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Halftime Report
The Market Bull Run Continues: The Committee's Next Move 8/11/26
00:44:13
Scott Wapner and the Investment Committee debate their next movie as bullishness abounds in the market. Plus, we discuss what Nvidia's $500 Billion financing deal announced yesterday means for the stock and the AI trade. And later, the desk share their latest portfolio moves. Investment Committee Disclosures
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- [00:01]
Edward Jones Financial Advisor
At Edward Jones, we believe rich is more than caring about the latest and greatest. It's also taking care of what gives your life meaning. That's why your dedicated financial advisor meets you where you are with personalized financial strategies that help protect what matters so you can preserve your progress while creating a path forward. The key to being rich is knowing what counts. Let's find your rich together. Edward Jones Member, SIPC not every sale
- [00:31]
AT&T Business Wireless Representative
happens at the register. Before AT&T business Wireless, checking out customers on our mobile POS systems took too long. Basically a staring contest where everyone loses. It's crazy what people will say during an awkward silence. Now transactions are done before the silence takes hold. That means I can focus on the task at hand and make an extra sale or two. Sometimes I do miss the bonding time. Sometimes.
- [00:55]
Scott Wapner
AT&T business Wireless connecting changes everything. 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, Carl.
- [01:17]
Rob Secchen
Thank you.
- [01:18]
Scott Wapner
Welcome to the Halftime Report. I'm Scott Wagner. Front and center this hour, the state of the markets as investors wait on tomorrow's CPI print. We discuss, we debate with the investment committee. Bullishness seemingly abounds on the street. Joining me for the hour, Joe Terranova, Brian Belsky, Rob Secchen and Josh Brown take you to the markets and show you exactly what we're doing as we come on the air. This looks like a wait and see tape to me. You're not really doing a whole lot. Yields are a little lower, oil's off the highs. The story, though, to me is the bullishness on the street. Targets go up, earnings estimates keep going up. I want you to listen to Goldman's global head of hedge fund coverage, Tony Pescarello with me on closing bell on why he's so positive and why so many are.
- [02:04]
Tony Pescarello
I think the foundation of the market is solid. Why do I say that? The economy's proven again to be very durable. Running around trend. Earnings growth has been superb. I think the flow of funds is still very favorable, particularly in the month of August. And then we have $1 trillion of capex working its way through the system.
- [02:22]
Scott Wapner
Those are just a few, Josh, of many reasons why, as I said, bullishness abounds. Targets go up, optimism continues to rise.
- [02:32]
Josh Brown
Yeah, that's right. And I think part of the optimism is just this, a function of how far through earnings season we now are. We've basically heard from almost all of the most important Growth, earnings growth stories and then we're just getting such a panoramic virtuous cycle. It's everywhere you look is we beat, we're raising, we're raising the lower end of the forecast, etcetera, etcetera. So we're through 80% of the S&P 500 by market cap. Like we, we've got almost thing I know in video still out there. But if you take the actual and then you blend that with what we're still expecting. So these are still estimates. Even if you pull tech out, you're looking at 28.3% earnings growth. If you add tech back, it's 32%. It's outrageous. The net income margin has been revised up during the course of this season to 15.6% from 15. So margin is ahead of expectation. Then you look at sales growth and that's better. 15.2%. That's 300 plus basis points above what was expected. As recently as two months ago 10 out of 11 sectors were getting profit growth. So a lot of the narratives about it's all AI or it's so narrow, it's concentrated. Throw them all in the garbage. They're money losing narratives. The reality is corporate America, the current management of companies in every sector. Look at what they've had thrown at them over the last five or so years. Whether we're talking about record inflation spike or we're talking about the pandemic itself and all the difficulty in hiring people and then the tariff stuff, these are like absolute warriors, the people running these companies and they just continue to find more and more and more earnings growth, more margin, more upside to estimates. And in that environment is 20 times earnings cheap? No, but why would it be less? Why would the multiple on this particular crop of companies be 16 times earnings? Because it was in 1994. It makes no sense. These companies are, it's the Michael Jordan of every sector. So I think that's what people are reacting to and there are great stories everywhere I look.
- [04:55]
Scott Wapner
So Joe, you know, again highlighting the important words from Tony economy, durable earnings growth, superb flow of funds, favorable trillion dollars of capex.
- [05:08]
Joe Terranova
Fifth point, not on that list. And I agree with the first four points. Resiliency. We've really stress tested this market, this bull market this year, haven't we? Rising.
- [05:18]
Scott Wapner
We did talk about that too by the way.
- [05:19]
Joe Terranova
Rising.
- [05:20]
Scott Wapner
You know, the deleveraging to write, the cleaner, the cleaner positioning. Right. All of it in total is, you know, frankly why, you know, elevated oil prices or yields that are still a bit elevated. Aren't enough to derail the market because the other stories are just too good.
- [05:36]
Joe Terranova
So I think the question becomes what becomes your indicator to alert you that potentially there might be trouble ahead. I continue to watch the S and P equal weight. I think that's a very important indicator. I'm also watching the US Dollar, but most importantly the equal weight. And the equal weight is hanging in there.
- [05:53]
Tony Pescarello
Scott.
- [05:54]
Scott Wapner
We're seeing in there. Didn't we hit. We had a new high on the equal weight on Friday.
- [05:57]
Joe Terranova
We did and it's carrying forward today even with oil prices moving higher. So I think that's validating everything that Tony has said and Josh has said and everything that we've been emphasizing over the last several days. You have to maintain your position, which is a bullish one, until you are greeted with some form, form of an indicator to suggest otherwise.
- [06:18]
Scott Wapner
Doesn't look like that is around the corner. I mean, who knows what's around the corner. Belsky. But Scott Rubner of Citadel sums it up I think as well as anybody else. And very simply, companies are not simply beating elevated expectations. They're driving the steepest earnings revision path since at least 2000.
- [06:39]
Brian Belsky
That's true. There's a six thing going on. It's called called the. Yeah, but bull. People are still doubting this after all of this. There's still amount of skepticism every time the market goes up. You have an amount of people trying to guess on when the next correction is. How about let's sit back and really enjoy what's happening. The revision story has been amazing as someone that's been looking at revisions for a long, long time. If you take a look at FY2 versus FY1 numbers and how they continue to go up and just the second quarter earnings, Scott, and how they just blew away expectations. The numbers continue to go up from here because companies are eff in their earnings growth in how they're valued, how they're operating the business in terms of return on equity, return on capital. And the debt to equity is down dramatically across most sectors. So that's why I think this is going to continue in the. Yeah, but bulls are. Yeah, but the market earnings are.
- [07:30]
Scott Wapner
Earnings are a bubble.
- [07:31]
Brian Belsky
Yeah, but we're in a bubble. The Fed's going to misstep. You know, the yields are spiking today. So let's sell. I mean that's not investing.
- [07:40]
Scott Wapner
What about you, Robbie? How do you feel about this market? I'm guessing that you probably agree with what many of the bulls are saying. I mean sentiment, indicators are so off the charts at this point. Is there any concern in your mind about that? The fact that when I do go down the list, it's bullish, bullish, bullish, bullish.
- [08:00]
Rob Secchen
Well, that's a reason. When everybody gets on the same side of the boat, you're vulnerable to a surprise. But I don't think that's going to happen. To be candid with you. We're strong. Earnings are strong, they're broadening, they're not stretched. Let me put some numbers to this. 15% in the second quarter is the fastest revenue growth since 21. Fastest since 21. 88% beat rate record. P E is down. And here's the thing that I think the yeah buts need to hear. Institutional positioning is in the 37th percentile. It is not stretched, not even a bit, which is going to draw people in. That retail positioning. If you look at some of the Goldman data, I think it is a little stretched. Retail investors feel a little more in than institutional investors. But we're all hanging on the number of stories that we talked about, some of which should cause us worries. But markets tend to climb these walls of worry with the slow removal of negatives. And I think that's going to be what draws institutional positioning back in and maybe pushes us towards 8,000 absent a bolt like a hot inflation.
- [09:08]
Scott Wapner
Well, I mean that's, that's where many of the targets are now, beginning again, 8,000 and above. And we do get the CPI tomorrow morning and there's obviously a lot riding on it. A, you know, a cooler read sort of takes the Fed off the, off off the hook and sort of validates the let's wait and see ideas. A hot number puts the pressure on. Like you talked about in the last news conference the chair did, we have no tolerance for inflation being above target, but they didn't do anything about it at that meeting. So if you get a hot read tomorrow, are they under more pressure to do something about it in September? You still got to get through Jackson Hole too. But the market, this just feels to me like a wait and see market for this number it did yesterday, it does a bit today and then we get the, we get the prize in the morning.
- [09:58]
Joe Terranova
I think you're spot on. But let's, let's play the other side of this for a second. Let's say inflation comes out and it's much hotter than anticipated and you have to begin to price in that there will be a rate hike. Let's play the bearish argument.
- [10:12]
Scott Wapner
We're 5050 right now, by the way, I think so. Let's say, let's say that jumps.
- [10:16]
Joe Terranova
Let's say it goes 75, 80% towards a rate hike. Let's play the bearish argument for one second. Let's say they are right. We are all missing something. What do you think the return on that bearishness ultimately is going to be? 5%, 10% to the downside. And you're telling me I'm going to be fast enough to know when everyone's going to rush in and buy the dip?
- [10:36]
Scott Wapner
See the.
- [10:37]
Joe Terranova
You mean if they mean if they
- [10:38]
Scott Wapner
do hike or if expectations go up.
- [10:41]
Joe Terranova
Let's say they hike. You get your reasoning.
- [10:43]
Josh Brown
If you're even funnier than that, you get.
- [10:45]
Joe Terranova
And let's say the market goes down. Okay, play that along for a second.
- [10:48]
Scott Wapner
It just depends. There are some on the Fed, by the way, voting members like Hammock who say one hike is not enough.
- [10:54]
Joe Terranova
Okay, so let's say now we're into the process of multiple hikes. What I'm trying to point out is I actually think your return on being bearish is not that strong. I think you're looking at maybe 5 to 10% down and then you have to be be fast enough to get back in because the dip buyers will return once again to be bearish here. You have to believe the setup looks something like it did in prior instances where the market goes down greater than 20% and stays there. And I don't see any fundamental evidence for that even in fact understanding that the Fed might start hiking rates.
- [11:28]
Scott Wapner
It's not like you have to worry about the AI story running out of gas any anytime soon, Josh. Right. I mean didn't we get more evidence of that yesterday afternoon in that extraordinary event on this network with Jensen Huang? And then the, the, the heads of those six firms that are going to partner with in video to raise $500 billion in third party capital. Just to get you up to speed, everybody on what exactly this is about. Take a look at what we put together just so you clearly understand what this is. So they're going to partner with financial firms to raise $500 billion in third party capital. They've signed Mouse with Goldman, Apollo, Blackstone, Brookfield, KKR and BlackRock. The deal is going to help Nvidia's customers finance the cost of compute the financial terms not disclosed. But the street seems to be more positive than not on it. On the idea of what is both revenue sharing, alleviating circularity concerns. I'm quoting from some of the notes that are out there today that are reiterating this st at an overweight. It seems as though that this has taken a little bit of the risk out of the equation. However you judge it, you have the stock. What do you think?
- [12:48]
Josh Brown
Well, I think gen. So of all the people in this world that you could choose to contra and bet against, you want to bet against Jensen Huang? Okay, I don't. You definitely are welcome to. Because he looks at his stock price, it goes nowhere for a year. Right. He's got the best performing stock of the prior decade. Why isn't the stock going up? Why are we multiple contracting? Well, sir, there's talk on the other coast in New York and Boston, they're worried about circular financing. They think you're Cisco basically giving money to all the competitive local exchange carriers in 1999 to buy Cisco routers with your money and then you get to book it as revenue. And they think that you're running the same playbook. He says, oh, okay. But we also know the world is structurally short compute and probably will be for at least the next five years. What if we can socialize that risk and that upside a little bit and bring in third party people who just want to bet on the compute demand itself having a value? Can we do that? And of course we know that there's trillions of dollars in dry powder between private credit, private equity. There's a whole wealth management world of which I'm the avatar. Everybody's looking for new products to bring their clients that have a yield attached to them. Let's, let's build a bridge between what Wall street is looking for, which is more stuff to invest in with a yield that we feel good about and with what Silicon Valley needs, which is spreading out the risk a little bit and not having to have Amazon and Google do a debt offering every month. This is like the best of both worlds. I don't know that it takes the circular risk talk off the table, but it should at least push it back further from the conversation. If we think that there's a lot of demand directly to invest in compute. Well, it's a new, it's a new story now. And that story is, wow, the ecosystem might have another 10 million new check writers all of a sudden. And I think it's brilliant. I'm not saying I'll invest myself, but I think it's a brilliant move by Nvidia to engage the people that actually represent the investor class.
- [15:08]
Rob Secchen
And you agree that takes a little bit of the risk, 100% off their balance sheet. They Cap their own exposure at 25%. How does that not de risk their the name? In addition they've kind of said to the market compute is now an investable infrastructure asset. It's securing financing. Like your wildest imagination there. Especially with the partners that are in this group which you know many critics would say they're talking their own book. Right. They need to, they need to do this. However I do think it sets the table for a broadened customer base too with customers that might have had some financial concerns as it relates to the financing of their build out. This is a win.
- [15:54]
Joe Terranova
I think it's a win win for both. I think for Nvidia you no longer have to question if they are going to have to cut pricing on gpu. That's. That's no longer an issue. And for the consortium it's a home run. The getting the computers, the collateral for the debt. Why wouldn't you want that? I think this is extreme. Accelerates what ultimately will happen which will be in the next five years one of the largest futures market in the world will be oil and it will be compute.
- [16:21]
Rob Secchen
You will see price of commute compute though if it commoditizes. That's obviously one of the fears that that is out there. The decreasing price of compute. You're buying an annuity street. I'm not saying that's happening Joe. I'm just saying that that is a risk.
- [16:35]
Joe Terranova
I disagree with you. I actually think think if you see a futures market and you have the transparency I think that creates an even better environment for everyone. In particular the consortium themselves which will have the hedging ability against the compute that they are getting as collateral against the debt. I think it's ultimately a good thing. I agree with you just overall 30,000ft. This is a win win for all.
- [16:59]
Scott Wapner
Let's talk about Apple for a minute. The stocks read again and they're pushing back to today on that downgrade that the stock got yesterday. I think it was underperform. They say they're still planning to offer a glass centric overhaul the iPhone for the 20th anniversary of that device. That's according to a published report. The price target did get cut though. Belsky 340 from 350 at loop. They do reiterate buy. So this is a stock guys if you do me a favor and just back it up for a minute like a little bit. A little bit longer.
- [17:32]
Brian Belsky
Yeah.
- [17:32]
Scott Wapner
Just so you see the run up. Thank you. That you see the run up into earnings and then you know it looks like it hit A near term peak, at least for now.
- [17:42]
Brian Belsky
I mean look at July alone. And also to remember this is a stock that's been underperforming for a while and all of a sudden it came back on again. And so I think this is clearly just a. I think this is a dip action. I don't think there's any kind of fundamental anything wrong with this. They're going to kill it in the fourth quarter in terms of their new products and it's one of our largest positions. So we think you can't bet against Apple. You just absolutely cannot.
- [18:02]
Joe Terranova
I think the bearishness builds once again. 56% of the analyst community have a buy rating on it that's very low relative to the other trillion dollar companies. 329,12 month price target. Now you have six actual sell ratings on Apple. That's the first time you've seen this since 2020. So I agree with you in the interim this is a sideways to lower trading action. But I think longer term the best positioning is to be long because I think it moves towards Josh's 400 target.
- [18:33]
Rob Secchen
I think it's certainly tough to be underweight. We reduced it on the show in late July because it became such an outsized position because of the relative performance. And this is healthy fundamentals being offset by a really rich valuation. They're rerated a bit. I'm glad that we trimmed however we're still very long the stock.
- [18:52]
Scott Wapner
So what about Alphabet? Hasn't traded well relative to the others lately. Belsky, what's up with that? It gets reiterated today at Goldman Sachs. The target's 435. You know there's concern over the brain drain reorgan. Goldman's talking about that today. The commentary around it, the capital raising debt and equity all are sort of overhangs. How do you view all that?
- [19:16]
Brian Belsky
No, we think they're in the penalty box here a little bit near term because of the reorg because of where they're spending money. But we still believe that with respect to how they're going to monetize AI is a proven. They've proven that they can monetize what they run inside the company just like Microsoft. And so I think this pullback is a great opportunity for longer term investors to continue to buy this stock. We think it's one of the five stocks in the US you should absolutely positively own it.
- [19:41]
Rob Secchen
Support portfolio of businesses. It's not just one business. They lead in cloud, they lead AI models, YouTube, TV, Waymo. It is a diversified business.
- [19:54]
Scott Wapner
So the other story that we're following today is a report that Anthropic is trying to shore up confidence from the investor base ahead of their coming ipo, whenever that may be, perhaps as early as this fall. Kate Rooney is following that story, following the money as well for us and joins us from our bureau at One Market in San Francisco.
- [20:13]
Kate Rooney
Hi, Scott. So that does align in some parts from what I'm hearing from sources out here. Anthropic's IPO according to sources, could be as soon as October. And I'm hearing that the company has been meeting with bankers as part of that entire process. But the Wall Street Journal with some new details about what's going down in those meetings. Anthropic has reportedly been offering assurances about its corporate growth rate during all of that has been also fielding questions, according to this report, about the company's growth rate and revenue run rate amid some of the cheaper systems coming out of China. These open source models, Journal reporting investors have been pressing Anthropic executives on all of these topics in these pre IPO meetings. And then what it may mean, as I mentioned for that revenue run rate that has been ramping at an unbelievable level. They last topped $47 billion. No comment from Anthropic, but they have publicly talked about the value of these more expensive models that they offer and then the cost per task, essentially the value you get for spending more. So that has been their defense around this. The company has filed, we should say confidentially to go public. We still have not seen those numbers, Scott, and the S1, which will flip closer to that listing date.
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Podcast Disclaimer Narrator
Okay.
- [21:19]
Scott Wapner
Yep, good stuff. Kate, thank you very much for the update. That's Kate Rooney. Robbie.
- [21:24]
Rob Secchen
Yes.
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Scott Wapner
You want in on this when it goes public?
- [21:27]
Rob Secchen
You know, we tried to get some in the private markets. This is not one we were able to participate in. I think I will say that these companies have had so much demand. However, the price traction has been you get a big buy up and then they rerate. Metta did that. Space X did that. I think a lot of these companies that were waiting for investors to come in, they're large engineered IP IPOs with lockups that are unique in markets, take a time to find price discovery.
- [21:58]
Scott Wapner
So is that what, is that what's happening with Space X? It's, it's having to wait. Investors are waiting for this time to, to pass to get this price. It did get, I think yesterday it was back above the 135 level. The offering, it's back below it now. They did get reiterated overweight at Morgan Stanley. And you, you own the name?
- [22:16]
Rob Secchen
We do on the name again. We own the name because we're locked up. We own it from the private side, so we haven't bought any since the ipo. I think, you know, we're very happy with the business. I think what moves Space X up is Starlink growth, higher connectivity margins and a disciplined capex commentary. I think if you don't get a disciplined capex commentary, I mean, everybody knows this company can build rockets. They want to make sure they're spending in a way that they can return some profitability back on that spend, get a good roi.
- [22:51]
Scott Wapner
All right, so let's get some, some moves before we take a break. It's for Brian Belsky's got a couple.
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Edward Jones Financial Advisor
Yeah.
- [22:59]
Josh Brown
What?
- [22:59]
Brian Belsky
Don't.
- [22:59]
Scott Wapner
Go ahead.
- [23:00]
Seema Modi
Yeah.
- [23:01]
Scott Wapner
Are you okay?
- [23:02]
Brian Belsky
I'm ready.
- [23:02]
Scott Wapner
What was that?
- [23:03]
Rob Secchen
Hey, he's in the starting blocks.
- [23:06]
Brian Belsky
All right, I'm torqued up.
- [23:07]
AT&T Business Wireless Representative
Let's go.
- [23:08]
Brian Belsky
Obviously.
- [23:09]
Scott Wapner
Why don't you just take it away?
- [23:11]
Brian Belsky
Hey, tell me a change.
- [23:12]
Scott Wapner
Just, I'm just going to be quiet now. Go ahead, Go ahead.
- [23:14]
Brian Belsky
What do you want to talk about first?
- [23:15]
Scott Wapner
Just go ahead. You made, you choose Qualcomm. You decided you were going to do your thing. Just go.
- [23:20]
Brian Belsky
We sold Qualcomm because from a dividend perspective is in our dividend growth portfolio. And we like financials a little bit more. So we did a one for one switch from out of Qualcomm and into Truist.
- [23:33]
Scott Wapner
You like financials better than chips?
- [23:34]
Brian Belsky
Yes, we do. And we like the dividend growth and truist in particular, and the yield relative to Qualcomm. And I think too, from, from a technology perspective, there are a lot of great technology companies in the dividend growth in the dvy, which is the dividend aristocrats. But we want to be more concentrated on financials with the higher yield and the better, better dividend growth third, because we're, we are a 40% of the position.
- [23:59]
Zepbound Advertisement Narrator
Yeah.
- [23:59]
Joe Terranova
You like financials?
- [24:00]
Scott Wapner
Yeah, but we want to tighten.
- [24:01]
Brian Belsky
We already, we're already 32% percent financials in our value portfolio, Joe. So I want to get a little bit bigger in certain names. So we sold our fifth third, took a victory lap and added to a couple other names.
- [24:12]
Joe Terranova
Good, good trade. But I think you stay with fifth third. That's what we're doing. You're going to see the integration of Comerica in the second half of the year. I think that's going to be beneficial. Stock looks great.
- [24:22]
Scott Wapner
Financials, by the way, are going for the 11th consecutive week of gains. It's the longest, Josh, since 89 at least. We'll see whether we get. I mean, it's early in the week, obviously and we got to get through tomorrow with the cpi, but this group's been on a run.
- [24:39]
Josh Brown
I can't think of an area in financials I don't like other than payments, which got some weird PayPal related. Will there be consolidation or will there not? Away from that. I like the credit cards. I like the regional banks, which we talked about. Spread financials. I like the banking financials. Anything that's even tangential to Wall Street. I like the asset managers. I like the money center banks. I like the brokers. We've been talking about Robinhood. We talked about interactive brokers. On my list, the best stocks in the market. We talked about Citizens, which I'm long cfg. It's, it's a cornucopia judge of stocks that either the profitability is increasing or the charts are running up or in many cases both. Insurance. We talked about Berkshire. JP Morgan made record highs recently. Morgan Stanley looks amazing. I mean, this is like one of the hallmarks of the 2026 bull market is how well almost every financial that matters has been acting and how great the guidance looks. I mean this is a big. One of the most important legs of the stool.
- [25:54]
Scott Wapner
Yeah, throw up some private equity names as well, guys, if you could please, because they look great today. Look at all these names coming back. Stones. Yeah, and maybe some of it has to do with that news that that came out yesterday, but software is trading a lot better. That obviously helps this group. But there's a cycle through some of these names. One of the strongest areas of the market today. Apollo's up 6%. But there's your Blackstones and your KKRS as well. We'll take a break. Coming up, running for cover. One of Brian Belsky's retail plays is getting smoked today. We'll find out what he's doing a little bit later. We have Josh Brown's best stocks in the market as well. With my Sapphire preferred card, we took
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Scott Wapner
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- [27:20]
AT&T Business Wireless Representative
every sale happens at the register. Before AT&T business Wireless checking out customers on our mobile POS systems took too long. Basically a staring contest where everyone loses. It's crazy what people say during an awkward silence. Now transactions are done before the silence takes hold. That means I can focus on the task at hand and make an extra sale or two. Sometimes I do miss the bonding time.
- [27:44]
Scott Wapner
Sometimes AT&T business Wireless connecting changes everything. All right on holdings down more than 19%. That's the worst day ever. New 52 week low revenues missed. Not a great guide. You put that with Under Armour getting downgraded. Nike's been a mess. Dick's Sporting Goods hasn't traded well lately. What's going on with this?
- [28:12]
Brian Belsky
Well, their net sales were off big because the wholesale segment was very light. Very light on the where they make their money and actually where their product is dramatically different than the other companies that you talked about was the apparel. Apparel is up 48%. Direct to consumer up to 26%. That's where they need to really focus. I think the problem is on the wholesaling side. They've got an expensive shoe. Their average shoe is 150, $180. And so I think that kind of puts them into a very direct segment. But we own it because of the great product that they have. In terms of the apparel side of
- [28:46]
Scott Wapner
things, you own on holdings for the apparel.
- [28:49]
Brian Belsky
Yeah, that's what you want. That's where I think where they're really going to make the money in the margins. And I think they have better product than those other companies. We've owned the stock for six years. We bought it right before COVID You
- [29:00]
Scott Wapner
bought it for the apparel?
- [29:03]
Brian Belsky
I bought it. Well, no, I bought it originally for the shoes, but we're holding it still for the apparel.
- [29:06]
Scott Wapner
Do I sound skeptical?
- [29:07]
Brian Belsky
Yeah. Have you had the apparel? Do you have any of the apparel? That's fantastic running stuff. They have really great. They have really great stuff.
- [29:13]
Scott Wapner
I'm sure they do. But I mean, aren't the shoes, the sneakers the bread and butter of the business?
- [29:17]
Brian Belsky
They are, but in terms of the margin, where they're going to get the margin and how this company is really
- [29:22]
Scott Wapner
going to grow, they charge in $150 to $180 for the sneakers and they're not getting the mar.
- [29:27]
Brian Belsky
No, they're not getting the margin out of that because they're not getting the sales there where the margin is in their apparel.
- [29:33]
Scott Wapner
What do you think you're snickering over there.
- [29:36]
Rob Secchen
I'm laughing at you. Your face is just making me laugh today.
- [29:42]
Scott Wapner
Is there a problem with this? Is there a problem with this area? The area of retail? Like I said Under Armour, Nike said Dick's Sporting Goods. Now this. Joe. Hello? Anybody?
- [29:56]
Joe Terranova
No, I'm here.
- [29:57]
Rob Secchen
Anyone?
- [29:58]
Joe Terranova
Consumer discretionary control room.
- [30:00]
Scott Wapner
Anybody?
- [30:01]
Joe Terranova
Consumer discretionary is incredibly difficult to kind of see long term sustainable momentum trends. And I think apparel is really the highlight of that because of the fickle nature in the buying intention of the. Also you have seen strength in off price and strength. And off price is generally equating to a negative growth environment for apparel. Absolutely. Because now I'm going to off price and I am getting your products.
- [30:35]
Rob Secchen
You think there's a gigantic trade down? I actually think the upper part of the part of the economy off price,
- [30:41]
Joe Terranova
off price has been remarkably strong. Okay. And if you're telling me that the trends in traffic and off price are strong, that means that apparel is being discounted for sure.
- [30:52]
Brian Belsky
That's why you always want to be with the better product. You want to be the better product and they have the best product in that category, period. It's a way better product than Under Armour. Way better product than. Than Nike. Nike's got other operational issues that are going to continue too big. Under Armour is a failed company for the last year.
- [31:08]
Scott Wapner
Is there, is there a apparel competing with those companies or is it competing with Lulu Vuori, those companies?
- [31:15]
Brian Belsky
Well, Vuori is not as athletic intensive as on. Obviously Vuori's doing a little bit more casual wear and things like that. Vuori is more along the lines relative to Alo and Lulu. Lulu is going to a complete reboot as well. But I would say that from. It's more of a Nike and Under Armour comparison in terms of the Atlantic side of things. And yes, people have been trading down, but I think you always want to buy the best product and with the best company. And I think longer term this is going to be a company that is going to do well.
- [31:46]
Scott Wapner
Josh, last point.
- [31:49]
Josh Brown
You just don't have to be here. Like if you're, if you're a manager and you have some sort of mandate where you have to own a certain amount of retail or apparel stocks. Okay, that's one thing. 99% of our viewers have no such mandate. Nobody's every one of these charts looks worse than the last one that you showed in a market environment like this, why are we even spending 10 seconds? Let's focus on what's working and unless you know something the market doesn't. All of these companies have challenges and there are lots of companies that are firing also. And there's away from this group. Let's come back to this group someday, not this day, okay?
- [32:28]
Scott Wapner
Seema Modi has the CNBC news update. Hi there.
- [32:31]
Seema Modi
Hey Scott. I'm here to hear the stories we're watching. 100 firefighters from Mexico are joining crews battling a deadly wildfire in British Columbia. The 60 square mile blaze has killed an 80 year old woman, destroyed homes and forced 20,000 people to evacuate. Canadian police have opened a criminal investigation into the fire's cause. The Ebola outbreak in eastern Congo has now killed more than 2,000 people. Officials say it is the fastest growing outbreak on record, reaching that toll nearly three times faster than the deadly 2014-2016 epidemic. Health teams warn the virus is still spreading faster than they can contain it. And the White House is lifting its ban on TikTok across federal government devices, saying the app no longer poses a national security threat. The reversal follows TikTok's January deal transferring control of its US user data and operations to an American led joint venture. The ban had been in place since Twitter 2022.
- [33:23]
Scott Wapner
Scott Seema thanks Seema Modi coming up, Josh Brown's best stocks in the market. He says a textbook breakout is underway in a travel related name. He reveals it Next.
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Rob Secchen
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Joe Terranova
Ozempic. You redid your jingle?
- [33:46]
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Ah, thanks for noticing. Catchy, right?
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Edward Jones Financial Advisor
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- [34:05]
Brian Belsky
There's only one Ozempic.
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I told you it was catchy.
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- [34:39]
Josh Brown
what made you confident
- [34:40]
Scott Wapner
that you could do something that hadn't been done before? I Have no fear of failure Trailblazing
- [34:46]
Podcast Disclaimer Narrator
women Changing the game One of my
- [34:48]
Kate Rooney
favorite pieces of advice, think about what your boss's boss needs. Leadership can look in many, many different forms.
- [34:55]
Scott Wapner
It really does come down to just trusting yourself.
- [34:57]
CDW Advertisement Narrator
Life is short and you just gotta think big to accomplish big things.
- [35:01]
Podcast Disclaimer Narrator
Julia Boorstin hosts CNBC Changemakers and Power Players. New episodes every Tuesday, wherever you get your podcast.
- [35:20]
Seema Modi
Foreign.
- [35:25]
Scott Wapner
This textbook breakout that Josh Brown has found in his best stocks in the market is which name?
- [35:34]
Josh Brown
Expedia. So this is one of the names that we've been talking about pretty much all year. It's been on the list of the best stocks in the market. We first talked about it almost a full year ago September at 221. It's up about 47% since we talked about it again on 1229 which was 286. So it's up about 13% from there. And the story is very simple. It's a narrative violation. People looked at the stock this spring and said yeah, what the hell, throw it in with the SaaS apocalypse names. But it's not sass, it's travel. And travel is the very best slice of consumer spending. Q2 revenue grew 14% to 4.3 billion on 34 billion in gross bookings. They are breaking records everywhere you look. The B2B business is in its 20th consecutive quarter of double digit growth. So management just came out, raised full year guidance across the board and they're going to return $900 million in the form of buybacks year to date. This is part of a 5 billion dollar authorization. So they're a float shrink or two. What we wrote yesterday is this is a textbook breakout with a low volume retest. I guess the retest ended yesterday because today it's off to the races. I think traders should use 290 as their pivot point. Below that level it's no longer in a short term uptrend. You can walk away from it. I think investors give it a little bit more space. We're looking at 2 60. That's that area where the 50 day sits. That is a rising 50 day. It's been meaningful in the past. It should be going forward above those levels. I think you want to be long the stock.
- [37:16]
Scott Wapner
Okay, well Belsky, you are. Joe, you're no longer.
- [37:20]
Joe Terranova
No longer.
- [37:21]
Scott Wapner
So what about from both of you? Go ahead Brian.
- [37:25]
Brian Belsky
We bought Expedia about a year ago on our small mid cap portfolio and then we bought it in our value portfolio in March and it was cheaper than bookings we love this travel space. We've owned Hilton and Marriott for a long time as well. We think travel is where people are spending their money. And so we think this stock is better actually fundamentally than booking name that
- [37:43]
Joe Terranova
you continue to own. I think it's breaking out for sure. In terms of sentiment, 45% of the analyst community has a buy rating on it. 24 right now, 329 is a 12 month price target. The end of July, we rebalanced the earnings, came out August 6th. You could make a really strong argument that maybe extending the rebalance another couple of weeks into the S and P earnings season would be beneficial because this is a classic example of. Yes, in fact it would be.
- [38:13]
Scott Wapner
But I mean, if you look at a three month. Can I get a three month. Guys, please.
- [38:17]
Joe Terranova
You're incorporating the price action from the end of July through the last, last several weeks that you had a significant bump up. So if you pull back where you were sitting at the end of July, you didn't have the intense momentum that you have right now.
- [38:30]
Scott Wapner
No, I know, but, but from the end of June, it looks like you had a momentum start to pick up again. You went from like around 210 to 250, let's just call it, because I don't know the exact numbers based on the chart we're looking at, obviously, but a couple more weeks would have made the difference because you would have gotten a bigger burst into August. So you, you may have kept it.
- [38:52]
Michael Santoli
Yeah, you would have.
- [38:53]
Joe Terranova
Because. Can we pull that chart back to the beginning of the year? You'll see the high was in January. So you actually had a deceleration in momentum from January through July. There you go. See that deceleration?
- [39:04]
Josh Brown
Sure.
- [39:05]
Scott Wapner
But that would. January, February, March, if there's a deceleration, you would have bounced it at their April rebalance. Would you have?
- [39:14]
Joe Terranova
No, because you're also factoring a 12 month momentum score. I know it's, it's difficult to keep pulling back these charts, but if you pull back the lens and look at a 12 month score. There we go. See how that looks good. So you're, you're measuring different time frames. Okay, I'm sorry if it sounds complicated, but you're measuring different time frames. Bottom line is the stock looks great. And factoring in what we just saw in the last. Let's call it eight trading days, it's. Josh is right. It's breaking out. I wish we still had it.
- [39:42]
Scott Wapner
Okay, well, it's up another 3% today. We'll follow that. Mike. Santol is next with his midday work. Got some news to get to word of another leadership shakeup at Open Air. Kate Rooney has these details. What do we know, Kate?
- [40:13]
Kate Rooney
Hey, Scott, we're just learning that Brad Lightcap, he is one of the longest tenured employees at OpenAI, is now leaving. This is according to a social media post. He says he is going on to start something new. It is the latest shakeup for OpenAI. Like Cap was the former CEO, he has been leading special projects and says in this post he joined in 2018. He is also a close confidant of Sam Altman, founder and CEO of OpenAI. They work together at Y Combinator. So Brad Lightcap very much a key executive in the founding and sort of transition throughout the years from what was originally a nonprofit into a now almost trillion dollar business. He says here that he's been talking about the next horizon and other things in AI. So is going on to start something else. Doesn't share any details here, says he's going to remain at OpenAI for the next few weeks. But it is the latest shakeup. As I mentioned, we had Fiji Semo, the head of AGI over there, CEO of its applications to leaving earlier this year. She was the former CEO of Instacart and left due to a chronic illness. But this of course, comes at a time when this company is looking to go public and we're seeing very much a shift in the senior management here and power consolidated under Sam Altman, but some of the senior leadership very much moving around here, Scott, ahead of an ipo.
- [41:28]
Scott Wapner
So because you mentioned, you know, because of the ipo, which is I think the thing that most people are thinking about as you bring us this news. Could we think of this as a surprise then, in the timing before the company goes public.
- [41:41]
Kate Rooney
So, Scott, I think what's been happening behind the scenes and from what I've heard is that there's more power being consolidated under Greg Brockman, who's one of the other co founders. He's taken over a lot of the leadership role from Fiji Semo, who left. And this does seem to have been in motion. And you see this with tech companies that mature and grow ahead of an ipo. Some of the original leadership isn't always the right group to necessarily take the company public and lead a public company. Unclear what actually happened behind the scenes here. I don't want to say too much, Scott, without actually knowing the details of his departure, but it could be one of these examples you see in tech where, you know, he's a young executive, he may not be the right person to lead it. You have names like Sarah Fryer who was a former CEO. You have Denise Dresser who is the former CEO of Slack. So you're seeing sort of this more institutional group come in from outside of tech, coming from software versus the original group who really is kind of a startup culture to its core, which I think Brad very much represents but says he's going to do something else.
- [42:41]
Scott Wapner
So yeah, we'll see what's good insight. Yeah, I appreciate that insight Kate and the context that's important to Kate Rooney, our senior markets commentator in overtime co anchor Michael Santoli sitting here at post nine. What's your thought? I mean I feel like I would if I threw it to you the same way I threw it yesterday, minus yields in oil it would still end with waiting on the cpi.
- [43:02]
Michael Santoli
We're waiting on the CPI and in the process digesting the move from last week. I mean everything that was going on in July where it seemed like there was this very sort of fragile push pull below the surface. We know a lot of it was forced liquidation, these mechanical rotations and I certainly was one of those out there saying look, this could actually knock something loose. This could be a little too erratic for the market's own good. That didn't come true. Right. We actually got past it. Why we come past it? Hyperscalers rebound. You managed to get the S and P to have this breakout. Now I think if you have a 2% pullback in the S&P it stays above 7,600. You've still preserved the breakout. Nothing major is going on there.
- [43:40]
Scott Wapner
You want to I guess give us your opinion on what many people are talking about being a cleaner tape now we got through, you know, those excesses at least to some degree. Not to say there's no you know, leverage in the system or anything like that but you did have some important events de grossing deleveraging and here we find ourselves.
- [44:00]
Michael Santoli
It was almost scripted that you had, you had a major casualty. You kind of had that as a signal that in fact a lot of that for selling was going on. You have you know, kind of a sacrifice to the, to the market gods is the way you would put it in this hedge fund that blew up. Now that being said, this market does not take its time in re risking, okay, you already look at the 5 day put call ratio. It is rock bottom. The tactical fast moving players have immediately put back on upside exposure. I don't think that means the whole world is now over long. You have room for that to, to go higher. So I do think it's a better setup. We'll see if you know, if macro permits, as you say, CPI tomorrow.
- [44:40]
Scott Wapner
Okay, good stuff. I'll see you later this afternoon. That's Mike Sentoli. And speaking of options, we'll play options action. Coming up, Oliver Renick is flagging what he says is the biggest single trade in the options market right now. It's in a name that Joe owns as well. So we'll reveal it and then we'll trade it on the other side of what Oliver's saying next. All right, let's play options action. Oliver Renick is at the CBO Global Markets in Chicago. What do you see there?
- [45:26]
Oliver Renick
Something we don't see often, Scott. The single biggest options trade on the entire tape today is in the defense category. A seventy million dollar call trade in RTX that looks like someone doubling down on an existing bullish position. Here's what we saw about 30 minutes after the opening bell. Someone sold just shy of 7,000 contracts of deep in the money. 125 strike calls in RTX expiring in mid December, then purchased the exact same number of the same strike calls. But with February expiry next year, we can see from the open interest that first trade was a clear closing trade and the second one was a clear opening position. This is someone using options as a stock replacement strategy. That's likely quite profitable after RTX's rally. And they're rolling this out to get a fresh, clean, long position on a Stock that's up 20% on the year. RTX volume, five times the daily average in options today, all thanks to this one trade.
- [46:23]
Tony Pescarello
Scott.
- [46:23]
Scott Wapner
Well, glad you found that, Oliver. Thank you very much for that. Oliver Renick, you have RTX.
- [46:28]
Michael Santoli
Yes.
- [46:29]
Joe Terranova
Significant exposure in the defense industry. $1.5 trillion defense budget on the table here. RTX benefiting RTX, General Dynamics. They are the two strongest names in the defense industry that we still maintained exposure to.
- [46:43]
Scott Wapner
Okay, we'll take a break, we'll come back, we'll do finals. On the other side,
- [46:57]
Josh Brown
Josh Brown, final trade, Snowflake Snow.
- [47:01]
Scott Wapner
Okay, Robbie Klac. Klac, Belski, Gilead G I L D, airbnb. Wow, you got did that really well. Alright, I'll see you at 3 on the closing bell. The exchange begins right now. You've been listening to CNBC's Halftime Report, the podcast you can always catch us live weekdays at 12 Eastern only on CNBC.
- [47:25]
Podcast Disclaimer Narrator
All opinions expressed by the Halftime Report participants are solely their opinions and do not reflect the opinions of CNBC or its 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 opinion. Such opinions are based upon information the Halftime Report participants consider reliable, but neither CNBC nor its affiliates and or subsidiaries warrant its completeness or accuracy, and it should not be relied upon as such. To view the full Halftime Report disclaimer, please visit cnbc.com halftimereportdisclaimer Snoring Gasping for
- [48:01]
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