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Halftime Report
The Road Ahead for the Record-Setting Rally 1/24/25
00:47:32
Scott Wapner and the Investment Committee debate the road ahead for stocks with some making the case that this rally still has a long way to go. Plus, the desk debates some fintech Calls of the Day. And later, former NFL player Brandon Copeland joins us to discuss the big business of college football. Investment Committee Disclosures
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- [00:01]
Capella University Representative
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CNBC Make It Host
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Scott Wapner
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CNBC Make It Host
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- [00:47]
Scott Wapner
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. Hugh, thanks so much. Welcome to the Halftime Report. I'm Scott Watkin. Front and center this hour, stocks at record highs with some making the case now that this rally can go a long way further. We will discuss and debate with the investment committee. Joining me for the hour today, Bryn, talking to Joe Terranova, Jim Leventhal, Jason Snipe, take you to the markets of S and P more or less at new highs, did close at a new one yesterday. It it is given a fraction back. So is the Dow and the Nasdaq as we have a really big week on tap obviously next week. Bryn, I'm going to start with you. All right. So we're on track for back to back weeks of gains. And Tom Lee has a note out today says stocks are going up for the right reason. Notably, he has a 7,000 price target for the S and P by the middle of the year, says first five days have been positive, 82% win ratio. That's number one. Sentiment capitulation on December to January, that's good. Inflation softer. That's good. Fears of day one, tariffs, overblown, cyclicals leading. That's a risk on sentiment, he says. And we are tracking above expectations according to Tom Lee. What about according to Brent, talking to you?
- [02:11]
Bryn
Exactly. So I guess that's like about a 10% move, right. If I just take the year end price target. So I think the direction is seems correct. Right. And as we're going to see tomorrow, next week really starts the Oscars of earnings that we'll get into later in the show with all the big cap tech companies. I think that right now since, you know, tariffs for this week, this week at least have taken a back, a back step in terms of the narrative. I mean, the consumer surprisingly is still strong in spending. We're seeing that earnings are supposed to grow double digits this year with tech leading the way at 18%. Rates have settled down. And so I think when you have those different ingredients creating the backdrop of this mosaic, it looks like we're going to continue to move higher. You know what price the 7,000 to 6,600 for me is a little bit too prescriptive. I don't think the markets are that predictable. But I like his 6600. I know people like Ed Yardeni I think are much higher than that. And if earnings come in, then we really don't need to have multiple multiples expanding. You could actually have, you know, multiple stay flat to slightly compress if earnings beat expectations this year.
- [03:31]
Scott Wapner
Joe. I mean the point is that's being made by, by Tom and some others, irrespective of the difference in the targets, is that we're not close to being done that. You know, in some respects this next leg is just getting started.
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CNBC Make It Host
I would agree with that. I think that let's remember something and we'll talk a little bit more in depth about Apple. But the advance so far year to date is without Apple. Apple is having its worst start to the year since 2008. So it is about a broadening story. It's about looking in other sectors like industrials and seeing stocks like Tractor Supply or Deckers working well or Mikado Libre. It's like looking at financials have been remarkably strong so far year to date. I keep talking about the fact that you saw that double digit earnings growth for many of the money center banks and stocks like Raymond James and Discover are also working well. You're looking at industrials, a name like Helmet that's up significantly. So it is broadening out at the mid and large cap equity size class. Yes, you are getting the beta from the Russell 2000 that seems to be working so far year to date. But the setting is a favorable one. And I think with that setting investors have to think about engaging, changing in risk until there is something to suggest that either the Fed's disposition changes or you've got inflation that rears its head. Or lastly, which is most important, you don't get the earnings growth. And so far 79 out of 500s and P companies have reported and we have 16 and a half percent earnings growth.
- [05:07]
Scott Wapner
All right, how about this, Jimmy? Another alleged benefit to stocks buybacks are booming. According to Barini Research, US companies have announced more than 48 billion in buybacks through the close of January 2, putting this on pace for the strongest January since 1999.
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Jim Leventhal
You know how I feel about buybacks. I love them. If you're a shareholder, it just concentrates the earning power of the shares that you own. As long as the share count is going down and with the numbers you just highlighted, Scott, share counts are going to go down. I think what's very important, and this ties in with what Joe and Bryn were just saying, is you can only buy back shares if you have positive cash flows. We've had several years now of GDP expanding, of profits now starting to grow. There was a little profit recession, but the cash flows are clearly there to buy back shares. Both Joe and Bryn just highlighted the importance of earnings going forward. And I want to point out something, a pattern that's happened or been broken rather thus far in the earnings season. We're seeing analyst estimates for the fourth quarter of 2024 going up with only 15% of estimates S&P 500 companies reporting. As you said, Joe, this is an unusual pattern. For the last two years. What you've seen is right out of the gates there are disappointments and analyst estimates come down for the quarter being reported before the Mag 7 and Mega Cap Tech ride in to save the day and outperform for the quarter. It's mainly been financials. We know that. But it's a very good sign because if we're going to get this market not only continuing to grow higher from here, but to broaden out, we're going to have to see the other 493 stocks or, you know, the other sectors besides tech and Amazon and Meta. We're going to have to see those other sectors perform in terms of earnings growth, which we are seeing. It's a good sign.
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Scott Wapner
I mean, Netflix, one of the big stories of the week. Jason, you own that stock?
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Jason Snipe
Yep.
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Scott Wapner
They talked about buybacks. I mean, there's a lot of stocks, a lot of big names that our viewers own that are talking a lot about buybacks. And as I said, strongest January since 1999, according to Burini Research.
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Jason Snipe
And you know what? For me, when I think about buybacks, it's just a reflection of confidence going forward for a lot of these companies. If I think about Netflix as an example, great quarter. I mean, double subscriber growth on what the guide was, you know, they announced a $15 billion buyback, 17 in total, which is a great number for them and a lot of other companies. So for me, as I, as I've kind of seen the earnings picture and obviously Joe alluded to what the numbers are. Financials were strong. We're seeing rails perform, we're seeing health care perform. Industrial names have obviously done well. Crude has, has weakened, the dollar has weakened. You know, so I think there's a lot of macro also in the, in this earnings picture that's going to propel the markets forward. So I think there's a lot to like about the market and I think it's time to kind of as people are reassessing allocation, I think it's time to get a little bit incrementally more bullish here.
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Scott Wapner
Let's show shares of Twilio if we could please. They had an investor day. Stock is unbelievable today. A lot of analysts talking, talking it up to price target. Oppenheimer goes to 160, you're up more than 20% today. Stifel goes to 130. Obviously it's trading well above that at this particular moment. Joe, you own it. I bring it up because they're another one who announced buybacks as well.
- [08:29]
Mike Santoli
They did.
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CNBC Make It Host
And this was a remarkable quarter. And for those out there that don't believe technicals could guide you towards entering position in an equity name, this is a classic example of yes it can. Because that's exactly what guided me into the position. And what followed was the fundamental confidence that's reflected in this earnings report. Seeing double digit revenue growth, seeing the free cash flow estimates from 25 to 27, those estimates being raised, and really understanding that this company has embarked upon a journey the last several years in which they were evolving from a messaging company to moving now towards a customer engagement platform. And they're successfully navigating that. I thought about looking at the position this morning, saying to myself, is the position too big? Do I want to pare it back? And the answer to that candidly is I don't. I'm going to maintain the positioning size I have.
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Scott Wapner
So I guess there has been a conversation, Brent, around the price that you're willing to pay for stocks, right? We're well above the 10 year historical average valuation on the S and P. I get it that you specifically have made the point that valuation is not a good signal to use when buying or selling stocks. I bring it up because insiders, there's been a fair amount of insider selling and according to Bloomberg, you've had 98 S&P companies at least one insider buying this year, 447 S&P companies, at least one seller insider that buy sell ratio, they say at 0.22 is on track to be the lowest in their data going back to 1988. The FT with a headline today says stocks are most expensive compared to bonds since the dot com era. It does raise the issue as to whether stocks are too expensive. Regardless of whether you think valuation is a good metric to use or not in thinking about how to buy or sell names, these two factoids would, if nothing else, lend to a good conversation on that topic.
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Bryn
I think so. And I think when you look at the buy sells, I think actually that's a really constructive data point on individual names. And you know, one of the names that Joe and I own, I cut my position back as Palantir. And you saw some really meaningful insider selling last year. And I think that was the insiders taking advantage of what was a historic year in terms of performance. I think you need to look at that when you have senior insiders, you know, taking profits, taking advantage of what the market's giving. And so I think it's more of a data point on the individual names. And I think it's important to look at that. I definitely look at that and I think that right now there are some individual names that are priceless for perfection. I think that's what we're going to continue to see this year, especially in earnings season. If you do not deliver, your stock will be down 20 to 30%. I mean, I feel like these earnings going forward are going to be especially brutal for those that underperform. If you have a high valuation, I really think that investors need to be cognizant of that and understand there's there could be some big downside in names that don't need to these really high expectations. To your point, of companies that have nosebleed valuations.
- [11:55]
Scott Wapner
Well, I mean it does lead us to mega cap earnings next week, right? That that's what people would say. Well, those are the stocks with the higher valuations. I mean, you know, mega cap tech, like, you know, some of the ones that are going to report, Jason, next week, Metta, January 29, record high today. Microsoft also on that day. And then Apple is next Thursday. So you got a couple on Wednesday and then you got the big one on Thursday. You get to wait a little bit for Amazon and Alphabet and Nvidia. But you know, relative to our conversation, you're going to need earnings to deliver and these names really need to deliver.
- [12:33]
Jason Snipe
I mean, Bryn alluded to it earlier, 18% earnings growth for this sector. And we do know that they do not Trade at a monolith. As a monolith, we know Apple has obviously been struggling. It's down 11% year to date. They have some issues with China and using losing some momentum there against Vivo and Huawei. But I think it's obviously going to be very important. We talk, there's a lot of talk about Capex. We talked, there's news about this infrastructure build. $100 billion this year and potentially 500 billion over the next five. You know, these are numbers, these are potential catalysts. But again we have to see the follow through. It's nice to see a broadening. It's nice to see the Russell. It's nice to see other sectors working, but we have to see follow through from the generals.
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Scott Wapner
Yeah. What's your thought here on these?
- [13:19]
CNBC Make It Host
Look, the interesting one to me is Apple and you know we exited the position on Halloween. We didn't exit it for any other reason than the revenue growth. And the revenue growth. If you think about the quarters in 2023 had negative quarters, then 1Q24 you report a positive quarter and then you go right back to a negative quarter in Q2. So it looked like last quarter you saw the uptick in the revenue growth. They achieved 6%. Okay. That's not achieving the type of revenue growth that the other MAG7 are achieving in any regard. Now this quarter estimates for what, 4% revenue growth. That's not that exciting. So I think that's the biggest challenge for this company. I know they made an announcement earlier today where one of their critical executives is being repositioned and charged with trying to come in and redesign some of their AI strategy that could be important. I think that's an acknowledgement of maybe the AI strategy is not exactly where they thought it would be on January 24th. But to me next week that is the most critical one. In the case of Metta, the spending is a little bit higher than anticipated. The street expectations expected 50, 52 billion in spending. They're coming in at 65 billion. Okay. They have to spend like you have to spend on AI. And if you're spending a couple of extra billion dollars, it's worth doing it. It's really. Apple is the focus.
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Scott Wapner
I'm gonna go to Bryn for a second. I mean no stock has more to prove I think next week than than Apple. It's below its 50 day. It's below its 100 day. It's approaching the 200 day worst month since December of 22. It is the only of the Mag Sevens that is negative Year to date, it's in danger of dropping to number three in market cap. That basically tells you everything to know about where momentum is in this name. And it's non existent.
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Bryn
Yeah, it's nonexistent and it's non existent in their earnings. So when you look at this 18% earnings growth for the year of the sector for this quarter, Apple's looking to grow earnings at 2.3% and that's with their buybacks. Right. Which is like juicing that number. So I think that the technicals to go back to Joe's point about how technicals can give you insight, the stock doesn't look well. I mean I sold half the position last year. I didn't sell all of it. A great company but I think right now people want earnings and revenue growth and 2.3% to me just doesn't justify it. And also when you started he here all the analysts that were just like fawning over the 16 are now just like moving that to the side and start talking about the 17. I just think it's the same story. You just need to have some more innovation. I think that the exciting thing is Metta and Amazon are looking to grow mid 20% earnings. Microsoft's only 6.7. But then you have in video at the end of February coming in 60, I think 68% really Metta, Amazon and Nvidia continue to be the three of those names that to me are just growing those earnings so strong and then therefore those companies should deserve a higher multiple than an Apple or Microsoft.
- [16:30]
Jim Leventhal
Just picking up on what you just said, Brian, I would add Google to your your must buy or must own list and I think you're absolutely right. Touching on Microsoft, I mean that's why one that really hasn't done well for quite some time. I'd put it in the same category as Apple, although it's not having as bad a year to date as Apple. Really what these come down to when we're picking within. I agree Jason, it's not a monolith when you're picking it's not just the multiple, it's the growth rate that's embedded in the stock. And I think when you look at Microsoft and Apple in the low to mid-30s on a forward basis for a multiple and you look at their earnings growth rate, these are fabulous companies but they just just don't deserve that multiple. Doesn't mean they're going down. It does mean that something like an Nvidia, which has a higher multiple by the way, but a Higher growth rate of earnings or Google or Amazon for that matter, to my eyes are much more attractive.
- [17:20]
Scott Wapner
Are you worried about Apple going into this number? I mean, so it's rather unprecedented you've had this many downgrades going into a print. Yet another negative note today from, from a firm that cut the price targets B of A, albeit slightly three bucks. But they're not raising the price target. If anything, you've had, you know, you've had a couple of downgrades. I think this week, maybe had one last week or the week prior. But there is a dramatic change in sentiment from even the more bullish people. Ex Dan Ives there's no change in sentiment there. But you know, you get my point.
- [17:54]
Jason Snipe
No, and I think there is definitely room for concern. And as I mentioned earlier, you know, China down close to 20%. Right. And where, how, how they have lost market share to other players in China. I think that is concerning the multiple. Obviously we talk about the multiple when that, when the stock has the stock rose a lot. It ran a lot last year. So obviously the multiple expanded. And to Brent's point, the revenue growth hasn't been there, the earnings growth hasn't been there. I do continue to like the services business, but that needs to take more of a margin going forward. So yes, I think there's definitely concerns about the name in general and I think that's why the street is kind of weakened.
- [18:36]
Scott Wapner
Let's be clear. I mean, Brent, though, there was a lot of conversation that the whole move last year was punk in Apple based on what? Right from WWDC until, you know, the end of the year, the stock went up a ton based on what hundred.
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CNBC Make It Host
Ten billion dollars buyback?
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Bryn
Right. Well, there you go. I mean the. But this is where, you know, they've done a masterful job of managing their balance sheet and to their point, returning, returning cash to shareholders via the buyback and they continue to do that. And I think between the buyback and the anticipation of this AI software inside of the 16, but that just hasn't manifested itself. And I look at my iPhone 14 which works wonderful. I have my perplexity, my chat GPT and my copilot and I'm great. And so I just think they've missed the mark here at this point. Do I think we're going to go buy a different iPhone like a Samsung? No. But I do think to Jason's point, you cannot discount China and China is such a massive market. And even though Apple is still, still in the top top five, just not being able to have that excitement by the Chinese investors, the Chinese buyers to buy Apple I think is going to continue to be, you know, punitive for them. And also let's see what happens with currency. I know a lot of these tech names you know are going to, are going to talk about the dollar strength last quarter and let's see if, if Apple has talks about that as well.
- [20:07]
Scott Wapner
That's some news on Metta as we're having this conversation. Want to go to Julia Boorstin for our news alert regarding that stock. What do we know? Julia?
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Julia Boorstin
Scott Meta is announcing that it is beginning a test of ads in threads. Threads is its fast growing new social app. They say it's for public conversation. They are also announcing that the community Threads community now has 300 million monthly actives and three out of four people on threads follow at least one business. So it's a natural segue to introduce ads on Threads. They say these are going to be AI powered ads and backed by Meta's ad system. Advertisers will be able to extend their existing ads from different platforms such as Facebook or Instagram onto Threads. And they're also integrating Met his brand safety and suitably suitability standards and controls. Of course this follows Mark Zuckerberg saying they are shifting away from third party fact checkers to a community notes service system. So they want to make sure advertisers feel confident in where their ads appear and also are going to give it give controls for what ads people see. So this is just the latest news from Metadata after they announced 60 to 65 billion dollars in capital expenditures focused on AI this year. Back over to you Julia.
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Scott Wapner
Thank you for that. That's Julia Borstin. I don't see very much pessimism whatsoever about matter heading into their number next week. Week bear today overweight 680. They're expecting solid results as well. A guidance they expect to be good growth, growing their users, impressions, ad prices, etc.
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CNBC Make It Host
So first of all, ads on Threads is exactly what you want. It means that that is maturing and that is beginning to grow into what the Meta believe the product should be. But it's you know, remarkable on a day that you announce spending at 65 billion it comes in ahead of the 50 something billion that the street is expecting your stock trades to an all time high. So it tells you the strength about this company. You know it's interesting because you were, you were mentioning before how the analyst community thinks about the Magnificent seven and I was doing this real time as you were talking. So Five of the companies excluding Tesla and Apple have a buy rating, a percentage buy rating of at least 80% of the analysts have a buy. Apple is only 62%. That's probably the lowest figure that I've seen in terms of a percentage buy rating for Apple in many, many years.
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Scott Wapner
Let's talk about a move. It's not in the, in the mega caps, but it is in the software space. Adobe. Yeah, you bought it.
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Jim Leventhal
I'm adding to it. I mean you, I think I know or you know, I own it and it's been a dog and no question about it, you know, I think first up, Pat on the back to you on Twilio. Okay. You bought that when very few people believed in it. And I think that's applicable to Adobe. I know there's competitive threats out there, we've talked about that. But I don't think those competitive threats are going to dislodge the PDF format that is the, the basis for Adobe's business. I think they're doing a great job integrating AI in it. I've had some cash in the portfolio build up from dividends. I'm looking at, where do I see, see the value. Adobe just jumps out at me. Now look, I've been wrong on this. I could still be wrong. I'm saving some dry powder for after earnings are reported which is actually several weeks away. And, and if I can, I'll add to it then. Unless the thesis, particularly on the competition side tells me that I'm totally wrong and I have to get out of it. But if I look at my portfolio and I say where do I see something cheap that I can buy? It's Adobe.
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Scott Wapner
Maybe it's cheap because it's deserves to be cheap.
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Jim Leventhal
Well, that's the argument that people are saying, particularly with competition, it's AI cannibalizing products. But I think actually this is my belief that AI is being well integrated. Look, you use PDFs, we all use PDFs. I think Adobe does a very good job of giving you that summary button that you can hit. Just summarize this 10 page PDF for me. I think it does a good job. Obviously the share price has been saying that the market doesn't believe they're doing a good job. I'm making a stand. If I'm wrong, I'll get out of it. But I think at this price it's a good entry point. There's a little bit of life, a little bit of life to the chart. I may be reading too much into that, but I'm buying into it.
- [24:16]
Scott Wapner
Is that. Do you think that's life? What do you think? Smiling a little bit of life.
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CNBC Make It Host
Wow.
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Scott Wapner
All right.
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CNBC Make It Host
Might be able to ski down that chart.
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Scott Wapner
Come on, give me a year to date.
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Jim Leventhal
Year to date.
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Scott Wapner
Give me year to date, please. Can we do that?
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CNBC Make It Host
Let's down 27% over the last 52 weeks.
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Jim Leventhal
What's that, Joe?
- [24:34]
CNBC Make It Host
Year to date. It's year to date. It's basically unchanged.
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Jim Leventhal
All right, but what's that in the last two weeks? Come on, give me the last two weeks. Come on.
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Scott Wapner
Year to date. You said year to date. Stocks down 1.3% year to date.
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Jim Leventhal
Look at that chart right there. Look at it.
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CNBC Make It Host
Okay, pull it back. The last 52 weeks is down 27%.
- [24:51]
Jim Leventhal
I already acknowledged that five times in what I was doing. You were a day trader.
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CNBC Make It Host
Now you buying zero dated options.
- [24:56]
Jim Leventhal
Also I said that's like that's when.
- [24:59]
Scott Wapner
The Giants go from three to four wins. You're like, well, the team's showing life. I'm feeling good. Let's go. We can still make the playoffs.
- [25:08]
Jim Leventhal
I feel like I showed enough integrity and acknowledged and it's had the snot kicked out of it. It may be showing some signs of life.
- [25:15]
Scott Wapner
All right.
- [25:16]
CNBC Make It Host
Okay.
- [25:16]
Scott Wapner
Okay. We have. Well, we have two committee stocks that are showing a lot of life, that's for sure. Hitting fresh all time highs today. We will discuss after this break.
- [25:33]
Capella University Representative
Is it time to reimagine your future? The right business skills may make a difference in your career. At Capella University we offer a relevant education that's designed to focus on what you need to know in the business world. We'll teach professional skills to help you pursue your goals like business management, strategic planning and effective communication. And you can apply these skills right away. A different future is closer than you think with Capella University. Learn more at capella. Edu.
- [26:04]
CNBC Make It Host
Learn how to use AI to be more successful with cnbc. Make it's new online course.
- [26:09]
Scott Wapner
We'll give you examples that can help.
- [26:11]
AI Tools Master
You master AI tools.
- [26:13]
CNBC Make It Host
Go to CNBCMakeIt.com AI and register. Now.
- [26:32]
Scott Wapner
Other things moving today that we want you to know about the xbi. How about biotech on pace for the best week since July. This return of the return of the health care trade is a big deal, Jim.
- [26:44]
Jim Leventhal
And you know what? It's not just mean reversion. That's my belief. I do believe we're supposed to be skating to this area of the rink. This is where the puck's going to start with. The valuations are really Quite cheap across the space. Not just, you know, biotech is a little bit more speculative because you got a lot of small companies that are coming out with new drugs, but the whole health care space, the valuations are cheap, you've got good dividends. You're through the election, which is always a tough time for health care stocks. The demographics of an aging population support this. And frankly, the rhetoric that's come out of D.C. in the first week of this new administration is not too terrible for the space. So this is not just about mean reversion. Oh, it's cheap. There are fundamental reasons to get behind this space, Jason.
- [27:26]
Scott Wapner
AbbVie is your main stock in this group. You have a few others, but AbbVie reports a week from today.
- [27:32]
Jason Snipe
Yes. So, I mean, for me, as it relates to AbbVie, you know, the big thing was Humira. Right? Humira and the biosimilars, obviously that coming off the docket and looking at Skyrizi and Rimvoak as now being the leading players, both of those, both of those drugs were up close to 50% year over year last quarter. So their pipeline is rich. I like, I like the free cash flow that they still have. And, and I think to Jimmy's point, the election is over. That is no longer at play with a lot of these healthcare names.
- [28:01]
Scott Wapner
Joe, you got Boston Scientific, Lilly, Welltower, Intuitive Surgical, ResMed, Stryker and Scholette.
- [28:07]
CNBC Make It Host
Yeah. And that's the right place to look right now. The medical devices, if you look at the ihi, the medical devices etf, I think that's near an all time high. And Jimmy, or close to an all time high, Jimmy, that's a stock that over the last 52 weeks is breaking out. Technically, the name that I do own.
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Scott Wapner
Is the xbi you bought, bought it at the very, very beginning of the year.
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CNBC Make It Host
So I did, two and a half weeks ago. Look, it's, it's, it's under. It's disappointed me somewhat, quite candidly. I would have expected a little bit of a better performance since the November 11th high. You have a series of lower lows. I would have thought that we would have gotten a little bit more of a high beta inflow allocation of capital.
- [28:47]
Scott Wapner
Almost 4% year to date. What do you mean?
- [28:49]
CNBC Make It Host
I wanted, I wanted more? I mean, if you look at this stock. Look, I know we're only looking at charts here over the last two weeks. Thanks, Jimmy. But if you pull this back and look at it over the last 52 weeks, this has been very difficult to own. Now, you mentioned that I bought it.
- [29:03]
Scott Wapner
At the beginning of the year, January 2nd.
- [29:05]
CNBC Make It Host
That is correct.
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Scott Wapner
And you're disappointed by the performance.
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CNBC Make It Host
Okay, call me out on this guy. You know, many times I bought it last year and got stopped out and lost money on it. So maybe this is the one time it works. But when you pull the lens back a lot further on the xpi, it's been somewhat disappointing. The right trade in health care right now is medical devices like Stryker.
- [29:25]
Scott Wapner
Yeah, you got Striker, Joe's got stryker.
- [29:27]
Jason Snipe
You got strike 100%. And I think elective surgeries are coming back online. They had been for some time. So Stryker and other plays and Tuba Surgical, Boston Scientific. I think these names could be great catalysts this year.
- [29:38]
Scott Wapner
I mean, you have other exposure, too. You have the ibb.
- [29:43]
Jason Snipe
Yep, yep. So again, I mean, it, it leads back to the point I made earlier. You know, directionally, interest rates heading lower, election is over. Not necessarily mean reversion, as Jimmy said. But I do think health care earnings going forward are positive. So I like that.
- [30:00]
Scott Wapner
Kate Rooney has the headlines for us today. Hi, Kate.
- [30:03]
AI Tools Master
Hey there, Scott. President Trump is threatening to either fundamentally change or eliminate, eliminate FEMA altogether. While choring damage from Hurricane Helene in North Carolina, Trump added that the agency was, quote, a disaster and that he'll sign an executive order to begin overhauling or getting rid of the agency. The president has frequently criticized fema, which is tasked to help communities impacted by natural disasters. Meanwhile, Oathkeepers founder Stuart Rhodes and several others convicted alongside him will not be able to enter Washington or the Capitol complex until he has the court's permission. A US District judge issued the order two days after Rhodes visited the Capitol following his release from prison. Rhodes was pardoned by President Trump after being sentenced to 18 years for orchestrating that attack on the Capitol. And firefighters could be getting some help battling the wildfires that have been burning across Los Angeles area for almost three weeks now. The National Weather Service forecasting some much needed rain in that region over the weekend. And while the rain will help put out those fires, it could also bring some new challenges, such as dangerous mudslides. Scott, back over to you.
- [31:12]
Scott Wapner
All right, Kate, appreciate you. Thanks. That's Kate Rooney. Got Santoli on the other side. We have more stocks on the move. We're on IPO Watch 2, the biggest since July. We are waiting for the first trade. We'll bring it to you when it happens.
- [31:31]
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- [32:02]
CNBC Make It Host
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- [32:08]
Scott Wapner
We'll give you examples that can help.
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CNBC Make It Host
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- [32:31]
Scott Wapner
Senior markets commentator Mike Santoli at the desk now for his midday word. What's your big takeaway from this week?
- [32:38]
Mike Santoli
Volatility dissipating as the market kind of gets back into gear, a lot of the familiar drivers, you know, we've had this sort of, I wouldn't call it a growth scare, but it was a yield scare that caused people to wonder if growth was going to continue. Obviously it has. And the fact that volatility has come in, not just in stocks but across bonds as well, suggests that, okay, we feel as if the environment is familiar and it's continuous with the trends that we were mostly enjoying last week or last year. And no policy surprises of a sort that the market really has to be too alarmed about in the short term. I think all that bundled together gets you to the new high. The other piece of it, S and P makes a new high first December 6th. On December 6th, the 10 year closed at 415. So you can do fine when bond yields go up by half a percentage point if everything else holds together.
- [33:30]
Scott Wapner
Yeah. So what does it all mean then for next week? You know, get it three of the mega caps are going to report. Yeah. How would you assess what's at stake?
- [33:38]
Mike Santoli
I do think the bar is kind of high. We've had pretty good responses. Obviously, the banks and Netflix flicks. The bar is high in the sense that people have not really cut back their numbers very much going in. And I was looking back to the mega cap tech reporting weeks of the prior couple of quarters. It wasn't really an upside catalyst. I mean the numbers were good. It lets you build your estimates for the remainder of the year in a way that was constructive. But if you go back to the third week of July, market was beginning a correction at that point. Third week in October market was still kind of in the pre election jitter phase and it did not provide immediate traction. So I don't think you look at it for, you know, a spark to the upside, but you say does it does the full year earnings look okay. And then of course the Fed meeting. I don't know, I feel like the inflation stuff feels like it's a little bit more tame in the last few days. You got some of the shelter inflation looking a little, little less scary. Hopefully that should maybe minimize the amount of drama market.
- [34:32]
Scott Wapner
I think you could make the argument that you don't need those stocks in the here and now to spark your word something to the upside. But it, you know, in some respects it does prevent a move to the downside.
- [34:44]
Mike Santoli
Absolutely, it definitely would. It buffers the index against big moves to the downside. Yeah, without a doubt.
- [34:50]
Scott Wapner
All right, I'll see you on closing bell. Mike Santoli, our senior markets commentator, calls the day. Coming up next, why one top analyst says, quote, not too late to get into a Stock that's up 14% this week alone. We'll tell you what it is. We'll trade it and debate it after the break calls. The day we're talking Fintech to start things out. Visa today, Piper Sandler raising the price target of that stock and a number of others in that space. Brin, your own visa goes to 368 from 322. They're overweight. That stock hitting a record high asset.
- [35:44]
Bryn
Light operating margins are in the 60s, profit margins in the 50s. They're heavily investing in blockchain. People will continue to swipe globally. So I just think this is one of those core holdings like a Costco or what have you that you can just hold, just hold and compound. Compound the growth.
- [36:01]
Scott Wapner
Jimmy, you own this too. This is your, your payments stock of choice.
- [36:05]
Jim Leventhal
Yeah, I think there's, I think there's a put and a take here. The put is I don't think anybody's going to be surprised by US consumer growth in retail sales in particular, which will obviously benefit Visa. So that's not a surprise. That's probably more than baked into Visa. On the other hand, to the extent that the international economy can pick up and people can start consuming outside the US that will benefit Visa's cross border payments. If you're in Visa, that's the thing you're looking for.
- [36:31]
Scott Wapner
Block Joe, Target 101, they're overweight. The name PayPal 93 from 88, you're in that name. Mastercard 591 from 575. Overweight, you're in that name.
- [36:45]
CNBC Make It Host
Yeah, a couple of things here. Number one, the momentum, which the ETF is not in Visa. The momentum near term, Jimmy's going to care about this last two weeks. It's a lot stronger in Visa than it is in MasterCard. And that's distinctly different than what we witnessed in 2024 where there was more near term strength in MasterCard. I've talked about block ticker symbol XYZ now. Pretty interesting. I've talked about potentially this being the one name in the financial sector sector in 2025 that is one of the leaders in that actual sector. They've done a great job in terms of diversifying and PayPal is woken up. You know people have made the valuation argument there. It's been mid teens valuation for extended period of time but finally second half of the year it's awakened. You've got strong momentum there.
- [37:31]
Scott Wapner
You find it ironic that the guy who runs a momentum ETF is giving you the business about talking about a two week chart. Is it just me?
- [37:39]
Jim Leventhal
Last, last time I compliment Joe, I'll tell you that. Jimmy, come on, pat him on the back.
- [37:44]
Scott Wapner
And he's a momentum etf.
- [37:46]
Jim Leventhal
Don't turn your back to this guy.
- [37:48]
Scott Wapner
Momentum can turn quickly.
- [37:49]
Jim Leventhal
Kidding. Everybody knows I love Joe. How could you not love Joe?
- [37:51]
Scott Wapner
All right, when we come back, college football crowning a new national champion this week with Ohio State beating Notre Dame to cap the first 12 team playoff coming up as big money continues to transform the sport. Former NFL players player Brandon Copeland joins us on the movement to give student athletes an even bigger voice off the field that developing stories next. All right, name image like this three, three words that have thoroughly transformed college football into an even bigger business with some student athletes commanding millions of dollars a year to play for one of the nation's top programs. Now a movement is underway to give players an even bigger voice on the future of that sport. Brandon Copeland played 10 years in the NFL now spends his time advising and educating the next generation of athletes. He is a member of CNBC's Global Financial Wellness Advisory Board joins us once again at post ninth. Welcome back. Good see you.
- [38:56]
Brandon Copeland
Thanks for having me.
- [38:56]
Scott Wapner
You are at the center really of this conversation. I think we can say it is about where this is all going from here, specifically in terms of athlete representation at the collegiate level. So it was reported that just before the national championship game on, on Monday night that prior weekend there was a meeting of about 50 players who were discussing how to have a big bigger seat at the table. And you were in the room.
- [39:25]
Brandon Copeland
Absolutely.
- [39:25]
Scott Wapner
Can you, can you shed some light on what was discussed and where this is all going?
- [39:29]
Brandon Copeland
Yeah. So first and foremost it was historic that like you said, college football players would fly into Atlanta on, frankly, their first weekend back from school break, so to speak, to talk about the business of college sports. They did that through athletes.org, their chosen players association, to understand, get educated first and foremost, foremost. But then also to organize and understand their thoughts on the different issues that college athletics leaders are making decisions on about them, without them. So how long should transfer portal be? What happens if you get hurt in the middle of the season and you have this nil contract, but now because you can't play, the school takes away your nil contract? Right. There's a number of things that are going on in college athletics right now that the average fan sees and thinks that college athletes are finally making money. However, it's not all going through as planned. It's not as clean and organized as the pro level. So what does that actually mean? What does that look like? Right. We had one young man who was a five star recruit, was going to go to a big SEC school and he was going there and he said during the conference, if that school would have paid me the money that they promised me to go there, then I would have paid for my father to have another kidney. And his father passed away last January. We have other folks who, a quarterback from Northwestern spoke about how at your spring evaluation period, he's transferred a couple of times, but sometimes the coach is telling you, hey, you will never see the field here. So you either enter the transfer portal or we're going to push you off of this team. Right. So there's a number of different things where college athletes right now need to be protected in their own players association so that they can have rules and standards that protect their livelihoods from compensation and health and safety standards.
- [41:21]
Scott Wapner
To what degree do the institutions need to be protected, do you think, in terms of you're promising millions of dollars to a student athlete to go, you know, play football, football at your school, theoretically over a four year period. And if you decide that you're not going to stay for all four years, what protection is in place for the institution that has ponied up this money?
- [41:43]
Brandon Copeland
Yeah, right now, none, frankly. Right. That's why you see guys that are literally decommitting from schools or they're red shirting in week four of the season as their team is having a most successful season of their, you know, generation, so to speak. UNLV's quarterback did that in the middle of the season last year.
- [42:05]
Scott Wapner
Right.
- [42:05]
Brandon Copeland
Because he was promised money that he never ended up getting. And so I think that by having the representation you will also have great opportunities for the schools to actually have some real contracts that they can oversee as well too, which is why it works so beautifully at the pro level.
- [42:22]
Scott Wapner
Come back to you in just a second. But that bell is because of the second biggest IPO since July. Venture Global is open for business today. It did price at $25 a share. That was down from the 40 to 46 range. And you can see the trade on your screen right now. It's down obviously and we will track that for the remainder of this day. It is an LNG exporter, but it is big news because it's the second largest IPO since last July. Another question. Just basically, do you think NIL is out of control or not?
- [42:53]
Brandon Copeland
I think NIL is out of control for a couple of different reasons. I think nil, what people have to understand is NIL is name, image and likeness, which is a marketing deal. So for Patrick Mahomes, it's a subway deal, a State Farm deal. It's not the check he gets for throwing a touchdown pass to Travis Kelce. It's not pay for play. The NCAA and schools don't want to admit that it's pay for play because they're also afraid of triggering employment status for their athletes. When you create this house of cards, which NIL is, and you're not necessarily giving athletes a piece of the revenue that they generate for the media contracts, the ticket sales, the concession fees and things of that nature, now you have these mis structured contracts that end up being again what we keep seeing in the market with lawsuits. Lawsuits, lawsuits, lawsuits. There were seven players from Florida State basketball team that just filed a suit against their former coach and the school for promised money that they never actually received. And this is happening all over the place. There's only a few people who are coming out and actually suing today, but there will be more if they don't clean it up.
- [44:00]
Scott Wapner
Is it, is it, is it the free market working the way it should? Or for example, Carson Beckman, most might know, you know, was the starting quarterback for the University of Georgia. Great player, gets hurt, gets replaced. He's transferring to Miami for $4 million. He's probably only going to be there a year.
- [44:21]
Brandon Copeland
Yep.
- [44:21]
Scott Wapner
Brock Purdy, who is the starting quarterback for The San Francisco 49ers, is still on his rookie contract. I don't even think he's making a million dollars a year.
- [44:29]
Capella University Representative
Right.
- [44:29]
Scott Wapner
Is there something wrong with that dynamic? Does it need to be fixed or is it purely the free markets at work?
- [44:36]
Brandon Copeland
I think that it needs to be fixed. But it needs to be fixed in a way where the schools have their representation and the athletes have their representation. Right now, the reason why this dynamic is happening is because the schools are trying to solve it all themselves without necessarily bringing the athletes to the table to figure out what the real structure should be.
- [44:56]
Scott Wapner
Right?
- [44:57]
Brandon Copeland
And until you bring the athletes to the table, you're going to try to continue to impose rules on them that they're not going to comply with. We just recently saw Wisconsin had a cornerback, Xavier Lucas, who decided to transfer. He wanted to go transfer to Miami. Wisconsin wouldn't allow him to transfer. So he said, you know what? Since you're not going to let me transfer, I'm just going to go. I'm going to unenroll and I'm going to enroll at Miami. The NCAA come out and say, hey, you always can unenroll and enroll at another school, which is news to everybody, right? But what's the point of a transfer portal and all these other rules? And what's also going to stop a team in the middle of the season from getting the hot quarterback and saying, hey, can you unenroll at your school and come over to my school and let's make a run? If you don't bring the athletes to the table, then these are going to be problems for so many people involved. And frankly, I played with Bill Belichick for a season with the Patriots. I can't imagine how he's going to deal with having to recruit players every single season to want to stay at unc.
- [45:53]
Scott Wapner
Were you shocked that he went back to college?
- [45:56]
Brandon Copeland
Shocked, yes. I will say, yeah, I was shocked. But I think that hopefully this year off, you know, I've seen him smile more in the last year than the whole season. So hopefully he's. Hopefully it works at the college level with how he's coaching his players.
- [46:11]
Scott Wapner
Eagles, commanders, Bills, Chiefs. The winners will be who?
- [46:16]
Brandon Copeland
You got commander, Commanders. I got Jayden Daniels pulling it off. Right, The. The young rookie pulling it off.
- [46:21]
Scott Wapner
I knew I liked you. Next. Next game. Next game.
- [46:24]
Brandon Copeland
Yeah, you got the Chiefs doing it. I think the Chiefs, they. There's not too many teams that have a Super bowl routine where they know exactly what they're doing to get ready for this moment. And I can't wait to watch this weekend.
- [46:36]
Scott Wapner
All right. Nor can I appreciate you being here. It's an important conversation. I'm glad you're right in the middle of it. That's Brandon Copeland once again, again here with us at post nine. We got finals coming up after this. All right, we have the setup. We got some key earnings next weekend beyond the mega caps. Lockheed Martin. Jimmy, Tuesday before the bell.
- [47:10]
Jim Leventhal
I like it. I want to see the earnings come in and then see if I want to add to it. I think it's been knocked down way too much on this idea from Elon Musk that the F35 stinks. The F35 is going to be around in many air forces for many years to come. That plus missiles. I'm sorry, we're in a world where there's kinetic hot wars. Lockheed Martin's going to benefit.
- [47:30]
Scott Wapner
Chubb Tuesday.
- [47:31]
CNBC Make It Host
Joe, Little concerned here. Yellow light on the momentum. Hurricane Milton is definitely going to impact the earnings.
- [47:37]
Scott Wapner
Brin, you got Tesla next week. Wednesday, big day.
- [47:42]
Bryn
They're looking for revenue and earnings growth of 8%. I will say the 50 day moving average is in the 200s. So they need to delight and excite investors to keep a forehandle on this name.
- [47:54]
Scott Wapner
ServiceNow service.
- [47:56]
Jason Snipe
Now they're, they're AI tools. They're really starting to monetize them. I think those ASPs will be strong this quarter.
- [48:01]
Scott Wapner
All right, we got a big closing bell coming up at 3:00 Eastern Time. The venture capitalist Bill Gurley is going to be with us. We're going to talk all things I, Altman versus Musk. You name it, we've got it. Cameron Dawson, Jill Carey Hall, Stephanie Gill, Aya Yoshioka with me as well. Brent, give me a final trade, if you would, please.
- [48:19]
Bryn
Docusign. They crushed it last quarter. I think they're going to have another really strong Q4. Earnings don't come out till March 7, so I think this is a great entry point.
- [48:27]
Scott Wapner
Jason White, Emcore.
- [48:30]
Jason Snipe
They will be instrumental in the data center build.
- [48:32]
Scott Wapner
I like this name, Jimmy.
- [48:34]
Jim Leventhal
UnitedHealthcare. We were talking about healthcare in general and to the extent that money comes back to that sector, just remember UnitedHealthcare is almost 10% of the XLV and it will benefit.
- [48:44]
Scott Wapner
All right, Joe.
- [48:45]
CNBC Make It Host
Guidewire Software. Staying away from those Mag 7 names. You notice that?
- [48:49]
Scott Wapner
Yeah, that's true. You know what my final trade is?
- [48:51]
CNBC Make It Host
What?
- [48:52]
Scott Wapner
Jaden Daniels.
- [48:53]
Jim Leventhal
There you go.
- [48:55]
Scott Wapner
Definitely. I'll see you on the closing bell. You've been listening to CNBC's Halftime Report, the podcast you can always catch us live weekdays at 12 Eastern only on CNBC.
- [49:12]
Capella University Representative
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