Scott Wapner (3:39)

So let's, let's talk about. I always like to address tension within the market. There's a tension there. Unemployment rate for six, you know, yields are obviously falling in anticipation. The two year guides the Fed, that's the conventional thought. But then you have fund managers maybe like yourself who are the most bullish they've been in three and a half years and allocation to stocks is the highest since February of 2022.

Stephanie Link (4:08)

So I'm not as bullish as that because I have been bullish for the last three and a half years because the economy has been really strong. It surprised all of us to the upside and I was bullish on the economy and I bullish on the consumer.

Scott Wapner (4:21)

I still am using was a couple of times there.

Stephanie Link (4:24)

Yeah, I was right. But let me just say I was really bullish a couple of years ago because I didn't think that the economy that we were appreciating how strong it was. It was, it still is though. And so I understand why people can be excited. Maybe it takes a little bit of time for people to understand that the economy is not going to fall off a cliff. And that's what a lot of people thought especially back in April, remember, especially back in February with Deep Sleep Seek, remember. I mean there are always pockets of pluses and minuses, but the economy throughout all the uncertainty that we've seen has remained very strong. We're running at three, three and a half percent. Earnings have been better than Expected expectations for earnings next year. And this is where I think the bullishness comes in. Expectations are for 15 to 17% earnings growth next year. I'm not sure we're going to get there. I do think we can get to 8 to 10% but that's I think a real piece of the positivity out there right now from everyone out there. Interest rates are going to be falling. We don't know how much, but they are falling. And the market is broadening. The market broadening is why I actually am staying pretty positive because that is very, very healthy.

Scott Wapner (5:30)

The reality is the city this time of year is not an easy one to navigate as Malcolm Methridge, who joins us from D.C. is finding out around holiday season in New York City. It's good to have you at the desk.

Malcolm Methridge (5:41)

Glad to be here.

Scott Wapner (5:42)

Glad you made it. Now you know what we're talking about. Talk about holiday traffic in Manhattan. So how do you square the tension within the market here of a, you know, a jobs picture that's not great one that, gosh, it feels like it's almost hard to get a handle on because of the tremendous gains in productivity we're going to get from AI trying to understand how that is going to manifest itself on corporate America. But then you have fund managers like maybe yourself who are bullish, who are talking about run it hot into 26 and why it's hard to find many people who are negative this market at all. What do you make of that?

Malcolm Methridge (6:27)

Well, the word that came to mind when I saw B of A's fund manager survey was sobering because to your point, the cash levels in that survey being at about 3% record low normally we'd want to start selling when we see that number crack about four is the rule of thumb if you respect that survey. So to this point, from 2021 to maybe the first half of this year, we were able to hang our hats on the fact that the labor market is very strong. Unemployment was staying 3%, something with a three handle on it that was very firm. We were also able to hang our hats coming into 2024, 2025. The investments into AI aren't going to hurt us because these companies at the forefront of building are doing it using their free cash flows. Why wouldn't they do that? Now there's cracks in that story as well. Taken together, it sounds like everyone at the party is super bullish that this is the best party to be at. That all starts to get a little bit nerve wracking. I think it should at least put investors on, on, on awareness that these numbers sound like consensus is building where things start to tip the other direction.

Scott Wapner (7:32)

I mean, it's funny though, it wasn't that long ago where, you know, you had, you know, Tom Lee was coming on every appearance and saying, oh, it's the most hated rally, it's still the most hated rally as it was going up and to the right. Now we're suggesting there's too much bullishness. They say that the fund manager survey says the bull bear indicator up to 7.9 is close to a sell signal. Now all of a sudden the party is, is getting too hot.

Joe Terranova (7:58)

No, I'm more in the belief that there is too much bullishness. And I agree with both of your remarks. If you remember over the summer I said to you I felt as though the AI trade was getting mature. And you quickly responded by, you know, saying really that the thematic contribution from AI and the innovation build out you think is getting mature. And I said no, what I think is the positioning surrounding the AI trade is mature. Who is left to really come into that trade? It's been well known over the last two years and I think it's a great example. When you think about the market, I think people are full right now. I think they've been fed over the last several years with really good returns in a lot of different places. And right now, you know, they're going to be a little bit lean in terms of where they're going to be looking for opportunities. So I think we are more bullish and I support what we have in that report than we've been in years. And I think that's a factor when you turn the calendar to 20, 26 and you're thinking about where you go with this market.

Scott Wapner (9:02)

Well, on that. Yeah, go ahead.

Malcolm Methridge (9:03)

I think it's also worth pointing out that we've been, at least I have been celebrating retail this year. The retail investor has gotten the trades right. Deep seek, bought the dip, Tariff day, bought the dip. Sell off throughout the summer, Bought the dip.

Scott Wapner (9:17)

Everything almost has bought the dip. If you go all the way back to the deep seat time until now, the chart doesn't lie. You see what looks to be a V shaped recovery at every bit of upset within the market. It's been one of the most unique characteristics of the past 18 months. Every, every bit of market angst and upset has been bought and it's been the right move.

Malcolm Methridge (9:44)

And to this point it's been the right move. So what I'm focused on now is bitcoin that's been selling off the last couple of months. We've seen that trade from like 126 or so all the way down into the mid-80s. That to me is more of a gauge on what retail is thinking than the VIX is. The VIX is great for fund managers, institutional managers, but I think bitcoin specifically tells you a ton more about what retail wants to whether retail is risk on or not. If this cold winter in crypto holds for a little bit longer, I think that might be a signal that institutional is going to be following that trade.

Scott Wapner (10:17)

Let's try and take stock if we can of what's happening with the trade just because I know that many of you have heavy exposure there. We have heavy exposure in terms of conversation over the last many months. I want to zero in on that over a period of one week. Now if you look at the hyperscalers, the pullbacks are not going to look that dramatic. You start to get down to in video which, which is not on that. Nvidia is down 4 1/2% there. Now you're looking at it and then you get more dramatic declines from what really has been the epicenter of the anxiety. We're sticking with the AI anxiety because that's what the market's going through. It's having like an anxiety attack over what's been going on with the spend and the debt and the bubble. Question, Steph. Broadcom worst three day period since March of 2020. Oracle's had its worst three day period since May of 2022.

Stephanie Link (11:14)

So last week Oracle and Broadcom both reported and I think they were very different reports the conference. They were both strong in terms of fundamentals but the conference calls really hit both stocks and I will say Oracle, that stock got hit because they didn't address the finance issue, the debt that they are incurring to spend on all of this capex, they had RPO's of 438% year over year and grew 15% sequentially. Those are great, great numbers. But they didn't address the elephant in the room in my opinion. And the stock at 33 times earnings, really expensive. Now on Broadcom I thought the quarter was really very, very good. I mean total revenues of 28%, a growth of 74%. Guidance is for another 28% in revenues and 100% growth in AI. But the stock sold off. It's up 132% since April. So the expectations were enormous. These are the kinds of opportunities though because when you look through the fundamentals. The fundamentals are very, very strong. They signed up another custom ASIC customer and they're doubling their business. And so to me, yeah, the stock is rerated. We've talked about this a lot that I wasn't anxious about or wanting to buy the stock in front of the print because it had such a nice run and a revaluation. But the fundamentals are really, quite, quite sure.

Scott Wapner (12:38)

But, but you could look at so many, you know, different names and say that the fundamentals are really strong. At some point you don't get into a lower law of large numbers, you get into a law of high expectations. That's one of the reasons why I think this trade is not this particular one but maybe part of has been struggling a bit because as the stocks have gone up a lot, the valuations have gone up right along with the stocks, expectations have gone up and now it becomes a higher bar to meet. At the same time when you're asking questions about the durability of everything going.

Stephanie Link (13:11)

On around this, they're expensive, the stocks are more expensive. But what I look at is earnings estimates. All of these companies earnings estimates went higher. Metta, Amazon, Microsoft, Broadcom, even Oracle numbers went higher. And so maybe we have some indigestion in the short term because again the expectations were so high and these stocks are so crowded, they're so over owned and loved. So let it take a pause. But then you get to pick and choose which, which one you want and I'm telling you Broadcom is absolutely going to be there and one you want.

Scott Wapner (13:44)

To say the most important thing I think let, let. I think investors are trying to figure out what Steph's talking about. Let it take a pause, let them take a pause is what the market seems to be trying to figure out. The question for everybody is how long does that pause last.

Joe Terranova (14:01)

So I think the pause obviously stays in place for, for far longer. For the stocks that are not, as we call them, the mega caps, I think the Mag 7, they will be the first to kind of come out of this. The biggest trouble spot in all of this is Oracle. Well, it's been Oracle and it is. No, I think it's Oracle.

Scott Wapner (14:21)

I'm going to give you another one.

Joe Terranova (14:22)

But there's a bigger risk to Oracle than there is to Core Weave. Oracle is defending its credit rating. Oracle has to remain investment grade. What happens if Oracle falls to high yield? The size of the high yield debt market is $1.5 trillion. What is articles debt right now?

Stephanie Link (14:40)

Wanted to be 100 grade. Okay.

Joe Terranova (14:43)

And I want to be the GM of the New York Yankees. So they have 100 billion to 150.

Scott Wapner (14:50)

Billion chances better than that in yours.

Joe Terranova (14:52)

So 150, $150 billion worth of debt if heaven forbid, they fall into high Yield, that's literally 10% call though, right?

Scott Wapner (15:03)

Okay.

Stephanie Link (15:03)

They're going to remain investment grade. I'm not defending the stock, I don't own it. But I'm just saying.

Joe Terranova (15:07)

But we are not, we are not 100% certain that they maintain that investment grade rating in 2020.

Scott Wapner (15:13)

We are 100% certain. Cashmere ain't got nothing to worry about. You're staying right here with the Yankees. Now, I said it wasn't just Oracle. Now the conversation around core weave seems to be picking up because the Wall Street Journal goes in today with a headline, Core Weave Staggering Fall from Market Grace Highlights AI Bubble fears. Deirdre Bosa joins us now to take a closer look at what's been happening here. The value is down $33 billion in some six weeks.

Stephanie Link (15:39)

Yeah, and it's been really a wild ride since its IPO earlier this year. It was of course the first pure play infrastructure name to hit the public markets. Just GPU capacity and demand. So that does make it a kind of beta for the trade itself. When exuberance peaks, that rips. But when investors start asking hard questions about Capex customer concentration, it gets hit first. And right now, as Scott said, it is a proxy for those bubble fears, more so than other infra names like Oracle or In Video or Broadcom, which have cash flow and diversification. I was listening to your guys conversation with fascination just now. But the market clearly thinks that core weave is the bigger risk right now. I mean, Corby doesn't have any of those things. It's dealing with open air, build out delays, messy messaging, rising financing costs and all at a moment when the market is shifting from how fast can you build to when does this actually pay off, Scott?

Scott Wapner (16:30)

Yeah, we're just moving from, you know, different name to different name and deciding how serious we should be concerned about some of these issues. Thanks so much for that, Deirdre Bosa. I like this note from Citi today, Malcolm. We see the AI bubble likely building further in 2026. The big sector rotation they say happens after the bubble peaks, not before. While diversification is likely still helpful next year, tech should be part of the longs. So don't give up the ship yet because the bubble hasn't even peaked. Maybe it's not close. I keep hearing we're in the third inning, fourth inning, second inning of this whole deal.

Malcolm Methridge (17:09)

I like that. And I actually see circle all of what Citi had to say on that note, because I made the case on the show last week. Jim beat me up about it, but I'll let that go. The fact that something is going to have to go meaningfully wrong with the MAG7 trade because of how heavily weighted each of those names are in The S&P 500, Apple, Nvidia, Google, all of those names are 6, 7, 8% of the entire index. Something will have to go meaningfully wrong for this rotation to actually play out. I don't think that that comes to a head at least in the first half of 2026. I think more than likely the party will continue in those names except for the ones that have this borrowing issue that we've been talking about. So where before it was spend at all costs, growth at whatever cost, in order to participate in the AI revolution, now it's can you actually show us tangible benefits to those investments while we wait for the bigger, broader conversation to happen? So if I'm Google, for example, there's obvious places I can take the AI in house. If I'm Microsoft, there's obvious places I can take that technology in house. If I'm core weave, my one job is basically being a landlord. That's not really going to be as valuable to investors looking for the tangible benefits near term.

Scott Wapner (18:25)

I want to talk for a moment more about software, which has been such a dramatic underperformer relative to semis for certain. The IGV year to date is only up five and a half percent. In a time where we're talking about software being everything as it relates to AI and agentic AI and all that. The Sox is up 38 and a half percent. If you look at stocks that are, you know, well liked, have done well, even a Snowflake, which is up 41% year to date over the last months, down 15%. These stocks can't get traction. ServiceNow has been a salesforce disappointment. Leads me to you because you bought ServiceNow, right? That's a new buy.

Malcolm Methridge (19:15)

Yep. Why brand new? So I've been watching this name for a while. I as we go into 2026, one of the things that I want to be owning are companies that primarily generate their revenues in the enterprise space selling into other businesses. And what what I hang my hat on is the air figure, the annually recurring revenue numbers. ServiceNow boasts a 97, 90, 98% customer retention rate and I think that's a really big deal that's being underweighted right now. The sell off in those shares because they decided to, to take down yet another company in a short period. I completely understand. I think that it actually adds something very valuable to their tech stack in the security space. The company that they're acquiring is going to help them to secure sort of dumb tech instruments that otherwise hackers love to infiltrate. I think that actually makes a ton of sense. But I think the thing that really scared the market and sent those shares plunging yesterday was really just another acquisition. I think that was the market's take on that. And as we investigate a little bit further, you realize these things are additive. This is actually how ServiceNow is going to incorporate AI into its stack going forward and maybe even start to right size internally because that headcount is pretty, pretty large in comparison to the actual revenues that they generate.

Scott Wapner (20:27)

I'm thinking of when you, when you had that reaction where you like another acquisition. That reminds me of Joe when Salesforce doing these things and there was chatter of some Salesforce doing something like I can't remember exactly what it was and you were like another deal. No, not so, not again. So now if you look at Snowflake, which I, which I threw up. Mizuho. Steph still loves that name. Top pick for 2026. We believe healthy consumption activity along with secular trends driving enterprises to modernize their data estates, set up Snowflake for sustained momentum.

Stephanie Link (21:01)

So it was up 70% into the print. So the expectations were very, very high. I actually just recently nibbled on it because it has pulled back almost 30% from the highs because the fundamentals also seem to me to be sustainable with a product revenue growth at something like 29, 30% with operating margins with potentially getting to eventually 15% from the 7 to 8% level you have, RPO is growing 37%. That's visibility to me. Can I explain the valuation? I actually can't not even down this much. But I do like the growth that I am seeing and right size it in my, in my portfolio.

Scott Wapner (21:40)

What's RPO's? Because I mean a lot of people hear that and they think of the run pass option on Sundays in the NFL.

Stephanie Link (21:46)

It's future bookings, future revenues that they've booked. So to me you have. That's, that's visibility. That's the thing that I like. But I also like the fact that the margin story is just beginning and this management team, they've done a great job in terms of product introduction. And it's gaining acceptance, they're gaining market share. I'm not even sure this is going to be a public company. Down the road. I think someone should buy them.

Scott Wapner (22:08)

You said use the word nibbling, which leads me to another area that feels like it's waking up. Discretionary. Beyond Amazon, beyond Tesla. You bought Estee Lauder. Yeah, that's a little controversial. I mean, take me through that. Take me through that.

Stephanie Link (22:26)

Look, I think you've had new management in place for over a year and a half. The old management, they stumbled. They didn't invest where they needed to. But most importantly, we're now starting to see a turn in one of their largest regions, which is China. China and the U.S. 48% of total revenues. I think that they have done a really good job in terms of trying to do self help to improve their distribution facility here and in China. And they have what they're calling this beauty reimagined strategy with new products, lower costs, and just streamlining their businesses and streamlining their products. And I think 2026 sets up really well. This stock has been ugly for years. No, it's had a good.

Scott Wapner (23:06)

That's why I had the reaction. I did.

Stephanie Link (23:07)

Yeah, well, it's had a good year this year. But that's why I think that 2026 really sets up nicely because the expectations are still really, really low.

Scott Wapner (23:15)

Yeah, yeah. Chart looks, looks pretty decent. So discretionary is the third best sector month to date. The best financials, steeper yield curve, what could be a strengthening economy in the next year. Run it hot. That's good for the banks, A pickup in deal making. Good for the banks, a pickup in IPOs. Good for the banks. Good for private equity too, especially a certain IPO that is set to price. Leslie Picker is here at post 9 with more details. Tell us more than Scott.

Stephanie Link (23:44)

You're right. Nice to see you too. And yes, this is very good for the banks as well as the private equity community. Guidance to investors, I'm told by sources, is that this one will price toward the high end of the range, the top half of the range, which could make it the biggest IPO globally this year. Medline manufactures and distributes medical supply products, things like masks and gowns and laptops markets. It was taken private by a consortium of private equity firms including Blackstone, Carlyle and Hellman and Friedman back in 2021, which was then the largest LBO post financial crisis. At the high end of the range, the IPO range, Medline could be valued at $55 billion, which is more than 20 billion higher than the sponsors paid for it. As a result, it's seen as a key test not just for the IPO market, which of course is ripe with a healthy backlog of 2026 potential deals, but also the private equity industry which has struggled over the past few years to find exits for portfolio companies. Now Medline is poised to be the largest IPO of a buyout in history, which makes an important test for sponsor backed assets that need to find exits. In fact, anxiety over exit challenges was listed as a top concern among 80% of investors who were recently surveyed by prequent. And so any type of recovery and exit opportunities, those are IPOs or sales, is important for the restart of that fundraising flywheel. Global PE fundraising this year is expected to be flat to slightly lower than 2024 levels. And you can see well off the heydays of the 2020, 2021 era.

Scott Wapner (25:19)

These stocks have started acting better to the private equity ones. Like you, we had the, the tumult over the, you know, a couple of bankruptcies in the private loan market, then all of a sudden you had, you know, a million questions about private credit again. And lo and behold, over the last month these stocks have actually looked pretty good.

Stephanie Link (25:34)

Yeah, and you can see the bifurcation of the specific alt firms that are more tilted toward private equity versus private credit. The TPGs of the world, the Carlyle's of the world are, are in the green year to date actually. And they've, they've kind of been bolstered by this idea that the flywheel of fundraising engine could be turned back on. That bodes well for management fees, potential carry, especially if Medline is any indication of what a profitable kind of deal might look like in this environment.

Scott Wapner (26:02)

Maybe we were a year early on the private equity trade in general. I mean we came into the year, I think with pretty high expectations that you were going to have animal spirits and you're going to have exits and all the things that private equity has been pent up waiting to have happen and it really didn't happen in any significant way. No. Maybe next year is the year.

Joe Terranova (26:22)

Well, and you're also sitting on arguably 2 to 3 trillion dollars worth of market capitalization when these 5 or 6 companies that are sitting on the sidelines, the space X, the databricks, stripe anthropic when they come to the marketplace, OpenAI ByteDance and they're, they're being funded, I think it's databricks that just did another round as well. So the private markets are serving them well. Ultimately they are going to step into the public markets and it's going to be an incredible force when they do just because of the size that they're going to enter the markets with.

Scott Wapner (26:57)

LP thanks as always, Leslie Picker. Up next, our top calls of the day, including a new street high for one of Steph standout stocks this year. Half times back in two minutes.

Joe Terranova (27:15)

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Year of service when they sign up. Visit joingelt.com to schedule a discovery call. That's joing.com join gelt.com. All right, we're back. We do our calls of the day. We're going to start with Digital Realty. It's a top pick at Wells today reiterated overweight to REIT Data center reit. Malcolm, you own that?

Malcolm Methridge (29:07)

Yeah. To me this is probably the safest place to play the data center build out. Right. They're in the business of commercial real estate and their biggest, best clients happen to be all of the hyperscalers. So there's a reason why all of these hyperscalers have been outsourcing the build out of the data center AI Boom. I don't know if exactly what that is, but because they don't want to own those assets on their balance sheets. I think that should say something. Digital realty instead, to me is the better place to be.

Scott Wapner (29:32)

Let's go to Steph on Coinbase. Today the Target goes to 280 from 320. Obviously with what's happening with the price of bitcoin, which is probably more important than looking at that. If you let throw up bitcoin, I mean, I wish you could show them both side by side because it is what it is.

Stephanie Link (29:50)

It is what it is and the stock is volatile and it is going to trade with the price of bitcoin. But I still believe very strongly that if you're going to be involved in bitcoin or crypto in general, you want to focus on an exchange. You have buyers and sellers. It's going to get wrapped up in all of the pricing. But I do think that there's still a lot of monetization potential. They have the broadest offering in crypto in the world. They have a great management team. So, you know, it's a small position. I think it will always stay a small position. But I want to have exposure, some sort of exposure to crypto to bitcoin, especially given Gen Z and younger are focused on this particular corner of the market more so than even equity. Scott, it's really quite amazing. So I want to have some sort of exposure and I think the exchanges at least it protects me a little bit more than the actual commodity itself.

Scott Wapner (30:39)

So this next stock has not traded well at all. Costco. And I don't know how many times we've said that over the last few years. Not many. No. Look at that. It's a disappointer. It's a new 52 week low today. Argus is defending it. They reiterate a buy. They've got 1200 as the price target. 1200, okay, 40% up from here. What is happening with this stock, which everybody always loved for the dual revenue stream. You get the retail stream and then you get the annuities of the, you know, the memberships. What's up?

Joe Terranova (31:21)

So this stock has rolled over significantly, as you've cited. It's a variety of reasons ranging from loss of market share, less traffic, challenges with the tariffs that we have not seen Walmart have. And I also think positioning comes into play.

Scott Wapner (31:38)

You think the dollar hot dog is finally crushing these guys to your point.

Joe Terranova (31:43)

To your free samples that people like.

Scott Wapner (31:46)

Rotisserie chicken me stroll through.

Joe Terranova (31:48)

You know, I'm trying to. We're talking about.

Scott Wapner (31:51)

I know, I'm serious. Wow.

Joe Terranova (31:53)

So I think positioning is a, is a element here in why the stock is going down as well. And if you look at the consumer staple sector, this was a name that gave you growth that you really found difficult to find in the consumer staples sector. We own this stock since 2021. 2021.

Scott Wapner (32:12)

Give me a five year guys, please.

Joe Terranova (32:14)

It's worked really well for us. And as it pressed towards new highs over the summer, I was sitting here saying I think I made it my final trade a few times. It's broken down.

Scott Wapner (32:23)

Sure.

Joe Terranova (32:23)

The mo, the momentum has been neutralized and the valuation is still high relative to its 10 year average.

Malcolm Methridge (32:33)

For sure.

Scott Wapner (32:34)

Okay.

Stephanie Link (32:35)

Very expensive.

Scott Wapner (32:37)

Gap overweight today at Wells. It's a bump up 30 bucks is the target there? It is.

Stephanie Link (32:43)

I have to be honest, I actually toyed with do I buy Gap or Estee Lauder? And Gap is had a nice run. I still like it very much. Management team is doing an amazing job. The products are out there, people want it. The comps, I mean old Navy at 6% comp, Banana Republic at 4. You have Gap Brands at 7. These are comps that are enormous. So it's working. It's just had a nice run. I'm waiting for just a bad day, a pullback and I'll add it to the portfolio.

Scott Wapner (33:09)

How about.

Stephanie Link (33:09)

I think Estee Lauder offers a little more upside for 2026.

Scott Wapner (33:12)

I'm sorry. How about the GE's aerospace top picket Goldman Vernova target to 831 at Wells. That's a new street high.

Stephanie Link (33:19)

I mean, you know ge, I love the story. I think Culp has done an amazing job. The CEO has done an amazing job. Is it going to have as good a year as they had this year? I mean, I hope so. I'm not selling it but it's had a nice run. It's. The recovery has happened.

Scott Wapner (33:34)

Let's get a five year on aerospace.

Stephanie Link (33:36)

And, and GE Vernova. That's a volatile one but that's electrification at its finest. And they're raising their quarter. Last week was amazing. I mean they raised across the board. They're doing partnerships with all kinds of different companies.

Scott Wapner (33:50)

So I remember when you made your big contrarian. You know, I heart Larry Culp bet right?

Stephanie Link (33:58)

Yeah.

Scott Wapner (33:58)

And you took some flack for that. Not because of Larry Culp obviously, because he's an amazing operator, obviously. But for thinking that there was a turnaround in store here.

Stephanie Link (34:10)

He did an amazing job at Danaher when he was the CEO of Danaher and I saw what he did there. And I thought for sure there was a lot of low hanging fruit at ge. Changed the culture, brought in new people, made engines and Services for Engines, 70% of the total revenue free cash flow has gone higher and higher. I think it continues to go higher. My only beef is that it had a nice run, but I'm not touching it.

Scott Wapner (34:33)

Yeah. All right. Bertha Coombs has the headlines for us. Hi, Bertha Scott.

Stephanie Link (34:38)

Defense Secretary Pete Hegseth said today there are no plans to release unedited video of the September 2 strikes on a suspected drug trafficking boat in the Caribbean. It comes amid claims the US Carried out a second strike on survivors in what some have called a potential war crime. Hegseth and Secretary of State Marco Rubio are on the Hill today briefing lawmakers on the boat strike campaign in international waters near Venezuela. The Council on American Islamic Relations, also known as CAIR, is suing Florida Governor Ron DeSantis over his order designating the group as a foreign terrorist organization. CAIR argues the action is unconstitutional and is asking a judge to keep it from being enforced. DeSantis has accused the group of extremist ties. And the Federal Aviation Administration says it will spend $6 billion on new air traffic control, telecom infrastructure and radar surveillance.

Scott Wapner (35:38)

Systems that will be deployed by the end of 2028.

Stephanie Link (35:42)

It comes after Congress approved 12 and a half billion dollars in June to reform the country's aging air traffic control system.

Scott Wapner (35:52)

Scott? Bertha, thank you very much. Bertha Coombs. Coming up, another trade alert coming your way. Halftime committee member Seurat Sethi has a new buy and two new sells. He joins us next with the word.

Stephanie Link (36:09)

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Malcolm Methridge (36:37)

Edu.

Stephanie Link (36:39)

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Scott Wapner (37:25)

We'll jump down to D.C. for some breaking news from our Emily Wilkins on the Hill. What do we know?

Stephanie Link (37:32)

Hey, Scott. Well, of course, we've been following this debate around the Affordable Care act tax credits. They're set to expire really right around this time. And that is going to mean that for millions of Americans, health care premiums are going to skyrocket. Congress is, of course, rushing to find a potential solution on it. But Speaker Mike Johnson told members of the media today that he would not be allowing a proposed amendment that would have continued extending those tax credits. How House Republicans are going to vote tomorrow on a health, health care bill that Johnson says will reduce the cost of health care premiums, but it has nothing to do with those tax credits. It would allow them to expire. And that's concerning for some of the more moderate Republicans in his party, particularly those facing difficult elections in the midterm who say that they need to have a vote on them and that Americans need some relief from the higher premiums that they are already seen. Meanwhile, we know that there is a group of bipartisan, bipartisan senators who are trying to find a path forward. But again, the clock is really running out here. A number of Americans are already facing premiums that have doubled since last year and there is expected to be an impact on the private market as well.

Scott Wapner (38:34)

Scott, we're looking really at the end to the end of the year, Right. So we have a two week window essentially. So if you're not going to get anything next week, does this imply that there's zero chance you'll get anything before the end of the year, or is the political pressure just going to get to the point where there's going to be no choice but to have some sort of vote?

Stephanie Link (38:54)

You know, Scott, I think the political pressure is definitely going to continue. I mean, this is definitely set to be an issue that will be a part of the midterms next year. Everyone here up on Capitol Hill knows that they might not be able to get something done before the end of the year because they only have a few days left. But there does seem to still be some willingness to try to see if they can get this done retroactively, maybe do something in January, have the prices apply. Not 100% sure on the logistics there, but I can tell you that at least the pressure is not going to go off necessarily just because we get past December 31st.

Scott Wapner (39:25)

All right. Thank you. As always, Emily Wilkins down on Capitol Hill. For us, we do have a trade alert I mentioned to you before halftime committee member Surat Sethi joins us now. Tell us what he's been doing. So let's do. It's good to see you man. Let's do your buy first Verisk Analytics. Tell me more. Yeah, so Scott, this is a leader.

Joe Terranova (39:44)

In the insurance data analytical sector.

Scott Wapner (39:48)

70% of the revenue comes from underwriting, 30% from claims.

Joe Terranova (39:52)

But what I really like about this.

Scott Wapner (39:53)

Business is 80% recurring revenue. And if you look at their customer retention is 95%. Historically 8% revenue growth last year was 5% stock got knocked down trades about 17 times. Cash flow again historically traded anywhere up to 25 times.

Joe Terranova (40:10)

So you're picking up a really high.

Scott Wapner (40:12)

Quality cash flow company that I think is just, you know, put out to.

Joe Terranova (40:17)

The woodshed with all of the software companies especially when you have the AI over hang.

Scott Wapner (40:20)

And we think, you know, they've got.

Joe Terranova (40:22)

A really good management team that's been.

Scott Wapner (40:24)

Installed over the last couple of years. Okay. Couple sales. As we said, PayPal's number one. Give me more info. You know, I've been with this one for a while and you know it's your end tax lot selling. I've lost patience trades at a very cheap multiple. But there's so much competition on the branded side with Apple pay, Google pay on the buy now pay later with a farm management spending a lot of money. It's a new management team gave it a little bit of a chance.

Joe Terranova (40:51)

So I just think it's time to.

Scott Wapner (40:52)

Move on and look for better ideas. Yeah, Constellation Brands too. You got out of. Yeah there too.

Joe Terranova (41:00)

You know, 8% negative volume growth, secular trends with GLP alcohol and a secular trend downward.

Scott Wapner (41:09)

And I just think, you know, it was time to move on to other places and staples or growth because I do think it's going to be much harder for a company like that to grow its earnings.

Joe Terranova (41:17)

And she has pretty high multiple for.

Scott Wapner (41:19)

For what you're paying. You know, it's interesting. I know people have been watching these, these kinds of stocks. It's almost like there's a suggestion that you, I don't know, uninvestable. I don't want to say that I'd rather somebody like you opine on that. But you know, when Brandon Gomez who follows this for us talks about where the trends look like they're going to consistently go, what does that mean for stocks like this? How long have you owned this name? We've owned it for probably three years. It did well for a while, Scott. I mean it had the whole cannabis tailwind behind it and then really coming out of COVID and the secular headwinds coming out of drinking alcohol. Yeah. Moving to other places. And you know, at first it was, hey, maybe this will change. But it is becoming, becoming very hard to own these companies at these prices now. Scott, if, Scott, if the stock trades down to the low multiple, maybe then it becomes investable. But I just don't know where the earnings growth is going to go. And I think at this point I'd rather be on the sidelines. What's the multiple of it now? 15 at this point. But you know, where is earnings going to go? Maybe that's a peak multiple. Who knows? Well, I mean it's like such below a market multiple already. I guess that that's, that's why I even ask. All right, Sirat, I appreciate you. I got to run up against it. I'll see you soon. Seurat SETI up next in Tolley with his midday word, Senior markets commentator Mike Santoli here at post 9. What's on your mind today as you watch this market look pretty ugly?

Joe Terranova (42:59)

It's pretty much stuck in these swirling currents. So as much as there's been wear and tear on how the S and P perform, we're back to levels that were first reached in late October, really October 24th. It's the message of the market is not alarmed. It's not showing stress about the macro outlook very much. It's just saying the construction of this index with anxiety pressuring some areas is not allowing us to make a lot of headway. You're kind of at the 50 day moving average again. We haven't gotten escape velocity off of that area. So I think all those things are sort of in the mix. We don't really know what to do with the job number today as well. Yeah, I mean the bond market says okay, it's on a net basis maybe dovish or fuel for future dovish ness. But that's colliding with this idea that we're going to get some kind of ramp up in economic growth into next year. So it's not so much saying that, you know, the market is, is sending a whole warning signals as much as it's a little bit confused. Wonder if after options expiration, you know, this week you start to release the market and say, oh, we could buy some of the winners on sale and we can get a little more comfortable with this low volume holiday impaired trading. But again, we thought that might happen by now. Yeah, in December we'll see if that.

Scott Wapner (44:08)

Santa Claus still Has to show up and it's still early by the way. Santa Claus rally doesn't even start.

Joe Terranova (44:12)

That's right. Till a couple of days before Christmas.

Scott Wapner (44:14)

Yeah. And then across the calendar, turn for a couple. All right, I'll see you on closing bell. That's Mike Santoli. Coming up next, markets never sleep. The big push from one exchange for round the clock trading. That's right, 24 hours. The committee's take next. All right, welcome back. NASDAQ is pushing ahead with a plan to expand its trading hours in an effort to create a 23 hour trading day five days a week. I was going to ask you guys what you thought about this. And then we found this Wells Fargo note which says the following quote, this is literally the worst thing in the world. That's from their trading desk, Wells Fargo to clients. I cannot think of an action that single handedly gamifies the stock market even more than it already, it has already become. This is the epitome of making trading even more like gambling. They say that most liquidity clusters around the open and close, making the idea of stretching this counterproductive retake.

Joe Terranova (45:15)

I think we've already experienced the gamification of trading and investing. I think that it would be very difficult to go back to where we were beforehand. The exchanges are going to have to respond to what some like Robinhood ultimately are going to do. What do you do If Robinhood has 24 hour trade and you're the Nasdaq? Well, if you have 24 hour trading and that 24 hour trading continues to build. And if you now introduce the prediction markets, the New York Stock Exchange I believe has already said they have a plan in place for 20, what is it? 22 hours worth of trading in a daily.

Scott Wapner (45:52)

All right, so Jeannie's out of the bottle. That's the way it is. That's where we're going. So it is. What it is is I think so.

Malcolm Methridge (45:59)

Robinhood initiated this two years ago. Right. And it's the reason why Robinhood stock price is up 200% year to date in Wells Fargo's is up about 30. I think that it's the old school way of thinking about markets that is allowing these upstart types of companies that play in this space to take market share from the folks that look at it that way.

Scott Wapner (46:19)

All right, to be continued for sure, because this is not going away well. The finals next. All right, full house here on closing bell. Three o'. Clock. Dubrovka, Lakos, Sung Chob, Goldman, Mohamed El Erian, Ellen Zentner Lauren Goodwin. Liz Thomas. Rich Saperstein. We need a bouncer. Right there with the rope. It's gonna be hard to get up here today. Final trade. What you got?

Malcolm Methridge (46:43)

Goldman Sachs.

Scott Wapner (46:44)

All right.

Stephanie Link (46:45)

Capital One.

Joe Terranova (46:46)

Monster beverage.

Scott Wapner (46:47)

All right. Good stuff. I'll see. Well, Dowell's down 400. I'll see you on the 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.

Stephanie Link (47:04)

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Joe Terranova (47:44)

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