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Halftime Report
The Momentum Unwind Resumes: Your Next Move 7/7/26
00:43:51
Scott Wapner and the Investment Committee debate how to trade the momentum unwind. They share their latest moves. Plus, we hit the latest Calls of the Day. And later, Josh Brown spotlights Archer-Daniels-Midland in his "Best Stocks in the Market." Investment Committee Disclosures
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- [00:00]
Stephanie Link
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Stephanie Link
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- [00:31]
Joe Terranova
regarding that seat on the committee.
- [00:33]
Stephanie Link
We're promoting quarterly earnings.
- [00:35]
Oliver Renick
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- [01:02]
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, thanks so much. Welcome to the Halftime Report. I'm Scott Wapner. Front and center this hour the latest on the momentum unwind. Many of those names are down sharply. Meantime the Dow hitting a new record high before turning negative trading all of it with the investment committee as always. Joining me for the hour, Joe Terranova, Stephanie Link, Rob Secchen and Josh Brown. I'll show you the markets here. We have gone red across the board. NASDAQ is the weakest as you might expect with that momentum unwind yet again or at least continuing after that bounce that we got yesterday. 7500 is right where the S and P sits. Micron, intel, amd, Marvell, all down significantly. We can show you some of those as we cycle through here. The AI power names, Vernova, Vertiv, Quanta, Eaton also down Caterpillar just keep showing these guys because it really tells the story about what is happening here. Joe, as Goldman Sachs says, the character of this market has changed.
- [02:16]
Joe Terranova
I think it's a fight for leadership and we talked about the momentum rebound yesterday. I think a lot of us questioned that that one day rebound was evidence that maybe a near term bottom had been put in place. I think more deleveraging as it relates to the momentum factor is what lies ahead for all of us. I think it's semis, I think it's memory and I think the evidence to support that premise is the reaction to earnings for Samsung and for Micron classic examples of good news, bad price action. If you look at the chart, if we could pull up a chart of Micron, you will reported earnings on the afternoon of June 24th and the high for the stock is June 25th. We know what happened last night with Samsung was good.
- [03:00]
Scott Wapner
Right. Their profit was up 1800%. Concerns about capex, concerns about demand seemed to be the issue today. The cost in Korea got smoked overnight. Was down 5% momentum in the midst of its worst drawdown since 1Q23.
- [03:16]
Joe Terranova
So let me just. I think what happens now is as we move forward over the coming weeks into earnings which the expectation is they will be good. The market tries to find leadership elsewhere. Don't be surprised if it finds it in the Mag 7 itself. But certainly I think semis and memory, they have a lower sideways consolidation period in front of them. It's noise, it's not a peak.
- [03:40]
Scott Wapner
Steph, the idea that the character of this market has changed, are you on board with that? Because it impacts, you know, a good handful of stocks that you've believed in as much if not more than any others. Right. The, the AI power related names are all caught up in this momentum unwind.
- [03:58]
Stephanie Link
Yeah, I mean I am encouraged that since June 22nd when semi is peaked, that health care is up 9%. Financials up 6%. Cybersecurity up 20%.
- [04:07]
Scott Wapner
New record. Another record.
- [04:09]
Stephanie Link
So, so we have this rotation clearly, but Micron and Samsung didn't say anything about demand Waning. Micron secured $100 billion in contracts between now and the end of 2027. Samsung said very similar things that demand is going to exceed supply well into 2027. It's just that these stocks have run really, really far. 19% of the S&P 500 is semiconductors. That's three times as much as since 2022. That is huge. Right. So they've had a nice run for good reason. The growth is there.
- [04:46]
Scott Wapner
Sure.
- [04:46]
Stephanie Link
And it's all the same trade. Scott, it's semiconductors and it's the food chain that I've been talking about.
- [04:51]
Scott Wapner
Yeah, the AI food chain. Let me just give some context. I'll come right back to you on how much these stocks have run to your point because looking at charts alone doesn't tell the full story until you read the numbers as well. Micron is up 218% year to date. It's now down 28% from its high. So you're looking at, you know, Bear market levels of pullback corrections for many of these. Intel up almost 200% now down 23% off of its high. Marvell up 167% year to date, now 31% off of its high, and so on and so forth.
- [05:27]
Stephanie Link
Right. And so you want to pick your spots because if you believe demand is exceeding supply for a long period of time, you're going to get opportunities. These things don't grow every single year. 200%. It's just not normal. In fact, I'm looking at some of the industrial companies that I own, even though Quanta Services Vertiv, you know, they could correct another easily another 20, 25% but they are buys. And because I look at the backlogs, this is why I talk about backlogs all the time, it's really hard to cancel backlogs. And the backlogs on average are growing third in the 30% range. Historically, backlogs for industrials grow 4, 5%. So they're seeing enormous visibility. I mean, even though it sold out until 2028. Quantum Services, I told, we talked about this total addressable market number that they, that they cited a couple of weeks ago at their analyst meeting. 960 billion to 2.4 trillion between now and 2030. That's not normal. And this is a very conservative company and 70% of their clients are utilities, which by definition are very conservative.
- [06:27]
Scott Wapner
It could be painful though, if you're right. Right. If you say, well, they could easily correct another 20 to 25%.
- [06:32]
Stephanie Link
Sure.
- [06:32]
Scott Wapner
That's going to look, that's going to look pretty ugly on the screen.
- [06:34]
Stephanie Link
But those are not the ones I want to sell. Those are the ones I want to add to as opposed to Marvell, which I had been trimming last week when I bought ServiceNow, I trimmed a little bit of Marvell because that's, that stock is up so much. And even though I think the fundamentals are phenomenal, you got to take some profits along the way.
- [06:49]
Scott Wapner
So it's obvious that many of the AI related winners are the ones that are now suffering. You know, the idea that Goldman says the character of the markets changed, you know, yesterday you had this big rebound, Rob, and you know, we asked the question, okay, is, is, you know, momentum back in some respects, was all, was the pullback done or at least, you know, close to done today would suggest, no way. As others like Jeff DeGraff came on closing bell yesterday and said, no, the momentum crack is real and it's not, it's not finished pulling back yet. And Steph, I think, you know, the way she tells the story is kind of an agreement, another 20 to 25% for some of these names, maybe, who knows?
- [07:31]
Rob Secchen
I think that's right. Who knows if we get there? But I think this is a reset, not a reversal because this is still an unbelievable air arms race. These companies are enormous beneficiaries. The price moves have certainly been pulled forward as a result of this demand. And so when you have the magnitude of what we've seen seen, you're going to have a reset. If you look at the average resets in this space, the worst ones have been drawdowns of 12%. This is much more significant partly because of just the magnitude of the upside. So you're going to see volatility around this. But this infrastructure is getting built out. These bottlenecks still exist. You have Metta out there selling computing power and generating possibly $20 billion in incremental RE by selling 1 gig of, of additional power and to bring that on cost $50 billion. Who knows if that's the pricing mechanism on a forward basis. But those economics are absolutely attractive and it shows. And they have the most compute power that has been bought of any of the hyperscalers and a lot of people looked at that as a negative. I look at it as boy does it pay to invest in this infrastructure.
- [08:52]
Scott Wapner
Yeah, so it's. Josh, it's not just chips.
- [08:55]
Frank Holland
Right?
- [08:56]
Scott Wapner
I mean, let's make that clear too. 82% of tech is in correction or worse, 62% of tech is in bear market or worse. Just to give you an idea of some of the notables that are off their 52 week highs by extraordinary amounts. Oracle 60% down, service now 47% down. Adobe 41, Salesforce 38, Palantir 35 and then Microsoft 29.
- [09:26]
Josh Brown
Yeah, well look, I think what's happening right now is not fundamental, it's behavioral. The market has been drunk on some of these momentum trades for a very long time. And you know that that's that positive sentiment around the capex build out. It's not like springing up in a vacuum for no reason. The earnings growth for these companies has just been like, you couldn't ignore it even if you wanted to. Some of the numbers that these companies are putting up. But the problem is we got into this realm where the expectations have gone so far at this point that they're almost impossible to make anyone happy. Samsung's a really great example. Earnings beat by 6%. They literally had nothing negative to say. The print, the profit print was a 19 fold increase for the quarter ending in June. And you see the price action in the stock and all of the related price action in all of the companies that are part of this ecosystem. And you just come to realize, all right, we're not talking about fundamentals anymore. We're talking about how levered people have been. Todd Son at Strategic is out of it with a note this morning. We now have $200 billion in leveraged ETFs and most of that is in tech and most of that is long. So it's actually 13 to 1 long to short in these leveraged ETFs. So nobody short, nobody is leveraged short or inverse. Everybody is all in on the same trade. That 200 billion notional is more like half a trillion dollars. And so when we get drunk like this, there's going to be the hangover and nothing fundamental has to have changed. Everything Stephanie said is true. Everything, everything that we're talking about with this capex theme is all still true. But the price action tells you that people went overboard and really that's correcting right now. But I don't, but I don't think it's, I don't think, I don't think it's bad. Like I know nobody wants to buy a stock and be down 10% the next day. I understand that. But I don't think it's bad for us to have these rotations and have this shift in the other direction. There's no such thing as a one way trade. And this is elemental stuff for, for those of us who have been in this business, this goes, this is Wall Street. Remember what Luke Manheim had to tell Bud Fox. You want to roll kid? Enjoy it because it never lasts. Why should this be different?
- [12:02]
Scott Wapner
You want to just comment on that?
- [12:03]
Rob Secchen
Yeah, I just think the notion of levered ETFs and how the banks and, and ET create these create a structure that kind of feeds fuel to the fire of the upside. Whether that be through options or futures or in some of those are short dated day trades. The leverage applies for just that day. So it does create a lot of additional support for some of these names on the upside. But the unwind is equally so as
- [12:37]
Scott Wapner
people are definitely learning. How do we feel about the, the bond offering from, from Amazon? Everybody owns it. Steph, you get the first one on that because obviously not the first Alphabet. Oracle, Meta, Nvidia. It's not surprising now Amazon. No, not surprising at all.
- [12:52]
Stephanie Link
It's not surprising especially since DRAM prices. ASP is at micron were up 60% and NAND prices were up 80%. So a lot of this spend is because the memory is a lot more expensive than it ever has.
- [13:03]
Scott Wapner
But you're getting a little fed up with what you're seeing at Meta.
- [13:05]
Stephanie Link
Well, I.
- [13:06]
Scott Wapner
Does this sort of into that level of concern in any way? Do you have a. What's your thought?
- [13:12]
Stephanie Link
I think, I think Amazon has better fundamentals at this very moment in time, but they too are eating their free cash flow. They're going to, they're going to go from 42 billion last year in free cash flow to 4. So of course they're going to have to do a debt offering or several debt offerings. And Andy Jassy, the CEO of Amazon has been very honest and open about having to spend and they will continue to spend, which goes back to the fact that I don't think that we're at the end of this cycle, that fundamentals remain strong because these max sevens and the big techs are going to continue to spend. They have to spend. That all being said, Amazon has a lot of ways to win us. They doubled the capacity and so they can grow 28 to 30% in us. That would be an acceleration which is good. Fundamentally retail sales, same store sales are running in the upper single digits. Advertising is a $70 billion revenue run rate business for them growing to 115 over the next two years. And then this computer that they're doing, this custom compute and custom chip business could be $100 billion for them. So there's a lot of ways this company can win and this is the reason why over the last couple of weeks I've been adding to Amazon because I think that the valuation has gotten much too cheap for all of these ways to win. I'm not even looking at PE, I'm looking at EBITDA 11 times. EBITDA, that's really the most important number to me for this stock. Historically it's traded at 18 times. So this thing is pulled back and I think the fundamentals don't deserve, I mean they do deserve having to be buying these things right now. Meta, on the other hand, there's a lot of question marks.
- [14:42]
Rob Secchen
We own it too.
- [14:43]
Joe Terranova
I would Amazon.
- [14:44]
Michael Santoli
You do?
- [14:44]
Rob Secchen
Yeah. I would disagree a little bit on the Meta side.
- [14:48]
Stephanie Link
I own meta, trust me. I hope. But I just more frustrated with their fundamentals than anything.
- [14:52]
Rob Secchen
I think it's Amazon's exposure to two speed economy right now that really has the lower end consumers struggling and I think that's why it's lagged the others year to date. I also think that they do have to play catch up on Spend where maybe Meta doesn't, so that relief is already there for medical.
- [15:10]
Scott Wapner
Amazon is not, as Steph said, they're not slowing down, they're spending any time soon. B of A just raised their CapEx estimates by the way, for Alphabet, Meta and Amazon. As Canaccord today says, the bear case against Metta and their AI spend has gone too far. Those are their words.
- [15:25]
Rob Secchen
Agree with that, by the way.
- [15:26]
Joe Terranova
So everyone on the desk goes, Amazon, we know the fundamentals are remarkably strong. You began this conversation though by addressing the fact that they're doing another bond offering and the headline on that sometimes scares investors. Why? Because cumulatively, in 26 we're now up to 335 billion in debt offerings from these types of stocks.
- [15:46]
Scott Wapner
Green, by the way.
- [15:47]
Joe Terranova
The stock is green. That is twice where we were last year. Is that troubling? No, it shouldn't be troubling because in the case of Nvidia, in the case of Alphabet, in the case of Amazon, it's money well spent. The demand is remarkably strong in these debt offerings for a company like Oracle, a little bit more troubling if they continue to access the debt markets for a company like Meta, a little bit troubling because they have not had reputation spending experience. Let me finish. Have you followed what has gone on with Space X in the secondary market with their debt offering? Very weak demand. It's one of the reasons why nothing fundamentally about Space X but you're seeing real weak demand in the secondary market. It's affecting the equity price of SpaceX. Look at these individually when you're.
- [16:37]
Rob Secchen
But I don't know how you look at matter and say somebody selling compute power because they built it is a bad thing. When everybody else is trying to catch up to build it and it trades it 16 times.
- [16:50]
Joe Terranova
They just announced
- [16:53]
Rob Secchen
any hyperspace.
- [16:54]
Scott Wapner
They just announced it last week, they
- [16:55]
Rob Secchen
just talked about being negative today.
- [16:57]
Joe Terranova
They just announced it last week. They announced it last week and when they did, I did say this could be powerful for them. But reputationally, when companies do debt offerings, you look at their history managing the balance sheet and their capex and if you measure Nvidia, Amazon, Alphabet relative to Meta, I think you would agree those three companies have a much stronger track record in terms of their spending and you'll see better demand for their debt.
- [17:25]
Rob Secchen
First to monetize doesn't mean not monetizing for the last to monetize. And so I think when you have Double the compute power. Anybody else? Anybody else? That's a huge opportunity. At a 16 times recent announcement. I agree with you.
- [17:43]
Stephanie Link
16 times earnings and they just grew revenues at 30. Here's the bull case. They just grew revenues last quarter 31% ad impressions up 19% ad pricing up 12. So that's your positive. Investors want more. They don't want to see negative free cash flow which they are a negative 11 billion which I'm not happy about. And I don't think want them spending more and more. I want them to see better returns, better monetization. I think Amazon by comparison is we are seeing that with us accelerating after all the spend that they are putting together.
- [18:15]
Scott Wapner
Let's not forget about Josh Apple either. 312, almost 313. It's only about a percent and a half off of its all time high target goes to 345 at JPM reiterated overweight. I mean you, you flag this. I don't feel like a few months ago that it was this the stock to watch and it certainly has been in the face of questions about a lot of the other stock. Look at that chart now.
- [18:39]
Josh Brown
I think it's going to 400. This is the stock and I'm going to tell you right now the amount of catalysts that Apple has in the second half of this year. I don't even think the average market participant is aware of what's coming. IOS27 is going to be a game changer. A gentic Siri is going to be a game changer. The foldable phone. The jury's still out until we actually see the product. But oh my God, I know they can't make and sell a lot this year, won't be in this year's earnings, but they could be a category killer there. And then the realization dawns on everybody where the conversation was Apple's late to AI. All of a sudden that narrative shifts to holy cow. Apple is the company with two and a half billion devices currently providing access to every large language model, every AI app to their users, taking a toll on every transaction. My God. And they didn't have to spend the capex to do it. So to me, this is the Name of the Mag 7 for the second half or the Mag 8 I guess we call it now for the second half. And it's like a sleeping giant hidden in plain sight. Everyone's been looking past it and even the China story has gotten better at Apple. The last time they reported that that number hit 20 billion like they they are at a point now where revenue is growing again, earnings are growing again, they're raising guidance in certain categories and we got new phones coming and I just, I don't see how other people pay more attention to it.
- [20:28]
Rob Secchen
Well, I'll tell you why. Possibly we own it. Josh, I'm with you. But the reality of it is is this is a very healthy fundamental story. And by the way, the markets are agree with us but at a 34p E doesn't that never some has never
- [20:44]
Josh Brown
mattered has never mattered.
- [20:46]
Advertisement Voice
Apple.
- [20:47]
Josh Brown
Apple has been a worse buy at lower multiples than it's been a better buy at higher multiples. That the thing that people are paying up for with Apple is not that it's Micron and earnings or earnings and revenue are going to skyrocket. The thing people are paying up for is the reliability of those cash flows coming in and the discipline. And this is a company that is still buying another $100 billion buyback, still shrinking their float while the other companies that are of comparable size are borrowing money in the bond market and spending over 100% of their cash flow on this capex build out. Apple's getting paid by all of them. That Apple is the toll booth for consumer AI period.
- [21:36]
Scott Wapner
It's a good segue to the Dow, you know, for obvious reasons. So we closed above 53k for the first time ever yesterday. We had been trading above it for much of the morning than we, you know, before we went negative and we're a little bit below that right now. McDonald's one to watch. J and J Traveler, Chevron, Merck having pretty good sessions. Record high. J and J record high. Travelers record high for Coca Cola you have one one month winners that include American Express up 13%, Sherwin Williams up 13%. Home Depot up 11 and a half. You want a shot at this, Joe?
- [22:10]
Joe Terranova
I mean my biggest position tactically is Apple so I love what Josh said. I would have liked to have commented on that. But a lot of these Dow names, Travelers, you don't get everything you want
- [22:19]
Scott Wapner
on this program, Joe.
- [22:20]
Joe Terranova
So Travelers, American Express, you want to
- [22:22]
Scott Wapner
throw a little tantrum over there, we can have you do that. But that's why we're, we moved on. Right.
- [22:28]
Joe Terranova
So travels in America Express, their financials, they're part of the rotation we've talked about in the last several days. Insurance companies have the pricing power. The market can rebuild positioning in the financial sector for sure. The momentum strategy has not been there.
- [22:44]
Scott Wapner
Okay, Travelers, American Express, those are Travelers
- [22:48]
Joe Terranova
as an insurance company.
- [22:50]
Josh Brown
Merck Bravo's best stock in the Market
- [22:54]
Joe Terranova
Merck finance financials to health care. Health care yesterday struggled for sure. A lot of people were questioning whether it was going to participate. Merck has been a name that we've owned. It has momentum actually embedded in it, surprisingly enough, while the rest of health care has underperformed. Lilly is another name there as well.
- [23:13]
Stephanie Link
I don't understand why Discretionary hasn't done better because oil prices crude is down 40% from its highs. We know that consumer has a job. We know that wages are growing 4 to 5%. And I know Wells Fargo came out, I think they upgraded discretion or they were talking positively about it because it's only up 0.6% year to date. Like that's where I think the real value. I agree with you on financials and you know, I agree with you on a lot of these names, but I think that there was real value to be had in discretionary here.
- [23:42]
Joe Terranova
His names like Ulta Sands, which were former momentum winters winners rather which have significantly underperformed.
- [23:49]
Stephanie Link
I think what I think it's Walmart, the only sector eating today.
- [23:52]
Scott Wapner
Did you know it's the only sector negative year to date? Yeah, discretionary.
- [23:55]
Stephanie Link
That's why I say like. But there's a lot of tailwinds for the consumer. And I go back to looking at credit card data, I look at retail sales data. It's all really strong. Yeah, okay, it's K shape fine, but it's strong. And I'm fascinated by this Walmart news today and I'm surprised it's stop the stocks up, not up more.
- [24:14]
Rob Secchen
This is interesting. Defensive darlings like J and J and Coca Cola, which you listed, there have been better hedges to the, to the volatility coming from A than the bond market has, frankly. So as you're building portfolios, these things are up 30% for the year, 23% for the year. They're beating the market market and they've actually acted in a much more uncorrelated way than buying fixed income thought.
- [24:41]
Scott Wapner
Josh, there was an interesting note today from Goldman on your halo stocks in which they suggest the first phase is largely complete but the second phase is only beginning. That capital intensive stocks have significantly outperformed capital light ones, driving a substantial convergence in valuations. Going forward, we expect returns to be increasingly driven by earnings with greater dispersion between winners and losers. Well, earnings estimates are up to 24 and a half percent now. Thereabouts there were only 15 only in January. But what about that trade, the name you coined and that others have picked up? It's Only half over.
- [25:18]
Josh Brown
Yeah. Look, I think what's, what's very obvious to people at this point is that we're going to see companies that have these kind of capital intensive balance sheets and businesses that are less replicable by LLMs get a second look from investors. And obviously it's been happening all year. Industrials have been great. Defense stocks have had their moments. Utilities have done great. These are all part of the, part of the halo trade. The question becomes like, how, how long does this go on for? And in my opinion, it goes on for years because we're going to be in a market where software companies, data providers, information companies, they were the Wall street darling for 15 years. Everything was about capital light, asset light. These were the business models that got the highest multiples. And in real time, we're watching that flip flop. And now you're seeing investors put a higher degree of confidence on companies that have physical assets and their ability to continue to generate cash flow. And it's no secret, the money that's going into these types of stocks is coming out of the types of companies that we used to say are worth paying 25, 30 times earnings for. And now we're not so sure about whether or not they have any defensive moat versus an anthropic coming along and saying, oh, that's what you sell. All right, we'll just bundle that into our next iteration. We sell that too now. So I think this has legs. You guys are looking at the halo ETF up on the screen, which I'm an advisor to and involved with. There are a lot of ways to win in this concept and I think that this is something that we'll be talking about for years as the AI revolution marches on.
- [27:16]
Scott Wapner
Okay, we'll take a quick break and then we'll get Joe back from the abyss. He's all right, recovered from his annoyance over not being able to speak about Apple. Right.
- [27:29]
Josh Brown
Do it as your final trade.
- [27:30]
Stephanie Link
Joe smiling.
- [27:31]
Joe Terranova
You don't listen to me on the golf course. I talk to you about it every Friday.
- [27:34]
Scott Wapner
He's back. We have a call, by the way, in our call of the day, a name that Steph's been adding to it. She's got hit with a downgrade today. We'll get her take.
- [27:42]
Stephanie Link
Coming up.
- [27:51]
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I've got ideas.
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Joe Terranova
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Josh Brown
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Joe Terranova
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Josh Brown
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- [29:20]
Scott Wapner
Okay, we're back. We'll get to the call that I mentioned. But first Joe has some real moves he wants to to get to.
- [29:25]
Joe Terranova
Thank you, Scott. I appreciate.
- [29:27]
Scott Wapner
So you personally sold Generac?
- [29:30]
Josh Brown
I did.
- [29:31]
Scott Wapner
And then you personally bought Costco.
- [29:34]
Joe Terranova
So you.
- [29:34]
Scott Wapner
So Joe, the floor is yours. Please characterize us here.
- [29:37]
Joe Terranova
You would characterize. Rob, I'll talk to you on this. You would characterize Generac as a classic example of a momentum trade. I am getting in front of what I know is going to happen over the next several months.
- [29:50]
Scott Wapner
Clairvoyant to the moment.
- [29:52]
Joe Terranova
Well, you try and do that in this business. The momentum funds will begin to liquidate Generac. Why? Generac is basically an industrial company that's delivering very strong on its revenue growth. But you're seeing a lot of capital flows that are coming there that have nothing to acknowledge the fundamental story. It's just about the price appreciation, the relationship to momentum, taking the capital, moving it into Costco. I think that was a clear valuation reset for both Costco and for Walmart.
- [30:19]
Scott Wapner
Do you think that you think that the Costco valuation. Because you're right, I mean that was there was a clear valuation about this stock.
- [30:26]
Rob Secchen
Yes.
- [30:26]
Scott Wapner
Was valuation.
- [30:27]
Joe Terranova
Yes. And I think that reset has completed its process. I think the fundamentals are strong. I think you're beginning to see in the case of Walmart and Costco, they are going to benefit again on pricing power as the cost of goods for them comes down. You've already heard Sam's Club with Walmart, they're going to lower prices on beef and other staple goods. So I think that enough is enough for the pullback in Costco and Walmart. Taking a personal position in Costco.
- [30:59]
Scott Wapner
All right, good stuff. Thank you for that Steph. Now to this downgrade.
- [31:02]
Stephanie Link
Okay.
- [31:02]
Scott Wapner
You've been buying more truist within the last two weeks, right? Okay. It with a downgrade today it was a buy. Now it's neutral. At UBS the target to 55 it was 58. It's lagged this year. Recently announced CEO change in the prospect of rate hikes in the forward curve. Cloud near term visibility on the leadership roster. Talent retention near term EPS power and recently introduced medium term targets.
- [31:26]
Stephanie Link
And this is why the stock trades at one times book and that has typically been a very good time to buy a bank when it trades at one times book book. This is a company that's going to have a fine quarter. Is it going to be blowout? I don't know. I mean I think you're going to see higher net interest income, steady net interest margins, higher fee income which is kind of like across the bank board by the way. But you have to wait for September 1st for the CEO to actually officially start. He has a very good background of fintech as well as traditional banking. I think he's going to get the job done. But maybe the stock goes sideways until we get and hear more from him. But I think the fundamentals of the company are right on track.
- [32:02]
Scott Wapner
Robby ASML reiterated a top pick in overweight at Morgan Stanley today. $2092 is the price target.
- [32:09]
Rob Secchen
Buck completely agree. We see a lot of upside in the name. It is the ultimate bottleneck in AI infrastructure. No advanced chip in the world gets made without their machines. They have a monopoly of on the world's most most advanced lithography equipment. A position that no other company could replicate within a meaningful time. It is expensive but you know, I think it continues to perform. It's up like 63% this year.
- [32:39]
Scott Wapner
Josh. Service Titan top pick Piper Sandler target 115 multiple growth drivers they talk about.
- [32:48]
Josh Brown
Yeah so this company got thrown out with the rest of the software stocks earlier this year. But I think the market is waking up to the fact that not all software companies are created equally and not every SaaS provider is laying down on the train tracks in front of the lms. Service Titan is a really great example where they dominate at the top of the trades market. Somebody comes to your house to take do work on something or build something. Very often they've got the service Titan machine in hand and the software that powers that construction or trade business is this company. But the catalyst that's being cited today by Piper Sandler is about Max. Max is their premium AI tier. This is going to be the company that brings AI to the trades. Max represents a two time subscription revenue uplift for the Service Titan customers who adopt it and it's driving higher consumption. On top of that, Piper Sandler says Max could be a $38 million run rate product just in the first year and longer term get to 370 million which would be 50% of service titan subscription revenue. So I like the stock a lot. I'm long, I'm an investor investor, not a trader.
- [34:11]
Joe Terranova
You know, my 10 tantrum really helped, just helped me out. I'm going to give the viewers a great trade at the end of the show. You are Max7 because I just, I just got something. There's a Mag7 that has the same setup that Apple had at the end of March when I initially bought it.
- [34:27]
Scott Wapner
Still not over. You still talk?
- [34:28]
Michael Santoli
No.
- [34:28]
Joe Terranova
This is exciting. One of the Mag 7 is about to go give it to you at the end the of the show. I'm going to buy it personally.
- [34:36]
Michael Santoli
Wow.
- [34:37]
Scott Wapner
Okay, he's storming back, ladies and gentlemen.
- [34:40]
Rob Secchen
Right, ladies.
- [34:43]
Scott Wapner
Frank Holland has a news update.
- [34:46]
Stephanie Link
Hey, man.
- [34:47]
Frank Holland
SCOTT Good afternoon today and good afternoon all of you. ABC is firing back at the FCC over its investigation into the View and new comments. ABC cited the show's long history of newsmaking interviews and said it was being singled out because of President Trump's criticism. FCC chair Brennan Carr claims the show isn't a bona fide news program and therefore it is subject to the FCC's equal time rules. The International Olympic Committee provisionally lifted a suspension of the Russian Olympic Committee. It's a step towards Russia's return to the Olympics ahead of the 2028 Games. Russia was suspended in 2023 for recognizing Olympic councils in Russia occupied parts of Ukraine. The IOC has not yet decided if Russia will be able to decide, display its flag or play its national anthem. And Supreme Court Justices Amy Coney Barrett and Elena Kagan are set to testify on Capitol Hill next week on their annual budget request. It will be the first appearance of justices before Congress since back in 2019. The Supreme Court requested a boost of more than $14 million for fiscal 2027. That includes increased security for the justices. Scott, back over to you.
- [35:50]
Scott Wapner
Okay, Frank, thank you. Frank Holland. Coming up, Josh Brown's best stocks in the market he says ride the wave of strength in these two names as we kick off the second half of the year. They'll reveal them next.
- [36:03]
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- [36:33]
Joe Terranova
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- [36:37]
Josh Brown
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Joe Terranova
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Josh Brown
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- [36:47]
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- [36:52]
Scott Wapner
That time again. Best stocks in the Market According to Josh Brown the spotlight today is on. Tell us.
- [37:00]
Josh Brown
We wanted to take a look at the best stocks in the worst sectors. If you think that this is a market that's got heavy duty rotation, which I, I know we all agree with, what better way to prepare? And so we did. I'm not going to do Merck, but that was one of the names doing way better than most of its category. Let's do Archer Daniels Midland. ADM guidance is a story here. Management raised full year earnings per share from 415 to 470, up from a prior midpoint of $4. This is being helped by the highest soybean oil prices in more than three years, plus the new federal biofuel blending requirements. They also have a cost program targeting 750 million in savings. Not to mention, this is a company that's been paying dividends uninterrupted for 94 years. That is incredible. 377 consecutive quarterly payments. So it's a very stable business I think with a great chart and we could see a breakout here. The next catalyst will be earnings. In early August. The street is expecting a 39% jump. State street is another one. The asset managers mostly look like death, especially the alternative asset managers. State street looks incredible. Give me a little bit of a longer term chart here guys. Record Q1 across the board. Revenue up 16% to 3.8 billion. Earnings up 40% affects trading up 30%. Record client volumes, record assets under management. $5.6 trillion record ETF inflows. They just have everything working at the right time. The Trump accounts are defaulting to their fund Spy M. That's the default for all the new Trump accounts going right into that product. They're also doing a dividend hike. So I think this is a very simple setup. Traders can use 159 as a working stop and then trail this thing as it goes higher. For investors with a little bit more risk tolerance, I think 150 is really the line in the sand. Earnings of July 16, the reaction there could make or break this trade. I think the momentum for State street will continue and you ain't going to have to worry about that 150 level, Joe.
- [39:18]
Scott Wapner
So ADM was your final trade, you know, towards the end the of May. You haven't owned it for a while.
- [39:23]
Michael Santoli
I have.
- [39:23]
Scott Wapner
But you must have seen something that Josh has been looking at to even make it your final trade.
- [39:29]
Joe Terranova
Yeah, it's pulled back a little bit recently. It's a good spot, I think to buy it. It's pulling back out of the moving averages. But agriculture is right now from the commodity standpoint, building strong tailwinds behind it. So that's your mosaic, that's your Archer Daniels bunge. Another name that, that you could talk about in the agriculture world is as well, commodities right now are pivoting away from precious metals a little bit, away from oil and looking towards agriculture in particular as you go into the summer season.
- [39:58]
Scott Wapner
Okay, so just to reiterate this tease that you did, this big deep tease.
- [40:02]
Joe Terranova
Yes.
- [40:02]
Scott Wapner
You get to tell us a stock out of the mega caps for the end of the show. It has looks like it's going to break out and you're going to buy it.
- [40:10]
Joe Terranova
It is going to break out from what has been a sideways multi month period.
- [40:14]
Scott Wapner
Okay, so we'll do that coming up. And Santoli as well when they come down. Senior markets commentator and overtime co anchor Michael Santoli is here at post nine for his midday word. Well, so much for yesterday.
- [40:41]
Michael Santoli
Yeah, exactly.
- [40:42]
Scott Wapner
Yeah, the bounce, I mean in momentum. Goodbye.
- [40:45]
Michael Santoli
And you know, in a sense we did talk about it near the close, which was how much do you want to give credence to these daily to and fro of what's in favor and where you have a little bit of the extreme positioning that's going to get unwound interesting today? I mean obviously you're, you're kind of giving it up. And the semiconductor group has not told you enough to disprove the idea that there's been a consequential interim top set a few weeks ago, whatever it might be. That being said from about late morning on, Nvidia just decides to go up. Right. Because it's defensive and it's not memory and it did not actually get kind of to the extremes. The rest of it did. That buffers the overall index as well as all the defensive stuff which people say are going up for a reason of its own. In reality, it's anti semitic economies or anti memory. So interesting that we're able to stay within 3% of the highs basically in the S and P while all this goes on. I do like to remind folks we did this for four months from November through February. You had equal weight outperforming, you had most stocks doing better than the index. The S and P did absolutely nothing over that period and we've done nothing so far for just under two months. In the headline S and P, what
- [41:52]
Scott Wapner
do you make of the software bounce which is ongoing? Going again today, Salesforce, Snow Service, IBM. Pretty good week, Pretty decent look at
- [42:01]
Michael Santoli
the stuff that's gotten most blasted on a three month basis or a year to date basis. I mean, I wish you were more complicated than that except to say that's the other leg of momentum because when you have a momentum trade on, you're also short stuff with the worst momentum. So I think that's probably most of it. That being said, you might be seeing green shoots in things like Microsoft actually trying to firm up here something maybe a little bit away from, from pure, you know, security software and things like that. So, you know, who knows if it's kind of bumping along the bottom there and things like ServiceNow and Salesforce.
- [42:35]
Scott Wapner
Good stuff. I'll see you in a couple of hours. On closing bell, it's Mike Santoli. Up next, Oliver Renick with options action from Chicago. Options action time. And for that we go to Oliver Renick who's at the CBO Global Markets in Chicago. What are you looking at today?
- [42:56]
Oliver Renick
Hey Scott. We're watching software stocks which have been up all morning and options flows have favored the group since late May when we saw chip stock positioning sour as traders warmed up to the IGV software etf. Where today we see basically no put buyers and one big put spread seller who brought in a net $1 million selling $2 million of the 85 strike puts in IGV expiring August 21 and buying 1 million of the 80 strikes expiring the same date. That's a bet the software group will hold levels it first fell to in February before staging a now 27% comeback since April. Cybersecurity stocks are the big winners of the trade with the hack ETF up 40% on the year now strangely, no options traded there but to that note, I might watch Broadcom, the second biggest holding in hack where call buying almost triples put buying despite just a 7% move year to date.
- [43:51]
Scott Wapner
Scott, appreciate that, Oliver, thank you very much. That's Oliver Renick at cbo. Steph, you've been playing and so has Rob, but you know you've been playing for this rebound in some of these software names.
- [44:02]
Advertisement Voice
Yeah.
- [44:02]
Stephanie Link
So ServiceNow is one most recently, but I like the option of the option action in Broadcom. I mean, I think that that stock has lagged for a long time and it's actually gotten to a better reasonable valuation. But back to software. ServiceNow is trading at 23 times forward estimates growing 20 to 25% total revenue growth with operating margin and gross margin expansion. So I just think it's down so much and so hated and it's mission critical. Software companies need their software to survive.
- [44:27]
Scott Wapner
Okay. By the way, we're going to take a break but come back again. Joe's big trade is next. Liz Ann Saunders is going to join me today on closing bell. Adam Parker, Lori Calvesina and low Tony, you don't want to miss that. Let's get to your trade here. What do you got?
- [44:45]
Joe Terranova
Okay, March 30th, Nvidia164 up to 236 by the middle of May. You now have a retracement back into what's known as the box. Technician will know that 50 to 62% and a half area. You want to buy Nvidia here, which I will do. You're going to have to risk some around nine and a half, 10% back to the April 7 gap at 178. It's a similar pattern match to when Apple broke out from its sideways consolidation November through March.
- [45:11]
Scott Wapner
Okay. Again, it's personal buy.
- [45:12]
Joe Terranova
Personal buy. It's not in the tea, it's in. Oh, absolutely. Number one stock in the T. You
- [45:17]
Scott Wapner
haven't owned it personally in a while. So you're going to buy that.
- [45:19]
Joe Terranova
Okay, 100%.
- [45:20]
Scott Wapner
All right. Good, good stuff. Thank you for that. Josh, what's your final
- [45:24]
Josh Brown
toast? Is about to take out its 200 day moving average to the upside.
- [45:29]
Scott Wapner
Thank you, Robert.
- [45:33]
Rob Secchen
Microsoft, the worst of the rerating is behind us and it's trading as cheap as it was in 22 at 21 times.
- [45:40]
Scott Wapner
Okay. Stephanie Link.
- [45:41]
Stephanie Link
So I made my case for service now, but I was buying it. I'll continue to buy it. It should not be down 31% year.
- [45:46]
Scott Wapner
Yeah, well, software staged a nice rebound and there it is up another 5%. So in video is you're going to be your final trade, Quite literally, yes. All right, well, we will. We'll follow that for sure. I'll see you three o'. Clock. We'll see what this market does towards the close. We'll watch momentum carefully. And of course, the Dow trying to close above 53K yet again. The exchanges now you've been listening to CNBC's Halftime Report, the podcast. You can always, always catch us live weekdays at 12 Eastern only on CNBC.
- [46:18]
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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 halftime reportdisclaimer this year's girls trip to Telluride was the best. We one upped ourselves with my Sapphire Preferred card and with 5x points on Chase Travel plus 3 times points on vacation homes with top brands. We we got this incredible cabin. It was a mansion and with three times the points on dining. We ordered a wagyu steak dinner and that pistachio gelato was too good. So where should we go next year?
- [47:14]
Josh Brown
I've got ideas.
- [47:15]
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Chase Sapphire preferred the card that's preferred for a reason. Cards issued by JP Morgan Chase bank and a member FDIC subject to credit approval terms apply.