The State of Stocks 4/28/25

Summary

CNBC’s Halftime Report: The State of Stocks – April 28, 2025

Introduction

In the April 28, 2025 episode of CNBC's Halftime Report, host Bryn Talkington, along with analysts Joe Terranova and Jim Leventhal, delved deep into the current state of the stock market. The discussion centered around the delicate rally in equities, the impending jobs report, mega-cap earnings, trade tensions, bond market dynamics, and specific stock performances. The episode also touched upon the burgeoning popularity of actively managed ETFs and the impact of geopolitical developments on market sentiment.

Market Overview

The episode opened with a portrayal of a volatile trading morning, noting that the market was "red across the board" at session start (01:03). Despite this, the S&P had recovered 50% of its losses from the February all-time high to the April 7th post-Liberation Day low. JP Morgan highlighted a "tactically bullish" stance, suggesting potential continuation of the rally for multiple weeks, though acknowledging the pain trade could intensify (01:03).

Key Drivers for the Week: Jobs Report and Mega Cap Earnings

Joe Terranova emphasized the critical nature of the upcoming jobs report and the earnings from four mega-cap companies (Microsoft, Meta, Amazon, and Apple). He pointed out that the recent market rally was precarious, driven by short-dated options rather than long-term conviction (01:59). Terranova noted, "If there was real conviction, you would see the longer-dated options rallying," highlighting the rally's fragility (02:55).

Jim Leventhal concurred, describing the market as a "delicate" balance influenced by uncertain trade deals. He stressed that while the equity markets remain optimistic about delaying further tariffs, the underlying economic damage remains a concern (05:01).

Trade and Economic Factors

The analysts discussed ongoing trade tensions, emphasizing their significant lag effects on the economy. Terranova explained, "The bond market is driving everything," and suggested that economic cooling is necessary to manage corporate bond maturities and issuance (12:58). Leventhal added that trade disruptions continue to hinder supply chains, with South Korea expressing doubts about securing trade deals by July (04:43).

Bond Market and Yields

The bond market's role was a focal point, with Terranova warning that a ten-year yield reversal to 4.50% could signal major problems. He asserted that bond yields need to stay lower to support the corporate issuance market and mitigate Federal Reserve rate cuts (12:58). Bryn Talkington echoed this sentiment, noting that lower yields would positively affect bond markets but negatively impact equities simultaneously (13:18).

Mega Cap Stocks Analysis

The discussion shifted to mega-cap stocks, with a particular focus on Microsoft, Meta, Amazon, and Apple:

• Microsoft: Leventhal highlighted Microsoft's pivotal role, describing it as a "long-term compounder" capable of weathering market storms. He remained bullish on the stock, despite acknowledging potential challenges in cloud services (17:33).

• Meta: Terranova expressed concerns over Meta's revenue growth and competition from companies like Huawei and Nvidia. Despite the stock's recent price reduction, he viewed the management of margins positively and remained cautiously optimistic (18:21).

• Amazon: Terranova maintained a bullish stance on Amazon, citing strong momentum behind AWS and diversification into streaming services as key strengths (19:51).

• Apple: He expressed caution regarding Apple, noting its decelerating revenue growth as a potential headwind, although acknowledging upcoming exemptions from the administration could provide relief (18:55).

Sector Analysis: Health Care

The episode also covered significant movements in the health care sector:

• Lilly: HSBC downgraded Lilly's rating from "Buy" to "Hold," reducing its price target from $1,150 to $700. Terranova discussed concerns over revenue growth deceleration and increasing competition from Amgen's weight loss drug (27:15). He remained open to reassessing his position based on upcoming earnings (28:57).

• UnitedHealth: Piper Jaffray downgraded UnitedHealth, cutting its price target from $592 to $552. Despite the downgrade, Terranova noted that he purchased more shares, viewing it as a "permanent compound" in his portfolio (30:19).

ETF Trends and Strategies

A significant portion of the discussion was dedicated to the explosive growth of actively managed ETFs. John Mayer from JP Morgan Asset Management highlighted that actively managed ETFs now represent about 40% of total market trading. He discussed the success of JP Morgan's JEPI, an actively managed ETF offering approximately a 9% yield, attributing its success to downside protection and income generation through strategic options trading (35:32). Terranova and Mayer emphasized the importance of active management in navigating market volatility and capturing upside opportunities.

Geopolitical and Other News

The podcast briefly touched upon recent geopolitical developments:

• North Korea: North Korea confirmed sending troops to support Russia in the Ukraine conflict, a move criticized by both the State Department and South Korea (32:04).

• FCC Review: The FCC announced a review of spectrum-sharing rules among satellite systems to enhance space-based telecommunications, favoring companies like SpaceX's Starlink (32:04).

• Columbus Day: President Trump claimed he was reinstating Columbus Day, despite it never being officially canceled. In 2021, President Biden recognized Indigenous Peoples Day alongside it (32:04).

Specific Stock Performances and Downgrades

• Chipotle: Argus downgraded Chipotle to "Hold," citing slowing same-store sales, rising costs, and fierce competition. Terranova acknowledged the resilience of the stock despite negative news, pointing to strong earnings growth and technical support (30:19).

• Spotify: Bill Baruch upgraded Spotify, highlighting its momentum play and impressive earnings growth. Terranova noted the stock's technical setup and potential for significant upside pending a strong earnings report (37:59).

• Qualcomm and Sherwin Williams: Upcoming earnings reports were discussed, with analysts offering mixed outlooks based on sector performance and market conditions (43:14).

Conclusion: Market Sentiment and Future Outlook

The episode concluded with a cautious yet optimistic outlook. Analysts agreed that while recent rallies are fragile and driven by short-term factors, upcoming jobs reports and mega-cap earnings could provide the necessary catalysts for sustained growth. Terranova emphasized the importance of active management and staying invested to capture long-term returns, despite short-term volatility. Leventhal and Terranova also underscored the necessity of awaiting concrete economic indicators rather than relying solely on headline news.

Notable Quotes

• Joe Terranova (01:59): "If there was real conviction, you would see the longer-dated options rallying."

• Jim Leventhal (05:01): "Costs are going to stay high for the companies while revenues come down."

• John Mayer (35:35): "When the market moves 5%, 7% down, you should expect that a few days later... you'll see an upside movement in the market. And if you miss those upside days, they're gone."

Key Takeaways

• The current market rally is fragile, reliant on short-term options rather than long-term investor confidence.

• Upcoming jobs reports and mega-cap earnings are pivotal for determining the market's direction.

• Trade tensions and their delayed economic impact remain significant risks.

• Actively managed ETFs, particularly those offering high yields and downside protection, are gaining popularity.

• Specific sector and stock performances, especially in health care and technology, are under close scrutiny with mixed outlooks.

Investors are advised to stay informed, maintain diversified portfolios, and consider active management strategies to navigate the uncertain market landscape.

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Timestamp Reference

• [01:03] Bryn Talkington introduces the episode and discusses the market's recovery.
• [01:59] Joe Terranova explains the delicate nature of the market rally.
• [05:01] Jim Leventhal discusses high costs and declining revenues for companies.
• [12:58] Discussion on bond market dynamics and economic cooling.
• [17:33] Analysis of Microsoft and other mega-cap stocks.
• [18:21] Tiernova’s outlook on Meta and Amazon.
• [18:55] Concerns about Apple’s revenue growth.
• [27:15] Double downgrade of Lilly.
• [30:19] Terranova's stance on UnitedHealth.
• [35:32] John Mayer on actively managed ETFs.
• [32:04] Geopolitical news and FCC review.
• [37:59] Discussion on Spotify and its earnings report.
• [43:14] Upcoming earnings reports for AstraZeneca, S&P Global, and Sherwin Williams.

Transcript

[Scott Wapner]

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[Jim Leventhal]

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[Joe Terranova]

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[Bryn Talkington]

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.

[Jim Leventhal]

All right.

[Bryn Talkington]

Welcome to the Halftime Report. I'm Scott Wagner. Front and center this hour, the balance of stocks look to continue their tariff tantrum rebound. We are debating and trading these markets with the investment committee as always. Joining me for the hour, Joe Terranova, Jim Leventhal, Bryn talking to Steve Weiss along in a moment. We will check the markets little volatile morning. We are red across the board. That's not how we started though. And who knows where we will end. But Joe, it does speak to what the week is ahead, which is huge jobs report and of course four mega cap earnings reports among a very busy week of big names that are reporting as of Friday's close this past Friday S and P has now recovered 50% of its losses from the February all time high to the April 7th post Liberation Day low. And JP Morgan today says they are tactically bullish. It's not at all clear but that this could go on for multiple weeks. The pain trade they say is higher. You agree?

[Joe Terranova]

Okay, so let's talk exactly why I think the jobs report and the earnings from these four mega caps are so important because I think when you look at this rally, how have we gotten here? We've gotten here because there's been a pivot clearly on the administration. More Treasury Secretary Bessant, less Peter Navarro, less Howard Lutnick. If you think about where we are relative to last Tuesday, treasury yields since last Tuesday are down 20 basis points. So the equity market seems comfortable as long rallying as long as the bond market is actually going to go with it. The problem is there's this vulnerability to the rally. I would call it delicate. Right? This has been a real delicate. It's not a robust rally and it's reflected in something that I looked at over the weekend. If you look at where the majority of the buying is coming from, it's in short, dated options. If there was real conviction, you would see the longer dated options rallying. So that delicate nature requires that you need a new catalyst and hopefully you get that this week from the jobs report and from really strong earnings from the mega caps. Lastly, the way I'm playing it, I still have these S and P futures. I'm riding them higher. I have a 54, 50 stop in the futures, which is the equivalent of 54 and a quarter cash 25 handle premium. I've been riding these higher since last Tuesday. Do I have real conviction in it? No, I don't, but I'm playing the momentum.

[Bryn Talkington]

Jimmy, I feel like delicate is a good word to use just because it implies both ways. Like if you know you're going to get a number of headlines at any minute, in any hour, in any day of the week and the market's going to react to it, your position, whether bullish or bearish, is delicate because you just don't know what the headline is going to be and what the movement in the market is subsequently going to be.

[Joe Terranova]

Well done, Joe. I mean, you summed it up in one word. I completely agree. And the problem for me is this all does still really revolve around trade. I agree with you. The jobs report is important and of course hearing Capex plans from Microsoft, Metta, everybody else is very important. But this thing will go up and down in the big sense on what happens with trade deals. Here's why I say that. We pretty much know that there is damage being done in the economy. We can talk about, you know, ship loadings out of China and we can, we can figure out that there's going to be backlogs if this ever gets restarted at Los Angeles, Long Beach. That's after we deal with what might be empty shelves this summer in some stores, but that the equity markets right now are looking past that. They are saying that as long as we get some memorandums of understanding, some broad outlines of trade deals, and as long as those are enough to delay further reciprocal tariffs, then trade can pick back up and the big damage can be at least temporary in nature.

[Bryn Talkington]

It's a big lag. It's a big lag effect.

[Joe Terranova]

It's a big lag effect.

[Bryn Talkington]

Like the labor market is a lag effect. Yeah, the. And that's part of J.P. morgan's tactical note. They're not naive to what they say. The issues Are they just say that we're still one to two months away from seeing the negative impact of the trade war on the real economy. Exactly to your point.

[Joe Terranova]

Delicate again to the point we're all making here. If you think about the job market are still loath to lay people off. They remember 2021, 2022, how hard it was to get good workers. They're still loathe to lay them off. But if they get into a situation where profit margins which have been high start to meaningfully contract or worse go negative, they will lay people off. There is a finite amount of time to get these trade deals at least set up in the general concept.

[Bryn Talkington]

The other thing Brin holding the market up according to some is the fact that the labor market hasn't unraveled like JP Goldman Sachs is trading desk points out today that that retail hasn't blinked yet and likely won't until you get a deterioration in the labor market. So you know retail's hanging in. Some suggest we're tactically bullish that we could continue to move higher over the weeks to come. And Tom Lee suggests that the probabilities today favor a V shaped recovery for stocks. You buy it.

[Scott Wapner]

I don't know about a V shaped recovery. I think that to add to Joe and Jim's word of the year I would say rangebound. And so as it relates to labor, your first point understand with immigration stopping I think the labor force participation that denominator could go down because there are just less people in the labor force. And so I think though you also have what we're hearing is people somewhat have the higher, you know, people that own companies ptsd. I'm talking about small mid sized. I'm not talking about Facebook laying off people from reality labs have PTSD of not being able to have enough people at the workforce because of COVID So all I hear is people are hanging on to their work workforce en masse. I do think this rangebound is really important for investors from an allocation standpoint because the 200 day which the S&P is below is at 5740 and so I think that that is a high level. It's somewhat like outer earth orbit. We can get there but it's very hard to punch through it. And it also is gravity will say on the downside but we're below it. And so I do think we're in that mid range right now. So I think returns maybe we can go up 2 and a half or 3% before we hit that 200 day. But looking historically, you need a catalyst to punch back up above that. And so I do think rangebound is what investors should understand. And like a 5250 to a 575040 is a really good range. And so right now you have a little bit on the upside. One last thing you guys are talking about. You know, obviously Google's numbers and the importance of the hyperscalers. You know, Goldman had a good. Had a good. Had a good quote that if you look at Capex this year, they're expecting 9% growth in the S&P 500. And CapEx, if you take out the hyperscalers, that growth goes to 1%. So if you want to talk about manufacturing in the US and spending, these companies, Google already came out, these other companies coming out this week. That is very important for Capex to the US which also obviously creates jobs. If you take that down to the data centers, etc.

[Bryn Talkington]

Weiss, you know, I feel like, I feel like you got all beared up just as the market was getting tactically bullish. Like if you bought the Weiss s bomb on the halftime report. That was like, that was the buy signal.

[Jim Leventhal]

Who.

[Bryn Talkington]

Who knew? I don't hear Weiss. I don't know if the viewers hear Weiss.

[Joe Terranova]

Is he getting bleeped out?

[Bryn Talkington]

All right, we gotta fix Weiss. Yeah, we gotta fix his odd. Was that Weiss? No, I apologize. We'll work on that. Got him.

[Jim Leventhal]

I'm back.

[Bryn Talkington]

Okay, there's Weiss. So you obviously heard my question.

[Jim Leventhal]

You did.

[Bryn Talkington]

You got more bearish than most for. For certain. And the market clearly appears over the last handful of days that it's. It's become a tactical opportunity for people.

[Jim Leventhal]

Yeah. So. So let's look at it. I've been very cautious on the market since Trump took office. I've said that repeatedly. Said it then and continue to stay it. Also, most of my exposure, and I wasn't sure at one point has come from indices. I have sold some stocks where I do believe that this will have more than a headline risk, damage to meaning headline risk to the upside, such as Amazon and Google because of the cloud. And I don't think it was spectacular. Cloud report from Google, it was okay, they met the numbers. But going forward there will be challenges. So that's why I do with indices. I don't do it with stocks a lot. I'm sitting and I can take those indices off pretty quickly because they're so liquid. That's what I did. So I don't generally catch all the bounce up, but I do, I do participate now specifically, as last week, if you recall, my position was when I dropped the S bomb was that, look, the market's going to bounce on headlines. It's a little bit oversold right now. And as you get these headlines come out without substance, you can get the bounce. I still think they should. The market should be sold. So there's the disconnect. Disconnect.

[Bryn Talkington]

So you say that you'd fade this bounce that we got.

[Jim Leventhal]

Yeah, it was a, it was a pretty violent bounce, which no surprise, I mean surprised me as it was happening. But in quick recollection, why shouldn't be surprised. The drop down was, was just as violent. So. But the way I look at it, there's a disconnect between what the averages are telling, what the indices are telling you and what's happening underneath the economy. Britain is dead on. That after Covid, you don't want to let your employees go. There are two levels of employees. One are the skilled laborers and is our. As our economies become more automated, including the warehouses, you need more skilled laborers. However, you still then have the laborers that are, I call them day workers, unskilled laborers, laborers. And those, they're still not going to let go. Usually they're the ones to let go. So what does that do? So if you have to hold on to the workers with the. Not with the, with the business levels resetting lower from when you hired those workers, you're going to hit the margins.

[Bryn Talkington]

Of the companies and that's where you go with this. Weiss, I feel like you're telling us a riddle, like what we doing here, what we're doing. You translate this for us, please.

[Jim Leventhal]

Most people don't need a translator, but I'm happy.

[Bryn Talkington]

Yeah, what I'm saying, you're going to come back with something like that, but that's okay.

[Jim Leventhal]

Costs are going to stay high for the companies while revenues come down. We're a consumer led economy. You see what the approval ratings trump are. You see what the thoughts are on the economy, where it's going. So the consumer is drying up. We've heard that time and time again. So revenues down, margins higher. What do you have? You have a lower S and P reporting number. That's good. We're going to see if tariffs don't get handled. And Korea came out today, South Korea, and said we don't even know we can get a deal done by July. So you'll see another 200 fictitious deals announced, but they won't mean anything. Supply chains are frozen. So I believe the economy is going to session well on its, well on its way. There's a recession. That's why I think you sell the pops in the market.

[Joe Terranova]

All right, pick up, let me just pick up on the point of economic cooling and why it's so important because this is why to me, the bond market. And you've done a great job talking about this, the bond market is driving everything. And after Friday, if you see a ten year reverse, Scott, go back to 450. That's a problem. You have to understand this year at the end of the year, you have an avalanche of maturity, especially in the corporate market. You're going to have a tremendous amount of issuance that's going to be put into the market. And if yields are going to spike, you're going to have a problem there. So the economic cooling is actually exactly what we need. If you're talking to me about a 10 year at.

[Bryn Talkington]

I mean when you say what we need in quotes only to get bond yields lower, like what you're seeing today. Right, Yields. Yields are at the lows of the day and stocks are at the lows of the day because then you revert back to the economic cooling trade being negative for yields and being negative for stocks at the same time.

[Joe Terranova]

Yeah, listen, I think a lot of what, I think a lot of what's going on today is maybe some short term profit selling more than anything else. I do think there's this correlation where it's bonds higher and possibly equities higher. So I guess what I'm really saying is if you lose the bond market again, forget it, game over. The equities are going right, but yields.

[Bryn Talkington]

If there, if, if concerns about the economy only pick up, yields are likely to continue going lower, not higher.

[Joe Terranova]

That's the direction, I think we think that's the direction that we need. I think that helps the corporate issuance market. I think that does the work of the Federal Reserve that sees seems hesitant to go out and actually give the market rate cuts.

[Bryn Talkington]

Tony Pescarello at Goldman is looking. I don't think this would surprise people more. Gap up, gap down, price action. In other words, the volatility is going to continue. However, he does say that for the first time in two months, the technical factors tilt net positive. When you look fundamentally, I mean, the dynamics of what's happening right now are much less clear. And he says what you see is what you get. I think that Tony usually has a pretty good and insightful way of like distilling down what the institutional community is feeling because that's who he Deals with. He's head of hedge fund coverage at Goldman Sachs. He's talking to the biggest investors in the world on a regular basis and trying to set the level on what everybody's thinking. Yes, you could get some pops, but you could also get some drops until something more material and fundamental changes about the environment that we currently find ourselves in.

[Joe Terranova]

And I think you will get some drops. I agree with Joe that today's drop is probably just a little bit of exhaustion after four days of up and we were up earlier in the day so I think there's just a little bit of exhaustion. But the real meaningful drops are likely to come because I don't think we're done with the hawkish tweets or whatever you want to call them. I mean this, this is a president who likes to stir things up and he's almost certainly not done. The question again becomes how much damage is being done and how long will it last? Unquestionably there is meaningful damage being done. The flip side of this is that sentiment has turned a little bit. This is what Tony Pascarello is talking about. You see it in the advance decline line, which has more work to do.

[Bryn Talkington]

Definitely only near term to sentiment. Big picture sentiment.

[Joe Terranova]

So bad it. It is. But that near term sentiment, if it can continue, which is a big if, it's a big if it becomes momentum oriented, it becomes, it gets to what a lot of people are talking about is escape velocity to the upside. Let me be clear. We're not there yet.

[Bryn Talkington]

No. But maybe you get, maybe you get there Brin with the mega caps this week. Maybe Meta and Microsoft on Wednesday and Amazon and Apple on Thursday. Thursday start to do the job of reminding people why that trade has worked so well. Why they talk about Capex continuing unless they see something dramatically changing. Wedbush's Dan Ives, he expects strong results from big tech this week as a. Exactly what we're talking about. The two words he uses, confidence booster. We need it. We need one.

[Scott Wapner]

I think everyone's saying that the Mag 7 were dead a few years ago or few months ago. I think you have to revisit that now. They're all, they're all different. And I've been really clear. I think you're going to continue to see dispersion. Micro Tesla aside, they're not in the trillion. Tesla's not in that trillion dollar club anymore. The other trillion dollar members are actually pretty cheap outside of Microsoft and Apple which are definitely the most expensive of the two. And I said, I said earlier, I think the Capex spend is real, that goes through our economy. And I think these stocks are cheap. Look at, look at, you know, Google, you know, announcing the big buyback. These are really healthy companies that are, most of them are Capex light or capital light companies. And so I think Microsoft is going to be a great example because Satya has said very clearly that their spend, the amount of spend and where they spend it is going to be dependent on where the economy is. And so I think that's what we're going to learn from Microsoft is their view on the economy and how that spend will permeate itself throughout the economy.

[Bryn Talkington]

Yeah, Joe, a reckoning for the Mag 7 is going to test this market. That's what the Wall Street Journal is talking about. You know, ex. The rally that we've already seen back in these names. You look at Nvidia is down fairly substantially today. It's a reason why the NASDAQ is at the lows of the session down more than 200 points, one and a quarter percent.

[Joe Terranova]

So I always like to talk about position and sentiment and I think in both those instances they work in the favor of the Max 7 because position and sentiment obviously has been worked off from being aggressively bullish over the last six to nine months. Metta and Microsoft, there has been relative outperformance so far year to date. That seems to be where investors are paying somewhat of a slight premium. Apple, which I do not have a position personally, nor does the E ETF hold it.

[Bryn Talkington]

Meta got a massive price reduction today. I did loop. Yep, I did to 695from 900. Why? Because of China and softening consumer data. You don't often see a reduction like that. They were at 30 times, they've taken it now down 25. They look at the issues as transitory, but nonetheless and they urge people to buy on the weakness. But still the reset your expectations is the words of the day. Yeah.

[Joe Terranova]

I also think that price target is aggressive. At a bare minimum, you're Talking about nearly 60% rally for the stock. I think that matter. As I said before, I think the management of the balance sheet, I think what they've done with margins, I think you'll be okay there. I think you'll be okay with Microsoft. I'm concerned about Apple. I think Apple, where it is, is probably fairly valued. But the revenue growth keeps disappearing. That's a problem. Apple is not growing its revenue like the other Max 7. And when you think they're beginning to grow the revenue, then you see the actual contraction. So that's A headwind. I also think that when we continue to look at China and the importance of that geographic region in stimulating some growth, it's been missing and I think we could expect that it's going to be missing for fairly longer than we anticipated. On the plus side, you're going to get exemptions from the administration as it relates to Apple.

[Bryn Talkington]

Yeah, we'll see.

[Joe Terranova]

We'll see about. I'm sure that, that that headline is coming somewhere. So Amazon is the one name that I own personally. I bought it at 194. I own that because I think that AWS obviously has a lot of strong momentum behind it. But I also think the diversification of the product mix has been very strong and I think the advancement more and more into streaming is going to benefit this company.

[Bryn Talkington]

Weiss, you think the setup's better for Microsoft since. Let's take that one. It's tomorrow. Sorry, it's Wednesday. Reiterated by Jefferies goes 475. They say the setup is de risked. Right. This stock had basically done nothing and it just started to get something going again. Maybe you read through to ServiceNow like they do and SAP and even Alphabet and say, well, those results were better than feared. So the macro is more resilient than, you know, some have had feared. So time to be bullish. That story again.

[Jim Leventhal]

Yeah. You know, Microsoft is the one that I think about most because this is a core position as is matter to my bigger positions. Meta I think is my biggest next to Taiwan semi. But Microsoft define the most confusing and the reason is that they haven't executed tremendously over the last year. The stock has been sort of, you know, in this narrow range. I don't know. You know, it's really a question of degrees if it's been de risked because it depends where they miss. They miss on cloud. If they miss on their core business. Those are issues. I really don't have an opinion on it other than that I'm sticking with the position because it's a long term compounder and it can get through any storm and ultimately it'll grow into whatever valuation has. I feel the same way on matter which I actually think is more de risk despite the bounce it's had over the last few weeks. So. So that would be the horse I'd play in this. You know, overall I do think the market is susceptible to headlines more on the positive side in terms of bouncing. So I don't want to make it that I'm tactically bearish here right now. I happen not to be so. So will Be interesting week though, and that could change. This quarter is really. And the market move is dependent on earnings and guidance, which hasn't been good.

[Bryn Talkington]

You're not tactically bearish, so you're not bearish.

[Jim Leventhal]

I'm not technically bearish right now. Today, for the next few days, I am overall saying the market still trades below 5,000. That's unquestionable. You know, in my mind that's where we go. But right now you've gotten so many negative headlines as we saw last week. Aside from this pause and some profit taking, I still think the overall direction is lower. But if we come out okay, we've got an agreement in principle with Japan, then the market will bounce up. But nothing's happening on China.

[Bryn Talkington]

Bren chips look to be the most controversial space right now. SMH is down more than 2% lows of the session. That would be the first negative day in five because you've had a nice bounce back in names like in video. But as UBS says today that the controversy around that name remains high. You have the report about Huawei and their new chip to match Nvidia. That's probably weighing rather heavily on the space. You've had multiple price target cuts related to Nvidia as well. But a lot of the names in that area are all sort of tied together. The way that they end up moving. Nvidia goes lower, Broadcom does too, and then AMD and Micron and you know, on and on and on and on. But what about Nvidia right here?

[Scott Wapner]

Yeah, I think the, you know, the ban on their chips, the H20 chips is real, right? That I think that's why they wrote them off, wrote that five and a half billion off because they were specifically made for China. And so I do think though, if you, if you actually read the article, it's like Huawei is developing their testing. I mean, so is amd, so are these other companies. And so I think for, you know, in video, I think this is being priced into the stock today. It probably continues to be a laggard all year long, but like 2018, that was a wonderful time to accumulate shares of Nvidia then. And so I think everyone's trying to copy them. We all know the Chinese tech companies are wizards at taking apart, putting back together, stealing our IP and then creating their own product. But Nvidia still to me is the, is the, is the top dog in this race. And so, but that being said, I think sentiment is negative. These headlines will not stop. And so I think this is an accumulation year. The volume has been really low on Nvidia, so you really can't even sell calls right now and get much premium. So I think you just have to sit and ride this out because they're still in pole position in terms of innovation, innovation and technology within all of this space.

[Bryn Talkington]

Weiss, what do you got quickly on that Taiwan semi?

[Jim Leventhal]

You know China is increasing their, you know, their training drills. So that's what I worry about. You know, one day I could wake up. The other thing I'd say is that chip companies are frozen and the reason is before they go ahead with the building of new chip factories, they don't have any idea of whether they'll be able to sell the chips that they make here to other countries or they've got to build smaller chip factories fabs because they will only be able to sell domestically. So everything seems to be up in the air and that sort of can make you cautious on chips. But I haven't cut back Taiwan semi at all yet.

[Bryn Talkington]

All right, we'll take a quick break. We come back, we have our calls of the day including a double downgrade from one of Joe's stocks which means we debate it, we trade it next.

[Joe Terranova]

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[Jim Leventhal]

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[Jim Leventhal]

Have you said cool beans in the past 90 days?

[Joe Terranova]

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[Bryn Talkington]

If if this sounds like you, you're.

[Joe Terranova]

Stuck in the past. Discover is accepted at 99% of places that take credit cards nationwide and every time you make a purchase with your card, you automatically earn cash back. Welcome to the now it pays to Discover. Learn [e-mail] credit card based on the February 2024 Nelson Report as a salesperson.

[Scott Wapner]

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[Bryn Talkington]

Welcome back. Calls of the day. We have a double downgrade for Lilly. It was to reduce from buy at hsbc. See this price target. I got to do like a double take Joe to 700 from 1150. That the risk reward is no longer attractive. That the market has assumed a significant market share for Lilly. With potential economic sensitivity to the adoption curve for glp, we think these expectations might be revised down. Wow. They report this week to huge.

[Joe Terranova]

I've been a strong supporter of what we've witnessed in terms of the price action in Lilly over the last several years. Everyone knows it's been one of the significant contributors of the etf. But this is a good note. This is a good note that really gets in depth into the challenges that Lilly could be facing. Now if you're just purely studying price, okay, you're looking at momentum. Let's get past that. It looks fine. But now when you look underneath the hood and you look at the things that are important to me, you look at their revenue growth. Their revenue growth. There's too much variability to it. So you're talking about 44% revenue growth in the last quarter. But then in 2Q25, we're going to knock that down to 27%. You have a very strong gross profit margin in the 80s. But again, as you move through the course of the year, that begins to decelerate. So the, the possibility of deceleration in revenue growth, growth is real. And the other thing that I think you have to think about, besides the fact that there is competition now, besides the fact that Amgen is coming with a weight loss drug, is, is there elasticity to an economy that begins to contract for people utilizing the drug?

[Bryn Talkington]

This market, this move in the market on the stock chart today says to me that the market kind of says, yeah, whatever. I mean, the stock's down 1.24% on a double downgrade and a price target going from 1150 to 700. And maybe they don't believe that there is as much economic sensitivity to the adoption of glp. I mean, I suppose they're suggesting that if we go into a recession, then people are going to be and because consumer sentiment is where it is that they're going to be left able and apt to pay for these GLP1 drugs that are not covered by their insurance companies.

[Joe Terranova]

I think the calendar helps, Lilly, and I'll just because they're reporting earnings on Thursday. So you're going to wait until you hear what the earnings are. You're going to wait to see what the guidance is before you actively begin to pare down the position. Look, all I'm saying is I have an openness to what I read in the report as someone who obviously has a bullish position in it because of my ownership in the ETF itself. So I have an openness to look at this and I do see some of the things that they see that could be challenged as you move ahead.

[Bryn Talkington]

UnitedHealth price target got cut to 552 from 592. It's still overweight at Piper Weiss. You bought a little more of it today. Unh.

[Jim Leventhal]

I did. And that's, you know, if you take a look at this stock, absent that big drop after the quarter, it's really defensive on down days for the broader market, it tends to trade higher. But on a fundamental basis, look, when we heard that announcement from Humana a while ago that their stars rating losing business. UnitedHealth picked that business up apparently, or some of it and just misunderstood how that would the risk of that book of business as well as V28, which I mentioned repeatedly a number of times, which goes to the coding and what are allowable expenses by the government for. For health care. So I think right now it couldn't be more negative. It's still a permanent compound in my view. So it's not quite a big position yet. But I'll look forward to building as we get greater clarity throughout the year.

[Bryn Talkington]

Let's hit Chipotle Joe as well because it's not often that the stock gets a downgrade. It did today to hold at Argus on those comp numbers that we got recently. Slowing same store sales, rising avocado chicken and pepper prices, fierce competition among restaurants. Higher wages and store location costs are likely to remain headwinds. You agree with that note?

[Joe Terranova]

First time in the last five years you had the slowing same store sales. I think what's interesting about the stock is the reaction over the last couple of days since they reported earnings. Guess what the stock has done? They delivered some real negative news. They lowered the full year guidance. And the stock has actually had resiliency. It's actually rebounded, which is a point.

[Bryn Talkington]

You were looking for too.

[Joe Terranova]

Even talking about in all of the stocks that we talk about in this environment, you want to see stocks that give you the bad news and the.

[Bryn Talkington]

Stock just either hangs in or goes up. Yep. All right. Let's get the headlines now with Courtney Reagan. Hey, Court.

[Scott Wapner]

Hi Scott.

[Joe Terranova]

Good to see you.

[Scott Wapner]

North Korea has confirmed for the first time that it sent troops to fight for Russia in the war in Ukraine. State media reporting today that the country's leader Kim Jong Un ordered the deployment and that its troops helped regain control of Russian territory that was occupied by Ukraine. Both the State Department and South Korea have criticized the deployment as illegal. The FCC will open a review of the spectrum sharing rule among satellite systems. The agency's chair Brendan Carr said today the decades old rule limits power usage which hampers better coverage from SpaceX's Starlink and other systems. The FCC says the review will allow for a boost in space based telecommunications and a truth Social post Sunday, President Trump says he's bringing, quote, Columbus Day back from the ashes by reinstating the day as a holiday as he accused Democrats of destroying Christopher Columbus. His reputation. However, Columbus Day was never canceled as a federal holiday. In 2021, former President Biden became the first president to formally recognize Indigenous Peoples Day alongside Columbus Day in October.

[Joe Terranova]

Scott, back over to you.

[Bryn Talkington]

All right, Court, thank you. Courtney Reagan. Up next, the manager of the world's largest actively managed etf. You don't want to miss his take on the current market environment. Why this year shaping up to be another record breaker for that ETF and the space in general. ETF CF Edge is next.

[Joe Terranova]

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[Jim Leventhal]

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[Joe Terranova]

Get started [e-mail] AI are you still quoting 30 year old movies? Have you said cool beans in the past 90 days? Do you think Discover isn't widely accepted? If this sounds like you, you're stuck in the past. Discover is accepted at 99% of places that take credit cards nationwide and every time you make a purchase with your card you automatically earn cash back. Welcome to the Now It Pays to Discover. Learn more at discover.com credit card Based on the February 2024 Nelson Report.

[Bryn Talkington]

We are back on the halftime report. We go to Bob Pizzani now who has today's ETF Bad J.

[Joe Terranova]

Bob, Good to see you we've been telling you about this potentially record year for ETF. ETF launches. 288 new ETFs have already launched this year. Well beyond the 120 new launches. @ the same time a year ago we could see a thousand new ETFs in 2025. That would be an all time record. Leading the pack, actively managed ETFs. Let's talk with one of the leaders of that space, John Mayer, Chief ETF strategist for JP Morgan Asset Management. John, what are the major trends in active. What are the lessons investors should take away from this wild month of trading in April? You know, ETFs represent about 40% recently. 40% of the trading in the overall marketplace. Actively managed ETFs are really right now. This moment is a good time to focus on them. Because of the dispersion in the marketplace, an active manager can do bottoms up research and focus on the individual companies or securities inside an etf. It's really important right now. Yeah. So you oversee the world's largest actively managed etf. That's the premium income etf. Jp we call it jepi. This seems to have satisfied a big need for investors to have downside protection and generate income at the same time. How does JP work? Why has it been so successful this year? It's good question, Bob. JP is a unique fund. It offers a yield that it's approximately 9%.

[Scott Wapner]

Volatility is a friend to JAP.

[Joe Terranova]

As volatility increases in the market, so too does the income provided to the investor. And also given that the options roll on a weekly basis, that increases the income when volatility declines. Also offers the opportunity for upside in the underlying. So you're selling calls and using that to generate index.

[Scott Wapner]

Yeah.

[Joe Terranova]

Okay. So the ETF world also is seeing very big inflows into ultra short bond funds at the same time you manage a huge one. JPS is the symbol there. 4 1/2% yield. Big inflows again. Then short term investment grade corporate.

[Scott Wapner]

What's involved here?

[Joe Terranova]

Again, this is actively managed. You're buying and selling bonds all day long.

[Scott Wapner]

Yep.

[Joe Terranova]

You know, investors are looking to diversify their portfolios particularly particularly on the fixed income side. Given that yields have come down from 4.9 to 4.2 on the 10 year. This fund yields 4 1/2% and investors are looking to preserve capital while at the same time earning a relatively safe income. And it happens. This is actively trade. I want to point out you're not tied to any index here. Actively Managed all the time. All the time. Answer the original question. What's the takeaway from this wild month of trading? You manage huge amounts of active funds. What advice do you have to give about investors about watching this trading action this month? When you see the market move 5%, 7% down, you should expect that a few days later. Later you'll see an upside movement in the market. And if you miss, miss those upside days, they're gone. And that's going to really impact your long term returns. It's time in the market.

[Scott Wapner]

It's not timing the market.

[Joe Terranova]

That's an old Jack Bogle phrase and I love it that you said that. Thank you, John. Appreciate it much more. It's coming up on where the money is going in active management. Coming up on ETF Edge. That's 1:10pm Eastern Time. John will be joined by Mike Egans from ETF Action. That's ETF Edge, cnbc. Scott, back to you.

[Bryn Talkington]

All right, Bob, thank you very much. We look forward to that. Coming up, we have a committee move. We have a buyer. We have a buyer of a stock that is reporting earnings this week. Going to join us next with that move. Welcome back. I mentioned a committee move. A buyer of a stock which is reporting earnings this week. It is Spotify and it is Bill Baruch. Why'd you buy this name which reports tomorrow before the bell?

[Joe Terranova]

Spotify falls within that theme. We've been leaning into relative strength, relative.

[Bryn Talkington]

Outperformance and a lot of that becomes.

[Joe Terranova]

Little to no tariff impact. Spotify is using AI in ad generation.

[Bryn Talkington]

Ad targeting.

[Joe Terranova]

The technical setup is absolutely terrific. They're growing earnings terrifically. Last quarter, 589% year over year earnings growth. They're expected to show 127% year over year growth this quarter.

[Bryn Talkington]

Margins are expanding.

[Joe Terranova]

You know, the thing to hear is sizing it properly.

[Bryn Talkington]

You know, we grazed quite a bit.

[Joe Terranova]

Of cash and some more what may.

[Bryn Talkington]

Be considered speculative names at the end of March.

[Joe Terranova]

But this is a momentum play. I'd like to see the continuation in this technical setup. Coming out of earnings now, we size.

[Bryn Talkington]

It about 75 basis points.

[Joe Terranova]

If they miss and this thing's lower.

[Bryn Talkington]

It'S gonna have a little impact to us. But if we really beat and this.

[Joe Terranova]

Thing extends and breaks out, technically I see adding to the position and generating.

[Bryn Talkington]

1% of alpha over the next year in a, in a really strong environment year to date, chart looks like a mountain range. Why?

[Joe Terranova]

Well, I mean it's been resilient and.

[Bryn Talkington]

Growing earnings tremendously and yet a big technical Breakout at fourth quarter of last year.

[Joe Terranova]

The pullback over the recent weeks as.

[Bryn Talkington]

Well has hit that support level just perfectly and now it's rising again. So we're building a little bit of a wedge pattern. If this can break out and make new highs, I think there's a lot of strength behind it. I mean, it just looks like it's at that level of maybe short term resistance. If you look at where the prior and most recent move was, right, we're looking at a chart. You're on the phone and I don't know if you have a screen in front of you at this moment, but if you see, you know, into later March, obviously the stock moves up, then it moves down. Now it moves up right to that spot and looks like it's sticking right.

[Joe Terranova]

There it is, you know, $640, the.

[Bryn Talkington]

High early this year.

[Joe Terranova]

If we get a good earnings report, I expect expected to break out above there. What I really do like is when we extended in November, we created a little bit of a range.

[Bryn Talkington]

November till the end of the year, you kind of draw a wedge there. In the apex of that wedge was.

[Joe Terranova]

Exactly where we hit on support, about $480. So it's been, it's been trading really well technically.

[Bryn Talkington]

And if this breaks out, I do think that there's 50 to 100% upside in this stock.

[Jim Leventhal]

We have to see earnings growth continue to support that.

[Joe Terranova]

But I think there's a lot of momentum behind it.

[Bryn Talkington]

Okay, good stuff. Thanks for calling in, Joe.

[Joe Terranova]

You want it to end 111% in the last year, up 56% since we bought it on Halloween. What has happened? It's become the classic momentum stock. Tomorrow they report earnings, get a little nervous. Now Bill's buying it. Malcolm Etheridge bought it last week. I'm sure it's on Josh's best stocks in the market list. You have to to hear tomorrow that they're going to raise prices and that they're confident that they are going to maintain the pricing power that they have. There's been the comp that this is very similar as it relates to music, to what, to what Netflix has been able to do and that there's a degree of recession resiliency. We'll see. Let's see what the conference call looks like tomorrow. I think that's going to be incredibly important. But I will say this. There's a lot of people that are now buying this name.

[Bryn Talkington]

Yeah. All right. Good stuff. Thanks for that. Up next, Santoli with his midday word. After this break, senior markets commentator Mike Santoli here at post 9 with us for his midday word. As you like everybody else, I think, try and figure out whether, you know, this rally back, the rebound deserves an A, a B. I think it's pretty.

[Joe Terranova]

High in terms of the, the character of the rally. You know, a lot of the sort of internal stats and how strong and persistent it was for a few days. And so everybody knows you can tote a lot of those signals up and say, well, this has a pretty good risk reward set up historically, but you have to be looking at six to 12 months in the near term. I do think that almost was the easy part in the sense of you just had this huge burst of relief from. Okay, we're going to be somehow backtracking a little bit from maximum tariffs bond market. It could calm down quite a bit. The idea that economic kind of activity didn't just sort of sudden stop and now I do think it's a matter of you have to see something a little more tangible now. Up four and a half percent the S&P last week, up 14% from the low. So giving a little bit of it back, being short term, overbought, not that big a deal. But we didn't get Escape Velocity. There's a lot of other things you would look at that say, you know, we're making in a kind of a run for the downtrend line. Not yet. And again, we still keep struggling under the April 2 close.

[Bryn Talkington]

Got to get through important things this week to maybe get to a point like that. Mega cap earnings, obviously, but even more substantially probably because of where the narrative is, the jobs report.

[Joe Terranova]

Probably. That's right. Yeah. So jobs might be one of those things where just sort of the absence of an outright negative is going to be fine, even though nobody's going to want to extrapolate too much from those numbers. Yeah. And that so you know, the stock responses to earnings have been pretty good so far. We'll see if that does continue.

[Bryn Talkington]

All right. I'll see a three. Good stuff. Mike Santoli, the setup is next. All right. Back at 40k for the Dow, busy earnings week. As you know, beyond the mega caps, including Visa, which is tomorrow. Bryn, talking to you first.

[Scott Wapner]

Yep. I mean this company consistently has low teens earnings growth, 65% operating margin, margins. They're innovating with tokens, blockchain. They have a global presence. I think this is kind of an easy one going into earnings. They will continue to deliver and then warrant their above average multiple.

[Bryn Talkington]

AstraZeneca is tomorrow.

[Joe Terranova]

AstraZeneca is just a solid health care company. Solid pharmaceutical company. Why do I say that? Because it's got a broad spectrum of treatments. It includes oncology, cardiovascular disease, rare diseases. It's got an attractive valuation. Valuation? Decent dividend yield and it's in a defensive sector. I like it.

[Bryn Talkington]

S and P Global tomorrow.

[Joe Terranova]

S and P Global. This could be a difficult quarter. Comps are going to be challenged. Think about the issuance outlook. Not very good for high yield investment grade.

[Bryn Talkington]

What about Sherwin Williams, which is tomorrow as well.

[Joe Terranova]

PMI is having good housing. Market hasn't been good. That said, though, paint sales have been strong.

[Bryn Talkington]

All right, quick break. We'll do finals. On the other side of that.

[Joe Terranova]

Are you following the Halftime Report podcast? What are you waiting for? Look for us in your favorite podcasting app. Follow the Halftime podcast now.

[Bryn Talkington]

See on closing bell, 3:00 Eastern. See what this market's doing. Anastasia Amoroso, Ed Yardeni, Alex Cancowitz, Lauren Goodwin and Samir Samana. We'll take you through that final stretch. Let's do finals. Steve Weiss, your first Goldman Sachs.

[Jim Leventhal]

There's an article in the Journal today which is what I've been talking about. Now's the time you get in front of potential clients, increased relationships, existing clients, and that's what they're doing. So come at this even stronger than they were.

[Bryn Talkington]

All right. Thanks, man.

[Scott Wapner]

Brent Apollo Global earnings come out Friday. So maybe dollar cost average, we should get 15 to 20% earnings growth this year by this name. When? When it's on sale.

[Bryn Talkington]

The farmer, Qualcomm.

[Joe Terranova]

I don't usually step in front of earnings on a final trade. They're reporting on Wednesday. But here's the thing. The multiples come way, way down, which I think is pricing in an earnings disappointment that may or may not happen.

[Bryn Talkington]

Okay.

[Joe Terranova]

Jyoti Checkpoint Software. After last week's earnings report sell off, you get an opportunity to buy at a better price.

[Bryn Talkington]

Okay, so we're currently read across the board. We're back below 40k on the Dow. We shall see. And I'll see you you at three. You've been listening to CNBC's Halftime Report, the podcast. You can always catch us live weekdays at 12 Eastern only on CNBC.

[Scott Wapner]

All opinions expressed by the Halftime Report participants are solely their opinions and do not reflect the opinions of CNBC, NBCUniversal, their parent company or affiliates and may have been previously disseminated by them on television, radio, Internet or another medium. You should not treat any opinion expressed on this podcast as a specific inducement to make a particular investment or follow a particular strategy, but only as an expression of an opinion. Such opinions are based upon information the halftime report participants consider reliable, but neither CNBC nor its affiliates and or subsidiaries warrant its completeness or accuracy, and it should not be relied upon as such. To view the full halftime Report disclaimer, please visit cnbc.com halftime reportdisclaimer with HubSpot's.

[Joe Terranova]

Suite of AI powered tools, you can get more done way faster, speed up your lead generation and create attention grabbing.

[Jim Leventhal]

Lead driving, quota crushing campaigns in an instant.

[Joe Terranova]

Get started [e-mail] AI.