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The Post-Powell Playbook 8/22/25
00:44:32
Frank Holland and the Investment Committee debate the Post-Powell Playbook following Jerome Powell’s highly anticipated speech in Jackson Hole. Plus, the desk share their latest portfolio moves. And later, we discuss the latest Calls of the Day on Roblox, Snowflake and more. Investment Committee Disclosures
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- [00:00]
Narrator/Advertiser
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- [01:03]
Frank Holland
I'm Scott Wapner and you're listening to CNBC's Halftime Report, the podcast the most profitable hour of the trading day. We record this live weekdays at 12 Eastern. Listen in. Carl and Sarah, thank you very much. Welcome to the Halftime Report. I am Frank Holland in for the judge, Scott Wachner front and center. At this hour, the Post Powell Playbook. Following the Fed chair's highly anticipated speech in Jackson Hole, we will debate the next move for your money as the Dow hits a new record high. Joining me for the hour, we have Jim Leventhal, Jason Snipe, Kevin Simpson and Steve Weiss. But first, quick check of the markets. A lot of green on this board right now. The Dow is up over 2% again, hitting a new all time high. The S and P just, just an inch away from its own all time high right now, up about one and a half percent. Last time I checked, it was about less than a quarter of a percent from an all time high. And looking at the NASDAQ composite as well, up about one and three quarters of 1%. Why? Much, much more on the rally in stocks coming up. But first, when you get to our senior economics reporter Steve Liesman, who's live in Jackson Hole with much more on what we heard from Fed Chair Jay Powell. Steve, I think we got to begin. How did you, how would you describe this? Was this hawkish? Was it neutral? Was it leaning? Was it a clear direction in your mind? The markets, they seem to think what he's going to do next. What do you think?
- [02:21]
Steve Liesman
Well, I think it was dovish, maybe a little bit more dovish than some had expected. And, and I think the market reaction may be more dovish than some expected. So it's Pretty interesting in that regard. Look, he did open the way up for a rate cut. I'm going to play the line that ignited the market here and then come back and give you some commentary on it. Here's the thing that everybody focused on.
- [02:46]
Kevin Simpson
With policy in restrictive territory. The baseline outlook and the shifting balance of risks may warrant adjusting our policy stance.
- [02:55]
Steve Liesman
So the market took that and it took off. And take a look now at the probabilities, Frank. It's 85% probability of a rate cut. Now it had been down as low as 65% as this kind of hawkish commentary had crept in. There's before and after the speech, 60. What is 84% for a cut? It had been as low as 65. It's shown there as 75. I guess it crept up going into the speech. And there's a bunch of reasons why the Fed chair says we could cut rates. He says he sees downside risk to unemployment or to employment. He sees the idea that the, the funds rate is modestly restrictive and he's leaning on this idea that it's a one time price hike from the tariff strike.
- [03:37]
Frank Holland
So Steve, one thing I kind of latched on to the markets clearly or not is the word may in there may warrant adjusting our policy stance. We got to keep in mind we have a jobs report, we have a PPI report and remember PPI came in hot last time. We also have a CPI report before that Fed meeting. We also have a retail sales report. Not sure if that's going to really matter when we're talking about some of these different reports. Do you think that the Fed chair, he gave himself some wiggle room to later say we're not going to cut because the jobs report may be better than expected or CPI may be much higher than expected.
- [04:07]
Steve Liesman
All that's correct, Frank. There were a bunch of caveats in there. The biggest caveat you didn't mention though, that I would say is the one about inflation expectations. He basically said we are not going to allow tariff price increases to become broader inflation. That's on his watch. He believes that's in his control and that would mean remaining relatively tight. So you're right. And I think what happened here Frank, is, is he didn't really talk the market down, but he did tell them, listen, the data coming in September could be consequential. The market knows that. And so what will happen, I think Frank, is the Fed chair doesn't need to say it, but if the data come out as you described it and lean against that rate cut Then the market will adjust over time. But right now I think they see a go ahead for, and let me just make one other comment here, which is that if there are price increases, they need to remain linked to the tariffs when you start to see them bleed over to other areas. Austan Goolsbee, in an interview we did on Friday, a week ago, expressed concern that you had service inflation out there. If that becomes a problem, that's going to move the Fed further away from a rate cut. But right now he's got, I don't know, a green light sort of, but a dim green light. I'd say on the way. Maybe the market was a little over its skis in terms of its exuberance, but it's hard to tell how worried they were going into it.
- [05:31]
Frank Holland
Frank, you know, you know, Steve, that last word you said, kind of a dim green light, is very interesting. By the way, your ears must have been burning. I was talking about you earlier today on msnbc, just talking about the fact that you said that Jay Powell, he may take a wait and see approach, something I described as owlish. I'm going to give you that. You can use that going forward. Jay Powell had the chance to stop by you when he was walking by with some of the other central bankers and really clarify what he meant, but he didn't really do that. It was kind of short and sweet. Today, as we look forward, we're going to talk to the traders about this. What's the next, next economic report that really matters to the Fed? Is it just the jobs report? Is it PI? Is the cpi? Which one do you think is the most important one coming up?
- [06:08]
Steve Liesman
Can I say it's not as much the report as the way the Fed. Frank is thinking about reports. And we're all going to have to have a conversation. The traders and you and me and the Fed, everybody's got the conversation about what the right level of payroll growth is here now that immigration has really come down, almost nothing. We are deporting people out of the country. The labor force is shrinking. You can do the math, Frank. You can find 30,000, 20,000 payroll growth and an unchanged unemployment rate. So I would say, to answer your question directly, that the answer is payroll growth. The September 19, September 9 payroll revisions for the prior year, as well as the inflation reports. But it's also a discussion and listening to the Fed about how they're rethinking what they call the break even rate is how much payroll growth do you need to keep the unemployment rate steady, which is a measure of how tight the job market is, which is a measure of the risk that a tight job market or not would lead to broader inflation. That's the discussion you have to have, not just the number.
- [07:19]
Frank Holland
I see we got to leave the conversation there. We're going to get to the traders. But you know, I could talk to you all day, Steve. Senior economics reporter Steve Lyman live at Jackson Hole. Thank you. As always, Jim Leventhal, you champion at the bit. I know you're ready to get at this. You started nodding on the last thing you said.
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Jim Lebenthal
Yeah.
- [07:33]
Frank Holland
What's the proper payroll growth considering some of the enforcement of immigration with this administration.
- [07:38]
Jim Lebenthal
Right. Because the chairman was very specific on this and what he said was that labor supply, excuse me, labor demand has clearly softened, but there's this curious kind of balance that was the key word, probably second to the, you know, policy adjustment, maybe warranted line. This curious kind of balance between demand has softened, but labor supply has off has also softened. So that break even rate of unemployment, he's not willing to say what it is. It's too, it's too moving of a target and it's too unmeasurable. But what he did say, and I caught this right after the curious comment, is that downside risks may increase quickly. And for me, that was a moment where looking at the markets, I saw the markets accelerate to the upside. It seemed to me that his verbiage, while measured, while balanced, definitely gave indication that the Fed is aware of the potential for the labor market to soften the and for their focus to shift accordingly. Frankly, I saw this, this speech is very dovish, much, excuse me, not very dovish, but much more dovish than I expected. I expected him to be a little stern based on where market assumptions were for a rate cut. And I'm not surprised that the odds of a September cut are now at 89%. As I look at my screen right.
- [08:51]
Frank Holland
Now, you know, the word may in there, even Steve Sander was kind of a dim green light. I think a lot of people are trying to parse this. Investors aren't. We see the markets moving higher. But other people who are market participants are really trying to figure this one out. Jason, I want to bounce this off you from Ellen Zentner, the chief econom economic strategist from Morgan Stanley says in part labor market weakness appears to have outweighed inflation risk for the Fed and the market's initial response speaks for itself. Longer term, the debate about how far and how fast the Fed will cut rates is just beginning. Do you agree with that today we feel like we got everything under control. But there's a lot of pretty good way to go. Like three weeks left to go before that September meeting and again three very influential economic reports coming as well.
- [09:29]
Jason Snipe
There's no doubt about it. Obviously jobs are going to be a big number on 5 September and then revisions after that. And then we'll obviously get P and cpi, which I think will be important. I think Liesman summed it up great with adjusting for policy stances. Obviously the, the phrase that the market kind of anchored themselves to. But the other piece for me is what Powell mentioned in terms of inflation. He said that inflation remains well anchored. So that is definitely he's putting that aside. And I think even from a tariff perspective he is mentioning that as a, as almost a moment in time that we will move through. Right. So I think that the market is, and we know that the jobs are lagging indicators. We know that we will see a lot of jobs data come going forward. But I think that was a major point for me. The other thing I will say quickly, concern for me going forward, it relates to gross margins. I think we have heard from earnings reports, although earnings are really strong this quarter, that there are companies that are starting to talk about increasing prices like the Home Depot's, the Pepsi's of the world. So I think that is Wal Mart as well. So I think that is, that is something to pay attention to as we move forward.
- [10:37]
Frank Holland
All right, Kevin, what do you pay attention? We're going to get to your moves later. But is this a green light? Is it a dim green light, a full green light in your mind to put money to work, to put money in the market in places where there may be higher beta, high of higher valuation. Do you feel confident doing making moves like that?
- [10:51]
Kevin Simpson
Clearly the stock market's giving it a 100% chance of a Fed rate cut in September regardless of what we're seeing on the CME number. And I think you made a great point, Jason. And this is, this is probably the reason the markets are so excited is that we're pivoting away from inflation. That had been the major problem, the major talking point to the labor market. So the notes that I took and we all, you know, picked up on certain things that he said. But a reasonable base case is that the effects will be relatively short lived and a one time shift in price levels. Now we've heard that several times before as being a possibility. But to see that in black and white or to hear it in the speech was the thing that I thought also was a catalyst for markets to move higher. So great day today. And I would expect a rate cut in September for sure.
- [11:33]
Frank Holland
All right, so you're expecting a rate cut. The markets clearly expecting a rate cut. Steve Weiss, what are your expectations? What did you make of what Jay Powell to say and the fact that R.C. liesman said he sees a dim green light for that cut. The word may is in there. Even Jim, who said it was more dovish than he thought it was or thought it would be, I should say, says like there's still some questions about what's going to happen going forward.
- [11:55]
Steve Weiss
Yeah, well, first of all, May, I mean, of course they said may. One of you known the Fed to declare what they're going to do, particularly the Fed, the Fed chairman say okay, definitely cuts, of course he's going to say may. So I don't understand the debate on that. In terms of what the Fed's going to do, the Fed is going to cut. What the Fed has come to the realization of is that they can't control inflation. Inflation they can normally control in, in most cycles because it's a factor of the overheating economy where demand is far outstripping supply. So it's simple economics in this situation. They can't control it at all because it's inflation that's coming out of policy that's driving prices higher. So whether rates were at 10% or whether they were at 1%, inflation is going to run its course. And it's not just from tariffs that's the important thing. Tariffs are going to start the ball rolling, but it creates a pricing umbrella for everybody else to raise those levels. So if you've got to raise your aluminum prices by 40% because you import it, the domestic producers are going to raise it maybe 35%, maybe 30%. So but it will be a one time event, then we'll take it from there. They also really can't do much about employment because you've taken out a lot of the workforce through deportation, through those that aren't deported, that are hiding and not coming out to work. So you've got tough labor force and you're going to see wages grow up. So it's really stagflation. And what's kind of interesting about this is that it'll be the first time that the Fed is going to, to cut with stagflation so prominent without mentioning it. So I do think the Fed cuts, I do think that the market reaction is a little surprising in terms of the strength of it because a lot of that was pulled forward now. There was a little bit offset as we saw the odds for a cut decline as Steve mentioned going into the speech. And that's the reason for the, I would call it correction for the dip down last week in tech. So, yes, I think you can invest here, but I think you've got to be careful where you invest also.
- [14:11]
Frank Holland
All right, we did a lot of macro. Let's get right down to the markets. Tech is the lagging sector. This week. Comm Services is tied for number two. But today max seven adds about $370 billion in market value. Jim Leventhal is now the time to get back into these tech names. Microsoft, Nvidia, Alphabet. Just kind of jump back in.
- [14:30]
Jim Lebenthal
Yeah, I'm sorry, I've got to do the Economist. On the one hand, on the other hand, on the one hand, from here to year end, yes, you can buy here. And I think it's pretty, pretty likely that we will be higher by year end. All that said, I think on the other hand, one has to consider that September, September looms. And with this speech out of the way and with this speech, as I said, more dovish than at least I expected. There's an awful lot of good news priced into this market. So I wouldn't be surprised to see some volatility in September just because of the absence of good news. I mean, just to continue this theme for a second, I'm looking at S&P 500 earnings estimates for this year and for next year, and they're kind of, they're now starting to ramp up. So there's a lot of good news being priced in Franklin. And I just wouldn't be surprised if there were more buying opportunities as September unfolds. But all that said, I do think that earnings growth is what's really going to matter here. If you combine a dovish Fed with deregulation, a budget bill, that's stimulative, yes, tech is likely to perform on the back of AI, but frankly, so is the rest of the market. So hold those two thoughts in hand. The short term might be a little volatile. The intermediate term to year end is likely to be rewarding.
- [15:41]
Frank Holland
Right? Kevin, I would ask you the same question, but I know the answer, at least partially. You bought some Metta. I think the question is you buy the Meta before the news about them buying cloud services from Alphabet. And does this statement from Jay Powell today, does it change your mind about Meta to either buy more or buy more of those Max 7 names?
- [15:58]
Kevin Simpson
Well, it's always better to buy low and sell high. Frank. So we, we executed this trade yesterday in advance of the news and literally I think we paid 236 yesterday. So we're up almost $20 since then. We were not expecting the big spend for Google and also as an Alphabet shareholder, that's terrific. But overall you've seen a stock that's really rolled over recently. We still look at Meta, it was our number one pick going into the year. I think it continues to be. We look at this pullback and took advantage of it yesterday, bought another 1% and yes, we sit here today looking lucky and smart. But when you see weakness, those are the times to deploy capital.
- [16:34]
Frank Holland
What about the froth in the market? Jason, to come over to you, I'm not going to give you as easy a question as we gave Kevin with the idea of the froth in the market. I'm looking at some things like the ARKK, the ARK Innovation ETF, the SB, SP, HB, the Super High Beta ETF or the S&P High Beta ETF. Things that have had outperformance in recent weeks. They're outperforming today. Certainly the quantum Computing etf, Palantir. Moving back to the upside is now the time to get back in those names. Do you think investors, they've just kind of shaken off the worries about valuation and that froth in the market?
- [17:06]
Jason Snipe
I think so. I mean, you know, it's interesting looking at the Russell 2000, up almost 4% today. So yes, I mean there's been some digestion that yes, you would buy, you.
- [17:16]
Frank Holland
Would buy the buy volunteer. Well, at these levels, let me, it has pulled back.
- [17:21]
Jason Snipe
Let me, let me quantify this. So I'm talking more about some of the hyperscalers, the large cap names right where that had pulled back a little bit. Some of the adjacent plays, right. Like the nets of the world at risk and networks. I think those are names that you can look to to increase your allocation. Again, for me this is a moment in time and just in terms of digestion, I think the AI themes are long, long tailed stories and I think.
- [17:47]
Frank Holland
We'Re very early, but that's broad. Are you talking ships? Are you talking the Mag 7, are you talking some other adjacent names like an Oracle? We're going to talk about Oracle in just a bit too.
- [17:55]
Jason Snipe
Yeah, no, I think, I think you could buy a lot of those and I think for me, you know, as I, as a thematic investor, when I, when I look at the broader space, I think a lot of these Names could work. Industrials as well, Power.
- [18:07]
Steve Liesman
Right.
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Jason Snipe
And we'll talk about some names that we added. But I think, I think broadly speaking, it is an opportunity.
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Frank Holland
All right, so you mentioned industrials, by the way, you bought some Eaton. That's a stock that's pulled back as well. So are you looking for, for pullbacks or are you also buying in the strength?
- [18:19]
Jason Snipe
We've been looking at Eaton for a long time. Right. So eden's up almost 20% in the last year. It's down 10% in the last month. That's kind of the trade taking a little steam out of that. It's up 6% year to date, but it's a power play.
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Frank Holland
Right.
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Jason Snipe
So when we think about data centers and that's obviously all the rage and all the talk, I mean, soon to hit a 1 trillion, 1 trillion capex in the next year or two. Right. So for me, this, this is a nice place. It's small. I mean, it's not a small cap. $68 billion company based out of Ireland, you know, it was an opportunity for us to finally get in here. Workflows will drive 160% increase in power needs by 2030. And this is a name that obviously plays very well in that space. So that's why we added it.
- [19:02]
Frank Holland
While we're talking max seven adjacent names, Kevin, you roll down a call on Oracle, walk us through that trade.
- [19:07]
Kevin Simpson
Yeah, this sounds confusing, but is it? But it really isn't. So for viewers who want to hedge out risk, we were seeing a market that was rolling over a little bit. There was some rotation for sure. Over the past two weeks, we had written a third of the position. We talked about it last week on the show with Scott. We wrote a covered call on Oracle, one third of the name. The stock pulled down a little bit. And this week on Tuesday, we replicated that trade again, wrote a second covered call and then yesterday into weakness. We closed both of those out, rolled it out one more week. So we're at 237 and a half stocks probably around 236 right now. So we're still okay. But we literally credited our net credit of $16 a share. So if we do let this position get called next Friday, effectively we're out at 253 and a half now. I'm not sure that's the way we're going to do it, but this is a stock we really, really like. But we were playing the volatility heading into today's speech and I think that trade worked out really well for us.
- [19:58]
Frank Holland
All right, Jim, you're an Oracle shareholder as well. Your take on his trade stock story in general?
- [20:03]
Jim Lebenthal
Well, it's an option strategy and I know call writing and I like. I like call writing and I respect what you did there. Oracle's had a fabulous run here this year. We all know it. I've held it for about two and a half years, so I'm up almost triple on it. And I trimmed it actually a couple of weeks ago. There's nothing really to read into that other than if you're a portfolio managing, a portfolio manager, you want to manage risk. And so if something gets too big in the portfolio, like Oracle did, you trim it and add to things that haven't gotten as big. It's just as simple as that. But I think for the longest long run, it's a key player in the infrastructure build out for artificial intelligence.
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Frank Holland
All right, while we're talking about AI in general, Kevin, we get to one more. Your moves. You bought some Uber. A lot of people see that as an AI autonomous trade as well.
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Kevin Simpson
Yeah, I mean, Uber's got a lot of different fans, whether it's the. For the autonomous driving, ultimately for rideshare or for delivery. This is a name we've owned twice before. We made a little bit of money, wrote covered call falls on it. Kind of missed the big run. We've been waiting to get back into it, but we do have some cash on the sideline. We wanted to get into it before today's speech. We took a 1% position. We really like it long term. They're finally profitable. They're buying back shares. We think the stock's going to break 100 soon, at least. We want to be in the name, enjoying that, not looking at it and wishing we were in it.
- [21:19]
Frank Holland
All right, we also have some news that Waymo granted its first permit to begin testing autonomous vehicles in New York City. So the idea of autonomous vehicles in America's biggest city. But it's Waymo. Is that. Is that a plus for an Uber or is that something that concerns you when it comes to Uber? We had some analyst notes saying that the bigger way more gets. It's actually takes away from Uber and some of its business.
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Kevin Simpson
You could argue either side. We also own Alphabet in the growth portfolio. So we've got Waymo there. I think ultimately Uber could become a super app. And we've heard Josh Brown talk about it a lot, being the catalyst to get access to the rides and being sort of agnostic as to where the rides come from. So I'm in that camp and I think it's a plus.
- [21:55]
Frank Holland
All right, why she bought some more Uber as well. What was the catalyst for you, for you to buy? Was it on the idea that we'd see a dovish Jay Powell and the stock would move higher like it is? Is it on the idea that autonomous driving with the Waymo news is going to become bigger and move faster than maybe we previously expected and Uber is a beneficiary?
- [22:15]
Steve Weiss
First of all, I want to clear the elephant out of the room. We're all sitting here and we're looking at Kevin and clearly he got a new wardrobe consultant and he's looking more investment banker ish. So. So love that Kevin the Blues look. Well, no, I bought it because it wasn't a big enough position for me. I still believe I was on the show early in the week and believe that it goes through 100 and I think we'll get there. The stock sort of did not say it's been ignored because some. Well, but it's just not in the normal narrative that we've heard about Uber. So I just want to build the position up and you know, not surprised it's up today as everything is, but I may add to it again in the future. Pulls back.
- [22:56]
Frank Holland
Yeah. Overall when it comes to autonomous driving, Jim, do you have any. I know you own Alphabet as well. Do you have any. Any hard thoughts about it? Actually know somebody that was out in Arizona taking Waymo's. They were like it works great out there, big open roads. But they. A lot of questions about the reality in a big city like a New York, a Philadelphia, D.C. where it's a bit more congested. The.
- [23:13]
Jim Lebenthal
The uptake is there and it's already happening in many cities. Waymo is the clear leader right now. It's on the hockey stick inflection of any. Of any new business. It's here. I mean, frankly, it took a long time. I honestly remember talking about autonomous driving in like my first session on this show in 2013. Here we are 12 years later, it's finally taken off. It's taken along time. It's a reason why I particularly like Alphabet. I know it's not showing up right. Right now in the financials, but it's likely to snipe.
- [23:45]
Frank Holland
Any take on the Waymo news Alphabet. Just in general. Right now there's a metadeal. There's the idea of Waymo coming to New York City as well.
- [23:54]
Jason Snipe
Yeah. No, I mean as a. When I think about. Obviously I own Uber as well and I just think about as the ultimate platform. And I think about all this beta testing and all these cities is obviously accretive for the stock, whether it's Austin, Texas, Arizona, Philadelphia, New York. Profitability, as Kevin mentioned, is obviously been a new story in the last few quarters for them. So I think they have a lot of leverage to pull. And I think ultimately, wherever the AP that you're selecting could be found there on the Uber platform. So that's why I continue like this.
- [24:24]
Frank Holland
All right, we got one more move to get to. It's funny that Weiss mentioned your wardrobe. We're not going to on focus. Focus on it, but you made a move in the banking space. In the investment banking space, actually.
- [24:32]
Kevin Simpson
Well, that's. That was the reason I borrowed my dad's suit on the way into work. We sell into strength.
- [24:38]
Steve Weiss
You look great, Gordon. Gordon, Mr. Gekko, you look great.
- [24:44]
Kevin Simpson
J.P. morgan is a name that we've owned. It's a stalwart in our portfolio for many, many years. It's done incredibly well. We're up 30% in the past few months, 22%, I think, on the year. And what we did is just pure risk management. So we run a 5% max weighting as a target. We had a stock that grew to 6%. We were able to take profits, utilize that 1% profit, roll it into matter. And this is just the way professionals manage money. It's not about us losing any conviction on J.P. morgan. It's just nuance and trying to take advantage of what the market gives you.
- [25:16]
Frank Holland
All right, we're going to leave it there. JP Morgan shares up about one and three quarters of 1%. Coming up next on Halftime, we have our calls of the day, including an upgrade for one of this year's top top performers, Kevin Simpson, making another move. Halftime is back in just two minutes.
- [25:33]
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Narrator/Advertiser
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- [27:06]
Kevin Simpson
Everyone needs to invest.
- [27:07]
Frank Holland
We're going to show you exactly where.
- [27:09]
Kevin Simpson
The best stocks are and what's happening.
- [27:11]
Jason Snipe
With them in real time.
- [27:12]
Frank Holland
Join Pro for exclusive access to Josh Brown's best stocks in the market@cnbc.com Beststocks and welcome back to Halftime. It's time for our calls of the day, starting off with Roblox upgraded outperform at Wolf. Kevin, you own this one and you're writing some covered calls in your position.
- [27:43]
Kevin Simpson
Yeah, we love Roblox long term. They've come under a lot of pressure the past couple of weeks. And we wrote some calls last week. The trade was in advance of the news that came out that was a little bit negative. Worked out pretty well. We made about $6 and change. We wrote another covered call this week expiring next Friday for about $3.50. If Roblox kind of hovers where it is in the 3, 116, 117 area, it's 118 now. We'll net about a $10 profit. We have this half covered. I don't mind if they take it. I like the call long term, but the issues and the lawsuits and the things that are happening with some underage people kind of communicating with people that might not be in their age bracket. We saw this with Metta in the past. It's something that the company is doing their best to clamp down on. But it's a concern that you need to be aware of. And as shareholders, we're monitoring the position.
- [28:33]
Frank Holland
All right, moving on. We have also Snowflake, its price target being raised to 250 from 200, 245 at Citi. Jason, you own this one?
- [28:41]
Jason Snipe
Yes. Data warehousing should be a double digit annual growth compounder over the next decade. So for me, this stock has done very well. Year to date it's up almost 27%. You know, the TAM in the business was, you know, about $150 billion two years ago. Three years from now it should be $350 billion TAM. So I like what they're doing on operational margins are up around 9%. They're expenses are decelerating significantly. So I think this should be a good report going forward. There's been a little bit of a pullback over the last month, but I like the story going forward.
- [29:13]
Frank Holland
Speaking of that report, it happens next week along with Nvidia. It's a big one. It's kind of overshadowing Snowflake. Snowflake coming up next week as well. We want to move on. QXO initiated at a buy at Benchmark Weiss. You own this one?
- [29:27]
Steve Weiss
I do. And look, you know, I've talked that story so many times. Brad Jacobs is just a creator of wealth for himself and for all those who follow him. United Rental, gxl, rxo. I mean you can go down the list the waste management company had. So he made one acquisition, Beacon Roofing and he's tried to make another but was very price disciplined. So let it go to Home Depot, there'll be lots more M and A and he's still talking about 10 billion in revenue. So put a multiple on that and you'll get a stock that's substantially higher but it's going to go up in a step function over the next few years. So this is a long term hold, long term compounder. And particularly with rates coming down in the near future, that's going to drive more of their end market. So I'm excited to be shareholder.
- [30:21]
Frank Holland
One question for you. We saw Lowe's make an acquisition when it came to Interior Products. Also Home Depot make an acquisition when it came to building products. Any concern that QXO is facing some very stiff competition from these home improvement retailers that seem to want to get into the same business?
- [30:36]
Steve Weiss
No, I mean there's always M and A competition. Generally it comes from, I mean it's not stopped from private equity firms, from corporate consolidators like you mentioned. So you know, QXO has the benefit of being patient number one. Number two, they can also buy smaller businesses, which Brad has done in the past and put them together. So when you buy them smaller, you're buying them at a discount to larger because you just get multiple appreciation as they build. So you'll see that come through in Q share price. But I'm not concerned. There's always competition out there and I expect to see more of it, frankly, as rates to finance come down.
- [31:16]
Frank Holland
Well, it seems like that's on. What's going going on today? QXO shares up about 8 and a half percent, seemingly on optimism that a rate cut is going to loosen up the housing market somewhat. All right, moving on. Altria price Target raised to $72 from $64 at bank of America. Kevin, you on this one?
- [31:30]
Kevin Simpson
Yeah, I like the call. Interestingly, we bought this in the growth portfolio last Monday at $65 a share. Not our dividend portfolio, but as Steve would say, a perpetual compound or 6% dividend. The Lebanese, excuse me, 1112 times forward earnings. I like the call. I like the price target. I'm happy to be in the name.
- [31:47]
Frank Holland
All right. Altra shares up just fractionally right now. All right. Time now for our headlines. We're going to toss things over to Julia Boorstin with those. Julia, good afternoon.
- [31:56]
Melissa Repko
Hey, Frank.
- [31:57]
LinkedIn Sales Navigator Advertiser
Well, the FBI raided the Bethesda, Maryland.
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Jim Lebenthal
Home of President Trump's former national security.
- [32:02]
LinkedIn Sales Navigator Advertiser
Adviser John Bolton today.
- [32:03]
Frank Holland
A source familiar with the matter told.
- [32:05]
Jim Lebenthal
NBC News the raid was part of the national security investigation in search of classified records.
- [32:11]
Frank Holland
Bolton worked under the first Trump administration.
- [32:13]
Jim Lebenthal
He has emerged as a fierce critic of the president. A global group of experts said today Gaza City and the surrounding territories are.
- [32:21]
Frank Holland
Officially suffering from a man made famine.
- [32:24]
Jim Lebenthal
The UN Backed group says a half a million people are facing starvation, acute malnutrition and death.
- [32:31]
Frank Holland
They also predicted two more areas further south are expected to to enter an official famine by September.
- [32:37]
Jim Lebenthal
And Lyle Menendez will make his case for release to California's parole board today.
- [32:42]
LinkedIn Sales Navigator Advertiser
Just hours after it denied his brother Eric's parole.
- [32:45]
Jim Lebenthal
The brothers are serving sentences right now for the high profile 1989 murders of their parents. They say the killings were in self defense following years of sexual abuse by their father. Eric's hearing yesterday lasted 10 hours.
- [32:59]
Melissa Repko
Back over to you.
- [33:00]
Frank Holland
All right. Our Julia Boorstin with our headlines. Julia, thank you very much. All right. Coming up next on halftime, committee moves Kevin Simpson is ready with three more. Three more trades.
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Steve Liesman
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Frank Holland
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- [34:30]
Frank Holland
And welcome back to Halftime. We're going back to Kevin Simpson. He's been very busy, has more movies we want to get to. First one up, Kevin, you sold some helmet. Aerospace, give us the thesis.
- [34:40]
Kevin Simpson
Yeah. And again, just broadly speaking, we were very active because there was a big pullback in the market. We were expecting the speech today to be bullish, not nearly as bullish as it has been. This is an aerospace company that we love. How Mets done in crowd incredibly well for us. We've owned it and made probably 30% on the trade in five months. So this is just a situation where we're taking a little bit of profits, redeploying the capital elsewhere. We see a pullback on this name as we'll discuss with the next one. We'll be back into these things.
- [35:08]
Frank Holland
All right, so on a pullback, you'll buy it again? Well, it seems like it's going to move higher just because it's a cyclical, we're expecting a rate cut. But why would you buy it on a pullback? If you sold it here, you made your money. If you you thought was going to go higher, why would you ever sell it?
- [35:21]
Kevin Simpson
We have a tendency within this growth portfolio to use covered call writing and to be somewhat active and a little bit more nimble. So taking a 30% profit here, we're locking it in. We want to deploy assets elsewhere. We've got a little bit dry powder and not to be sarcastic, but if we sell it up here and it pulls down, we'll certainly revisit positions. And we do that a lot with a much longer time horizon with the portfolio, even with Uber that we just talked about, I'm actually paying more for for it than what we sold it out a year or two ago.
- [35:46]
Frank Holland
We can't rubber stamp your trades. Cab we got to ask why it's coming over to you. You own FTAI Aviation. What do you make of his trade? What do you make of the aviation space in general?
- [35:56]
Steve Weiss
Well, FDA has had just they had a great quarter. I got interested in it because the stock had done nothing. And then they announced that they picked up this essentially two and a half billion dollar line of credit. You put leverage on that and you get tremendous earnings power. So this stock is just about doubled, but I still think it's got a lot of upside over 200. Look, the aviation cycle is continuing to go on. It's a question of what you own here. I like the financing companies and those that make the airplanes, although like a helmet that are involved in it. But I just can't find those at appropriate valuations. So I would call pull out. Boeing's having nice move today, but just can't get there. I think it's overvalued.
- [36:42]
Frank Holland
All right, Kevin, want to get to another one of your moves. You and I were talking about this one. I was curious why you made this move. You sold Jabil kind of equipment maker. What's the catalyst for this sell Stocks pulled back about 5% over the last month.
- [36:53]
Kevin Simpson
It pulled back a little bit, but I think that was more with the broader markets. We made 18% in two months here. So again, just like with the helmet, these are both stocks that we love. Great strong conviction. They've had momentum. They dropped a little bit. We took the profits there. If we see this stock pullback will absolutely add into it a lot of reasons to like it. And I think if we can get back in a little bit lower prices, we'll happily do so.
- [37:15]
Frank Holland
All right, last one. You bought some more DraftKings, but I just want to toss this one around. What do you guys think of this buy? A lot of talk about these companies taking money away from the casinos. We do have some casino ownership. Jim, you own win. Just your thought about him buying DraftKings and some of that competition. When it comes to the gaming space.
- [37:32]
Jim Lebenthal
I think there's a real secular tailwind for DraftKings and the similar online bettors. And we know that it's mainly the younger demographic. I mean, that said, the hard asset casinos like Wynn have been rallying really, really well. And it's indicative that there's still strong demand for Las Vegas, that there are plenty of growth opportunities around the world. Wynn in particular has this Al Marjan resort that it's building and which it's going to top out next year and open in 2027 in Dubai. There's, there's a lot of tailwinds for both frankly. And in a declining interest rate environment, indebted companies like the Hard Asset casinos are going to benefit both on the balance sheet and the demand side for their product.
- [38:14]
Frank Holland
Snap. Give us a quick take. Would you rather be on this side, the draftkings, the Flutter or actually what he called the hard asset casino side like a win.
- [38:22]
Jason Snipe
You know what I think I like the Hard Asset. You know the casino we used to own mgm. I think, I just think that that momentum will continue. I mean we were in a while ago like at the end of the pandemic when kind of the Macao story played out. But I think I like the Hard Asset here.
- [38:36]
Frank Holland
All right, Kevin, we're going to be the last word since it is actually your trade.
- [38:39]
Kevin Simpson
We got in at 42 and a half on a pullback football season starting. We look at the event out come market. What fanduel is doing with cme, what Robinhood, what interactive brokers are doing. This is a space that I think complements the hard asset side and we're really excited about it.
- [38:54]
Frank Holland
Kevin, come with the picks. Week one picking the Eagles I'm pretty sure everywhere. Straight ahead, the Retail Report car some of the biggest names delivering earnings this week. We have Melissa Repco standing by with all the details. The committee is ready with their playbook. Halftime's back right after this. And welcome back to the Halftime Report. Walmart raising its full year guidance yesterday despite missing on the bottom line the company's earnings capping off a long list of retail results that happened this week as the market weighs how tariffs are impacting companies and consumer spending. Melissa Repko joins us now with the details. Good afternoon Melissa.
- [39:41]
Melissa Repko
Hey Frank. Some of retailers biggest names give a clear picture of how higher tariffs are rippling through the economy. The takeaway so far consumer spending is holding up and companies have gotten creative to reduce the tariff bill. Retailers are importing goods from a wider range of countries. They've gotten ahead of tariffs with early shipments and stocked up on items that are more likely to sell. Price increases are part of the strategy too. Walmart has raised prices on some items. CEO Doug McMillan told investors that shoppers reaction so far is somewhat muted. But he said he expects tariff costs will keep climbing in the back half of the year and some low and middle income customers have noticed and responded when they see a higher price. He said for some tariffs are easier to absorb. Walmart for Instance can offset some profit pressure with newer businesses like Global Advertising, which jumped by 46% percent year over year in the most recent quarter. Tariffs are tougher for struggling retailers. Target's profits took a hit from canceling orders this quarter and it gave a wider range for full year earnings, citing tariff uncertainty. Frank.
- [40:46]
Frank Holland
All right, Melissa, thank you very much for that look at the retail earnings this week. Kevin, I'm going to come over to you right now. You own two of the stocks he was just talking about, Home Depot and tjx.
- [40:54]
Kevin Simpson
Yet TJX just crushed it on top line, bottom line and it's a non tariff story. We just love, love the company. It's actually unchanged on the day. But I think that has a lot to do with interest rates which is why you see Home Depot up about 15 sticks. Lower rates mean massive stimulus and we've been seeing and talking for years about the next phase of remodeling. Think floors, paints, appliances. This is a beneficiary for both Lowe's and Home Depot moving forward and we're excited about the prospect aspects.
- [41:23]
Frank Holland
Why is your take on the retail sector, I mean after this surprisingly, I guess dovish Jay Powell, does that give you more confidence in retail spending and consumer discretionary spending?
- [41:33]
Steve Weiss
You know, retail is tough space because a lot of it deals with consumer taste. I've been looking at Lulu actually that stock's been crushed and I think the death bit is, is overstated. Anytime I walk into a store or you know to see it being crowded and I see them being the market leader so I'm looking at that. Still more work to do on it. Dick's Sporting Goods is one I've owned in the past. I still like that quite a bit. Unfortunately I missed a sell off. Just didn't, just didn't focus on it was great opportunity to have a nice snapback and they're the leader in their category. So overall in retail, I mean flooded with landmines but I think if you find a company that can execute cute then then you should own it with rates coming down. But just because rates come down, we only took about 25 to 50 bips. That's not going to drive a lot of behavior. So that would not be the reason I buy the retailers.
- [42:29]
Frank Holland
All right. With that, by the way, consumer discretionary, the leading sector today after the J. Powell news conference and the dovish sentiment there. All right, moving on. We've got Mike Santoli joining us with his midday word. We're back right after this break. Stay with us. And we're Back on the halftime report, senior markets commentator Mike Santoli joins us with his midday word. I usually try to front run you with the midday word. Sure. What's the midday word? I. We're trying to figure it out.
- [43:08]
Mike Santoli
It's relief, but it's, it's, it's relief of the exact sort the market was craving. You know, a week ago I kept saying, like the market wants the rate cut. It doesn't really want to need the rate cut. It doesn't want to actually suffer through the genuine peril or the concern about the underlying economy. So we're kind of getting that. And I do think this churn, this rotation, you know, the sort of relieving of the overbought conditions in this market that we've had over the last week or so perfectly set us up for this snapback. So even though it seems like it's kind of up, up and away, it is pretty controlled. I mean, the S and P kind of pops back up to its old high and it's hanging there. It's just about at the 10% year to date gain level. You know, I think it's pricing in a lot of good stuff, but probably also have to be aware that we can get some complicated data between here and then. You, you know, in terms of when we get an actual rate cut, I think there might be a little bit of a rethink of what it means for the longer end of the bond market. But for now we have relief that we have sort of the attention of the Fed in the places the market wanted it, which is on the downside risk to the labor market.
- [44:13]
Frank Holland
How long does this relief last? We have Nvidia coming up next week. Does it just last up until Nvidia? And if Nvidia performs as good as expected or better, does the jobs report, does the pie, cpi, those things still carry the same way? Where the market be so happy about Nvidia just powers through.
- [44:28]
Mike Santoli
Well, first of all, I don't want to presume the market will be happy about Nvidia. We probably will be, but we just don't know what the price is. I don't know if the celebration lasts until then, but I do think that this calm might last. So we have volatility really receding here. It's going to be the last week of August. Anything can happen. But I do think we're kind of locked back into, you know, the bias, but being toward this market being relatively well supported until Nvidia.
- [44:53]
Frank Holland
To your point, the VIX actually making a downside. Mike Sentinel thank you for your midday work. Coming up, a new list of under outperforming stocks, not underperforming, outperforming stocks that one firm says have more room to run. Jim owns two of them. We'll be right back after this. Stay with us. And walk back to halftime. Report UBS out with a note identifying stocks they say still have room to run. Two of Jim's names are on that list. Let's start off with AstraZeneca.
- [45:23]
Jim Lebenthal
Jim, AstraZeneca is just in the sweet spot of attractively priced pharmaceuticals. They've got a very broad platform of diseases that they treat mid teens, multiple I'm looking really quickly, 2% dividend yield. And it still is snapping back from some China news. A year ago that was a real big nothing burger. Meaning there is more, more room to recover from that. But you know what I'd rather talk about about Frank Delta. Delta. Because look, it's emblematic of what we're seeing in the markets today in that anything that is tied to debt on the balance sheet is rallying. Doesn't matter if it's Delta, doesn't matter if it's wind, doesn't matter if it's small caps. And you're seeing that with Delta. And as I said about when it's both on the balance sheet side where even though Delta has been reducing the amount of debt, they still have a meaningful amount of debt. So lower interest rates help them but but also lower interest rates help to continue the trend of people traveling and people are still traveling. For all the worries about Doge earlier this year or obviously what happened after Liberation Day, TSA traffic is a solid 2% higher on a one week basis average basis over the last week, solid 2% higher than a year ago. Every indication is that demand is going to hang in there and it's attractively priced. So I like Delta here very much.
- [46:38]
Frank Holland
As you can see, Delta shares up about six and a half percent. All right. Stay with us. Final trades. They're coming up on halftime. We are back on halftime with final trade. Steve Weiss, you're up first.
- [46:53]
Steve Weiss
I bought some Vertif stocks down over 20% since they reported a great quarter. Data center craze isn't dying anytime soon.
- [47:01]
Kevin Simpson
Kevin Simpson, DraftKings football season kicks off this week in Philadelphia. Go Birds.
- [47:06]
Frank Holland
Jason Snipe, Palo Alto.
- [47:08]
Jason Snipe
I really like this Cyber Arc acquisition I think will be accretive to the.
- [47:11]
Frank Holland
Name Jim Lebenthal with the final word, Citigroup.
- [47:14]
Jim Lebenthal
And as the old commercial goes, and I'll only do this on a Friday in August. Citigroup the city never sleeps.
- [47:21]
Frank Holland
Wow. Are we supposed to get that?
- [47:25]
Jim Lebenthal
That's all I got for you.
- [47:26]
Frank Holland
Great to be here with you guys. You all have a great weekend. That does it for halftime. The exchange starts right now. You've been listening to CNBC's Halftime Report, the podcast. You can always catch us live weekdays at 12 Eastern only on CNBC.
- [47:43]
Narrator/Advertiser
All opinions expressed by the Halftime Report participants are solely their opinions and do not reflect the opinions of CNBC, NBCUniversal, their parent company or affiliates, and may have been previously disseminated by them on television, radio, Internet or another medium. You should not treat any opinion expressed on this podcast as a specific inducement to make a particular investment or follow a particular strategy, but only as an expression of an opinion. Such opinions are based upon information the Halftime Report participants consider reliable, but neither CNBC nor its affiliates and or subsidiaries warrant its completeness or accuracy, and it should not be relied upon as such. To view the full Halftime Report disclaimer, please visit cnbc.com halftime reportdisclaimer My name is Josh Brown.
- [48:24]
Kevin Simpson
The best stocks in the market is very simple. These are stocks with good fundamentals in the process of rising higher.
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Frank Holland
Join PRO for exclusive access to Josh Brown's Best Stocks in the Market at CNBC.com BestStocks.