actually could rally because we're so depressed and so obsessed about this whole thing. And by the way, the economy slowing, not a recession in my mind, one and a half percent, 2%, that's okay. It's not great, but it's okay. And the data points that I'm looking at actually support still that kind of a number. We have a little Bit better housing data over the last couple of weeks, helped by lower interest rates. We had better industrial production, we had better durable goods. Personal income today was actually better than expected. Yes, spending was a little soft. That's not a surprise by any means. In a one one and a half to 2% GDP world, you can grow mid single digit revenues with a little margin expansion, probably 9, 10% earnings growth. So while I don't like to see all of these strategists lowering their targets and lowering numbers because we know stocks follow numbers on the way up and on the way down, I do think it's getting a little extreme in terms of it being this massive decel. Massive. It's not. It's a D cell, but it's not a massive decline. But say one last thing. The s and P500 is down 5% year to date. It feels worse because growth is down 10%. Technology is down 9%. Discretionary is down 10%. Energy, financials, industrials, they're actually hanging in better. But most people own the growth side of the s and P500. They have over the last couple of years and that was the right move.

[Stephanie Link]

Financials are down 5% this month, but.

[Scott Wapner]

Still up 3% for the year.

[Stephanie Link]

But you're down 5% this month.

[Scott Wapner]

Yeah, but the S and p is down 5% and the financials are up 3%. That's an 800 basis point swing.

[Stephanie Link]

So I talked to Rick Reeder yesterday of blackrock on the closing bell, who in his mind really summed up, I think what a lot of people are feeling right now related to these markets. Take a listen.

[Kevin Simpson]

We're in this incredible period of uncertainty and I think the data, particularly corporate data over the next couple of months is going to reflect the fact that people are sitting on their hands. You're in this period of stasis and uncertainty. So as an investor, you know, what do you do? You take your beta down a little bit, you manage your risk down a little bit, you buy some options to create some upside convexity in the portfolio. But I think you got to, you know, I always said, you know, instead of trying to hedge everything, just hunker down a little bit, take a little bit less beta risk, hold on to things like income that provide you balance in the portfolio.

[Stephanie Link]

So that's. Jim, Rick Reeder, take your beta down, manage your risk down, hunker down, less beta risk, hold on to things like income. What do you do with that?

[Kevin Simpson]

What that tells me is.

[Stephanie Link]

Well, for Rick Reeder.

[Kevin Simpson]

Yeah, no, I got it. I mean Bond guy, but I got it. All right. He hunkered down a little bit. What I don't hear him saying, and I'm with Steph on this, is that, oh, my goodness, we're headed into a bear market.

[Stephanie Link]

We're heading to a reception bear market. Like Josh made the case yesterday.

[Kevin Simpson]

Okay, I got it. And look, if you are in it, if you're in a correction, there is always that possibility that it's worse than a correction, that it's the beginning of a bear market. But here are the facts. Industrial production and retail sales are still growing at the latest read. They are. They certainly have muted. And this is Stephanie's point. We've had a growth slowdown that creates a correction in the markets. What we're doing this week is actually a classic retest of the bottom. This is what corrections do. They retest and they really retest your conviction. There are reasons to be concerned. And Rick Reeder was talking about uncertainty. I think we'll all agree uncertainty is very high right now. What I would like to see, and I can't promise that this is going to happen, is that April 2nd is some sort of finality. It won't be total finality, but some sort of finality. Because then we can go into the earnings season and have companies say, okay, we think we know what the tariff picture is. We've seen growing profits. We haven't people off. Look, jobless claims are saying we're not in a recession right now. Jobless claims are saying, we're actually kind of fine right now, but we need to get this tariff uncertainty done with. Let companies adjust to it and move forward.

[Stephanie Link]

So that's key. So, for example, the auto companies. Okay. Which, you know. Yeah, I mean, well, because it plays off of the point you make, like the finality that we're going to get on April 2nd. Are the auto tariffs going away on April 2nd?

[Kevin Simpson]

No, that's not the point.

[Stephanie Link]

No, no, no, I know it's not. But the point I'm making is that because what some have suggested is going to be a backbreaker and Armageddon. And you look at Ford and GM this morning. I mean, Coach, can I field that ball? How those tariffs aren't going away anytime soon. It doesn't appear so. Those profit margins, if the president's threatening those companies not to raise prices, where are those profit margins?

[Kevin Simpson]

Zero.

[Stephanie Link]

Okay, so what do those stocks do then?

[Kevin Simpson]

Yeah, no, I'm with you.

[Stephanie Link]

We're not.

[Kevin Simpson]

I mean, we don't have to do the 20 questions. I get where you're going. And I agree. And if you'll allow me, what I'll say is that makes. It makes no sense. It's true. Everything you said, it makes no sense. If presidential policy is to now crush the profits of the companies who employ your base. Makes no sense. At least not to me. So is he nuts? I don't think. Think so. I think, and Stephanie was touching on this, he's getting all the bad stuff out of the way early so he can get to the good stuff, not just extending the tax cut. But he's, look, he said this. He wants to replace income taxes with tariffs.

[Stephanie Link]

What if the bad stuff. You're talking as if the bad stuff's just going to go away. No, I hear you on the, on the. I've been talking about the good stuff, too, the deregulation tax.

[Eduardo]

Right.

[Stephanie Link]

But what happens if the bad stuff has a more punitive effect on not only the stock market and stocks themselves, but on the economy, on earnings. Goldman's got $280 next year. On earnings.

[Kevin Simpson]

Yeah.

[Stephanie Link]

What multiple do you want to put on that? You know what 280 times 20 is?

[Kevin Simpson]

It gets you right where you are.

[Stephanie Link]

5600 gets you right where we are right now. Do you think 20 is too high a multiple? Because I talked to a very big money manager this morning who says the market's delusional. The question is crazy in this environment. If you listen to the members of the administration who have come on this network and talked about these tariff policies, they don't think that money manager that I've spoken with, they don't think that that's going away. They think, thus earnings are too high. They think the multiple is too high.

[Kevin Simpson]

If the earnings are too high, Houston, we got a problem. I mean, if 280 is 20, 26, that's a problem. Unquestionably, we don't know is the unfortunate tr. And I don't want to sit here and talk to you, Scott, or my colleagues here or the people watching and say that I know with certainty. Nobody knows with certainty. That's why we'd like to get these tariffs out of the way and get companies that so far have retained workers and so far are enjoying growing profits back on the ball of their feet and growing. It is possible that the negatives outweigh the positives. That is certainly possible. We're unfortunately going to have to wait and see. Anybody who says they know is fooling.

[Scott Wapner]

US companies, they're going to restructure, they're going to increase price. They just will they're also going to.

[Stephanie Link]

You think Ford and GM are going to increase price when the president's threatening them?

[Scott Wapner]

Not, I'm not talking about the autos. I think those are in a world of hurt and I think that's a totally different animal, to be honest with you. But I would just simply say company, us Companies are really adapting and they adapt to change and they will do so and they will restructure and they will increase price. And oh by the way, I think that they're actually going to see more productivity we talk about all the time that is actually going to play right into the strength of companies and that will help them offset to a degree. I'm not saying it's going to be a perfect match and an offset, but to a degree I think it will help.

[Stephanie Link]

That's by the way, a Wall Street Journal headline. Not, not, not our headline. It's the Wall Street Journal quote, trump warned US Automakers not to raise prices in response to tariffs threat came in a call earlier this month. The President told the executives that the White House would look unfairly favorably on such a move, leaving some of them rattled and worried. Those are direct. That's a. Direct from that story from the Journal, I guess. Kev, I think what everybody in this market is dealing with is a, is a reassessment, a reassessment, what we call the great reassessment trade. Far different from what we thought on January the first. And I think that's the point that we want to discuss Here it is January 1st. What was the trade? It was pro business, it was pro economy, it was pro markets, it was pro M and a. What's the March 28 trade? Surging business uncertainty, sinking consumer sentiment, rising fears of stagflation or recession and falling stocks. The great reassessment takes us where.

[Malcolm Etheridge]

Let's focus on the consumer sentiment because I think that's something that we don't pay enough attention to for good reason. Historically. Historically. But my concern, Scott, is that it could be a self fulfilling prophecy because to Stephanie and Jim's point, the foundation is still intact. Yeah, we're losing momentum in the economy, but you still have GDP growth, you still have a great labor market and you still have corporate earnings. So those things are good. The problem is if the consumer is going to stop spending and that sentiment comes to fruition, then you're really going to affect growth, you're going to affect earnings and on top of tariffs and everything else, now you start to fear a recession for good reason. So I think Next week would be a wonderful time to get past some of the uncertainty. I'm just skeptical that that will happen.

[Stephanie Link]

You know, the other issue is, as Citi says, risk from protracted trade or war? Trade War, excuse me, may be underappreciated Book far out today. Bottom line, rising risk of recession is real. Our senior economics correspondent Steve Liesman joins us now with what has to be the Fed's worst nightmare still hot inflation, a sinking consumer, rising business uncertainty. What in the world do they do in an environment where the PC reminds us they still have work to do on inflation and some of the other data out today reminds us that the economy is really uncertain at the moment and I don't know what they might be thinking. You probably do.

[Steve Liesman]

I can't imagine a tougher position for the Federal Reserve to be in right now, Scott. And I think you're right to characterize what's going on on both sides of the mandate. The consumer spending numbers were not good. If you look at real spending, it was one of the worst numbers we've had in many, many months, even going back to the pandemic. In fact, if you put those two together, the decline in January and the very slight increase on an inflation adjusted basis. So to me, Scott, we've been waiting to see if the soft data would meet the hard data and it has. It has in this report. On the other hand, one of the notable features about today's inflation report was the idea that goods inflation is now part of the problem. Yes, service inflation is elevated and a bit more elevated than it had been. But now you had two months of higher goods inflation, perhaps one of those months reflecting tariffs from that were placed recently on China. But it's the first time, Scott, I went back again to the pandemic that the two month average of goods inflation has now exceeded service inflation. So I think the story here worth considering and I don't know if this to be true across the board, but I think the market is overestimating the Fed's ability to deliver rate cuts in the current environment. It could pass. You could have a rebound in consumer spending because the savings rate is elevated. Stephanie is right. You have had decent income numbers, but they were a little flattered by a one time off thing. But in any event, you do have some of the ammunition there to spend. But this inflation has to pass through, I believe, Scott, before the Fed can act. And I think the market may be a little bit too sanguine about the Fed's ability to ride to the rescue here. At least from a timing basis and maybe from an amount basis.

[Stephanie Link]

This, this, this week was a pretty good reminder of that right Musalam bargain. They underscore at least part of what the Fed's current view is because that was hawkish. There's just no other way to characterize what they said. The President meantime, we know wants interest rates lower. The Treasury Secretary wants them lower as well. Not by trying to force the Fed's hand. He's his, his tact has been different. He's talked about repeatedly wanting the 10 year to stay low, which just underscores even more of a pickle that the Fed is in the political pressure versus what the real backdrop appears to be not only on the economic but inflation front.

[Steve Liesman]

Yeah, well he's getting that lower 10 year, Scott, but he's getting it through a markdown. I believe in growth and the market seems to be looking past this inflation issue, which might again be the right call. But remember you had a bump up in tariffs in February. You had I don't know if they actually implemented. I guess they did implement some in March, but the bigger chunk is going to be in April. That takes you through to May. And if that happens, the market is now banking on let me get you a number here. I think it's a 70% probability, 72% probability of a rate cut in June. I think that soon and you have to Fed has there it is to 72. Then that third cut now that actually went up today. I would have not been surprised, Scott, if all of those probabilities came down today because I still think the Fed is going to address inflation before it's going to address weaker growth.

[Stephanie Link]

Steve, thanks as always. That's Steve Liesman, our senior economics correspondent. I mean let's just take this Steph, on the continuation of the theme of the great reassessment because you've reassessed, I think your view from the very beginning of the year on where we are. I think everybody has it's laid out right in front of you here where the majority I think people came in the beginning of this year thinking this was set up pro business, pro economy, pro markets, pro M and A. Have we gotten any of that surging uncertainty, sinking consumer sentiment and spending, rising fears of stagflation and recession and falling stocks. Have stocks corrected enough to reflect that? Have earnings expectations come in enough to reflect that? Has the multiple of the market come down enough that enough to reflect all of that?

[Scott Wapner]

Actually think the MAG7 numbers have come down enough, Scott. They have been coming down for a While now and we're starting to see that level off. So I'm really interested to see how they trade when they do report earnings. I have my eye on Metta by the way to maybe get back into that should that fall a bit more. It's already down about 20% from its highs. But I think the rest of the market, the other sectors, I think those earnings are going to be okay. I think financials will be okay. Of course M and A is slower than we thought but that is going to be more than offset by net interest income, net interest margin, some parts of capital markets, that sort of thing, industrials. I am not giving up on the data center build out. So that's why I was adding to Eaton and Qanta Services on discretionary. I mean I can't believe where a company like Target is trading at 11 times earnings. Those numbers have not even come down. They haven't been coming down. It's a, it's a psychological thing with them. Right. They have to prove themselves, execute better. But there are pockets in this market that I have been buying.

[Stephanie Link]

Mike, Mike Mayo by the way on your comment on financials. He cut his bank targets today.

[Scott Wapner]

So is everybody else.

[Malcolm Etheridge]

Why?

[Stephanie Link]

Because of the uncertainty and what he calls paralysis. Goldman, Morgan Stanley, PNC 5th 3rd, Comerica, Key Corp, M and T, Northern Trust region, State Stories, Street Truist, US Bancorp and Zion.

[Scott Wapner]

Right.

[Stephanie Link]

They were bullish over one year given the biggest deregulation in three decades. But the guide may be tricky given policy uncertainties.

[Scott Wapner]

Deregulation is going to be positive for the banks. Basel 3 Endgame is going to be positive for the banks. Everybody has been trimming their targets. Morgan Stanley did it earlier this week as well. And a lot of that has to do with lower wealth fees because of the lower markets that could reverse very quickly.

[Stephanie Link]

Malcolm, saw you sold the xlf. I did this morning.

[Jim Cramer]

My. This morning. This morning at the open. So my out of the bank on that is how long do I have to wait for that trade? Right. So to Scott set up we were told coming into this year, January we were bullish on the G sibs, we were bullish on the financial sector, we were bullish on M and A. All the goodies that were coming along with this administration. We haven't seen any of that and I've lost confidence that we are going to see that in the first half of this year. Like I would have been willing to bet back in January, which we were because we went XLF to overweight that sector. So I just think that you know, yes, there's the likelihood that eventually we get to that deal making bonanza. But how long do I have to wait?

[Scott Wapner]

I don't think it's just about dealmaking, to be honest.

[Jim Cramer]

For me it was. Yeah, for me I wanted to be situated in the companies that, in either direction that, that M and A is happening, the IPO market, them creating the buyouts, even interest rates becoming more favorable to help leverage, help companies that needed to refinance and rework their leverage. All of those positives that Goldman, Morgan Stanley, JP Morgan, all the names you just named, I can't rely on that deal flow anymore. And that's the thing that I thought was really going to juice those properties.

[Stephanie Link]

Even out of that it's like economic slowdown, falling rates, that's going to more offset.

[Scott Wapner]

Yeah. Lower capital, lower capital requirements is going to give them more ability to lend. That's why they want to lend it to small medium sized businesses, to consumer, to large business, to it to a lot of people. Just ask Jamie Dimon. That's why he complains all the time about the capital he wants to lend out more. It's too restrictive. So when you lower, when you lower the capital ratios that the capital requirements rather that will be positive not only for lending but also for buybacks. Stocks and these stocks, some of them are trading at one one point.

[Stephanie Link]

Are you making, is, are you making the loans you thought you'd make in a more uncertain environment?

[Scott Wapner]

They will make more loans than what they're doing now. I think they will, yeah, I do, Scott. And by the way, I have been adding to Wells Fargo and Bank of America because I think that the pullbacks from the highs give me a good opportunity. Own best in class.

[Kevin Simpson]

We know what the cause of all of this uncertainty is. We know what it is. It's Washington policy uncertainty. We therefore know exactly what the cure is. And there's only one cure, which is to lower that uncertainty. If that happens, Stephie's going to be right. I'm with Steffi on this and you know, I look at the banks in particular, I'm interested, Malcolm, that you sold them. But you know, look at something like Citigroup that's in the process of buying back 15% of its market cap. And all I can see is that if that uncertainty comes down and the economy continues to grow, they'll have bought back at now once again a meaningful discount to their tangible book value. That's actually a good thing. What this all comes down to is does the uncertainty decrease now nobody can Prove it. I can't prove it either. But unless this presidential administration is absolutely lunacy, then I think they have to take the uncertainty down.

[Stephanie Link]

The we were just talking about capital markets. I mean, there's a big IPO today that is for sure. And it's going to be a good barometer maybe of where we are, not only on that, but certainly in the air trade. It's core weave. It's the largest tech IPO we've seen in the US in several years. It's at the nasdaq. Christina Parts and novels is up there with the very latest on when we think this might get going.

[Christina Partsinevelos]

If you just look at the people behind me, they're quite relaxed, Right. Normally, if it's going to be pricing, there'd be a lot more excitement, a lot more employees. The man right behind me is Jay. He's the IPO execution officer. He acts as the middleman between Morgan Stanley Stanley. They're the stabilization agent. Right now, pricing is coming in around $42. Oscillating around there. Still way too early to call it. Keep in mind, the offering price is 40 bucks, which sounds great. Oh, $2 more, but much lower than the range they were originally looking for, between 47 and $55. So this company expected to raise about $1.5 billion through this IPO. 37.5 million shares. You're going to do the math. But overall that would value it anywhere between 19 and 23 billion dollars. I think there's, there are definitely some concerns with the debt structure and the fact that they have billions in debt that needs to be paid quite soon. But keep in mind, this is a startup they started in 2017 and valued at $23 billion. In just a short amount of time. They went from, you know, a mining company, 3D video rendering, to now an AI hyperscaler competing with the likes of us and counting Metta as a customer. But that debt structure, the customer concentration are really some big weights on this company right now. Also the timing. Right. Is this a great time to go to market?

[Stephanie Link]

Well, that, that's why, you know, there was some speculation as to whether we'd see this day. But we will, we have it and we will see. And you'll let us know when the stock opens. We'll, we'll certainly track it. Christina, thanks. We'll see you many times throughout this day. We know that. Just real quick. You bought more Nvidia?

[Kevin Simpson]

I did.

[Stephanie Link]

Relationship this company and Nvidia obviously is tied at the hip. You bought more?

[Kevin Simpson]

Yeah, I bought it not because of the core weave, but because of my right.

[Stephanie Link]

My general traded bad Nvidia.

[Kevin Simpson]

Yes, it traded terribly and now it trades at almost 23 times forward earnings for a stock. I know I do this every time. Growing earnings per share at 50%, that's to me a bargain. Now, if we're going to have a recession, okay, this trade will look poor. However, I've already said multiple times, I think we are doing a retest of the bottom in a correction. It always feels worse when this happens, especially when you retest. If it turns out, Scott, I'm wrong and this is much worse than a correction, then I'll have to take risk off.

[Stephanie Link]

Malcolm, you bought more Nvidia as well?

[Jim Cramer]

I did. I think this is a great positioning point for anybody who's missed this, like myself to this point. 10910 for a company that was up at 148 or so at its most recent high. So we're talking about a severe discount right now at a time when the company hasn't really lost a whole lot of strength. It's lost momentum, sure, but it hasn't lost a whole lot of strength.

[Steve Liesman]

Right.

[Jim Cramer]

They're still looking at something like a two to one ratio between receivables and assets on their books. And so until that relationship inverts, that's really the only thing that I would care too much about.

[Stephanie Link]

In the short term, we have a lot more moves to get to many throughout the tech sector. We will take a quick break and we'll do that on the other side.

[Eduardo]

Mizzen and Main is the pioneer of re engineering classic American styles with performance fabrics. All with the goal of making it easier for guys to achieve and enjoy their version of success. They're the brand you can turn to for a machine washable and wrinkle resistant dress shirt you can wear every day and high stretch pants that are as comfortable in the office as they are on the golf course. Go to mizzeninmain.com and use code POD20 to get 20% off your first purchase. Explore the world's hidden wonders on the Atlas Obscura podcast.

[Stephanie Link]

A village in India where everyone's name is a song.

[Eduardo]

A boiling river in the Amazon, a.

[Stephanie Link]

Spacecraft cemetery in the middle of the ocean. Every day the Atlas Obscura podcast will blow your mind in 15 minutes. You can find it on the SiriusXM app Pandora or wherever you get your podcasts. And don't forget to follow the show so you never miss an episode.

[Eduardo]

Check out the allnew CNBC sport Podcast where sports business and investing collide from media deals to team valuations, private equity moves and more. Catch the biggest business stories on the CNBC Sport podcast. Listen on your favorite platform.

[Stephanie Link]

All right, welcome back. Stephanie was making the point she thought that multiples at big tech have come down enough. And Malcolm, maybe you agree because you bought aside from Nvidia. Adding to that, you bought more Amazon and you bought more Microsoft. Amazon's trying to snap a seven week losing streak. Microsoft is on pace for its fourth straight negative month. That's the longest streak since 09.

[Jim Cramer]

Yes. So as the disciplined investor, I like to tell myself that I am, I like to buy strong companies at moments of temporary weakness that don't necessarily make any sense. Nothing fundamentally has changed about Amazon. Nothing fundamentally has changed about Microsoft. For those that didn't really like the fact that their capex was 80 billion to 100 billion, well now you get to buy all the growth that that capex buys at a discount. Right. So you're looking at something like 18 to 20% off between the two names. To Stephanie's point, she led off with I don't have to buy the second or third best player in a sector anymore at these kinds of discounts, I can go buy the best name in the, in the, in the space which is Microsoft or Amazon. And so that's why I've been adding to those names and some of those Mag 7 names, especially the ones that aren't negatively impacted by the consumer the way others are.

[Scott Wapner]

We thinking, well I was adding to it a couple of weeks ago and it keeps going down. So I hope you're right and I would look to buy more. Absolutely.

[Jim Cramer]

Even if it legs down from here though, I mean you're talking about a 20% discount on something that, and you're.

[Scott Wapner]

Also talking about 13 times EBITDA versus historically the average of 18 times. So I think to your point of being buying something at a discount and I think they are winning in retail, in the consumer. In last quarter actually their retail business, they grew 400 basis points in market share. Right. So they are one of, clearly one of the winners in the consumer. And of course once they can get capacity, I think that actually means that they'll see an acceleration in the second half of the year. So yeah, that's why I was adding to it.

[Stephanie Link]

Jim, Microsoft, why is, why is the stock traded so poorly?

[Kevin Simpson]

Well, I think there's been some concerns about the Capex expenditures. That's number one. I think also just honestly it was a little expensive. You go back A year ago it was roughly 35 times earnings and it's come down as you're both saying, I added to it right at this price level about two weeks ago. And you know, apropos of the Nvidia ad, what we're all talking about are high quality companies here. We're not talking about speculative companies, we're not talking about these hyper growth companies. We're not talking about measuring companies on price to sales. Why am I going on this rant? Because let's just say that I'm wrong and this is worse than a correction. If you can hang on to stocks through through something worse and come back to the other side, you're going to make a lot of money. Only if you're in the high quality companies that are not only going to survive but thrive by picking up market market share on the other side. That is Microsoft, that is Amazon, that is in Video, that is JP Morgan. Go down the list.

[Stephanie Link]

Jeff, what do you think about that?

[Malcolm Etheridge]

Yeah, no, I have to agree. I think we're not done. This isn't the bottom but if it goes down another 10%, you buy more. These are great names and you ride through.

[Stephanie Link]

What's the bottom like? I mean how much more do you think the market needs to come in?

[Malcolm Etheridge]

10%.

[Stephanie Link]

10% more than here?

[Malcolm Etheridge]

Yeah, why not? That gives you a 20% pullback in the old days.

[Stephanie Link]

Not sounds so easy.

[Malcolm Etheridge]

Investing is easy, Scott, by great companies that have improved profits. That's what we're trying to do.

[Stephanie Link]

But seriously, you know, 10% more than the 10% that we had.

[Malcolm Etheridge]

Yeah, I mean if you're asking what the worst case scenario is, that's what we've had on our whiteboard for some time was a 20% retrenchment. That's a lot more than 20% from some of these bigger names as they've come down long. But we're closer to the bottom than the top. I would be buyers here. We don't want to look back in hindsight if next week we get some clarity, we're going to look back and think like gee, we missed it. So you don't buy everything here. You don't try to time the market. Buy some here. If it goes down, buy more. I'm wrong and the market goes up.

[Eduardo]

Great.

[Stephanie Link]

I hope I am well, I mean why did you trim Tesla?

[Malcolm Etheridge]

We made for. We've had a lot of fun talking about Tesla.

[Stephanie Link]

Well Tesla, by the way, the price target a long time bull today at Deutsche bank cuts the price target to 345 from 420. You all can see where it's trading now, but you're telling has your view here change. You don't think this is, I mean you said by great companies when they come down a lot. Now you're trimming this one.

[Malcolm Etheridge]

I want you to invest in great companies. We traded Tesla, so we talked about this last week at what, 236 and it went up to 276 and we trimmed it. We sold 30% of of our shares after a 40 point move in a week. It's also different for me to own Tesla than a retail investor because I can write calls against it and that's a big difference and a big advantage that I have. So for me, I think it was an awesome trade. I'm not in it for the fundamental case. I don't know about this analyst call but you know, I think we made a lot of money with it. I'm happy to sell some here. It pulls back another $40. I'll buy it back and try to trade it again.

[Stephanie Link]

Okay, so Von now has the headlines for us. Hey, Silvana, good afternoon to you.

[Scott Wapner]

The Trump administration is asking the Supreme Court to step in and vacate a district judge's ruling to bar deportations under the Alien enemies Act of 1798. So in the emergency appeal, the Justice Department argued federal courts should not interfere with sensitive diplomatic negotiations. Earlier this week, a federal appeals court denied the administration's request to pause District Judge James Boasberg's order. More than 140 people are dead in Myanmar after a powerful 7.7 magnitude earthquake rocked the country overnight. That's according to state media which also reported over 700 people were injured. While in Thailand, an official said at least eight people were killed in the capital of Bangkok where a state of emergency was declared. The US Geological Survey warning today that death toll could reach in the thousands. And safety regulators are opening a probe into more than 2 million Honda vehicles, including the Pilot SUV and the Ridgeline pickup truck. Regulators say they've received complaints that the engine fails to restart on its own from a complete stop when the auto idle stop function is engaged. Scott, I'll send it back.

[Stephanie Link]

All right. Okay. So I don't know. Thank you very much for that. That's Silvana now. Quick break. Have even more moves to get through. We'll try and get some calls in there as well after this. Quickie.

[Eduardo]

Mizzen in Maine is the pioneer of re engineering classic American styles with performance fabrics, all with the goal of making it easier for guys to achieve and enjoy their version of success. They're the brand you can turn to for a machine washable and wrinkle resistant dress shirt you can wear every day and high stretch pants that are as comfortable in the office as they are on the golf course. Go to mizzeninmain.com and use code POD20 to get 20% off your first purchase. Explore the world's hidden wonders on the Atlas Obscura podcast.

[Stephanie Link]

A village in India where everyone's name is a song.

[Eduardo]

A boiling river in the Amazon, a.

[Stephanie Link]

Spacecraft cemetery in the middle of the ocean. Every day the Atlas Obscura podcast will blow your mind in 15 minutes. You can find it on the SiriusXM app Pandora or wherever you get your podcasts. And don't forget to follow the show so you never miss an episode.

[Jim Cramer]

All right.

[Stephanie Link]

We talked a lot on this show, as you know, about cybersecurity stocks, which especially CrowdStrike had been caught up in that momentum downdraft. You noticed that and you bought more of that along with more Palo Alto too. Tell me.

[Jim Cramer]

Yeah, I think as we're talking about whether we're in correction territory and here's the bottom or if April 2nd represent something worse and the markets go further from there. To me, cybersecurity is a sector within the software space, within the tech space that is defensive against a lot of what we're talking about. Right. It's a non negotiable as far as enterprise line items across their balance sheet goes. Sorry their spending plans go. And I think that not just looking at Palo Alto trying to move away from on prem and into the cloud and looking at something like a crowd strike that's already there. They've shown their platform of a platformization strategy is working. Look at a Zscaler which I also own similarly situated. So those two, I would even put it ahead of Palo Alto right now, which is still trying to make that transition to being a platform which I do believe in. I think those two are already frontrunners heading toward that direction.

[Stephanie Link]

Spotify, yes, more of that too.

[Jim Cramer]

So Spotify to me is another one of those that looks defensive. If you like Netflix, you should also like Spotify because the inelasticity of those streaming platforms has shown itself. And I think that Spotify is just a couple of years behind where Netflix is with its paid user growth. I think like a third now of all of their monthly active users are on the premium tier. That's music to my ears as a Spotify shareholder, no pun intended. But I think that that's a really great place to be putting dollars to work where you're worried about maybe the consumers looking to pull back some of their spending more.

[Stephanie Link]

Oracle.

[Jim Cramer]

So Oracle, I'm very bullish still on the AI trade. I think that infrastructure is really going to matter to Steph's point earlier. And I think Oracle is one of those that's again, here's the theme, selling at a significant discount compared to where it was. So if you liked it back then, you should really love it right now.

[Stephanie Link]

Is anybody, by the way, like the core weave ipo, anybody looking to buy that? Have you said you're still bullish on the trade? Why you? Why not?

[Jim Cramer]

Today we're talking about a company that got it. Its origin story started with bitcoin mining or Etherium mining and then once that wave crested, it made its way into the AI trade. I think that realistically you're talking about a reseller of Nvidia GPUs. It's why Nvidia had to step in and stop them out. Not really a business model I want to be throwing.

[Stephanie Link]

All right, I should just mention everybody, we were still waiting for the ipo. I know all of you have interest in what happens here for a variety of reasons. And we'll bring you the very first trade once we get it may not happen until after our program's over, but nonetheless, we as a network are all over that and you'll hear more certainly about that. You want to do quick on getting stopped out of toast.

[Malcolm Etheridge]

It just didn't work out. We like the company, we like the product. The stock didn't trade well for us. We got stopped out at $36.

[Stephanie Link]

All right, Santoli, he's next with his midday word. We're back after this. I mean, we do have a lot of moves today that should kind of tell you something about how our committee feels about these markets, Mike, which as we said at the very top, are really going through a great reassessment where you thought and where we are.

[Mike Santoli]

Yeah. And on multiple fronts, Scott. So obviously the rethink of the infrastructure theme and then obviously sort of being disappointed on both the economic growth and inflation sides of the equation. What does that mean for rates? I hate the stagflation term, but it does suggest a little bit of negative offsets in terms of what the Fed can do to rescue things. But individual stocks, I was just looking like more than 40% of the S&P 500 is already more than 20% off its 52 week high. So there's been a Lot of churn and damage. This is a. I think Wall street kind of wants to wait and see, to see some of these kind of policy cards turn over. But when the market is already correcting and when you're sort of below your 200 day average and people are a little bit on edge, it doesn't just wait and see, it has to retest. And so, you know, we've been saying it all along that, yep, V bottoms happen, but they're not the norm. You could have a plausible low from March 13, but maybe not the persuasive, absolute tactical low. I think we're dealing with all that stuff and I'm trying to be mindful of the idea. When sentiment gets this bad, when the market has gotten a little bit stretched to the downside, you just look for things to be slightly less bad and maybe you get a clearing event psychologically. April 2, it's just tough to put money behind that idea in the moment.

[Stephanie Link]

April 2, jobs report next week. Earnings front and center. Is that enough to, you know, stem the tide?

[Mike Santoli]

Yeah, I think the big question is, has the bar been lowered enough for earnings either? Absolutely. In terms of consensus, but also in terms of share price that'll be tested. And yeah, Jobs, I mean, that is maybe going to be a little bit of a firewall here because today's consumer spending number, it definitely did just nag at that sense that we see the confidence plunge. Is it going to show up in hard data? And I think people are capturing this notion there that maybe it is starting to show up and everyone has to revise down their GDP number.

[Stephanie Link]

All right, I'll see you in a couple of hours. On closing bell for your last word of the week, that's Mike Santoli. We have more moves from Kevin. I've got three or four in front of me from Kevin Simpson. We'll do it next. We are back. More moves, Malcolm, you bought more PayPal.

[Jim Cramer]

Yeah, that one's a play on Venmo, which Alex, Chris, at this point has yet to really find a way to monetize. But very few companies get to change the lexicon and jump from proper noun to verb. You know, you think Uber, you think Venmo is one of those kinds of names. And so I think that there's a lot of opportunity here with that one. Trading now at something like 65 bucks off 30% from its 52 week high. Not a bad place to start getting into it.

[Stephanie Link]

All right, so Kevin Simpson, number of moves. You bought more Amgen. Why?

[Malcolm Etheridge]

We had Amgen called away on March 7th in its entirety. So we bought. Buying It Back. Very good valuation, 3% dividend, strong pipeline. If you're thinking about. I think you have to consider biotechs as part of the conversation moving forward.

[Stephanie Link]

What about How Met Aerospace, what's that about?

[Jim Cramer]

You bought.

[Stephanie Link]

You bought that. Is that a new buy?

[Malcolm Etheridge]

It is. We've had a stressful day. Markets are down big. Let's have some fun.

[Stephanie Link]

Okay.

[Malcolm Etheridge]

How much. How many aerospace stock that we bought in our growth strategy? And I've been excited to tell you about this one because it's like tpl, when I brought that over the summer, Texas Pacific Land Trust, when I bought it, it was up 100% year to date. You looked at me like I was crazy. And that trade worked out really, really well. I'm not sure if this is going to be just as good, but it's up 95% in the past, trailing 12 months. So for those of you playing along at home, don't follow me into this with the, with all of your assets, but this is a company in aerospace. Strong growth, excellent margin, 50% of their revenue. Scott, for defense are coming out to side of the US So if you believe that these other countries are going to build up their defenses, this is a company that's going to benefit from it. And I'm excited to start talking about it today.

[Stephanie Link]

You sold covered calls on Amex and Home Depot.

[Scott Wapner]

Yeah.

[Malcolm Etheridge]

Knowing that the stock market has a little bit of pressure here, I think writing covered calls is something that everyone can be doing to harvest volatility. It's not a testament against either one of these names, but we think that we can harvest that ball, make option premium, still collect the dividends at the same time.

[Stephanie Link]

Steph, you own Home Depot.

[Scott Wapner]

I do, and it's been disappointing. It's down 8% year to date, but I do think the valuation at 23 times, it's kind of interesting because its historical average is about 26 times. And they just posted their first positive. Same store sales number in two years. And you have the spring selling season. You've got great operating margin, upside, opportunity, and the SRS acquisition synergy. So I still like it.

[Stephanie Link]

Okay, final trades coming up. All right. We're still waiting for that coral weave IPO to open. Christina Parts and Novelists at the NASDAQ has the very latest for us. What do we know?

[Christina Partsinevelos]

Latest $40. That's what he's telling me right now. I asked casually, when is this going to open?

[Stephanie Link]

Soon.

[Christina Partsinevelos]

Soon. And he's not yelling out the 15 second warning, which really stands for about 30 minutes. So we could be waiting for a little bit longer in terms of the IPO pricing, which we know is lower than what they originally wanted at 47 to $55 range. Still hoping to raise 1.5 billion in value of this company at 23 billion total.

[Stephanie Link]

Scott, we were around 43, though, right? A little while ago, and now you just.

[Christina Partsinevelos]

Yeah, yeah, it was a little while ago. 43. Then it dropped to 42. Now I'm being told 40.

[Stephanie Link]

Yeah, that's what I thought you said. I just want to make sure I heard you correctly. That's interesting in and of itself. All right, thanks for the update. We'll see in a little bit when all this gets going. Yeah. All right, let's do some final trades. What do you got, Malcolm?

[Jim Cramer]

Yeah, I said it once before. I'll say it again. PayPal.

[Stephanie Link]

Okay. Which you just added more to, as you said, Kevin Simpson, meta of the mag.

[Malcolm Etheridge]

Seven names. This is our top pick. Great free cash flow, huge margins, and now they're buying back shares, even pay a small dividend.

[Stephanie Link]

Okay.

[Kevin Simpson]

Farmer Jim, AbbVie Health Care. Obviously, that's defensive, but this is a stock that is in a nice uptrend. It's pulled back a little bit. Valuation, very attractive. Good management, good product pipelines. This is one you should own.

[Scott Wapner]

Steph Snowflake, it's down 23% from its highs. They have new product momentum, product revenue growth of 28%, and gross margin and operating margin upside.

[Stephanie Link]

Okay, so we have a Dow down by more than 600 points. You know that story by now. We'll take it through the final hour and we'll be joined by Robert Kaplan, Doug Clinton, Liz Ann Saunders, and Ed Yardeni. So the deck is stacked. I will see you in a couple hours. You've been listening to CNBC's Halftime Report, the podcast. You can always catch us live weekdays at 12 Eastern only on CNBC.

[Scott Wapner]

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 Mizzen in.

[Eduardo]

Maine is the pioneer of re engineering classic American styles with performance fabrics, all with the goal of making it easier for guys to achieve and enjoy their version of success. They're the brand you can turn to, a machine, washable and wrinkle resistant dress shirt you can wear every day and high stretch pants that are as comfortable in the office as they are are on the golf course. Go to mizzeninmain.com and use code POD20 to get 20% off your first purchase.