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Halftime Report
The State of Stocks 7/14/25
00:44:18
Frank Holland and the Investment Committee debate the state of stocks as investors brush off a new round of tariff threats. Calls of the Day include KKR, Taiwan Semiconductor, Wynn Resorts, Church & Dwight, and Exxon Mobil. CNBC’s Dominic Chu details today’s ETF Edge. The experts discuss the earnings setup for Netflix, United Airlines, and Marsh & McLennan. Investment Committee Disclosures
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- [00:00]
Frank Holland
A rich life isn't a straight line to a destination on the horizon. Sometimes it takes an unexpected turn with detours, new possibilities and even another passenger or three. And with 100 years of navigating ups and downs, you can count on Edward Jones to help guide you through it all. Because life is a winding path made rich by the people you walk it with. Let's find your rich together. Edward Jones, Member, SIPC on WhatsApp, no one can see or hear your personal messages. Whether it's a voice call message or sending a password to WhatsApp, it's all just this. So whether you're sharing the streaming password in the family chat or trading those late night voice messages that could basically become a podcast, your personal messages stay between you, your friends and your family. No one else, not even us. WhatsApp message privately.
- [01:03]
Scott Wapner
I'm Scott Wapner and you're listening to CNBC's Halftime Report, the.
- [01:07]
Joe Terranova
Podcast the most profitable hour of the trading day.
- [01:11]
Scott Wapner
We record this live weekdays at 12 Eastern.
- [01:14]
Joe Terranova
Listen in.
- [01:18]
Scott Wapner
Thank you, Carl and Sarah. Welcome to the Halftime Report. I'm Frank Holland in for Scott Wapner, front and center this hour, brushing off a new round of terror threats as investors gear up for a critical week of earnings. The investment committee standing by right here to help you navigate it all. Joining me for the hour, Joe Terranova, Shannon Sokotia, Steve Weiss and Jim Labenthal. Quick check of the markets. As Sarah and Carl just mentioned, the markets just turned very fractionally higher in positive territory. Right now you're looking at the Dow essentially flat, just up a few basis points. Similar story for the S and P. The Nasdaq, the best performer on a relative basis up just under a quarter of 1%. And all of this as investors digest the latest tariff threats out of the White House. And with that, we're going to go right to Megan Casella with much more. Megan?
- [02:00]
Frank Holland
Hey, Rink. We just heard a little bit more from the president on this. He was asked essentially how firm his threats are all of these latest threats now set to take effect on August 1. He was speaking about this in the Oval Office. Take a listen and we'll pick it up. On the other side.
- [02:14]
Steve Weiss
The deals are already made. The letters are the deals, the deals are made. There are no deals to make.
- [02:19]
Joe Terranova
They would like to do a different.
- [02:21]
Jim Labenthal
Kind of a deal.
- [02:21]
Steve Weiss
And we're always open to talk. We are open to talk, including to Europe.
- [02:26]
Frank Holland
So the deals are made in the president's mind. But if he gets to hear something that he likes better between now and August 1st, he is open to changing his mind. It might sound contradictory, but he's just looking for the best deal he can make. He went on to say that the Europeans are coming over to Washington. We have no further details on that, but it does suggest negotiations are ongoing and we'll see if they can strike some sort of an agreement, Frank, between now and August 1st.
- [02:51]
Steve Weiss
All right.
- [02:51]
Scott Wapner
I'm Megan Casella live at the White House. Megan, thank you very much for the very latest. All right. With that, let's turn to the markets. Joe, I'm going to turn to you again. The markets, they move just slightly higher right now. Look at the S and P essentially flat up a few basis points. NASDAQ doing just a bit better. Is this a sign that investors believe there's a taco trade in play? Like a, you know, Trump's going to change his mind about the tariffs despite what he just said. What he just said the White House, there are no deals. Those are the deals. Why did we turn positive after starting the day, in all fairness, slightly lower?
- [03:17]
Joe Terranova
Well, first of all, it's great to see you.
- [03:19]
Scott Wapner
Thank you.
- [03:19]
Joe Terranova
Always good to see you here this week, I think, look, the markets began to become desensitized to a lot of these tariff announcements after the May 9 Geneva meeting between the Chinese and the United States. So I think if you're looking for the catalyst for the market to experience some form of a correction and you're specifically looking at the announcement of these tariff rates, you're looking in the wrong place. I think ultimately what could be a catalyst would be earnings and the inability to see the type of quality earnings that the market is expecting. Back to the tariff rates itself, it's very clear that when we get these announcements in particular over the weekend, you've got all the quant strategies on Sunday night pressuring the futures lower. And then you see the strength and the resiliency of the market on Monday morning when you get the full participation. And that's what we have right now, Frank. We, we have a very resilient and strong market. We also have a somewhat quiet market. We are now early nine trading days into the month of July. And so far, the trading range, we have an intraday low on July 1st of 6177. For the S and P, we have an intraday high on July 10th of 6290. That 113 handles worth of S and P trading range, you have to go back to the summer of 2020, 19 to find a very similar quiet period. And there's an expression in this industry, you don't sell a quiet market.
- [04:49]
Scott Wapner
All right, Shannon, agree with that sentiment right now. How are you viewing this reversal when it comes to the market, again, turning higher after the President said there are no deals, which is counterintuitive to the moves that we've seen before?
- [05:00]
Frank Holland
Well, technically what he said is that the letters are the deals. But if you'd like to talk to us, of course we'll be open to other things. So, I mean, I think this is clearly the same narrative and rhetoric. And I think the challenge is here, Frank, is that we're on the precipice of an earnings season where there is still some concern about where these tariffs are going to show up. We're seeing them in terms of, if you look at the revenues that are being brought in, tariff revenue is being collected at a much faster pace than it was in 2024. So tariffs are hitting someone somewhere. There are those that say they're coming from the producers and they're digesting those and they're not passing on those costs. There are those that are, that say the companies along the supply chain are digesting those because we haven't seen them in PPI and cpi. The real thing is going to be what do we expect from margins? We're not going to see a margin hit necessarily this, this quarter from tariffs, but we could start to see those impact companies in the second half of the year. I mean, the US Consumer is not able to likely digest all of the tariffs the same way they were in 2018, 2019. We've been through this period of inflation, and I think the reversal that you're seeing here is that investors want to be positioned into an earnings season in which they're likely to be rewarded because it's a pretty low bar as it relates to earnings that are supposed to be delivered in the second quarter. So if you look across the different sectors, outside of technology and communication services, pretty, you know, lackluster expectations. And so I think that, to Joe's point, if you're not getting this market negative market reaction on tariff announcements, you're not seeing a significant concern about the dialogue around the Fed, for instance, which I think in another environment would have created a lot of volatility over the last couple of days, days, perhaps you need to be just positioned into this earnings season for the potential for companies to be able to maintain their margins and deliver above what the expectations are.
- [06:48]
Scott Wapner
You know, Shannon, to your point, we actually reached out to LZ last week, our data team, if you look at the earnings for the upcoming earnings season, the overall estimate, 5.7% tax 3.8. Comm services 2.8. So you do the math there. The earnings growth of those two sectors alone is more than the rest of the market. And so obviously some sectors are going to come in with negative growth. So when you're saying investors want to be positioned to be rewarded, does that mean we're going to see a big pile in into tech?
- [07:12]
Frank Holland
Well, no, I mean I think that, I think people are already in tech. They already have exposure there. But look, if you look at financials and health care, right, those are expected financials. In particular, less than 2% expected for earnings for the financial sector out of the s and P500. Health care is less than 2%. Energy is like 20, 24% negative. So you know there is potential for upside surprise on the earnings, but from the earnings standpoint. But you have seen this continued move in that during these periods you are looking at tech as that safety valve just given the absolute earnings versus the rest of the market.
- [07:46]
Scott Wapner
All right, Steve, I want to come over to you. We're talking about earnings season. We're kind of really shifting the conversation from tariffs. The markets don't seem to be reacting that much to the tariffs. Evercore ISI out with a note saying that tariff developments increase odds of a sell off. Obviously we're not seeing that right now. Markets turn positive. But they go on to say likely result in further EPS estimate reductions. Even as investors are saying Gwen, about the potential EPS estimate cuts, the inverse correlation of the trade uncertain and The S&P 500 increases the odds of a near term pause in the stocks rally. Do you see a set up like this one or do you think the tariff threat and fear may be overblown and people are really looking ahead, they're looking ahead to earnings.
- [08:22]
Steve Weiss
I think with the exception of the first announcement, tariffs on liberation or Independence Day, whatever it was Liberation Day, the markets ignored it. Markets ignoring every risk. They're ignoring the risk with the Fed. I mean you've got somebody in the White House who's a real estate investor. They live on debt. So you've got that, you've got. Normally you'd see a major upheaval in the bond market because rates would just go through the roof with instability there. If you take, if you listen to Kevin Haslitt today and I think a smart guy, he's got zero credibility what he says that tariffs aren't going to impact the buyer, meaning the consumer or companies. I can Tell you, in supply chain, as we look at some of our companies, aluminum is up 50%. So source from the U.S. the U.S. the companies here are not fools. They now see a pricing umbrella 50% above where they were. So where are they? They raised their prices 35%. So even if you don't pay the tariffs, you're going to pay it here. And look, companies that have EBITDA margins, like grocery stores, like many others, the auto companies, they're mid single digits at best. They can't absorb the tariffs to operate a loss. So we'll come through. So the question is back to Trump. He said there are deals, there are no deals. There are letters that he's saying this will be our deal. But deal takes two parties. So he's going to have to renegotiate the question that you bring up at some point. He's not going to tackle it. At some point he's got to say we're doing this not just with steel and aluminum, but more broadly. So every other company, every other country feels it. The critical countries are of course, India and the EU and Japan. Once you get through those. And those really don't matter. So I think you've got to see some deals or some maybe fake deals like we did with the UK really doesn't matter in terms of the market, overall risk in the market, it's definitely the Fed. Right. You can't put a complete dove in there. It's definitely tariffs. It's also inflation that that could come from the spending bill that was just passed and then it's more cuts they're talking about. So I think that the market's going to continue to have ignore these risks as they have for the last year and the market steps. Okay. And just the fine word in earnings, it would be an extremely disappointing season, earnings season if more than 75% of the companies don't exceed expectations because that's what they always do broadly, both on the revenue line and on the earnings line.
- [10:57]
Scott Wapner
But is that what you think is going to happen? You're saying you expect that to happen? Yeah, I do.
- [11:01]
Steve Weiss
I do.
- [11:01]
Scott Wapner
So I feel like the three of you are pretty optimistic about this earnings season.
- [11:04]
Steve Weiss
I didn't say that. I didn't say that. Well, I mean, I don't think that.
- [11:08]
Scott Wapner
Which, which have been lowered. In all fairness. I think you have to have a.
- [11:11]
Joe Terranova
Strong growth of what's going to happen this earnings season. The potential for margin compression to occur is real. And I think if you're looking for some form of a near term Catalyst that's going to shake the bullish momentum. I think it's coming from earnings. It's not coming from the announcement of these particular tariff rates. It doesn't.
- [11:30]
Steve Weiss
It doesn't. It will come. The tariffs do stick if he doesn't back off. So August 1st comes and all those tariffs get.
- [11:37]
Scott Wapner
You mentioned that the EU and in your mind, India are the two important ones. Well, the EU one's hanging in the balance right now. The EU said they want to work with the president, but they've also said previously that some of the terms seemed a bit unreasonable and that's why this has been extended. Right.
- [11:50]
Steve Weiss
So my point is that everybody said we want to work with the president. India said it, Japan said it. Japan said we'll have a deal by June, July, where are we?
- [11:58]
Scott Wapner
In all fairness, some people say they want to work with the president but have also spoken out saying it's unfair. China is a great example. And obviously China is a huge situation there when it comes to trade. I don't want to leave Jim out. Jim, I want to come over to you.
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Joe Terranova
Never leave Jimmy out.
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Scott Wapner
Yeah, we were talking before the show, so please let me know if I'm mischaracterizing, but you're not quite optimistic about earnings season. You're actually taking a little bit of money off the table. Oracle in particular. Oracle up over 30% year to date. What's the rationale going into earnings season and also the idea that we have July seasonality where July is one of the best months of the year.
- [12:27]
Jim Labenthal
Yeah. So let me just simplify my message. I'm picking stocks. Okay. I see this is a great discussion. Risks, opportunity. I see them fairly balanced. I look at a market overall, the s and P500, that trades at 21 times next year's estimates. Maybe those estimates will be hit, maybe they won't. But I don't mind in that environment taking just a little bit of money off the table. And for everybody watching, I want to make this clear I'm not negative.
- [12:52]
Scott Wapner
Okay.
- [12:52]
Jim Labenthal
Don't look at it that way. What I'm trying to do is I'm saying some of these stocks. First off, remember, I've been fully invested since the beginning of the year. So this is a gangbusters year for me so far. I'm taking some money off of the table in my winners. Oracle was last week. Frank, you'll be on tomorrow. I'm most likely to have another one tomorrow. Just raising a little bit of a war chest. Because what I think will happen this earnings season, I do think overall were likely to exceed a very lowered bar. But what I'm really looking for is what always happens in earnings. Season one or two stocks actually have good reports in the markets for whatever capricious reason just decide to sell the heck out of them. And I want to have some dry powder available for when that happens. If it turns out that I'm wrong on that and the market keeps going higher, I'm not going to build so big of a war chest that it's going to hurt me as the market goes higher. But I do want to point out seasonality usually does occur August, September and it's frankly because of people going doing exactly what I'm doing, saying listen, we've come a long way in a short period of time. It's August. I want to put my feet up. I'm actually going to take a little time off later this week. Want to put my feet up and not worry about things so much. I'm still going to be plenty invested.
- [13:57]
Steve Weiss
Okay.
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Jim Labenthal
The market goes down, I'm going to feel it, but I'm going to have the dry powder with which to pounce.
- [14:02]
Scott Wapner
All right. So with all that said, if you guys don't mind, Lisa Shallow from Morgan Stanley wealth out with the new note. I just want to it's a little bit long. I want to run it by you guys and see if you agree disagree with this thesis. She says in part her and her team we see the S&P 500 gains beyond the 6,500 to 6,600 range as difficult to achieve. Some investors still envision risk around inflation and policy restraint. We're also unconvinced the dollar weakness is purely benign given the amplification of tariff impacts. Furthermore, we're skeptical that tax code changes net of some pay fors will are stimulative enough to prompt a new investment boom. And then they go on to say something you guys were talking about. Operating margin gains may also be elusive as accounting mechanics, demand destruction, tariff absorption and commodity gains brought upside earnings surprises. So quite a bit to digest there, Shannon. I just saw you kind of raise your hand there. Yeah, a lot in there. I'm going to be I want to.
- [14:49]
Frank Holland
Focus on the very last part that the tax opportunity is not enough to stimulate a boom. What I would counter, and I have a lot of respect for Lisa, what I would counter is that if it would not be if we were in a situation situation over the last number of years where there had been significant investment capital expenditure and we had not been in a very Difficult regulatory environment. So I think that it's there are multiple tailwinds that while the tax changes alone are not perhaps not enough to catalyze this investment boom. Think coupled with deregulation, lower interest rates which are coming not going to, you know we're not spending a lot of time on that. And also the likelihood that companies have been waiting share investors have not been asking companies to grow in this past period. They've been allowing them to hunker down and protect to Joe's point their margin that is going to shift. And so if that to me is one of several forces that are likely to drive to drive this boom which is why we think that there will be an acceleration of growth into 2026.
- [15:52]
Scott Wapner
You know and offers I was just talking to a pretty big transport CEO exposure a lot of different industries. They said the one big beautiful will passing. Yes, that's a different tailwind and companies want to invest but at the same time if there's any more tariff disruptions they may start to pause again. So concern that while a lot of people think that this tariff won't happen on August 1st.
- [16:09]
Frank Holland
They are paused. They are paused. They're not going to pause again. They're all paused there. Isn't this massive activity one big beautiful.
- [16:15]
Scott Wapner
Bill started or is it still paused until more clarity?
- [16:18]
Frank Holland
No, I think you need to have more clarity. But I think it's one of several catalysts. I mean tariffs are going to be with us through the end of the year that bottom line. And so at some point though investors are going to catalyze investment to these companies because they're really looking for you not to sit on your hands anymore.
- [16:33]
Steve Weiss
And, and the, the what was in there to drive capex. There's small levels of Capex. It's not like you're building a new plant.
- [16:43]
Scott Wapner
They're basically pointing the tariffs to build new plants.
- [16:45]
Frank Holland
No, you can do it.
- [16:46]
Steve Weiss
How long do you think it takes.
- [16:47]
Scott Wapner
To put up a three to five years about a new plant? But that was bill supposed to 10 years to start the process.
- [16:53]
Steve Weiss
Well for building plants, yes. And they're expanding it but the point is to drive additional growth. You're not going to see that the major Capex spending is still on pause. We've yet to speak to a CEO where there's clarity and that even includes where it's not, you know, major capex spending like health care insurance company. They don't know where the FDA is, you know, so everything's difficult. They know where Medicaid cuts are going.
- [17:19]
Scott Wapner
To Line up then the other side of the climate S and p price targets. RBC actually raising their price target 6250. Now it was 5730. But they say they're a bit worried about the momentum trade. Joe, this is something you've highlighted. There's no change to their 2025 EPS forecast to 258 and that's slightly below consensus. But they what they've learned from early reporters, which makes them think it's too early to stop worrying about the tariff impacts, that they're adding the momentum trade and earnings sentiment for mega cap growth to the list of things that are worrying analysts about the stock market near term. Are you worried about the momentum trade?
- [17:50]
Joe Terranova
The momentum trade is a reflection of positioning and I'm always concerned with where's positioning, where sentiment. Look, I think a lot of these notes are paying too much credit between the correlation of the macro environment and where stocks go. I think it's more about positioning. I think it's more about earnings. And I think when you're you're talking about specifically about the momentum factor in early July, you have seen days in which it looks like the momentum factor is rotating to other areas of the market. As I'm speaking, the momentum factor today is strong once again. In fact, it is the strongest factor to date. So it is not proving to have this sustainability in terms of deteriorating into a deeper correction. We're not witnessing that so far. And what that means is that positioning is going to remain anchored where it is. And if positioning is going to be comfortable and anchored where it is, you're not going to get that rotation that's going to force the correction in the market. You ultimately will get that rotation at some point. If we fall down on earnings, you mentioned technology, communication services and the expectation there for earnings. There is a lot of pressure on those two sectors to perform accordingly because that's where the strength of the earnings season is expected to be. And that's where the recent positioning has started to build once again. So you kind of look at those sectors and you're very aware of what that performance is going to be. And most importantly, what's the earnings reaction. I'll tell you this, if you have a good earnings season and the market does not respond with further appreciation, that's a signal the market's exhausted and you probably will expect the remainder of the quarter. It'll be difficult to achieve further gains.
- [19:31]
Scott Wapner
All right, let's look ahead a bit. Deutsche bank out with the note kind of talking about what you're talking about it's a quiet market right now, but the title of this note is actually Beware the end of the month. They say in part, markets are heavily discounting the new August 1st tariff rates. And given how we might not know the outcome until the final hours, there is the potential for a very sharp market reaction. If the tariffs snap back higher on August 1st and we get an underwhelming jobs report that would easily resurrect fears around a US Recession. Do you agree with that thesis that there's two big risk factors coming up.
- [19:58]
Joe Terranova
At the end of the month cutting then?
- [20:00]
Scott Wapner
I mean, I don't, I don't think the note gets that far into.
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Joe Terranova
Okay, but, well, but the point is there's something on the other side of.
- [20:07]
Scott Wapner
It and that you cut.
- [20:08]
Joe Terranova
You're talking about that's, well, let's, let's just get to the beginning to cut once again from what was done in the fall right in September. To me, I've identified, I think that's the moment that the Fed will actually start to cut once again. And I think the reason for that is I don't think you're going to see the inflation show up in the June readings which will be reported tomorrow, and then in the July readings which will be reported in August. If you don't see that inflation begin to show itself. The chairman has already said under testimony in front of Congress and the Senate, those are the two months he's looking at. So I think it's September. Ultimately, you get that rate cut once again. Probably another catalyst for the market in particular as you move into the fourth quarter.
- [20:49]
Scott Wapner
Just one quick we're going to find out with pie this week about inflation if producers are raising their prices. But Jim, I want to come over to you. Are you also, is that why you're starting to trim a bit? You're seeing that potential storm at the end of the month?
- [21:01]
Jim Labenthal
Well, let's just be clear. My, my trim is tactical. All right. I think by the end of this year, just to go back to where we started, I think the bill, the one big beautiful bill, is stimulative in a nice way. I think the Fed will cut because of what you're saying, Joe. I think the inflation readings are likely to come in lower. And by the way, for tomorrow's CPI, the headline figure expected is 2.6%. And Chairman Powell has said if not for tariffs, he'd be cutting already. So if you don't see real tariff impact, those cuts are coming. But I do want to talk about one Risk that also is coming and we've got to be clear about this August 1st, all right, that's the new line in the sand. If we kick that can further down the road road. If negotiations aren't done, if trade deals, letters, whatever, whatever it is aren't done and we kick that can further down the road, I don't think the markets are going to like that at all. Everything that's been talked about already with uncertainty and you see it by the way in continuing jobless claims, clearly there is no hiring going on. There's no firing either. But if you continue to kick that can down the road, I'm worried that firing will pick up.
- [21:58]
Joe Terranova
Jimmy, don't you expect this is going to be ongoing for the four years of, of President Trump's term? I mean, you know, this is fortunately.
- [22:05]
Jim Labenthal
Joe, you're probably right. Okay, so I'm sort of saying what the most benign outcome is, is you get a lot of clarity on August 1st. I would settle for some clarity but what I don't want is what we had happen last week which is basically had no progress. Right. So kick the whole can down the road another three weeks. Don't do that. We can't do that.
- [22:23]
Frank Holland
I think.
- [22:24]
Steve Weiss
I don't know if the camera can get this, but I was just sent this by friend of mine is one of the top bond brokers for duties. When you import into the US you've got to pay a duty last year on a million 2 of goods the duty was 35,000. What it says here, if it says no prediction possible on what you have to pay for the duties. So you don't know what's going to cost you to bring things in to the country. If you don't think that has a chilling pact on it, then you're, you're mistaken. And number one, number two, let's not forget in terms of inflation which still is a risk that there was so much buying forward, right to beat you go look for a car. They say still you can buy them even a week ago on pre tariff costs. So once you see that inventory subside, you'll see inflation move up and that will also be chilling towards demand. So the question for the earnings is if the companies are honest how much pull forwards and buying that's juice their earnings and their revenues. Now I don't know if we have a determine that but I'm optimistic on the markets on the, on the way the markets can approach the earnings period. I'm not optimistic on earnings supporting the.
- [23:33]
Joe Terranova
Value the market seems comfortable With a average weighted tariff of 15%. I think everyone would agree that, yes, that's basically what the market is pricing.
- [23:41]
Steve Weiss
I think it's 10%. I think it's 15%. Marks come up.
- [23:44]
Joe Terranova
Okay, 10%. I think it's 15. We agree, whatever. We agree to this. I think if you go 12 and.
- [23:51]
Steve Weiss
A half, it doesn't matter whether. It doesn't matter certainty.
- [23:56]
Frank Holland
It was.
- [23:56]
Scott Wapner
They say the aggregate now is about 18% right around there.
- [23:59]
Joe Terranova
Yes, but they say that's 12, 15, 18. Yeah, if you begin to go 20, 25%, I think the market has to recalibrate on that.
- [24:06]
Scott Wapner
I don't think that's percentage points rattles Everybody. I mean, 18 to 20, what's the big difference?
- [24:11]
Jim Labenthal
I started the year at 22 to 3%.
- [24:12]
Scott Wapner
That's something like that. So it was definitely low single digits. But you're saying just a few percentage.
- [24:20]
Joe Terranova
Points the market is comfortable with, let's call it that. Teens range. If we believe that as this progresses, and I disagree that August 1st is the end date, this is going to go on until the entirety of President Trump's administration. This is going on.
- [24:36]
Scott Wapner
There's going to be continued talk about tariffs, at least on paper, on the calendar right now, while we switch gears a bit, look at the banks. The big banks start reporting just as soon as tomorrow. Actually, looking at Wells Fargo, Citi, also JP Morgan, all of them are higher right now. Shannon, I want to come over to you. What are your expectations for big bank earnings? A quarter ago we saw them benefit from some of the volatility. At the start of this quarter, the Vix was above 50. Now it's certainly settled back down. Do you see that same tailwind for the banks?
- [25:00]
Frank Holland
Well, I think investors have been cheering the, you know, the results of the bank stress tests. And so therefore you've seen some nice appreciation in financials. And so the other thing to think about is, like, what we don't talk about nearly as much as we did, I think, you know, seven or eight years ago is buybacks. And, you know, what are these companies, what are these banks buying their stock at back at, and is that attractive in this environment? I think the other challenge is, is that, you know, what is going to be enough to catalyze this significant shift higher in M and A? What is going to be, you know, kind of driving, you know, whether it's going to be trading volume or where's going to be, where the, where are the earnings going to be driven by. And so I think for, for us, when we look at just this rotation to, you know, sectors outside of technology and communication services. Financials is a good home for that. One of the things I would say though, Frank, is that outside of the bank, the big banks and the brokers, you haven't seen as much participation with the regionals. And so, so that that divergence between the big banks and the regional banks, that's pretty wide right now. And so you're seeing this pickup in this deregulatory environment we talked about earlier. Starting to see that in some of the deals that are being announced.
- [26:07]
Scott Wapner
We just saw a deal today, Huntington buying a Texas bank, $2 billion deal. Your view on this? One of the big tailwinds for financials this year was supposed to be deregulation.
- [26:15]
Joe Terranova
Yes.
- [26:15]
Scott Wapner
Is this the first sign, is this the spark in your mind that deregulation is going to lead to consolidation, M and A, etc.
- [26:21]
Joe Terranova
There was a little bit of an uptick in M and A in the month of May, a mild uptick. We're beginning to see the expectation that you could see further M and A as we move through the end of the year. As it relates to regional banks, there's been a clear divergence in performance. We have significant ownership there. So there's a lot of disappointment in some of the names that have underperformed. In the case of Huntington bank, that is a regional bank that's working really well over Ohio based regional bank looking to expand, clearly growing. Intentions to go to the Carolinas. This deal today that gets them deeper into Texas, Dallas, Houston, Expanding, growing, that is what you want to see from these regional banks. However, it is not a universal thesis. It's very idiosyncratic. And that's why when you look at these regional banks, our ownership having significant amount of it, it's really been somewhat frustrating because they have not overall performed.
- [27:15]
Scott Wapner
Just to cap it off. Want to go back to the big banks. Why? You own Goldman. Goldman getting a downgrade today from Citizens actually pulling the price target. Analysts basically saying this stocks run up, I don't see any more upside.
- [27:26]
Steve Weiss
Who cares? I mean it's just, it's just one person's opinion, right? One person's opinion. And I'm just in it for the long haul. So look, I think most of my portfolio is overvalued, but what am I going to do? So sell it now, buy back lower. You're not going to pay taxes on it. I'm going to stick with it.
- [27:41]
Joe Terranova
All right, you're not going to sell it. Goldman Sachs is in the sweet spot. Stress test just finished. Capital allocation strategy benefits significantly from that. Investment banking has been strong. There's strong engagement on trading. Goldman literally is back in the sweet spot that we remember from 20 years ago.
- [27:58]
Scott Wapner
Jim, before we go, I want to get your take on Citi. Obviously Citi coming up as well. Last quarter was fixed income trading. It was equity trading that rose by 23%. You see a similar setup this time around?
- [28:07]
Jim Labenthal
Yeah, I see a similar setup. I see a lot of other positive things that can go right. I mean some things can always go wrong. But there's a large capital return to shareholders going on. They're in the middle of a 20 billion buyback. The share, the market cap's around 120 billion. That's meaningful. You can see upticks in investment banking and wealth management. And not that I'm saying this will happen tomorrow, but something to do be on the lookout for is improvements with regulators. They are working under some consent orders and maybe there's some light at the end of the tunnel that they'll talk about.
- [28:37]
Joe Terranova
I got to give you one more. In the financial sector, watch the insurance companies. They had pricing power. They were performing well six to 12 months ago. Now they are all rolling over. They've lost their momentum and the struggles are beginning. You're even beginning to see the revenue growth deteriorate.
- [28:51]
Scott Wapner
All right, moving on. Coming up next, we have our calls today on five committee stocks. Half ounce back in just two minutes.
- [29:01]
Frank Holland
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- [30:36]
Scott Wapner
And welcome back to the Hats on report. Let's get to some of the big calls of the day. KKR downgraded to market performance citizens even though Weiss said who cares? Joe, I'm going to toss this one over to you.
- [30:45]
Joe Terranova
I'm not sure why. Look, I think private equity.
- [30:48]
Steve Weiss
Do you care, Joe? They downgraded it.
- [30:50]
Joe Terranova
Oh, I always care.
- [30:51]
Scott Wapner
Care.
- [30:51]
Joe Terranova
I pay attention so much nicer than me. Come on. You have to respect the analysts. Those you have to read them. Some you agree with, some you disagree with. We're actually going to talk about one in a little bit. Just do it right now. Church and Dwight got downgraded so I totally agree with that. I think Church and Dwight Momentum's rolled over staples running at valuations that are high. But as it relates to private equity, KKR has had a little bit of a bounce back. We took ownership of it during that bounce back. We will see see what happens here on this earnings report. I think this is going to be a very strong earnings report for a lot of private equity names. So I somewhat disagree with the call. I think you stay with them.
- [31:26]
Frank Holland
But they're also down year to date too, right? Like just a little bit a touch.
- [31:29]
Joe Terranova
Marginally down year to date. I mean they have 5%.
- [31:32]
Frank Holland
They haven't participated the way other, other things have.
- [31:35]
Scott Wapner
But it's a stable, it's a defensive.
- [31:36]
Joe Terranova
They're down 5% year to date. They're up 20 plus percent over the last 52 weeks. So when we are looking at Momentum we're not just looking at a shorter body of a period of time. Rather we are pulling back the lens. We're looking at 12 month periods as well.
- [31:49]
Scott Wapner
All right, moving on. We're going to one of your holdings. Why? So we're going to see if you care this time around. Taiwan semi added as a catalyst driven idea over at Morgan Stanley. Take a look at the chart right now pulling back about 3/4 of 1%.
- [32:00]
Steve Weiss
That's great call and I care A lot. Now look, here's my point. I don't care because I don't know the analysts. So how could I care what they're saying if I don't know them? Let's move on to this. Look Taiwan semi keeps saying it is the best position. Very well positioned in video if you like Nvidia. This is a cheaper way to play it. It's still got great growth. It'll keep going. It's dominant. They are onshoring to take 10 years so to build the plants here. They told, you know they, they pulled out of I think it was Japan. They can put a plant there and now also adding that to here. The big concern for me though is is of course what's happening with China. And I worry about that and I worry about it quite a bit actually. It's you know intelligence services that are getting reported say invasion 27.
- [32:50]
Jim Labenthal
Okay.
- [32:50]
Steve Weiss
I think they preserve this but it'd be under communist rule. So you don't want to be.
- [32:54]
Scott Wapner
We're going to button it up really quick once I want to send me but part of the analyst thesis there is if they raise full year guidance the stock moves higher. Pretty normal set up there. All right. Want to move on to when Target raised to 1002028 over by Deutsche. Jim, you own this one. Your take on this call Jimmy, you.
- [33:08]
Joe Terranova
Work at Deutsche also.
- [33:09]
Scott Wapner
No, no, I said call by Deutsche.
- [33:11]
Joe Terranova
But I said Jimmy probably wrote this.
- [33:16]
Jim Labenthal
Joe, I need you to get in this at the end of the month. All right, but we'll talk about that at the end of the month. Look, when is enjoying a lot of positive analyst sentiment right now it has gone from $70 a share in the dark days of just three months ago to now over 110. I do think that the stock is now starting to price in two years from now. Some actual earnings power from the Dubai resort. I think it's getting respect for the capital allocation that it's done. It's a very well run company. I do at this point in time I would expect the stock to consolidate a little bit for the next month. Earnings August 12th. I'm not getting, I'm not getting bigger in it right now.
- [33:53]
Scott Wapner
You're just going to rerated outperform over Evercore. Your take on that one, Jim?
- [33:59]
Jim Labenthal
Exxon. Love Exxon. All right, look, we're going to have the discussion I guess we're going to have to have the discussion about which way crude oil prices are going to go. And the answer is I don't know and nobody knows. And I don't care. Steve, do you care about which way prices and oil are going to go? Hang on any in any oil environment, this company makes money. It returns it to shareholders in the form of dividends and share buybacks. Once in a while, it makes a big purchase like it did a couple of years ago. The earnings continue to grow. The share count continues to shrink. This is a good company to own.
- [34:29]
Scott Wapner
By the way, last week the IEA said demand is going to be lower than previously expected. But I have a sense of correction at least. You know, get back next week when.
- [34:37]
Steve Weiss
They change their view.
- [34:38]
Jim Labenthal
Oil actually rally last week.
- [34:40]
Scott Wapner
We got to move on to something that everybody agrees on. Contessa Brewer is going to do a great job with these headlines. Contessa, good afternoon.
- [34:45]
Frank Holland
Thank you for the vote of confidence there. Okay, to the news now. Rest of the rescue crews watching the river's levels today. They're searching for those still missing from the July 4th floods that devastated Texas Hill Country. Search and rescue operations actually stopped for the first time yesterday because of rain and rising water levels. And that's with 150 people roughly still missing. Federal Reserve Chairman Jerome Powell has asked the inspector general at the central bank to look into the $2.5 billion project to renovate the headquarters. According to Politico, that request as White House criticism of Powell ramps up. The Fed just posted a frequently Asked Questions page on its website, seemingly in response to the budget chief Russell Vogt's recent criticism of those renovations. And in honor of the July 25 release of Happy Gilmore sequel, Callaway Golf's putter division Odyssey has released a $500 limited edition of Adam Sandler's iconic hockey stick putter. The company says the putter, well, you can't even get it because it sold out within hours. I mean, maybe it's popping up on ebay already. So if you're willing to spend more than what the list price was, go ahead and get. But I mean, who doesn't want a putter shaped like a hockey stick?
- [36:04]
Scott Wapner
I mean, does the putter matter? As they say, it's all in the hips. All in the hips. All right, Contesta Brewer live back at CNBCH Crew, great to see you. Coming up next, Dom Chu is standing by with today's ETF edge. Halftime's back right after this.
- [36:19]
Frank Holland
At Capella University, learning the right skills could make a difference. That's why our business programs teach you relevant skills you can take from the course room to the workplace. A different future is closer than you think. With Capella University. Learn more at Capella Eduardo which are.
- [36:35]
Steve Weiss
America's top states for business?
- [36:38]
Joe Terranova
Get all the data and complete state by state analysis.
- [36:42]
Steve Weiss
See how your state measures up. America's Top States for business now on.
- [36:46]
Scott Wapner
Topstates.Cnbc.Com welcome back to the Halftime Report. I'm Dominic Hsu with today's ETF Edge. Now, hedge fund strategies are entering the.
- [37:01]
Joe Terranova
ETF marketplace at a pretty big pace right now and it could be a new opportunity for investors looking to diversify their money. Unlimited Funds is one of those firms unveiling two more hedge fund like ETFs starting tomorrow.
- [37:14]
Scott Wapner
Today I'm joined by the CEO and.
- [37:16]
Joe Terranova
Chief Investment Officer Bob Elliott at Unlimited Funds and he was formerly Bridgewater's Chief Investment officer. So hedge funds have been your thing for a while. Take us through exactly why, Bob, Investors are looking for hedge fund strategies with within an ETF wrapper.
- [37:33]
Steve Weiss
Well, I think for the vast majority of investors, they have basically long only portfolio stocks, bonds, other long only alternatives like private credit, private equity, etc. And what they're really missing in their portfolios is that flexibility to run long and short in certain market environments where maybe assets aren't performing well. If we just look at the last couple of, you know, last year or so, it's been an incredible macro environment up and down. And if you don't have the flexibility to be able to go long and short assets, you're kind of stuck with wherever the markets go. And so for most investors, they've been locked out of hedge fund strategies because they have to invest in direct funds that are very expensive and they also be accredited and only available to a small number of investors. And so our idea was use our technology and expertise and experience in the hedge fund space. Take that understanding, understand, use it to understand how hedge funds are positioned in real time and then package that in etf. Any investor can invest in, you know, with daily liquidity and low fees.
- [38:30]
Scott Wapner
All right, now with that wrapper, the.
- [38:33]
Joe Terranova
Funds that you manage, where are you.
- [38:34]
Frank Holland
Seeing the most activity?
- [38:35]
Joe Terranova
What is it the macro side of things? Is it the long short equity?
- [38:38]
Steve Weiss
Where are you seeing the most activity? Well, you've got to admit the last year really since the election, it's been all macro all the time.
- [38:45]
Joe Terranova
You know, macro policy, whether it's tariffs.
- [38:47]
Steve Weiss
Tax policy, the big beautiful bill, those are the big forces that are driving the markets on a day to day basis. And so what we're seeing is a lot of interest in macro managers and their ability to flexibly assess those circumstances and respond as policy changes. And they performed great. You know, in the last three months they're up something like 10% with very little beta to the S&P 500.
- [39:10]
Scott Wapner
All right, so hedge fund strategies within the ETF wrapper.
- [39:13]
Joe Terranova
We're going to continue the conversation with.
- [39:15]
Scott Wapner
Bob@Etfedge.Cnbc.Com Bob is going to be joined by Todd Sohn, strategic is technical strategist. So keep an eye on that show. 1:10pm Eastern time.
- [39:26]
Frank Holland
Frank, I'll send things back over to you.
- [39:28]
Scott Wapner
All right. Thank you very much. Don Chu with today's ETF edge coming up here on halftime, Bitcoin at a fresh record high as one committee member adds to their position. Halftime will be right back. Bitcoin right now trading at about 1:19, 9, 900 a coin up about a half a percent.
- [39:47]
Steve Weiss
Foreign.
- [40:01]
Scott Wapner
Back to halftime report. Bitcoin continues to move higher. Right now trading just below 120,000, still up about a half a percent. Remember, bitcoin trades right around the clock. Weiss recently bought more of the IBIT bit bitcoin etf.
- [40:14]
Steve Weiss
Yes, I did. And as I mentioned, I think it was last week was a final trade because now that the spending and tax bill are done, the focus is now going to turn to bitcoin. Look, here's the simplest way to look at it. Trump has, depending upon who you listen to and what you read, because nobody knows for sure, between 60, 80% of his net worth in bitcoin. So which direction do you think it's going to go? Right?
- [40:39]
Scott Wapner
So I mean, if that's your indicator, then I mean, I think that direction is going to go is higher. I do want to talk to you about one thing. Last week, a lot of reporting that there was a short squeeze when it came to cryptocurrency. That was part of what was moving it higher. You concerned that that may, you know, that short squeeze may be over and the catalyst for cryptocurrency and bitcoin in particular may have run out.
- [41:00]
Steve Weiss
You know, it's like watching the 13 filings. So when I see that the fund I'm looking at, which is Trump corporated, starts to sell, which I don't think they will, then I'll start selling. But right now keeps going. Look, there's no supporting valuation for it here. Like there was none at 10,000, you know, so my analysis, you know, fundamental analysis is pretty, pretty pure. I just think keeps going, you'll get it more regulated and that will and that those bills are going through Congress now. The FCC is pushing some stuff so when that happens, then more and more, you know, brokers will be able to buy it. For wealth managers, it'll be blessed. It's somewhat blessed now with the ETFs like I own Ibit is where I'm doing it on, not in Bitcoin directly. So I think keeps going and eventually they'll figure out a use case for it because there's not one right now.
- [41:51]
Joe Terranova
Why is I bet the better way to play lowest cost? Lowest cost. But why not just buy Bitcoin itself?
- [41:59]
Steve Weiss
Because it's, it's just easier for me to trade it by just trading. I bet instead having trade through Robin who try charging here. Here's some of the points that you're making. Some firms you go through, they could charge you 5% or 3%. You buy through Robin. If you have an account there, which I do and I used to own bitcoin directly through there, you don't pay a commission. So people, it's amazing how price insensitive people are or how unaware they are. Look at what you're paying for a transaction. So I buy. I bet the cost to it, the fees are very, very low. As I said, just gives you great liquidity. Instead of going to Robinhood and sell it, I just do it myself.
- [42:37]
Scott Wapner
There you go. Look at the IBID. Up about 1 1/2% percentage wise, outperforming the actual underlying cryptocurrency. All right, sort of had your own halftime report, the earnings set up outside of the big banks. Halftime's back right after this. And welcome back to Halftime Report. Let's get this set up on some non baked names reporting their earnings this week. Let's start off with Netflix reports on Thursday getting a price target raise over at evercore going from 1150 to 1350.
- [43:20]
Joe Terranova
Joe, I think there's a lot of optimism surrounding the stock. There should be a lot of optimism. I see it bouncing here. Look for 2025 revenue guidance to have an uptick. Also, why are you owning the stock? Because the back end of the year you're going to get strong content as well.
- [43:34]
Scott Wapner
All right, Shannon, any take on Netflix or just the state of streamers right now? Netflix generally kind of consensus seen as the best. Best of them all.
- [43:41]
Frank Holland
Yeah, I mean I think the competitive landscape has continued to shift in their direction and I think. But I think you look at the enthusiasm for Disney and Disney plus and you know, they're certainly, you know, amplifying their progress over the last couple of earnings calls.
- [43:54]
Scott Wapner
All right, I also want to move on United Airlines Another company reporting this week, Joe, another name you own, hopefully.
- [44:00]
Joe Terranova
Very similar to what we saw with Delta. Jimmy, right now it's very clear that there's bifurcation in terms of performance, both as it relates to price appreciation, what they're delivering in earnings of revenue growth. Delta UAL doing well. A lot of the discount airlines, not so well.
- [44:16]
Scott Wapner
All right, Shannon, any thoughts on the state of the airlines broadly?
- [44:19]
Frank Holland
No. I mean, Jim and Joe would definitely be able to speak to airlines a little bit better than I can.
- [44:23]
Scott Wapner
Jimmy, come on over to you.
- [44:24]
Jim Labenthal
Demands there. I mean, period, demand is there. People are traveling. By the way, the estimates mostly came down hard after Liberation Day and they haven't fully recovered. And that's where the opportunity is, is for those estimates to crop back up to where they were at the beginning of the year.
- [44:38]
Scott Wapner
All right, one more quick one. Marcia McLennan reports on Thursday before the bell company big on helping companies manage strategic risk and things like that.
- [44:45]
Joe Terranova
Joe, what are your expectations get travelers that morning? In both cases, you have broken momentum. Marshall McClellan, Reinsurance Travelers Property and Casualty Insurance. They need a very strong inflection point their earnings to reverse that negative momentum.
- [44:59]
Scott Wapner
All right, we're going to leave it there. Stay with us. Final trays are coming up on Halftime. We'll be right back.
- [45:31]
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.
- [45:43]
Scott Wapner
And we are back on Halftime with final trades. Jim's kicking it off with you.
- [45:47]
Jim Labenthal
Lockheed Martin, regardless of what happens in Ukraine, countries all over the world are really rearming and they're going to be buying Lockheed Martin airplanes and missiles.
- [45:55]
Steve Weiss
Weiss, we had a couple of analysts of the last couple of weeks come down downgrade. Netflix calls. Joe cared nothing about. I think that stocks paused now and continue going higher.
- [46:06]
Scott Wapner
Shannon?
- [46:07]
Frank Holland
Jim, so a little bit of my thunder. Industrial sector, including defense and aerospace, but also an inflection higher in manufacturing, production jerkey, cybersecurity.
- [46:17]
Joe Terranova
The big conversation today with CrowdStrike on Kramer check Point Software. One of the names that I like a lot. Never sell a quiet market.
- [46:24]
Scott Wapner
Frank, you're almost one year from that. Big it out. It'll be kind of interesting to hear what George Kurtz has to say about that. That does it for halftime. The exchange starts right now. You've been listening to CNBC's Halftime Report, the podcast. You can always catch us live weekdays.
- [46:40]
Joe Terranova
At 12 Eastern only on CNBC.
- [46:45]
Frank Holland
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 is it time to reimagine your future? The right business skills may make a difference in your career. At Capella University, we offer a relevant education that's designed to focus on what you need to know in the business world. We'll teach professional skills to help you pursue your goals like business management, strategic planning, and effective communication, and you can apply these skills right away. A different future is closer than you think with Capella University. Learn more at Capella Eduardo.