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Halftime Report
The Market Pullback 8/1/25
00:44:11
Mike Santoli and the Investment Committee debate the market pullback as new trade tensions and a weak jobs report push stocks lower. Plus, the desk share their latest portfolio moves. And later, we take a look at the Committee’s winners and losers for July. Investment Committee Disclosures
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- [00:00]
Edward Jones
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Scott Wapner
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Mike Santoli
Building your personal brand.
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Scott Wapner
Register now@cnbcmakeit.com Personal Brand. 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.
- [01:02]
Mike Santoli
All right. Thank you, Sarah. Welcome to the Halftime Report. I'm Mike Santoli in for Scott Wapner. Today, the market pullback front and center as new trade tensions and a clunker of a jobs report weigh on investors. The investment committee is standing by as we kick off a new trading month. Joining me for the hour, Jim Leventhal, Jason Snipe and Bill Baruch. Also joining us to start things off, CNBC senior economics reporter Steve Liesman. As Steve, thanks for coming to the desk here. Take a look at the major indexes down to one and a quarter percent for the S&P 500. That is up a bit off the lows. We were down a little more than one and a half percent earlier, actually one and three quarters. So a little bit of a grinding recovery, still decidedly down. We haven't had a 1% down day in well over a month. Dow down 1%. Nasdaq is leading to the downside, way down in large part by Amazon. Let's just get the macro set up, Steve, if you don't mind. If we can kind of characterize what we saw in the jobs report, obviously an undershoot on job creation for last month as well as these severe downward revisions. Unemployment rate sort of leaks a little bit higher. And it really did change the bond market's assessment of what's to come for the Fed.
- [02:14]
Steve Liesman
I think all that's right. And also probably changing the Fed's assessment of what's to come for the Fed. I think we had Rafael Bostic on. He said, look, this shows there's more weakness out there than we thought. And I kind of asked him that question I said I wish that I knew what I knew when I had the meeting last week. And he said well, I don't know if it would have changed it but we would have been thinking a little bit harder. And I think the big story here, I don't know if we have this full screen available, Mike, but it's the 91% probability of a rate cut in September.
- [02:43]
Mike Santoli
Yeah.
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Steve Liesman
And we went into this meeting with below 50%. Look, we didn't have this data. Now you might have intuited it, maybe this tells you a little bit more about. You all should be trading on the soft data because the soft data told us that tariffs had caused businesses to hold back on Capex and on hiring. It all also told us that there was going to be price pressure. We got that in the PC numbers this week. So you have all of the things economists told you that were going to happen, they just didn't happen in stock market trading time. Right. It's all been over this time. I don't know how you guys would have made a trade on this but all of this has come to pass and there could be more that might come.
- [03:24]
Mike Santoli
Yeah. In fact, let's get right to that, Jim. Obviously the setup matters for all these things, right. We had this really calm rally into the end of July and I think in part it was based on a lot of things but it was partly based on this premise that the economy was going to remain resilient so that we can withstand a wait and see Fed and we're not begging for rate cuts. Does this change the equation? Look, we're due for probably some give back in August anyway. But how would you view it?
- [03:50]
Jim Leventhal
I think the most important thing of what you just said is we were probably due for some give back in August and I've been saying that for a couple of weeks. I mean this to me seems like an echo of last year. It's almost the same thing, right? On a Wednesday the Fed didn't cut. On that Friday you got a weak labor report and it, everybody freaked out and it was almost laughable at the time. I mean Steve, I don't know if you remember this but that weekend people were calling for an emergency rate cut. I mean not seeing people with some.
- [04:15]
Steve Liesman
Usually not laughing when that happens but.
- [04:18]
Jim Leventhal
But that was laughable. And look, the point that I'm driving at here is I think we would all agree the economy is and has been quite resilient. Quite resilient. I think we would all agree it's been one heck of a rally And I said this, I think on Wednesday that there's, there isn't a wall of worry to climb right now. Well, guess what? We're going to build a new wall of worry and it'll be perhaps some indications or some fears of stagflation. Right. PC core a little higher than we'd like. The labor report a little weaker. Let me give the executive summary. Things are going to be just fine if the Fed cuts in September. I mean, I don't think they really need to, but they probably should as a prophylactic. We had 3% GDP. We're getting uncertainty to decline meaningfully. If the tariffs are at 16%, that's less than fear. All take the good, take the glasses half full. It's less than feared. Companies know what to do. They can move forward. Ooh, I got, I got, I got a guffaw from Steve.
- [05:14]
Mike Santoli
Only because whatever we thought, like, we had a moment of peak uncertainty in April, we got to a moment of peak perceived uncertainty based on, hey, we're going to have this settled around 15% pretty soon. And then things changed, didn't they, last night?
- [05:30]
Jim Leventhal
Okay, you mean on the tariff rate?
- [05:31]
Mike Santoli
Yeah, yeah, on tariff stuff, okay, sure.
- [05:34]
Jim Leventhal
But I mean, let's face it, this is a president who likes to create drama. There is not going to be a calm day or a calm moment that lasts longer a day in this administration there just isn't. So, yes, ok, the uncertainty raised a little bit last night, but the trajectory, to me anyway, is clearly down. You've got profits growing. You've got a strong and stable banking system. Not, you know, this perception that the labor report was weak. And since Steve guffawed at me, I feel like I got to go at him now. You know, look, we have lower working age population growth, right, because of the implications of deporting people. 75,000 is kind of the new 150 is what I would say. Like this is a stable labor market. The weekly jobless claims certainly don't give me any reason to fear.
- [06:19]
Steve Liesman
Look, I'm a little chastened from the first go round with the April 2 tariffs. It was true that if you ignored that, you made more money than if you basically sold it. Right? So I want to be careful here. But what I heard you saying, Jim, is everything's okay if I ignore all the bad news. That's sort of what you're saying.
- [06:46]
Jim Leventhal
If I say it, easy to ignore the bad.
- [06:48]
Steve Liesman
Okay, well, let me tell you.
- [06:52]
Jim Leventhal
The bad news.
- [06:52]
Steve Liesman
If I ignore the potential impact of tariffs on hiring and on Capital spending. And if I ignore the potential impact of that on inflation, then everything's going to be just great. The president has erected a tariff curtain around this country. Last night was a big deal. Right. He put out that list. It is going to be an average of 15%, five times what it was now. Go ahead. Folks at home trade against me. I hope you're right. I was wrong last time. But by the way, wrong on the issue, by the way of those huge reciprocal tariffs. He ended up backing off of that, which is where the excitement came from. But I just don't know why you don't have some caution given the magnitude of the change.
- [07:39]
Jim Leventhal
And I just want to say really quickly, I have lightened up in the last two weeks. I think everybody knows that. But I've done that at a very high level because of seasonality, not because I'm worried about. Well, go ahead. I don't want to talk over everybody.
- [07:53]
Mike Santoli
Just to kind of widened it out a little bit in terms of where the market was and where we are. We're pulling back. We're at levels in the S and P from about a couple of weeks ago.
- [08:01]
Scott Wapner
Right.
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Mike Santoli
If I wanted to build a little bit of a bear case for even not because of the specific tariff announcement, you would say, look, we got above 22 times earnings. Again, stocks haven't traded all that great off of pretty good earnings numbers. Volatility got a little bit too low. People got a little bit too complacent. And you know, it's probably just smart to expect a little bit of a, of a spill back. Look, the dollar's rallying. Part of the dollar down was part of the story. Now you have offsets to that. Right? Because now we got, we're, you know, the rate sensitive part of the economy maybe is going to get a little bit of life if we get a rate cut and bonds rallying. But you know, how would you as an investor take this on this from the spectrum of, hey, this is just a blip to we got to hunker down.
- [08:45]
Jason Snipe
Yeah, no, I mean, listen, the VIX has been quiet, right. It's up 20% today. I mean it's been hovering around 15. So we've been very, very calm waters. You know, earnings have been very solid, 81% beat rate 2/4, 2/3 of the S and P is obviously reported to this point. We've heard from the mega cap players which obviously have been very positive. But yeah, the RSI is right in overbought territory. We're kind of in that 69 70% 70 range for both the S and P and the Nasdaq. And tactically I think what Jimmy mentioned too I think is critical from a seasonality perspective. We're into the, the dog days of summer. You know, August into September typically aren't great times for the market. But I do see it as an opportunity given what we've seen from an earnings perspective. And I think that's really what's fortifying more for me. The bull case into year end.
- [09:37]
Mike Santoli
Yeah, yeah, Bill, definitely jump in. But I also was going to mention, you know, we're seeing this in the headline indexes right now. We kind of been consolidating under the surface for a little while here. I mean the equal 8s and P is like 4% off its high, it's just reached its high like Monday or something. So you know, it's not as if this completely came out of the blue.
- [09:56]
Scott Wapner
Yeah, I mean the futures hit an overnight high on the Metta and Microsoft reports and so actually the chart on the weekly chart is going to look pretty ugly. Big outside bearish reversal. Now there could, I think there's going to be a little bit more downside but it is, it's really going to be a stock pickers market. Going back to the Fed though, I looked at this meeting in July was, you know, Trump has been coming after Fed chair Powell. Obviously he wants him to cut rates. I think, I think the administration knows there's going to be a little bit of a slowing period as these tariffs hit. I think it's going to pass through fairly quickly. It's going to be going to be quarter three, maybe it drags into quarter four. We obviously had the bounce back in GDP for quarter two. But I think when you really take a step back this July meeting, I put a note out to clients early on Wednesday ahead of that saying this is, this is home court advantage for Powell. This was his opportunity to really kind of put his foot down and price out the cuts in September because he was to going almost pretty much humiliated in many ways during that. So they, in the aftermath, we talked about yesterday in the show, the aftermath, those, those cuts got priced out. Now we're seeing this jobs data, it's pricing those cuts back in. You have two cuts with a 60% probability this year to 25 basis point cuts. So you know, is that enough to stop this bleed? I think there could be a little bit more of force here in days to come or, or through the end of next week. There's going to be more data to come but, but the whole point is, if it was Powell's opportunity to put his foot down last meeting or this week, he has Jackson Hole coming up in August, and Jackson Hole can really be the time to. To tell, you know, to communicate transitions in policy. So I think that's really what the setup is here, and we're going to hear a lot about that in August.
- [11:31]
Mike Santoli
You know, Steve, among the many things that Powell said on Wednesday in the press conference was this economy is not acting as if it's being restrained by monetary policy right now. So to that point, he was suggesting, you know, whatever friction we're dealing with, it's not as if. It feels as if the economy screaming out for easier policy. Now, of course, we're a little bit restrictive. We're not above. We're above neutral. Does it change with the jobs report, do you think? I mean, me or even really the tariffs?
- [12:01]
Steve Liesman
I think it changed. What was it Thursday morning? Yeah, you got flat income and you got spending adjusting for inflation up just 0.1. You put together the 2/4 of GDP. You did just 1.2% on average. Your private sales of domestic purchasers was also pretty lame down in the 1% area. And now you have this jobs report. So I get that there are multiple paths here. One is that you sent me the graphic yesterday about the sectors that have been hard hit by tariffs. Not like these things have come through in an immune way. It's that the how great the tech is doing on the top of this that has really brought up the averages. So there has been a dramatic impact on stock levels of capitalization in those areas. There is the look through it. It's fine. There's another way to look through it, which is that maybe these tariffs bring down potential growth in the United States. I say that, though, with understanding the other side of this, there are some very positive things the Trump administration has done for business investment that hopefully will help. But right now, I think there's pressure on the consumer. I'm a little more bearish on this next several months till this stuff works through and proves Jimmy right about everything.
- [13:21]
Jim Leventhal
Thanks for bringing up the, you know, the other positive things because I don't have to waste my time with you asking about that because. But there's an important question that's tangential and important to this is how much do we think the data is getting fuzzy? You know, there's been discussions about this and look, it's like the macroeconomic picture. I think it's always a Rorschach test, right? You're seeing it one way, maybe a little bearish. I'm seeing it another way, a little bit positive. But you know, the data is creating this fuzziness with survey responses. How do you feel? Because I'm asking you earnestly. I'm a little worried about it.
- [13:53]
Steve Liesman
It's harder than ever to figure it out. It's why I am relying more and more on external data like adp. Now I take another look at that. I don't quite know how you trade it but the error rate of what we thought ADP was, we thought it was off by an average, an absolute average of 90,000. Now that's down to 50,000. So that error rate is now in half. That's private sector data. There's also the soft data. The soft data turned bad three months ago. We were waiting for it to show up in the hard data. If you follow that soft data, which is correct, you don't make money. I think that's, I don't know how to do it. I could just give you the econ. You guys put the probabilities on it.
- [14:34]
Jim Leventhal
The soft data I think is the most suspect. Like who the heck is actually responding to surveys?
- [14:39]
Mike Santoli
Right?
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Jim Leventhal
Like first off the response rate is low and then you think about who.
- [14:42]
Mike Santoli
Would actually include things like even the ISM survey.
- [14:46]
Steve Liesman
Yeah, that's been terrible. Yeah, that's been terrible. In terms of predicting what's going on, I think I would advise people to keep their ear to the ground. Listen to companies. Companies are talking about big tariff impacts or not and that they're looking through it and it's not having a massive effect on the bottom line. And I'm sorry to have lowered the investment and acumen and follicle count.
- [15:10]
Mike Santoli
Now. Well, we're going to rebuild it because we're going to. Thank you.
- [15:13]
Steve Liesman
I'm taking off. We're going right up.
- [15:15]
Mike Santoli
We appreciate it but that was great to get us, get us started. Apple now lower despite reporting its fastest quarterly revenue growth in more than three years. Let's get to Steve Kobach with more on what was happening this quarter for Apple. Steve.
- [15:29]
Bill Baruch
Hey Mike, I want to channel my friend Steve Liesman here a little bit because he says so often the tariffs have to come from somewhere. And we got a great example of that last night with Apple. They said for the June quarter, $800 million in tariff related costs. That is better than the $900 million they initially expected and it's only going to get worse from there as they move into these higher volume quarters for the September quarter. They're estimating a $1.1 billion hit in costs because of these tariffs. And even on the call, Tim Cook was kind of hinting that even though they're not going to give a specific number for quarters beyond that, as they move into these bigger quarters, especially the December quarter, which is their highest volume quarter, higher volume means higher tariff costs. So you can expect that number to increase again in the December quarter. That's of course, assuming everything stays as it is. Right now. The question, guys, is going to be about price increases. So far, Apple has been taking that hit on the tariffs. On the margin front. They guided between 46 and 47% margins for the September quarter. We're going to get new iPhones in about six or seven weeks here with potentially new pricing. So the question becomes leading into that iPhone event, do they raise prices or as the tariff picture gets worse into the rest of the year, are they going to just eat that on the margins, Guys?
- [16:50]
Mike Santoli
Yeah, Steve, thanks for that set up. I mean, you know, Bill, it seems like the stock faces a pretty high burden of proof, right? I mean, yeah, they had the pull forward of some iPhone demand. They did have a beat. Everything seemed like it checks out okay. Services even better than expected. We're backing off at the stock in a weak market, admittedly. So how would you treat it?
- [17:09]
Scott Wapner
Yeah, I mean, we're actually pulling the trigger in increasing our exposure in Apple. Apple, we're underweight Apple with a 3 1/2% position in portfolios. A couple of weeks ago we began trimming, you know, some of the names up top like Nvidia and Metta, and some of them just is just a little bit off to give us some flexibility and sort of a little bit of a rebalance, if you will. I have more of Apple that I want to buy. I talked about in the show yesterday, we look at 190, 195 area, but this was a good enough report that I think there's enough negative activity around Apple that, that I think in a, in a sideways to potentially down market, it could sort of hold ground fairly well. You know, again, some of the tariff, the tariff cost is. It's revised higher. Is that enough? Maybe, maybe. I think there's me a lot of questions moving forward, but I feel like there was a tone from, from Cook in the, in the call and in the conversation that, that they really are going to ramp up the AI efforts and we're going to start to see that in the back half of the year and I sort of make sure I'm not Too underweight. But, but again I think this as three slices. This is the first of three slices of buying that we're going to do an Apple.
- [18:13]
Mike Santoli
Jason, did you see anything to either have you rethink your assumptions about it or figure maybe it can even get a little bit less expensive at some point?
- [18:23]
Jason Snipe
Yeah. So I think for me the biggest takeaway was Cook is obviously open to M and A activity.
- [18:29]
Scott Wapner
Right.
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Jason Snipe
I mean that, that's always been the story. They got $133 billion worth of cash. You know, this, this hundred billion dollar buyback, it's somewhat been an autopilot for the last few years. What if some of those dollars are redirected? I think folks and investors are very comfortable with the idea that Apple needs to look externally to accelerate this. The story on the AI poll raise and I think they're willing to do so. The numbers, I think, I think we all just said it. I mean some of it has been front running through to due to tariffs. You know, I mean obviously the, the earnings and revenue be were a lot different than what we expected. I mean 10% revenue growth, you know, you know 12% earnings growth with 4 and 2% were those two numbers coming in. So the quarter was solid, China was good, services were good.
- [19:17]
Scott Wapner
So.
- [19:18]
Jason Snipe
But I think the big story is M and A potential.
- [19:20]
Mike Santoli
Sure. I mean, you know Jim, they detail the tariff exposure which is like a big number in the real world, a small number for Apple really. And you can kind of play either side of it and say, well this is why companies can, you know, in aggregate absorb that. Not that it helps but, but it's not something that should change the overall complexion of the financials.
- [19:43]
Jim Leventhal
I think that's an excellent way of summarizing it. All right. We're in a new world where they are are tariffs of Steve. Steve Liesman said, I think his expression was we're building a fortress of tariffs around this country. Fine. That is the hand we've been dealt. Apple will play that hand this quarter. Whether we think the tariffs, you know, whether they manage them well or it hurt it, it doesn't change the long term strategy for Apple. If you own it and I own it and like Bill, I'm a little underweight it, you know, what I would say is its valuation right now is smack dab in the middle of the valuation range for the last five years. It's not cheap, it's not expensive relative to history. And I think if you don't have a position, you certainly can build it out here. As Bill just said. And I agree with you totally. Or at least what I think you said was, hey, I've got more to buy. I'm going to take my time. I've got more to buy of Apple as well. I want to take my time. If it gets down to the low 20s as a forward multiple, that'll be terrific.
- [20:35]
Mike Santoli
Yeah, from about 27 or so at this point. And just to be clear, to be underweight Apple, if you're a benchmark to the other S&P 500 means owning less than like 5.7% of portfolio still a meaningful position. That's always the weird game. Everyone says people are underweight these names. Well, that's because nobody runs with, you know, six stocks worth a 30 year portfolio, at least not many.
- [20:55]
Scott Wapner
Right.
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Mike Santoli
Well, let's talk about one of those other big ones. Let's turn to Amazon. It's the biggest drag on Nasdaq 100 today following its earnings. Let's hear from Mackenzie Seagallos with more on Amazon's quartermaster.
- [21:08]
Mackenzie Seagall
Hey, Mike. So that's right, Amazon is now in the red for the year, underperforming its fellow hyperscalers. Now, investors had been counting on a strong US Turnaround this quarter. And while cloud does remain the company's profit engine, posting its first revenue beat in a year, you've got growth stuck at around 17%. Margins are thinner and its share of overall operating income is shrinking. And the deeper issue here is that US isn't generating cash the way that it used to backlog, which is signed cloud contracts not yet fulfilled rose 25% to 195 billion, while Microsoft's Azure jumped 37% to 368 billion. Even Google Cloud hit $106 billion. And this metric is key because it's increasingly viewed as the best proxy for future revenue growth. Now as for why some deal flow may be shifting here. On the call, Andy Jassy pointed to Amazon's in house chips as a cheaper alternative to Nvidia's Blackwell GPUs. But Cloud buy investors seem less focused on cost, leaning instead toward Nvidia's vertically integrated stack. Mike.
- [22:15]
Mike Santoli
Katie, thank you. It's really interesting guys because for as dominant as Amazon is across multiple fronts, from an investment perspective, it's not the cleanest story. Right? You have to think about tariffs. It's not just purely kind of cloud and I spend, you know, even a lot of the capex is happening in the retail side of Amazon, not just like hey, it's going to data centers. So there's a clear Preference for like the metas and the Microsoft words, very linear how it's feeding into earnings. Where does that leave you? You know Bill, when it comes to.
- [22:45]
Scott Wapner
The stock here, I think the way it approached the earnings report yesterday, it was, it was coming into resistance. It had a little bit of a tough time working through that. If you look back, I think was the February 6th gap around 206. Even if this had a great resistance report where it went higher, I think it was going to struggle at that 206 and then the record high is kind of right in that area too. The other part going into report that really didn't get me excited was Microsoft had a monster report and it really raised the bar for cloud. So that's obviously why Amazon is getting hit right now. Their margins on cloud where they shrank the 32.9% from 39.5%. Now all in all, I mean we've seen the multiple and amazing Amazon come down significantly. I mean I look back to three years ago, four years ago, the S and P wasn't an S and P multiple problem when we was elevated, it was really an Amazon problem and then multiple of the S and P. So now Amazon is not an outlier and I think that that levels the ground a little bit. I not necessarily looking to be a buyer of Amazon right here. We have I think enough of it right now. But I would say if somebody really loves Amazon and they think they're underweight, wait a few days. Wait, wait for the sales to settle out over the next week. I think you're to find a really good spot to be a pull the trigger on it.
- [23:56]
Mike Santoli
It's interesting Barclays out today with this notion that even though tech is now kind of reasserted the sort of outside relative outsized relative performance, its relative valuation to the S and P is actually not. It's actually below recent trends. You know, I mean it's, it's sort of like tell me what you want to compare me to and I'll tell you how good I am because the silver S and P has gotten more expensive. But it is sort of fascinating. We have this unbalanced economy where, where capex is really moving the needle on gdp. Consumers are taking a rest and the market seems to be reflecting that.
- [24:31]
Jim Leventhal
I think that's completely fair. And look, Bill mentioned it. I'm going to repeat it. The multiple has been coming down like, like skiing down.
- [24:39]
Mike Santoli
What happens though when companies reach a certain stage of maturity?
- [24:41]
Jim Leventhal
Yes, and it's fine. And look at 30 times forward, I Believe in Amazon. I was surprised by the quarter this. I didn't think we're going to have an Amazon Web Services discussion, but here we are. And in any business model you can have a quarter where things just don't go right. I mean, one of the things that they were talking about is they didn't have enough utility power. I mean, that's part of their supply constraint. Guess what? That's fixable. It takes some time, but it's fixable. Ultimately, the business model is one that I like quite a bit. This hybrid of the consumer business, the Amazon Web Services and then a lot of other shots on goal, whether it's logistics or things like that. And when we talk about the multiple at 30 times forward, some might say it's a little expensive, but we can do this game. Jason, we do it all the time of what if they stop the capex, right? What if the depreciation came down? That multiple is a lot lower. Where I end up on this is look, it's heavy right now. It's going to be heavy. There's no catalyst in the immediate offing. It comes down a little bit more. I'm adding to it.
- [25:35]
Mike Santoli
Yeah, I mean, it's interesting because as much as people want these stocks to take a breather and back off and give you a chance, it's not at least today feeding into a quote, broadening of the market. Right. You got small cap suffering, got equal weight suffering. Sometimes it doesn't. The baton gets dropped and not passed. So see how it goes. While still ahead, Bill Baruch has a new buy in this year's worst performing sector. We'll break down the move. Plus the trade on energy. Its earnings roll in from the big oil names. Halftime. Back in two minutes.
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- [27:38]
Mike Santoli
Welcome back. Let's hit some committee. Stocks on the move. ExxonMobil earnings beat as production growth softens the impact of lower oil prices Jim, you own it hasn't gotten out of its own way in a big sense in a while. But how do you view it here?
- [27:51]
Jim Leventhal
I mean, it hasn't got it out of the energy sector's way is the way I would describe it. Look, some people out there may say I don't want to own energy stocks at all. That's fine. That's your prerogative if you're going to own energy stocks. I've said many times the first stock you've got to own is ExxonMobil. And the reports today show why. None of us know which way oil and natural gas prices are going to go. Some people may think they do, but nobody really knows. In a down environment, ExxonMobil can produce the results. They can return cash to shareholders in the forms of dividends, share buybacks. You get an up market as far as fossil fuel prices go and this will perform. The problem here is nobody really cares about the energy sector right now. I get it. So I think the thing to do is probably just have your energy sector exposure maybe just a little bit above the s and P500. I think that's like two and a half percent. So if you're like 4% in energy, I mean that's an overweight, but still a small amount. Overall, I think ExxonMobil is the one you have to own in the space.
- [28:47]
Mike Santoli
Any other contrarians like it as a.
- [28:49]
Scott Wapner
Group, we're actually pretty overweight on energy. That's, that's just kind of how we run our portfolios. But we've had energy for the last three or four years at about 10%. We're lower in the record of seven and a half percent right now. That's after adding Cheniere. I think I Think the really Exxon could be well positioned with how Trump is using US energy in these trade deals. Exxon as well is putting a lot of investment to building up power plants and power demand to fuel data centers. So I think, I think they are with well positioned. You know what energy will if you could build a portfolio properly where it can still perform in other areas and energy kind of maybe a dog for you a little bit when you. When you hate it most it usually shows up for you. And that's where I think we could be seeing in the back half of the year.
- [29:30]
Mike Santoli
Yeah a little bit of essentially a kind of a damper on volatility that comes for other parts of the portfolio I suppose. Jason Colgate now this by the way Staples showing a little bit of life today. Little fat offensive twitch. But it's been a rough week for Colgate. You know the CEO talking about trying to streamline, get things back in line.
- [29:50]
Jason Snipe
Yeah yeah. And I mean it's been a rough year for Staples bottom line.
- [29:53]
Scott Wapner
Right.
- [29:54]
Jason Snipe
I mean just expensive names in a market that's running with taking advantage of momentum in other sectors.
- [30:00]
Scott Wapner
Right.
- [30:01]
Jason Snipe
So for me yes they're obviously they beat on the top and the bottom. You know they're reducing costs. I think their supply chains are improving. I think the biggest story here is they had 200 million of incremental cost potential coming from tariffs which just been reguided to 75. So I think that's going to be a positive story for them going forward. I think that their organic growth is solid. You know so I continue to like the same in the staple environment.
- [30:23]
Mike Santoli
Where is that mitigation coming from in terms of the tariffs? They're just resourcing, just resourcing.
- [30:28]
Jason Snipe
Just just in terms of the items that are costs are being tied to.
- [30:33]
Mike Santoli
Bill want to hit Bitcoin. You know it had it's did it sort of did its job on the risk on part of part of July. You know sort of softened up here. Where do you. Where do you see it?
- [30:44]
Scott Wapner
I think part of the story you can't ignore what happened in the dollar over the last few days. I mean it's massive the dollar higher. Well today after this jobs report the dollar is down what one $1 index is down 1%. We've seen it on a re. You know positioning in the dollar. So as well you've seen the equity market kind of come back a little bit. So I think that definitely weighed on bitcoin I a couple of weeks ago we say this 120 area is pretty sticky. There's a lot of excitement around it. You've seen some of the others like Ether and Solana have had big moves in recent, recent weeks as well. So it would be good I think healthy to really consolidate, consolidated an upper end of this range and if we could see maybe it trades as low as one of five but really holding very well, not even flirting with 100,000 I think would be really constructive. Been build for the, you know, the next leg higher.
- [31:29]
Mike Santoli
Yeah, I mean gold up, you know, 1.4% today after kind of lagging bitcoin this last little run that that spread is, is obviously coming in a little bit. All right. Let's get the headlines now with Bertha Coombs. Hi Bertha.
- [31:43]
Steve Kobach
Hi Mike. The New York headquartered Human Rights Watch accusing the US and Israel backed Gaza humanitarian foundation of turning distribution into bloodbaths. The group says Israel regularly opens fire on civilians seeking food amid its months long aid blockade. The report came out on the same day US Envoy Steve Witkoff visited one of the sites to assess the situation and help craft a plan to deliver food and medical aid to the people of Gaza. El Salvador's legislature approving constitutional changes that overhaul presidential elections paving the way for President Nayib Bukede to serve another term. He won re election last year despite a constitutional prohibition against it. El Salvador's Supreme Court eventually cleared the way for him to run again. The new changes eliminate term limits and extend presidential terms from five to six years. And it seems the second time is the charm. SpaceX launching NASA's Crew 11 into orbit just before noon after scrubbing yesterday's planned launch because of bad weather. Four person crew is made up of two NASA astronauts, a Japanese astronaut and a Russian cosmonaut who are now headed to the International Space Station. Great that they were able to get it in today, Mike, for sure.
- [33:11]
Mike Santoli
Bertha, thank you. All right. Coming up, a check in on the health care trade. We'll debate if this year's worst sector is due for a bounce. Plus Bill Baruch just made a new move in the space trade is next on Haptic.
- [33:29]
Scott Wapner
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- [33:58]
Mike Santoli
Welcome back to Halftime. We have a committee move to get to. Bill just bought Thermo Fisherman. This obviously used to be a kind of a favorite high quality name in terms of Secular growth, lab sciences kind of products, research stuff and yet it's falling on hard times. What do you like?
- [34:16]
Scott Wapner
Yeah, I mean it's really kind of based out at above Brown$400. It had a tremendous earnings report about a week and a half ago. We've been really underweight health care and it's found it as a good opportunity. Opportunity start to see some green shoots within that space. I think that earnings report really did something for us. Now the idea biotech may be kind of weighty weighing on diagnostics, weighing on some of that feed through now I think interesting here you look at today, rates are getting clobbered and biotech is one little industry that is, is actually very positive today. So I think that as they can work I think you see more spending kind of flow through to the diagnostics. And Thermo Fisher I think is at a great spot to look to to hold it long term here to be buyer.
- [35:03]
Mike Santoli
I mean I thought the bigger issue, I mean and you guys weigh in perhaps is just overall research budgets is getting slashed. Right. Universities and NIH and everything else. I mean is that not an overhang?
- [35:14]
Scott Wapner
It certainly is but I think a lot of that got priced in very quickly. I think that's a lot. That's why it's, it's really been a big underperformance. I mean it was down more than 10%. You know it was up I think almost 20% off of the lows post earnings. So it's come down a little bit. We use that little bit of a pullback here to be a buyer and again I think that story could flip and I do believe rates start to come down. This could have been, this could be the marker here today on the non farm payroll. And with rates coming down that at least brings that tailwind into the biotech space.
- [35:40]
Jim Leventhal
I don't think you're going to have to wait too long. Thermo Fisher high quality company. There's a lot of pharmaceutical, pharmaceuticals that I own that have kind of languished the last few months. AbbVie, AstraZeneca, Vertex and I think more than anything what we're talking about here is the sector overall has been unloved. It's been unloved for good reasons. The real giants, the UnitedHealthcare, the rest of the managed care companies, they've been hammered. Some of the glip one companies have gone down and so the sector overall has gone down. I think it's dragged down a lot of these other high quality companies including a Thermo Fisher with It, and I don't think that'll last too long. Quality. The cream rises to the top.
- [36:16]
Mike Santoli
Let me just weigh in with what our friend Jeff DeGraff said this morning about the group. Health care's weakness remains persistent and relentless. Bad charts are breaking hard, offering no refuge, devaluation or oversold arguments. The trends are weak. Avoid until they stabilize. Clearly, that's a tactical assessment. Right. Jason, is it. Is it time for, you know, your contrarian antenna to say, you know, it's as bad as it gets?
- [36:39]
Scott Wapner
Yeah.
- [36:39]
Jason Snipe
No, and I like my select names.
- [36:41]
Steve Liesman
Right.
- [36:41]
Jason Snipe
Like, so we own Abbvie as an example, which is up almost 10% year to date. And I think about a name like that who lost a Humira patent a while back and has spent about $20 billion on immunology acquisitions, which are going well. And I think you got to look at names with strong pipelines like they have with Renvoak and Skyrizi, that are growing very nicely. Sky guy Rizzi, up 60% year over year. Renvoak up 40% year over year. So I think you got to be selective, obviously. And I think there's some quality names, to Jimmy's point, that could really raise the top.
- [37:13]
Scott Wapner
I'll throw Amgen out there, too. Another one that's done really well that we own. We don't have the Amgen and then, you know, Thermo, Fisher and Lilly. I mean, we're still underweight. And I'm not saying I'm going to buy more, but I think this is a good little grouping for us. High quality names. Take us into the back half of the year.
- [37:27]
Mike Santoli
You got it. Nobody's talking too much about services.
- [37:31]
Scott Wapner
Right?
- [37:32]
Mike Santoli
I mean, the. Unh. I mean, it seems like. I mean, I've heard people argue that those companies don't tend to kind of underprice policies for long and usually the pendulum swings back. What do you think?
- [37:43]
Scott Wapner
Well, you get that. You get where it's. It's maybe the worst in here. UnitedHealth here. How many people are saying it and then they come out with the report and it is down further. I just, I personally have to stay away from it.
- [37:53]
Mike Santoli
Yeah, yeah. For such a huge component of the economy, 8.8% of the S and P is the health care sector right now. And videos almost.
- [38:03]
Jim Leventhal
Yeah, yeah, sorry. I guess that's making the rounds. That.
- [38:05]
Mike Santoli
That chart is. Is everywhere at this point. Yeah. But for good reason. All right, up next, the committee's July report card. A look at the winners and losers as we kick off a new month. Halftime. Back after this. We are back. As we enter into August, let's take a look at the committee's winning winners and losers for July. Guys, why don't we start with, you know, we can all take a victory lap on you know, Oracle in video and really with respect to whether you know, the stock has kind of been played out or, or you feel like it actually has more in the tank.
- [38:55]
Scott Wapner
Yeah, I mean Oracle has done just a tremendous jobs of 50% year to date. I mean they continue to kind of just you know, push themselves into multiple spots within the air space and data center space and, and software. I mean they're just really doing everything right and firing at all cylinders. I thought last year when that, when, when they really made a good run it could take a break for a little bit. But this year has just been tremendous and continue to get more good news. And then the spend that's going into, you're seeing these, these hyperscalers. I mean the amount of money that's being revised higher in spending, it does feed through into Oracle and you're going to see that continue to power them as well.
- [39:31]
Mike Santoli
Nvidia. I mean we all know the story. It's, you know, it's worth reminding folks that the stock went sideways for like the better part of a year. Long term going into this, this breakout period now it gets up to like 4.4 trillion. We've retraced a little bit. What do you think?
- [39:46]
Scott Wapner
Yeah, there's no doubt about it.
- [39:47]
Jason Snipe
I mean clearly the investment in the Middle East I think was very solid. I think, you know, this relinquishing of the export controls with China and now being able to sell these 20s or some.
- [39:57]
Scott Wapner
There's been some recent news about that.
- [39:58]
Jason Snipe
But I think that was a positive development. That was supposed to be an $8 billion hit for earnings. Earnings that we'll see literally almost a month from now. But the stock again to Bill's point as it relates to Capex, all, all roads are leading back to in video, you know, on, on that spend. So clearly, I mean the stock has had a lot of momentum and kind of resurface a lot of that run that was early part of last year before it kind of slowed down some.
- [40:22]
Scott Wapner
I'll add that the moat as well is the software. I mean the software to be able to run the AI and train it just, it really keeps that distance away from, from the second in line, Jim.
- [40:34]
Mike Santoli
Just to get to a timely one. Qualcomm is down like 8%. You know, we obviously got results from them it's been a bit of a tougher part of semis. What do you think of it now?
- [40:44]
Jim Leventhal
Well, I do think they're executing well on their strategy of diversifying away from cell phones into automotive and Internet of things. They've got solidly double digit growth, growth in those two latter categories. The problem with the report is the smartphone business. And even though we've known for quite some time that the Apple business is going away, somehow it still catches people by surprise. So it was a big down day yesterday when the smartphone business underwhelmed. That said, this stock is just way too cheap and I don't think enough respect is being paid to the diversification that they're doing. I will say management, if you're listening, I really don't know what you're waiting for to do an accelerated share repurchase. Your balance sheet can more than support it. Your stock is insanely cheap and you just haven't shown any appetite for M and A, which frankly I don't want you to at this point. Just recapitalize the company. It's an opportune time to do it.
- [41:35]
Mike Santoli
All right, see if they're listening. So, interesting month for the likes of Netflix and Spotify as well, which is super strong stories. Very, very much favored stocks. Maybe architecture arguably got crowded. There's been some shakeouts in both them. But interestingly, Netflix outperforming on a down day today. It's very defensive, it seems.
- [41:52]
Scott Wapner
Yeah, yeah.
- [41:54]
Jason Snipe
So I think, listen, the stock was, has been a tremendous performer this year. I mean, it was up almost 40% a month ago.
- [42:00]
Scott Wapner
Right.
- [42:00]
Jason Snipe
So it's down, you know, a little over 10 this month. So for me, I think they hit on all cylinders through the year and it has traded on somewhat defensively when there's concerns coming, coming into the year about the consumer. But for me, I think this is a little bit of digestion. I think the consumer is strong. I think advertising has done well. I think the advertising supported tier, I think kind of the downshift from the top to the bottom in terms of what you can select has done well and gives them a lot of opportunity. So I think for me this is again, just a little bit of digestion, but I think the stock will continue to work.
- [42:41]
Mike Santoli
All right, got to move on from there. Coming up, the setup on some key committee stocks reporting earnings next week. Halftime. Be right back. We are back with the setup on some key committee names reporting next week. Let's start with Caterpillar. Bill, what are you expecting here?
- [43:11]
Scott Wapner
Well, I mean, I Think US Energy Renaissance has helped. They have a strong backlog. It was up 25% year over year last quarter. Looking for about 30% year over year this quarter. You know, I think we'd like to see the margins improve. That, that really would, I think, help the stock a lot. I mean, it's been a huge run in California Caterpillar, but I think, I think they're set up to keep going. Even a consolidation here, even after a healthy earnings report, I think would set it up for a strong finish the year.
- [43:35]
Mike Santoli
Yeah, I mean, been shrugging off the steel tariff stuff. Everything. Yeah. Disney, Jim, what's the key?
- [43:41]
Jim Leventhal
So Disney has been at a consolidation range right now and it basically has to outperform on earnings because it's not cheap. It's not expensive either, but it's roughly 20 times this year's earnings. So it's not cheap, not expensive. If we're going to get more, more, we need earnings outperformance. I think you'll get it. Theme parks have been strong, I think direct to consumer, the streaming business, even though it's a small part of the operating income, that actually gives leverage that if you just get a little bit more there, can pump up the earnings a little bit more on the top line, meaning you get a high margin and the operating income goes up.
- [44:11]
Mike Santoli
Jason? Uber.
- [44:12]
Jason Snipe
Yeah, listen, Uber has been a great winner, obviously, so far this year, up 43% year to date. They've just partnered with a company called we right now. I think for them, partnerships have obviously been key. They're going to double volumes in Abu Dhabi. Revenues expected to be up 16%. EPS at 32%. I think they'll hit the numbers all right.
- [44:29]
Mike Santoli
Yeah, it's been a big help to the industrial sector. Stay with us. Final trades coming up. Join me today at 3 Eastern on closing bell. We'll see how the market will end the week. Morgan Stanley's Chris Toomey, Mohamed El Erian, NYU's Aswath the motor in and top Apple analyst Eric Woodring all join me this afternoon. Hope to see you then. Time for final trades Bell.
- [44:54]
Jim Leventhal
Let's get started.
- [44:55]
Scott Wapner
Netflix. It's trading into the 382-fibonacci retracement back to the April low and aligns with the consolidation level from the first half of May before breaking out. So this is the place to buy.
- [45:05]
Mike Santoli
All right, tactical call there.
- [45:07]
Jason Snipe
I like Palo Alto here. I really like this Cyber Arc acquisition. I think it'll be accretive to stock in the long run.
- [45:13]
Jim Leventhal
Jim, Transocean. This is a very high beta energy play competitor Valeris came out, I think it was yesterday, maybe it was Wednesday, with a very good report indicating they see contracting opportunities ahead. I think you'll hear the same from Transocean.
- [45:26]
Mike Santoli
All right, we will watch for that. By the way, the indexes have sagged back toward their lows for the day. That does it for halftime. I'll see you three for closing bell. The exchange with John Ford starts now.
- [45:37]
Scott Wapner
You've been listening to CNBC's Halftime Report, the podcast. You can always catch us live weekdays at 12 Eastern only on CNBC.
- [45:48]
Edward Jones
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- [46:28]
Scott Wapner
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Mike Santoli
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