The Road Ahead for the Record Rally 9/16/25

Summary

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CNBC Halftime Report Podcast Summary

Episode: The Road Ahead for the Record Rally
Date: September 16, 2025
Host: Courtney Reagan (in for Scott Wapner)
Panel: Jim Lebenthal, Stephanie Link, Josh Brown
Theme: Examining the sustainability of the ongoing record market rally ahead of a pivotal Fed meeting, plus sector breakdowns, stock picks, and broader economic signals.

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Overview

This episode dives into the forces propelling the U.S. stock market's remarkable rally, debates the outlook ahead of a widely anticipated Fed rate cut, and breaks down sector opportunities from consumer stocks to banks and tech. The Investment Committee discusses what’s priced in, evaluates recession risks, and highlights both conviction buys and laggards. Notably, the panel maintains a cautiously optimistic outlook, driven by economic resilience and robust earnings.

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Key Discussion Points and Insights

1. State of the Market & Fed Meeting [01:18–05:27]

• Current Market Backdrop:

  • Market slightly down midday with all eyes on the Fed.
  • The S&P 500 is up 32% from April lows, pacing for a fifth straight positive month ([12:44]).

• Fed Rate Cut Expectations:

  • Consensus is for a 25 basis point cut, “baked in” per Jim Lebenthal.
  • Panel expects minimal market shock from the decision ([02:04]).

  “We have a Fed chair and a Fed Open Market Committee that doesn’t like surprises... so I think the 25 basis points is probably baked in at this point in time.”
  — Jim Lebenthal [02:04]

• Market Resilience:

  • Since late April, only three S&P 500 closes down over 1%.
  • Rate cut is seen as precautionary, not recessionary.
  • The market environment is "very tranquil," suggesting optimism is well-founded ([02:04]).

• Growth & Earnings:

  • “The economy is strong—stronger than probably even we thought starting the year,” notes Stephanie Link ([04:00]).
  • Earnings still the main driver, with revisions trending higher ([04:19]).

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2. Consumer & Retail Strength [05:27–07:48]

• Retail Sales Data:
  • August retail sales & credit card data show a surprisingly robust consumer.
  • Wealthiest Americans’ spending is a major pillar, as are healthy bank reports ([05:27–06:14]).
• Stock Picks in Consumer:
  • Stephanie Link highlights beaten-down retail stocks expecting a catch up:
    • Deckers: “Down 43% on the year… double digit earnings growth, gross margin expansion.”
    • Gap: “Taking market share… strong denim cycle.”
    • Target: “Turnaround story, 11X earnings, 5% yield, new CEO.”
    • Chipotle: “EPS multiple has come down; buyback increased” ([06:14–07:48]).

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3. Caution vs Euphoria Debate [08:55–12:44]

• Barclays’ Warning:

  • Barclays signals “elevated euphoria;” panel counters that pockets of exuberance do not mean a market peak ([08:55]).

• Historical Perspective:

  • Market P/E ratios have not expanded, meaning earnings growth has driven returns ([09:18]).

  “Anytime you have a bull market…there are always these little sideshow things. Historically, those have not been reasons to just abandon your investments.”
  — Josh Brown [09:18]

  • S&P 500 has risen 11% on average in the year after a rate cut since 1970.
  • “If there’s no recession materializing… the S&P should be higher as monetary policy is more accommodative.”
    — Josh Brown [09:18–12:44]

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4. Softening Risks & Sector Cycles [12:44–19:20]

• Recession Skepticism:

  • “It’s just really hard to paint the bearish picture here in which we’re going into recession.”
    — Jim Lebenthal [12:56]
  • Unemployment and jobless claims not worrisome in the aggregate.

• Housing & Autos:

  • Housing still subdued due to rates, but lower mortgage rates could spark a new upcycle with broader economic ripple effects ([14:21–16:43]).
  • Plays on Housing Recovery:
    • Stephanie Link: QXO (building products M&A platform led by Brad Jacobs).
    • Josh Brown: Rocket Companies (mortgage/refi), Invitation Homes (REIT).

• Homebuilders:

  • Dr. Horton and Toll Brothers called cheap, trading at 12X and 10X earnings respectively.

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5. Financials/Banks — A New Era? [19:20–24:06]

• Bank Upgrades:

  • Mike Mayo (Wells Fargo) boosts targets for BofA, Citi, JPM, GS, MS.
  • Jim Lebenthal: Citigroup still has more room to run, remains undervalued even after a 41% YTD rally ([19:55]).

• Opportunities in Sector:

  • JPMorgan praised for consistent premium valuation tied to trust/confidence; sector seen as at an “identical opportunity” as at year start ([21:02]).
  • Steepening yield curve, capital markets recovery, and fintech are tailwinds.

  “The same opportunity in financial stocks today that you had eight, nine months ago… I think that augurs for a really great finish to the year.”
  — Josh Brown [21:02]

• Portfolio Moves:

  • Stephanie Link adding to Capital One, bullish on its acquisition of Discover Financial for scale in payments.
  • Morgan Stanley upbeat, M&A picking up (completed deals up 40% in North America YTD).

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6. Tech Check: Google/Alphabet's Comeback [24:35–26:08]

• Alphabet (Google):

  • Jim Lebenthal takes a victory lap as Alphabet rallies post-judicial clarity, up >40% this year.
  • Size, resources, and judicial clarity cited as key security for its long-term prospects.

  “I just felt like, all right, so you know, it’s the behemoth, that’s Google. I’m going to stay with it.”
  — Jim Lebenthal [25:02]

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7. New Stock Moves & Noteworthy Trades [28:52–33:12]

• Stephanie Link’s New Buy:
  • AppTean (auto parts, spinning out software): “Spin-offs perform… auto parts are in a trough, could recover… software has a huge addressable market.” [28:57]
• Consumer Experience:
  • Josh Brown remains bullish on Live Nation despite a downgrade, citing record ticket sales and strong secular tailwinds for live events ([30:24–32:13]).
• Tech Lagging — Adobe:
  • Jim Lebenthal is “hanging on but nervous” about Adobe, which faces increased competition and is down 21% YTD.

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8. Sector Check-ins: Healthcare & Industry Updates [36:34–42:44]

• Healthcare Sector Outlook:

  • FDA warnings to several pharma/telehealth companies over misleading product claims; deemed routine by panel.
  • Johnson & Johnson featured: Josh Brown sees a breakout set-up as the firm pivots to pure-play healthcare, spins off non-core assets, and raises guidance.

  “Big base… massive transition underway… the bigger the base, the higher in space.”
  — Josh Brown ([38:52] on JNJ)

• Other Pharma Picks:

  • Jim Lebenthal likes AbbVie, AstraZeneca, and Vertex, focusing on pharma/biopharma over managed care.

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9. Underperformers & Dead Money [43:54–45:29]

• Delta:
  • Jim Lebenthal remains optimistic despite flat performance, citing strong travel trends and healthy balance sheet.
• KKR:
  • Stephanie Link sold her position, preferring cheaper bank stocks due to valuation concerns.

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10. Closing Trades & Accolades [46:03–END]

• Final Trades:
  • Josh Brown: Electronic Arts — “Set up, starting to move higher.”
  • Jim Lebenthal: Lockheed Martin
  • Stephanie Link: Capital One
• Shoutout:
  • Josh Brown’s firm made Barron's RIA Top 100 List ([46:03]).

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Notable Quotes — Speaker Attribution & Timestamps

• "The setup is very positive. Even if you get a pullback..."
  — Jim Lebenthal [02:04]
• "Earnings have been revised higher and I think they're going to go higher even from here."
  — Stephanie Link [04:19]
• "There are pockets of euphoria, but… you never have a bull market that doesn’t have sideshow things going on."
  — Josh Brown [09:18]
• "The more you look at the data, the harder it is to paint a bear case."
  — Jim Lebenthal [12:56]
• "Housing and auto cycles could provide even more upside if rates fall."
  — Stephanie Link [14:21]
• "JP Morgan has never lost that trust and confidence."
  — Josh Brown [21:02]
• "The bigger the base, the higher in space."
  — Josh Brown [38:52] (on JNJ technicals)

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Timestamps for Major Segments

• Market/Fed Setup ........................................... [01:18–05:27]
• Consumer & Retail Data .............................. [05:27–07:48]
• Risk & Caution/Euphoria ............................. [08:55–12:44]
• Sector Cycles: Housing & Autos ................... [12:44–19:20]
• Financials & Banking .................................... [19:20–24:06]
• Tech: Alphabet/Google .................................... [24:35–26:08]
• Stock Moves, Calls & Downgrades ................ [28:52–33:12]
• Healthcare & Pharma/FDA ............................ [36:34–42:44]
• Underperformers/‘Dead Money’ ..................... [43:54–45:29]
• Final Trades & Wrap-Up ................................ [46:03–End]

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Tone

Conversational, data-driven, pragmatic, and collegial with measured optimism about macro and sector prospects. The panel maintains a focus on fundamentals, historical perspective, and encourages selectivity even amid bullish consensus.

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For Listeners:

This episode provides a sweeping, real-time review of market catalysts, sector rotations, and tactical stock ideas for active investors on the eve of a significant Fed decision. Panelists emphasize discipline, historical perspective, and the importance of “picking your spots” as the rally matures.

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Transcript

[Courtney Reagan]

What does it mean to live a rich life? It means brave first leaps, tearful goodbyes, and everything in between. With over 100 years experience navigating the ups and downs of the market and of life, your Edward Jones financial advisor.

[Stephanie Link]

Will be there to help you move ahead with confidence. Because with all you've done to find your rich, we'll do all we can to help you keep enjoying it. Edward Jones Member, SIPC.

[Jim Laventhal]

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[Josh Brown]

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[Jim Laventhal]

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[Josh Brown]

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[Jim Laventhal]

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[Courtney Reagan]

Thank you, Carl and Sarah. Welcome to the Halftime Report. I am Courtney Reagan and today for Scott Woepner, front and center this hour, the state of the record rally as we head into a critical Fed meeting. Our investment committee is standing by with the playbooks. Joining me for of the hour, Josh Brown, Stephanie Link and Jim Laventhal. Let's get you a check on the market here today. We are slightly to the downside across the board. Dow Jones industrial average down by about 3.10of a percent s and P500 hanging top down about 2.10of a percent. And then the NASDAQ is down just marginally here as we're about the midpoint of the day. But we have this very important Fed meeting. We all think we know what's going to happen. Jim, you and I were just talking before the show about the backdrop, about where we're sitting, sort of frame it up for us. I think we all know what we think is going to happen from the meeting.

[Jim Laventhal]

Well, you know, we have a Fed chair and a Fed Open Market committee that doesn't like surprises. So I think the 25 basis points is probably baked in at this point in time. It would be a very big surprise, which they don't like to do, to do more than that, to do 50 or to not cut at all. So let's just assume the 25 basis points is in there. I don't really know what the verbiage is going to be, I doubt this is going to be a hawkish cut where they start talking about, you know, how they may have to maintain a restrictive stance for quite some time. That would be surprising as well. But I think what's more germane to your question, Courtney, is that we've had a market that just inexorably marches higher. I took a look today, and since late April, when we got past the Post Liberation Day blues, There's been exactly three days in which the S&P 500 has closed down more than 1%. Now, that's not unheard of. That's not the great moderation. But it has been a very tranquil environment recently. And that to me says that a lot of this rate cut tomorrow is probably priced in. I wouldn't be surprised if we give something up in the wake of it. But that is not something that you should take from my lips and say, oh, I'm going to go sell stocks, I'm going to go sell the markets. That's not the point. There are too many positive things going on in the markets right now. I mean, take your pick. And I don't want to steal from either Stephanie or Josh. You know, I'll leave some of some on the table for you. But, you know, obviously we've got now you. I mean, we could do this. All three of us could do it together. We've got a growing economy, sure, we've got some worries about the labor market, but we still got low unemployment deregulation, growing profit growth. I'll stop there. The setup is very positive. Even if you get a pullback on.

[Courtney Reagan]

The news tomorrow, why are we then sort of marching just slightly lower here? Stephanie, if we think we know what's going to happen, what's guiding us Today.

[Stephanie Link]

We'Re up 32% from the April 8 lows. Right. So we've had a lot of good news. We are slowly ticking off the boxes of the unknowns with tariffs and we'll get Fed and inflation and geopolitical issues.

[Courtney Reagan]

Lisa Cook is going to be there. It looks like campfire.

[Stephanie Link]

That's a meeting which is interesting in and of itself. So we're ticking off the box boxes. We have been since April. And as a result, we are grinding. We have grinded higher. And then I would say a lot of it is because, yes, the economy is strong, stronger than probably even we thought starting the year, you know, where Atlanta Fed is.

[Jim Laventhal]

You looked right.

[Stephanie Link]

I know, I know.

[Jim Laventhal]

3.4.

[Stephanie Link]

Yeah. About two and a half, three percent growth which means and has translated into much better earnings. And that's really what the equity markets really care about, is the direction of earnings. And earnings have been revised higher and I think they're going to go higher even from here. The consumer is the most important part of the economy. It's 70%.

[Courtney Reagan]

You know, I agree with that.

[Stephanie Link]

I know you do. That's why I started with that. But they have jobs, they have wage growth at 5%. Inflation is coming down. You have a manufacturing renaissance happening. Anything tied to data center, we've been talking about it for three years. The labor market is cooling. It's not collapsing in my mind. So the Fed can ease, they probably should ease, but it's from a position of strength in the economy in my mind. So I think if, if we just, if we sell the news, I'm buying. I think the fourth quarter, you got to get through September, it's kind of volatile. I think fourth quarter is going to be quite strong. I think earnings are going to continue to lead the charge and I think the broadening out in the market is very refreshing. I still like tech, but there's a lot of other places that are doing well. Financials, industrials. I like consumer because that's actually, that sector's lagged and I think that's going to play catch up.

[Courtney Reagan]

Yeah, absolutely. And I want to dig more into that. And Josh, we got to get you in. We know that you're here. I mean the August retail sales coming in much better than expected. It does seem like the wealthiest of Americans are really sort of pulling along the economy. Maybe I'm too much of a worry war, but every time these numbers keep coming in stronger and stronger, I'm surprised.

[Josh Brown]

Okay, well, I was surprised to hear James Xavier.

[Courtney Reagan]

Josh, I don't think we can hear you. We're going to work on that. I'm going to go back to Stephanie for just a second while we work on that because I want to pick up on this thread about the retail sales and then the bank of America consumer spending also another month of healthy spending growth. So if the consumer is an area that you think is going to continue to take off and they're lagging now, where should we be looking?

[Stephanie Link]

The ones that I own actually haven't done well this year. But I do think you're going to see a catch up.

[Courtney Reagan]

Maybe they will, I think.

[Stephanie Link]

I think so. Look back to school, we know was very strong. You just mentioned credit card data. I look at the Chase data and we actually saw an acceleration in August from July in Terms of spend. American Express said that July and August accelerated from June. So we're seeing, we're hearing from companies, from the banks. Every bank last week at Barclays said how good the consumer was. So back to school was good. You know, that's a good precursor to holiday sales. And I think I own Deckers, for example. Now I'm kind of flat in the Trade. It's down 43%. That's why I bought it because it's down 43% on the year. But they've got some of the greatest brands in terms of Hoka, in terms of Ugg and double digit earnings growth and gross margin expansion. Operating margin expansion. Yes, it was very expensive. Price to perfection. Now, I don't think it is. I like the Gap. If we have a denim cycle, which my daughter, my 18 year old says we've had a denim cycle for a while and we're going to continue. They're number two at Gap and they're number three at Old Navy and they've been taking market share. Target is a little harder. It's a turnaround story, but it's trading at 11 times earnings with a 5% dividend yield and a new CEO who knows the company very well. He's been, he's a lifer there. And, and that was disappointing because we wanted someone from the outside, but I like having someone inside making some of the changes there. So. And then of course, Chipotle, which announced their increase in their buyback last night. And the stock is trading, you know, at 29 times forward. Its historical average is 46 times.

[Courtney Reagan]

Got it. There's a lot of good reads on the consumer. We're going to just take a beat here because we want to get some breaking news from Washington. Emily Wilkins is on Capitol Hill. What do you have for us, Emily?

[Stephanie Link]

Hey, Courtney. Well, as you know, a government shutdown is just days away at this point. But we do have news that the House Republicans are getting ready to release a Senate stopgap measure. It would continue current government funding levels until November 21st. And it would also contain $30 million into a fund meant to help keep members of Congress safe as they go to public events and go around their district. Obviously, this comes in the aftermath of the killing of Charlie Kirk. A lot of concern up here on the Hill on that. But it does seem at this point like Republicans are going to be releasing this bill. They expect a vote potentially on Friday and then it could go to the Senate where senators could stay the weekend to try and get this done. Of course, this bill does not have any provisions on health care, which is what Democrats say that they need to be able to vote for it. So at this point, even though Republicans seem to be on board with an agreement, it's not clear this is actually going to be able to pass all the way through without more Democratic support.

[Courtney Reagan]

Courtney, thank you so much, Emily, appreciate that. Good to hear some of those details. Josh, we are, we're going to get back to you here. I think you're good now. You know, we have positivity. One, two, three. I got you. We get a lot of positivity on the desk. But Barclays may be more in my camp talking about elevated euphoria, calling for potentially maybe more near term caution. Where are you?

[Josh Brown]

Look, I think we would all acknowledge there are areas of the stock market in which there is euphoria. But my counter that to that is it's always that way after an extended bull run. You never have a bull market, Courtney, that doesn't have like these little sideshow things going on. And historically those have not been reasons to just abandon your investments like, oh, this idiot is doing this crazy thing with leverage and blah, blah, blah. Therefore, I have decided I will no longer be investing for my retirement. Like it's crazy logic. So I think we can acknowledge that there is, there are pockets of euphoria, but I don't know, equal weight the Russell 3000, like all the stocks in the stock market, equal weight them and do an average of the P E ratio. We've had no P E ratio expansion across the entire market for the last three years, which means earnings have kept pace with the gains again on average, not for every stock. I think the bigger question though, and Stephanie and Jim nailed it. So I don't need to spend a ton of time on it. Are we going to have a recession or not? Because if we're in a rate cutting cycle that's being driven by the fact that there is a recession or fears of a recession, it's a very different scenario than if we're just in a rate cutting cycle that's accompanied by continued economic expansion. And I obviously think that the situation we're in right now indicates the latter, which is why I'm not, you know, as concerned. And think about this. The S&P 500 has risen an average average of 11% in the 12 months following every rate cut since 1970. So, you know, it's, it's not an extraordinary thing. We had a cut, then we had a nine month pause. Now we're going to have Another cut if there is no recession materializing within the next 12 months and right now there just isn't any sign of 1. The S&P 500 should be higher as monetary policy is more accommodative. Now why am I so confident that there's no sign of recession? Don't believe me? Just go by retail sales, go by the consumer, go by what the banks are telling us. To Stephanie's point, you can have gut feelings, you could have opinions, you can have anecdotes. My brother in law got laid off, my, my nephew graduated college, can't get a job. Yeah, it's not amazing for everybody, we acknowledge that. But think about this. The XRT, which is the retail ETF, is up 11% year to date in total return. Look at control group sales that we got this morning. That's the cut of retail sales that feeds directly into both PC and GDP. That's up 0.4% month over month. Sales are now a point 4% month over month over the last three months when adjusting for inflation, spending is actually bizarrely reaccelerating. So when you understand what the data is saying and you understand the history of these types of benign rate cuts that aren't accompanied by recession fears, it's really hard to paint the picture that you want to be out of the market. So I just think if we think about it that way from a data driven standpoint, we get a little bit more confidence than if we just think about all the things that could go wrong that haven't yet gone wrong.

[Courtney Reagan]

Yeah, I'm nodding because it is remarkable. The point on track for its fifth straight positive month, which is the longest streak since August of 2020, which is pretty remarkable. And Jimmy, you're sort of smiling and nodding along with John.

[Jim Laventhal]

Yeah, I mean, as usual he kind of nails it and maybe I'll just extend what he was saying a little bit to say if you are bearish. You know, what are you hanging your hat on? Are you hanging your hat on last week's jobless claims? That, that seems pretty tenuous to me. Yes, they spike, but they've spiked quite often over the last three years. Unemployment is 4.3%. Are we going to say that housing is stuck? Okay, housing is stuck, but you know what? Mortgage rates are coming down. Are we going to say that the ISM manufacturing is below 50? Yes, factually it is. And factually it has been for over two years. So you know, I think the danger as I'm listening to myself is there's a certain breathlessness with which I'm saying all this. It's just really hard to paint the bearish picture here in which we're going into recession. So, you know, all I did, and the reason I was nodding as Josh was saying was just add a little more detail about how hard it is to really, you know, conjure up the bear case. Can something. Can an asteroid hit the earth? Of course it can. And it doesn't even have to be an asteroid. You could get a geopolitical event that nobody's thinking of right now. That can always happen. But as Josh just said, like don't get out of the market because you've got a gut feeling that something's going to happen.

[Stephanie Link]

We have a 2 and a half, 3% GDP economy and we haven't even had a housing cycle yet. And we haven't even had an auto cycle yet. And I went back to look at a denim cycle. No, we have had a denim cycle. Apparently.

[Courtney Reagan]

I just gave in my skinny jeans. I'm just not quite ready. The wide legs.

[Stephanie Link]

Yes. The big baggy. No, no, I can't do it.

[Courtney Reagan]

Like a clown. Anyway.

[Stephanie Link]

But I went back and looked at the 30 year mortgage rate in January 13th. It was at 7.41%. It is now at 6.43%. We need to get it under 6 for sure. Closer to 5. And I think you have a home run in housing, but my point being is that you're on your way. And if we do get lower mortgage rates, you will have a housing cycle. And we know there's a multiplier effect to housing. When you buy a home, you have to buy stuff in the home, you buy stuff outside the home, you buy a car to get from the home to wherever it is you have to go. And there is a high correlation between housing sales and auto sales. And I think the auto piece is very interesting because we don't really talk about auto. We haven't talked about autos in a really long time. I happen to just buy one time I happen to just buy an auto parts company last week. But my point being is I think there's other drivers to the economy that if we get going, we can actually do. That's right. Then we can get. Then we really can get going.

[Courtney Reagan]

Well, I'd like to pick up again on your thread here about housing. I mean the ITV down about 5% in a week.

[Stephanie Link]

Yeah.

[Courtney Reagan]

So maybe we're not quite there for this reignition point because of rates or otherwise. But you also bought something else in the space.

[Stephanie Link]

Yeah. QXO and why it's a.

[Courtney Reagan]

Well it used to be called Beacon.

[Stephanie Link]

Yeah.

[Courtney Reagan]

Why can I not remember?

[Stephanie Link]

Beacon Building something silver technology.

[Courtney Reagan]

Okay.

[Stephanie Link]

But it's so it. They bought, they bought, they bought Beacon rather. So it's led by an industry pioneer, Brad Jacobs. He was at United Rentals, he was at xpo, he's at Waste Management. He's a rock star. He has put a billion dollars of his own money into this company. And this company is really just all of sudden a about making acquisitions in the building products distribution industry.

[Courtney Reagan]

Okay.

[Stephanie Link]

And so I think it's a hidden way of playing the construction housing just rebuild play. They have best in class ebitda. They're growing five times as much as the, the industry, trading at a discount to the industry. And I just think they have the best technology. So they buy these, they make these acquisitions and then they use technology to get more efficient, productive and that sort of thing. Hence the profitability story. And so I think this is just a hidden way of playing that kind of the cycle in general.

[Courtney Reagan]

Josh, you own invitation homes, Rocket companies. You want to hang on to them if rates continue to fall in this environment.

[Josh Brown]

Yeah. So to be clear, I don't view invitation homes as being a rates play per se. It's rental housing and this is really about the, the distribution. It's a REIT and just reinvesting that distribution. But on Rocket, look, I've talked about the stock, I added it. I think my average cost is like 13. I have not sold any despite the fact that it hit almost 22 the other day. I really think that this is one of the big turnaround stories that is sensitive to the rate cycle and, and to housing. While the housing market has been in this, I've called it an ice age. Existing home sales depressed, lack of activity, Realtors miserable, mortgage brokers miserable. I think we're coming out of that. And I think Rocket is one of the preeminent ways to benefit from increased activity in the housing market. Just, just like as a mental exercise you picture the millions of people who become eligible for a refinance as rates drop from they were north of 7, 30 year mortgage rate. If they get down 6, they get down to 5. It's millions and millions of opportunities for refis for homes to turn over. And that's all playing into rockets wheelhouse. They have spent this ice age making acquisitions. They bought one of the largest portfolios of mortgage servicing. Mr. Cooper, they also acquired Redfin which is the biggest driver of leads to Realtors and to mortgage brokers like They've been investing while this market's been in an ice age. And once it thaws out, I think the leverage and the benefits accrue to the shareholders of, in our case, you.

[Stephanie Link]

Know, it's also interesting, I own Dr. Horton and Toll Brothers. Some more pure play housing calls. These stocks are up 20, 30%.

[Courtney Reagan]

Rockets are 82% year to date from.

[Stephanie Link]

Well, these two are up from when they reported third quarter. And the third quarter they were horrible.

[Courtney Reagan]

Yeah, they weren't.

[Stephanie Link]

They were horrible in terms of demand. Right. In terms of deliveries. But gross margins were actually better than expected. So they're doing the best that they can. And I think obviously we know the market is forward looking indicator and everyone's looking at lower interest rates and maybe that's going to fuel these stocks. But there's so much more to go because these stocks are so incredibly cheap. 12 times earnings for Dr. Horton, 10 times earnings for Toll Brothers. Toll Brothers is the industry leader trading at 10 times earnings. I mean, I just think that these are still buys.

[Courtney Reagan]

Speaking of rate sensitive. And we got it. We got to talk about the banks here. Got a call from Mike Mayo today. Wells Fargo. Mike Mayo raising his price targets on the big banks. So he now has bank of America at 60 from 56. Citigroup 125 from 115. JP Morgan at 345 from 325. Goldman 855 from 785 and Morgan Stanley to 165 from 145. All the names except for Morgan Stanley, he ranks overweight. Morgan Stanley, he's looking at equal weight. And Jim, you got to take a, I think you got to take a victory lap on them. Citigroup up 41% year to date. Look at that.

[Jim Laventhal]

It's, it's been overdue. Courtney, I'm very happy with the last year's worth of returns in Citigroup. I do think there's more to come. I mean, for quite some time, and Stephanie and Josh know this, for quite some time I was looking at the stock saying to everybody as I was on air that this was trading at a ridiculous discount to tangible book value. There was a time about a year and a half ago was trading at 50% of tangible book value. To which I said, give me a break. Well, now it's trading at tangible book value. And maybe somebody should say, well, Jimmy, go ring the register. No, I see no reason why every other big money center bank should trade at a meaningful premium to tangible book value. And Citi is just A tangible book. So look, I think the 125 that Mike Mayo and he's been a very big bull on his target equates to a 125% tangible book value premium. And I'm with him on that. Let's rediscuss whether I should get out of the stock when it gets to 125. By the way, if you measure it on earnings or dividend yield, I think that 125 is justified as well.

[Courtney Reagan]

Josh, you're in J.P. morgan. Jim, you're there. To J.P. morgan hitting a record high today, what do you make of this stock? As we look at rates going lower.

[Josh Brown]

It looks like the target on JP Morgan just went to 345. And I can't say I disagree. One of the things about JP Morgan, since I've owned it over the last, I don't know, decade plus, it's always been, quote, unquote, more expensive than the other banks. That's never been a problem for, for me because I think banking, the fundamental thing about the banking business is trust and confidence. And JP Morgan has never lost that trust and confidence. As a result, they haven't gotten caught up in a lot of the scandals and accounting issues and need to do these kind of like mass divestitures that, that other banks have had to do. I do like the sector broadly. I was talking to my friend Nicolas yesterday from Data Track. Nick pointed out uniquely among all of the sectors that have had good returns this year, the multiple for the S and P financials started January at 16 times. It's still at 16 times. This means, yes, the stocks went up a lot, but their earnings went up a lot as well. So you have the same opportunity, starting opportunity in the financial stocks today that you had eight months, nine months ago when the picture was nowhere near as cheerful as it, as it is right now. And I think that's unique. I think that augurs for a really great finish to the year. And think about all the benefits, lower rates. You've got, you've got expanding margins in a lot of areas. You've got this whole fintech boom, the stablecoin component that's come along, a lot of growth, the asset management growth, everything is up on the year and you've got, the capital markets are back in action. So it's like so many different levers to be pulled, so many different ways to win. So, yes, I still like J.P. morgan, of course, and I'm also finding a lot of great stocks in the space that have made my best stocks in the market list, we now have 39 financials, I think on our, on our list of best stocks in the market. It's pretty unique.

[Courtney Reagan]

Steph, you don't own Citigroup or JP Morgan, but a bunch of other names here. I feel like all the rest of the Capital One, Morgan Stanley, bank of America, Wells Fargo, sit and stay as rates go lower. I mean, is there any sort of portfolio pruning you need to do here?

[Stephanie Link]

I will buy more Capital One. That's a fairly new position. I think the Discover Financial transaction is transformational, quite frankly. They get into the payments network business and they have size and scale, and I think you're going to see a rerating there. I would hold on to the banks that I do own. Wells Fargo is buying more, buying back more stock than they said they were going to. Morgan Stanley sounded giddy last week at the Barclays conference about M and A. We've seen completed M and A transactions year to date, up 40% in North America, up 103%. So M& A is just starting to really click. But of course, you have the steep yield curve. These companies are talking about better nii, net interest income, net interest margins, fee growth from capital markets. So, yes, they've had a nice run. But Josh's point, I still think they're very attractive at something like 14 times for the ones I own, at least. And you know, the market's at 22 times, so it's still at a discount.

[Courtney Reagan]

Interestingly, I was talking to an unnamed executive source fairly high up was talking about the Capital One cafes and actually how they are fairly attractive to consumers and it's turned into a good marketing tool, which I thought was quite interesting.

[Stephanie Link]

Whatever it takes me, I will take whatever they want to do.

[Courtney Reagan]

Capital One Cafe.

[Stephanie Link]

There you go. I mean, it sounds funny if they.

[Courtney Reagan]

Serve a pumpkin spice latte.

[Jim Laventhal]

I'm in Citigroup. Are you listening? Citigroup Cafe. I'll get behind it.

[Courtney Reagan]

Jim, I'd love to just real quick be before we go here, talk about tech because I think you deserve another victory. Look at your shares of Alphabet.

[Jim Laventhal]

Right, Josh? Steph, is this the usual thing where I get a lot of patience on.

[Courtney Reagan]

The back 43 and a half percent.

[Jim Laventhal]

I like hanging with Courtney.

[Josh Brown]

Scott is watching this show right now and leaping out of his. Leaping out of his chair. You are so dead next week.

[Courtney Reagan]

Well, you know, enjoy it.

[Jim Laventhal]

Yeah, well, look, you know, Alphabet, I was surprised in May when the stock was down around 160 and people were literally talking about an existential threat And I just, I didn't see it that way. I think if you go down to simple principles of investing, the bigger you are in any industry, the more safety you have. You have more resources, whether it's capital markets to finance, whether it's attracting talent to build new products, to respond to competitive threats, whether it's a customer base that you can fall back on. Look, Alphabet had all of these things and that's why I was surprised by the rhetoric I was hearing in May. And I just felt like, all right, so you know, it's the behemoth, that's Google. I'm going to stay with it. It's been vindicated both in the judicial realm where they've had obviously this penalty that wasn't as draconian as predicted. But right now I think it just, for now, it just goes with the markets. We have to wait until earnings come out and see if those competitive threats are now starting to have an effect. But for right now, it just goes with the market. I'm sticking with it.

[Courtney Reagan]

Joe Tierno yesterday was saying sort of those judicial rulings really was an unlock for this stock.

[Jim Laventhal]

They cleared the Runway.

[Courtney Reagan]

Cleared the Runway.

[Josh Brown]

Yeah.

[Courtney Reagan]

We had to go there before we wrapped up. I couldn't, I couldn't believe we made it through that whole block without talking about tech and lower rates. But it felt like you deserved victory lap. When I saw the stats, I thought 400%, 5%. That was a good one. Well, coming up, more committee moves. Stephanie Link is ready. She's got another new buy. You're going to want to stay tuned for that. And later, Josh Brown is back with an update to his best stocks in the market Hop.

[Stephanie Link]

Done.

[Courtney Reagan]

Back in two minutes.

[Stephanie Link]

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[Josh Brown]

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[Stephanie Link]

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[Courtney Reagan]

Welcome back. Stephanie has another move. Steph, you bought app team. This is not what I know much about. Tell me why you like it.

[Stephanie Link]

It's an auto parts company, but it's spinning out its software business. And we have a catalyst. November, they're having an analyst day. We're going to learn more about the information about the spin. You know, I like spins. Spins work. GE's up 422% since Larry Culp actually took the realm as CEO at GE and split up everything.

[Courtney Reagan]

Wow.

[Stephanie Link]

Spins were 3M one of the better names in industrial industrials last year because they are, they spun out their, their businesses too. So I think this is an interesting story because I think the auto parts piece as we talked about is in a trough in the moment, at this moment in time and I think could do better. And they obviously have a lot of auto exposure, but they're going to diversify into other end markets. They're growing mid single digits and margins are in expansion mode. And then the software piece, the total addressable market is like 90 billion. They're growing mid single digits and I think when they get away from the parent, they'll be able to focus more on growth and see an acceleration in revenue. So it's a spin story and it's, that's the catalyst. That's the reason in addition to maybe auto parts are just kind of lagging and maybe we're in for a recovery.

[Courtney Reagan]

That is interesting. And obviously with tariffs on autos, I've thought too that auto parts are an interesting place for us to study. See what happens if we fix up the cars instead of buying brand new.

[Stephanie Link]

Well, in the stock is trading at 8.7 times EBITDA. I mean it's awfully cheap, it's lagged. The whole sector has been terrible. Sure. So, but this is best in class. And by the way, Tesla is one of its biggest clients.

[Courtney Reagan]

Oh, that's key, that's critical. Let's get to some calls of the day. Rothschilds downgrading Live Nation to neutral. Josh, you own it.

[Josh Brown]

Yeah. Look, the stock is up a lot and I know sometimes on the sell side they'll do these types of downgrades or upgrades out of nowhere just to generate some activity on a trading desk or whatever, or have something to say. But in this case, I think, I think, I think I understand what their point is. Like we still have this lawsuit overhanging the company. We still don't know what the resolution has been and the company has already, the share price has already gotten a lot of credit for how great the business, businesses and the business truly is Great. Stock is 3% below 52 week highs. It's up 31% year to date, 74% over the last 12 months. Look at their last earnings report through July. They sold 130 million concert tickets for the year, which is up over last year, which was another record year. Double digit attendance increases internationally. They said over 40% of global stadium shows sold out 95% of their tickets within the first week of being listed. Spending at venues is up, concession spending is up, all double digits. And there are absolutely no signs of weakening consumer demand that the company can see. So look, I understand the downgrade. I just don't think as an investor that's really the thing that you want to have as a focal point. The reality is ultimately it'll get settled or figured out, it'll be a dollar amount and life will go on. People will still want to go out and see live music the next day. This is literally the best pure play for one of the hottest secular growth trends in the world. And I just don't want to let it go. So I remain long. I think the stock trades higher.

[Courtney Reagan]

Experience matters.

[Stephanie Link]

Look at that.

[Courtney Reagan]

Up 67% down just marginally on that downgrade today. Jim, I want to, I want to lob you one Adobe added to UBS 30 for 30 list. You own this one. They favor it for the industry leading position, ramp up of AI related offerings.

[Jim Laventhal]

This has been a very difficult stock, Adobe, and I'm sticking with it for now, Courtney, but I'm not pounding the table on this like I was on Google over the past few months. It may very well be bottoming here. I mean, we see a ridiculously low valuation mid teens for a software company. Estimates are now starting to peak up a little bit and you're getting analyst coverage like this. So I'm sticking with it. But as new money comes into client accounts, I'm not rushing out to buy Adobe. There's still a lot to be proven by the company, particularly with regards to competition. I know. I was just saying that with Google, you know, this is Adobe is a $147 billion market cap. Google is a $3 trillion market cap. So bear in mind that difference. This is, I'm hanging on to it, but I'm nervous.

[Courtney Reagan]

Okay, fair enough. Down 21% year to date for Adobe. Up next, Mike Santoli joins us for his MIDDAY Word. We're back right after this.

[Stephanie Link]

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[Josh Brown]

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[Stephanie Link]

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[Josh Brown]

With the fed expected to cut rates because of a soft jobs market, how much will still high inflation weigh on the decision about future cuts? Fed your Powell's remarks and his message to investors. Power Lunch tomorrow, two Eastern and streaming on cnbc.

[Stephanie Link]

Plus welcome back to Halftime report. I'm Kate Rogers with your CNBC News Update. As Israel expands its ground offensive in Gaza City, an independent panel of experts commissioned by the UN Released a report today accusing Israel of committing genocide in Gaza. Israel's foreign minister denounced the report, calling it fake and full of Hamas falsehoods. Fulton County, Georgia District Attorney Fani Willis lost a bid today to remain on the criminal racketeering case against President Trump over the 2020 election. The Georgia Supreme Court declined her appeal of a lower court decision that disqualified her from overseeing the case. And the FTC is probing whether Ticketmaster is doing enough to prevent bots from illegally reselling tickets on its platform. Bloomberg reporting the probe is based on compliance of the 2016 Bots Law and a decision on whether to pursue a case could come in a matter of weeks. In a statement, Ticketmaster wrote that it didn't violate the Box Bots act and would defend any such claims. Court back over to you.

[Courtney Reagan]

Interesting stuff, Kate. I did a story a couple times on Grinch Box. I always find that fascinating how that technology works. Thank you so much. Well, senior markets commentator Mike Santoli, he joins us for for his midday word. Mike, we're just a little bit negative on the session. We know, of course the big news of the week is the Fed, even if we kind of already know what the news is. What do you make of the action? Some strength in energy today, surprisingly perhaps.

[Jim Laventhal]

Yeah, I think it's a little bit antsy. And so some of the recent winners are backing off a little bit, especially in consumer levered areas. You know, we got the good retail sales number but the stocks that have already kind of run on the basis of a firm economy are just backing off. Energy strikes me as again, just kind of a laggards getting some relief type of a trade. Yes, we do know roughly what we're going to get. What you honestly never know with any precision is what's already baked into the market in terms of positioning, in terms of whether people are aggressive about, you know, how many cuts might be indicated in the in the outlook. So you have to just wait and see the the market react. I still think, you know, we've gotten to where we are at 6600 in the S and P because of general agreement of, you know, Fed's doing good news, rate cuts. It's not because the economy needs a ton of help. And that's those are things that have to be tested, I think in practice.

[Courtney Reagan]

Good stuff. I know we're going to look forward to seeing you here. Coming up in about 20 minutes on the 1. I'm going to let you free here to go prepare for that. Appreciate it as always, Mike. Well, coming up we've got Josh Brown's he's going to be ready with his best stocks in the market. It's a segment you all love, you don't want to miss, miss it. It's a healthcare name that he thinks could be headed higher. Those details ahead Halftime back right after this. Welcome back to the Halftime Report. We are going to throw it over quickly to Angelica Peebles. She's got a news alert for us. Angelic, what's going on?

[Stephanie Link]

Hey, Courtney. Well, the FDA today is publishing a whole big batch of letters that it's sending to pharmaceutical companies and also telehealth companies that it says are mislabeling or presenting inaccurate claims about its products.

[Courtney Reagan]

So some of those letters that we're.

[Stephanie Link]

Seeing, a couple to Novo and Lilly talking about this Oprah special that they did about a year ago talking about GLP1s and also some interviews that executives have given where they say that they're not specifically talking about some of the risks of those medicines. Also Hims and hers getting one.

[Courtney Reagan]

The FDA saying that they are making.

[Stephanie Link]

False, misleading claims around compounded GLP1s like semaglutide. Remember, that's the active ingredient in Novo's drug WeGovy. We're also seeing some from some newer drugs like from Alnylam and BridgeBio. Both of those have recently launched drugs for a heart condition called attr cardiomyopathy. One of those from Bridge Bio, they have an ad that's featuring Morgan Freeman. The FDA is taking issue with some of the statements there. And also those very catchy Jardian's commercials that you might be familiar with, those also getting letters. So the FDA really taking a number of actions and calling out a number of different products. We will let you know as we see more. They have said that they are going to release some of those on a rolling basis. And so this is just one batch. We might have more to share as those come in.

[Courtney Reagan]

Courtney, interesting stuff. Angelica, thank you. We will be watching that and watching shares of those companies. And those Guardians commercials are very catchy. Well, speaking of health care, JJ is on your radar today for the best stocks in the market. Josh?

[Josh Brown]

Yes. I almost said with Jardians, it's easy to say I'm lowering my A1C but I didn't want to get CNBC in trouble. I don't know if they're a sponsor. All right. Jnj okay, this is a, this is a great set up for me to explain a really important concept that transcends the J and J story. What's happening with the stock? And we're showing you a very long term chart. Here is what the technicians refer to as building a base. The general idea is that if and when a stock breaks out from a typical range that it's been stuck in, in this case like five years, the move could be extraordinary if it had been trapped in that range for a really long time. So there's an old adage on Wall street, the bigger the base, the higher in space. So this is a big base and J and J, the company is in the midst of a massive transition that's been underway for years under a relatively new CEO and they have a couple of key goals and they are executing on those goals. They want it to become a pure play health care company. So they spun off Can View, which was very well received on Wall Street. I know Stephanie's made a lot of money in that stock and they are fully focused on innovative medicines which is oncology, immunology, neuroscience and med tech. So surgical robots, cardiovascular devices, orthopedics. And that's what the business now is, I think taking a, taking a step back from gigantic M and A and the types of deals that distract management and really just doing fill in deals where it makes sense. Like this strategy is now being rewarded on Wall street with the stock price working. In July, they issued guidance for the rest of the year and had a lot of great news to share a lot of milestones. The next earnings report is not until October 14th. I think the stock bides its time just under those old highs until we get that October 14th report. And that could be the big catalyst. Health care has been terrible this year. I'll just end by saying the sector is up only 1.3% year to date, trailing everything. But there are some really big winners in the sector. We've talked about a bunch of them. In my best stock segment, JNJ has been sideways since the end of 2022. But not only is the stock price on a verge of a multi year breakout, the fundamentals are as well. They just raised full year earnings per share guidance dividends to $10.85 a share. That would be 8.7% growth for this year versus last year. And so when you have a technical setup like this with improving fundamentals and a stock that's really been forgotten about for a long time. I love these setups. I'm not long the name yet, but that could change. This is exactly the type of situation that historically I've done okay with. So that's, that's the JJ story today.

[Courtney Reagan]

Jim, what do you make of either this trade or the your own health care ownership with AbbVie, AstraZeneca, Vertex Pharma and any reaction to the FDA letters and Angelica brought us.

[Jim Laventhal]

Well, look, FDA letters come out all the time. I mean this is a highly regulated industry. So I don't really look at that and get scared or enthused one way or the other. But I think, you know, the point that Josh was making about health care has been a terrible sector, is absolutely true. And it's been driven by two names in particular that are the biggest names in the space, right? UnitedHealthcare and Eli Lilly. I do think, and Josh is making this point that you could pick your stocks. So AbbVie is one that I've owned that's had a very good year. AstraZeneca is another one that I own that's had a very good year. Vertex I've owned and it's been flat this year. I think though it has a very good long term potential. My point being is that pick your subsectors within the industry. Obviously, as you can tell from those names, names I like, Pharma and biopharma. That's where I'm staying. I think managed health care is a little tricky still with government reimbursements being questioned. But pick your spots and speak your pick your stocks.

[Courtney Reagan]

All right. That's why you watch the show, right?

[Jim Laventhal]

Exactly.

[Courtney Reagan]

Pick your stocks. Well, looking ahead to a special event, you can join Josh as he reveals his best stocks for 2026 at the next CNBC Pro Live that's happening on January 15th at the New York Stock Exchange. Scan the QR code on the screen right here and visit cnbc events.com/pro live for more info. Well, straight ahead, stuck in the mud, we'll debate a few committee stocks that have gone virtually nowhere this year even as the S and P climbs to record highs. Halftime. We'll be right back. Welcome back to halftime. Well, several stocks have gone virtually nowhere this year despite the S&P 500 at record highs. Names like Delta, Lockheed Martin, Nike and others all down around 3%. Jim, we give you credit earlier in the show for some good moves in Citigroup and Alphabet. Can't be all winners. Delta kind of a dude.

[Jim Laventhal]

I'll go out on a limb here, Courtney, and say perhaps sometime in the future we'll be singing the praises of Delta. When we talk about dead money, you have to ask yourself, is it something like what I was talking about with Adobe, where it was dead money a year ago and I should have sold it? Or is it what I'm going to tell you about Delta right now, where I see a lot of opportunity? I mean, remember this stock was up at $69 back in January before Liberation Day. Doge, all that sort of stuff put the kibosh on a lot of travel expectations. But what we're seeing right now, I track TSA passenger throughput every day. It's well above last year, which was a pretty good year to begin with. You've got a company like Delta that is monetizing the front of the cabin, probably better than any other airline out there. You've got you've got fairly benign fuel prices and they refine their own fuel to begin with. A very, very healthy balance sheet that's getting even more healthy as they produce a ton of free cash flow. So at roughly nine times forward earnings, I see a lot of opportunity here. The only thing that would make me scared is if I saw a recession. We covered that earlier in the show. Nobody's really seeing a recession in the offing, especially me.

[Courtney Reagan]

TD Cowan also reiterating Delta A buy. So maybe you're not alone at looking at opportunity down the road. Stephanie, KKR, you recently sold this one. This one also down 3%.

[Stephanie Link]

You know. Yeah, I mean, I made 10% in the name, so I like it very much long term. But I just prefer the banks because they are cheaper. This stock trades at 28 times forward estimates. It's just not cheap enough for me. And I made good money. And the whole reason I did it is because I expected capital markets to recover. Capital markets is recovering, except I think you're going to get better bang for your buck with the banks.

[Courtney Reagan]

All right? And we talked about that already earlier in the show, so cover that ground. Stay with us because final trades are coming up on amtime. Before we get to the final trades, we want to give a quick shout out to Josh Brown and his firm for making this year's Barron's list of the top 100 RIA firms in the country. Nice job. Appreciate that. Looks like a love fest here today, right? Everyone getting accolades? We are going to move. Let Josh have a quick moment to have his day in the sun. What's your acceptance? Didn't speak.

[Josh Brown]

Josh, Look, I just think. I just think the world of Barron's. I've been a subscriber since 1998 and I really appreciate all the work that my team did to get us onto this list. I know I'm the face of the firm, but I'm really just the hood ornament. The team is the Rolls is the Rolls Royce. So thanks to everybody and all the fans and clients. Really appreciate it, guys.

[Courtney Reagan]

Great job, guys. Josh, go ahead and kick us off with your final trade.

[Josh Brown]

Yes, I wanted to. I wanted to mention Electronic Arts. This was best stock in the market conversation we had the other day. It's set up. It's starting to move higher. I like it right here.

[Courtney Reagan]

Quick, Jim.

[Stephanie Link]

And Lockheed Martin is breaking out and staff Capital One.

[Courtney Reagan]

All right, nice job, everyone. Thanks for joining us. That does it for halftime today. The exchange starts right now.

[Josh Brown]

You've been listening to CNBC's Halftime Report, the podcast.

[Jim Laventhal]

You can always catch us live weekdays at 12 Eastern only on CNBC.

[Stephanie Link]

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.

[Courtney Reagan]

A particular strategy, but only as an expression of an opinion.

[Stephanie Link]

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@ Capella University, learning the right skills could make a difference. That's why our business programs teach you relevant skills you can take from the courseroom to the workplace. A different future is closer than you think with Capella University. Learn more at Capella. Eduardo.