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Halftime Report
The State of the Rally and the JOET Rebalance 8/4/25
00:44:18
Scott Wapner and the Investment Committee debate the future of the rally following one of the worst weeks for stocks since May. Plus, Joe Terranova shares the details of his latest JOET ETF rebalance. The Committee weigh in on his moves. Investment Committee Disclosures
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- [00:00]
Joe Terranova
A rich life isn't a straight line.
- [00:03]
Shannon Sokotian
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.
- [00:24]
Joe Terranova
Rich by the people you walk it with.
- [00:26]
Shannon Sokotian
Let's find your rich together. Edward Jones, Member, SIPC.
- [00:33]
Joe Terranova
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.
- [00:57]
Shannon Sokotian
No one else, not even us.
- [00:59]
Joe Terranova
WhatsApp message privately.
- [01:03]
Scott Wapner
I'm Scott Wapner and you're listening to CNBC's Halftime Report, the podcast the most profitable hour of the trading day. We record this live weekdays at 12 Eastern. Listen in. All right, David, thanks so much. Welcome to the Halftime Report. I'm Scott Wapner. Front and center this hour, the future of this rally with new questions now about the state of the economy and stocks coming off their worst week since May. We debate it with the investment committee, as always. Joining me for the hour today, Brent Torkington, Joe Terranova, Shannon Sokotian, Jim Leventhal, very strong day underway as you can clearly see there. NASDAQ is leading the way up 11 3/4 percent. We are, Joe, coming off the worst week since May. So where does this leave us after Mega Cap earnings were really good.
- [01:50]
Jim Leventhal
Really good.
- [01:50]
Scott Wapner
The jobs data was really bad. Are we in serious jeopardy here or are we just reloading as today might tell us?
- [01:59]
Jim Leventhal
All right, so one week ago I said to you, I thought the market was exhausted. What happened in the middle of the week was we had a 3.3 correction from the intraday high on Wednesday to the intraday low on Friday for the s and P500. Maybe that's just good enough to work off some of that exhaustion. I think the question that you have to ask yourself right now about the market is simple. Is a Fed rate cut on September 17th priced in? I don't believe it is. And I've been consistently sharing with you that. I absolutely believe that is what is going to happen. The Fed is going to cut. I think Jackson Hole is going to be incredibly important in that regard. And you have to ask yourself, is it priced?
- [02:40]
Scott Wapner
Is that what today, Shan, is about Are we anticipating rate cuts? And we're starting to get happy about it. And thus now the market is decidedly green on the back of those jobs numbers and the revisions, which obviously were not good.
- [02:56]
Joe Terranova
I think it's a combination of not only perhaps starting to price in more than 50% probability in for a September rate cut. I also think that there is a little bit of digestion that happened over the weekend in terms of those solid earnings announcements that you just cited, Scott. If you look across the board, earnings season has been pretty good. And what the fear is is that we continue to wait for this next shoe to drop in terms of tariff costs and the impact on margin and earnings. And again, our view is that that is going to be very industry specific. There are going to be winners and losers as it relates to tariffs. But the longer that we go despite, despite the fact that we're looking at somewhere around an 18% tariff rate right now, the longer that we go where companies are able to either spread those price increases out or they're able to potentially mitigate that in terms of maintaining demand from consumers, I think that we are going to start to see some enthusiasm. The tipping point, Scott, will be do we get additional data points that indicate that the economy is slowing even faster than anticipated because then a rate cut might not necessarily be as stimulative as what we're pricing in in today's sess.
- [04:05]
Scott Wapner
I love what we wrote there on the banner at the bottom of the screen, Jimmy, because I feel like that's exactly on point of what the market is trying to do. It is, in fact, trying to game out the Fed's next move. Wolf, today, Wolf, research says bad news is bad news again. That, you know, if you get a rate cut now, if the Fed needs to come in now with inflation still above target, it's because the economy's screaming that they need to do something. Mark Zandi today or yesterday actually posted on social media the economy is on the precipice of recession. That's the clear takeaway from the economic data dump of last week. And he goes on with some more data and says it's tough for the Fed to come to the rescue because of inflation being ahead of target. Bank of America says they still don't expect the Fed to cut this year.
- [04:54]
Bryn Torkington
I'm glad you gave me Mr. Zandi's comment because in the rundown that's the one that's stood out at me, and my first response when I read it an hour and a half ago was, was I wanted to say oh, get out of here. You're nuts. There's a Seinfeld episode. Get out of here. No, unfortunately, he has a point. We're pretty close. Things are uncomfortable right now and nobody ever to to this economy going into contraction. You've had three months now of no job growth. Now, I'm not, I see you're looking at me. I'm not saying we're in recession. All right, well, you've trained me over the years. I'm not saying we're in recession, But I'm saying Mr. Zandi's comment is well phrased. We're on the precipice. You cannot rule this out. And we hate being in the position that you just described, Scott, and you described it accurately, of waiting for the Fed to ride to the rescue. We hate that because the Fed is always late. This is not me criticizing the Fed. This is how the Fed works. To them, it's a feature, not a bug, that they're always going to take as much time and more than they need to. But now we're in this position where we need rate cuts. And I know this is to a discussion we've had on this Desk many times, a 25 basis point rate cut. We're going to have this discussion. What does that really do physically in terms of the numbers? Not that much. It's all sentiment. It's all the idea that the Fed knows it's not just going to be one rate cut, it's going to be two this year and then more in the following year to give consumers give companies confidence that interest rates are coming down and their financing costs are going lower with it. But it's not a position we want to be in.
- [06:21]
Scott Wapner
So, Bryn, what do you want to do now that you've taken last week into context here into consideration and we're talking about rate cuts being back on the table? Maybe we are in fact gaming out the Fed's next move, as we suggest, with our banner at the bottom of the screen. How do you see it?
- [06:37]
Shannon Sokotian
I think that we have, you know, I felt that we could easily have a rate cut regardless of these jobs numbers, just because we are fiscally financially tight. And Chairman Powell said that. I think that from the jobs number, we're going to have to just rely on ADP numbers, which are just the private sector, because if you net net ADP numbers and the private sector from bls, ADP was more directionally accurate before the, before the revisions. So you do have a slowdown. But also, don't forget, what is the white House and Congress going to do with all this tariff money. And so President Trump keeps, you know, sprinkling around. We're going to get checks out, we're going to cut capital gains, etcetera, etcetera. There is this other side stimulative dollars that theoretically they have at their disposal. So I think that we have this continued bifurcated economy. You have housing and real estate not doing great, all things data center air doing great. And so I think right now, as I said last week, you got to stick with who brought you to the party. And that still remains, I would just say the Q. Q. Q. Big Tech and some of the other mid cap tech companies because that's where you have line of sight with earnings and revenue growth, where the economy is weakening. Your small caps are off the table, your value names are off the table, etc. And so I think you're going to continue to see money flow into the names that are in the queues.
- [07:57]
Scott Wapner
Well, okay, we'll get there in a second. But part of what you just said interests me especially it's the Russell which today is acting more like a rate cut is coming than the economy going off a cliff is coming. The Russell's up 1.3%. If you were really worried about the economy going into a recession, I don't think that the Russell today would necessarily be up 1.3%. It would be the first thing that you would sell off on the way in and maybe the first thing that you would buy to come out.
- [08:29]
Jim Leventhal
Now I put myself out there weeks ago and I did it at the top of the show. A rate cut is coming. That's my perspective. I think the homebuilders will benefit tremendously. I think you have to be careful in looking at the market right now as an inflection point. I don't think that's accurate. Where is the inflation? The chairman clearly in congressional testimony said the inflation is going to show up in the June and July reports. It has not done that. And I think it positively impacts the wealth effect. If in fact you do cut rates, it impacts the wealth effect on the housing side which is literally frozen right now. So, okay, we could get excited about the Russell, maybe seeing a reflex response, a reflex rally similar to what we experienced in the fall.
- [09:13]
Joe Terranova
All.
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Jim Leventhal
I'm all for that, but I don't think that over the long term you want to move aggressively away from bid and large caps into small caps. I think there's enough there at bid and large cap in the earnings growth to stay there.
- [09:26]
Scott Wapner
Let's Remember what happened before we had Mega Cap earnings last week? We were talking about the possibility of a correction in the market. Jim threw out 5 to 7%. I felt like it was so cavalier the way that he just dropped that. Like you get 5, 7%, no big whoops. It would feel like big whoop though if you got 5 to 7%. So that's where we were before Mega Cap numbers and before the jobs report.
- [09:54]
Bryn Torkington
Yeah.
- [09:54]
Scott Wapner
So where are we now?
- [09:55]
Bryn Torkington
I'm still at 5 to 7%. I like the way you phrase that because I don't mean to sound cavalier in the slightest bit, but we all have to just be aware that the stock market does go down sometimes. I mean we usually get a correction sometimes more than once in a year. So it will wouldn't be absurd. I don't think we'll get a full correction as defined as down 10%, but down 5 to 7%. Boy, it seems like that could happen and it could happen. Let me just tell you how it could happen. And this is what I'm worried about this week in particular.
- [10:22]
Scott Wapner
Go ahead.
- [10:23]
Bryn Torkington
In addition on Friday to the jobs report, we had that ISM Manufacturing survey number which kind of stank. And we've been for two years relying on ISM services and services overall to promote this economy. We've got ISM services coming out tomorrow, you know, and Scott, Joe, Brian, Shannon, you know, every once in a while this series disappoints. Like randomly you get a bad number. Can't do that this week. Can't get the random bad ism.
- [10:47]
Scott Wapner
Deutsche bank today says we're overdue for a small pullback, which I think most people would say, yeah, I mean I can get behind that. I mean we didn't have until I guess Friday a 1% move in the S&P 500 in either direction for almost a month. So it shows you how sanguine the market's really been through the tariffs, up and downs post, you know, obviously the April low because we tried to focus on deregulation and the tax cuts being extended and the fact that earnings were better than anticipated. So maybe 22 plus times the valuation of the stock market wasn't so egregious because their earnings are going to be better. It's going to justify all that. And then you get what was the jobs report and the downward revisions and now we have people like Morgan Stanley's Mike Wilson and asking whether it's time for a pause in this bull market.
- [11:33]
Joe Terranova
Well, I think that the labor market was really what has been pointed to as the source of optimism and enthusiasm. And so Jim made a great point though because I think the other thing is like what is the predictive data saying? And a lot of this concern about, you know, soft data, you know, potentially affecting or impacting hard data. How does that translate? The most important thing though, Scott, is that you just talked about the bbb, right? And it's been the big beautiful bill versus tariffs. What's going to have the impact in the second half of the year. And if you don't start to see a reacceleration in the ESM on both the manufacturing and services side, I think that you're going to start to get those questions about this overhang, this lagged effect of tariffs, the potential for consumer demand to come down. And you're hearing it for some, you're still hearing from retailers about a consumer that's potentially a bit more cautious.
- [12:21]
Scott Wapner
Well, because you're getting more data now that actually shows higher prices from tariffs are filtering through more and more on the consumer level.
- [12:29]
Joe Terranova
But on a more optimistic note, I just want to end on an optimistic note. If you look at companies, they're still not firing, right? We're still seeing that divergence between hiring and firing. We're seeing this low hiring, low firing environment. When Powell talked about the unemployment rate last week, what really you should translate that as is watch the firing numbers, watch the initial claims numbers because consumers could feel concerned, but if they're not losing their jobs, they're still going to be engaged to the wealth effect that that Joe talked about earlier.
- [12:55]
Scott Wapner
Brent alluded to this. You did, and it speaks to what Goldman saying today about the mega caps, the qs, the biggest and what have been the best stocks in the market. And why don't be surprised in a more unsettled environment if you have more money flowing into what has been perceived to be offense plus defense equals somewhat safety in a choppy water environment. Goldman says earnings results have continued to demonstrate the growth exceptionalism for mega cap tech. That's where we find ourselves. That's how the market's reacting today. All right, we have questions about the economy, we have some questions about this, that and the other. I've got The NASDAQ up 1.7%.
- [13:36]
Shannon Sokotian
Right, because you had Metta just crushed it, Microsoft crushed it, Apple had really good numbers. And so I think that you're continuing to get strong margins, revenue growth, earnings growth, while the Capex, you know, writ large is huge with these numbers. They're still growing revenue and earnings. They're just spending their Free cash flow into capex, you know, outside of, outside of Apple per se. And so I think that's where you have visibility and I think where you're already starting to see the market pull off is if the headline number, whether it's the QS or VO or iv, it's really underneath the market with the open doors, the core weeds, even Robinhood, you know, which I owned is like stalled out here. Ethereum, Bitcoin have all started to sell off and flatline. To me that was really important to take some of that air on the froth side. But I think these mega cap tech companies are telling us the visibility regardless of the interest rate environment, regardless of growth, they are revenue margin cash cows. So I mean I think money is still going to continue to flow in that direction.
- [14:39]
Jim Leventhal
I don't, I don't, I don't disagree with that at all.
- [14:41]
Scott Wapner
Well, how could you? Because you just did your rebalance.
- [14:43]
Jim Leventhal
Okay.
- [14:44]
Scott Wapner
And money is flowing in that direction. To use Brin's exact words for you, you bought Amazon, you bought Alphabet. Alphabet and you bought Microsoft.
- [14:51]
Jim Leventhal
Yes. And going. And look, I kind of anticipated, I'm not surprised by the actions that the rules have taken here, here that it would go back into those three names. We now own six of the seven mega caps. And I identified the momentum as being as strongest as it has been in the mag 7 since 4Q23. If you study 1 month, 6 month and 12 month time frames as it relates to momentum, Apple is the one name that we do not own. The reason that we do not own it, it is the one name out of the seven that has negative performance in each one of those three.
- [15:30]
Scott Wapner
Well, you sold that one, so we are. So let's be clear, it's like you did own it. You no longer own it.
- [15:36]
Jim Leventhal
No longer own Apple. Don't own it personally. Don't own it in the etf. Part of me wants to own it personally just because it's Apple. But when I looked at the pure statistics and I looked at those three time frame measurements and I observed the fact that you can't ignore that Apple won six and a 12 month time period has negative return. You can't say that about any of the other six. You actually have three of the companies, Microsoft, Meta and Nvidia that have positive performance in each one of those three times.
- [16:06]
Scott Wapner
Let's put you this way, if you had kept Apple in here, you might as well take the metrics that you use to spit out your score and throw them out the window in the garbage. Because the stock has not had any moment momentum behind it for any great period of time in what feels like three months a year.
- [16:21]
Jim Leventhal
Yeah, and that's the difference, remember from.
- [16:23]
Scott Wapner
Wd, last year's wwc, the ramp up, which the chart would show, big ramp up. And then you all of a sudden, then you get downgrades and you have the tariffs and all these other issues that have negatively impacted shares of Apple. That, that chart there shows it well.
- [16:38]
Jim Leventhal
And that's the difference between facts and feelings. And look, some people that watch the show, they have fundamental strategies and that's that orientation. I'm obviously using rules. I'm observing price, most importantly and momentum and factoring quality as well. And you're correct. If you're studying what Apple has done on these different time frames over the last year, you can't find really anything positive to get excited about. The other thing on these earnings, by the way, I just want to talk about this for one second. What about the reaction to earnings? Because if I were going to score it, I'd say we've got two wins, Microsoft and Metta. We have three losses and then we have a tie. Alphabet's basically a tie. If you look at price report, you're.
- [17:17]
Scott Wapner
Only talking price action post earnings, not the quality of the results themselves.
- [17:21]
Jim Leventhal
And it goes back to good news, bad price action, which we've been talking a lot about on the show. So six have reported. You really only have two that you've seen really good price action after the earnings.
- [17:33]
Scott Wapner
Well, let's not forget to your exhaustion point of last week, these stocks ran fast and far heading into their numbers from the April low. Video was up 80%. Now it doesn't report for a few weeks. So we're not going to get the information that we want out of that one. But Microsoft's up 48% now. Met is up 47% since the April low. So the stocks, Jimmy, had come a long way.
- [18:00]
Bryn Torkington
They have. And I'm really thinking about what Joe's saying here about the price action post earnings versus the actual results. Obviously Amazon was, was really a disappointment. Here's where I'm going with this, Joe, is I think these, much like Alphabet, I think it's fundamental responses. You know, with Alphabet, I think the muted response was we still have this overhang from the DOJ trial with Amazon, you know, Amazon Web Services. That's the one area you could, we didn't see it underperform and the guidance there, the margins was a little bit disappointing. So, you know, I want to Believe you that this is saying something about the market, Joe I still think it's saying something about these stocks individually. All that said, I still am with you about exhaustion. I still think a 5 to 7% correction, consolidation, whatever you want to say it but I think it's more the macro picture as opposed to what these individual stocks are saying. And to summarize this, look, these stocks, Amazon, Alphabet, you know, Microsoft, these are great companies that if you can just get through this late summer volatility, they're probably going to set new highs before the year.
- [19:01]
Scott Wapner
By the way, calls today Nvidia buy at Citi and B of A that's reiterated at both places. Apple gets reiterated by at B of A and Amazon reiterated outperform at Evercore. It goes to the over overall point that Brin started by suggesting that well when in doubt, go where the money's going and continue to put it here because everything else is too difficult in that kind of environment.
- [19:25]
Joe Terranova
We've been looking for this capex inflection and you know it's right in front of us but it's being led by innovation and AI. That's where not only are the companies that are benefiting from that spending are doing well, but the companies that are making those investments from a capex perspective are also, you know, currying some, some, some favor if you will with investors. If you're looking at where can I commit capital to in this environment and where can I potentially see an opportunity? It has to be AI or innovation adjacent Scott, because the other thing that people are really worrying about is productivity enhancement and margins. So I think at the end of the day this is why you're getting the enthusiasm but not only within the sector but I also think for stocks that are, for companies that are investing, investing in those areas elsewhere in the.
- [20:11]
Scott Wapner
Rebalance most semis have not traded all that well lately. Today doesn't really count because many are higher going into amd. But if I gave you the list performance of several stocks in this space and say oh that's pretty ugly. You added KLA and Lam so semi equipment names you've added into the ETF in the rebalance. Why?
- [20:37]
Jim Leventhal
So semi equipment has had a very positive reaction I believe to the news the weekend of May 9th to May 12th in Geneva between the Chinese and the US and really I think the semi industry in its totality was most punished as we learned about the extreme nature of what tariffs are ultimately going to be. Semi equipment names. There's three, three names you focus on KLA Corp. Lam Research and Applied Material. The obvious question when I was observing what the results were was why didn't we go into applied material and again studying momentum in the near term, KLA Corp and Lam Research have their 52 week high resting in July. Applied material 52 week high is all the way back in October. Now you could look at that either way. Buy high, sell higher. That's the way I look at things. So I want to own the names that are making highs most recently, not the names that have made highs nine months ago. But there are others that could look at that and say from a valuation basis, okay, Applied Materials is in a great position. I think overall the overriding thesis, at least for me, was that I'm seeing a return to the semiconductor industry once again. And if this momentum oriented ETF is doing, I think other momentum ETFs are going to follow.
- [21:56]
Scott Wapner
Want to hit a couple of things. Palantir reports earnings after the bell. Brent, I'm going to you on that. It's up 110% year to date. It's up 18% in a month. We've been really studying the impact of the high beta trade which did break its six week win streak last week and had its worst week in a while. This stock always seems to be in that conversation about what's what it's P E is what its growth prospects are. It seems like everybody loves it. Not everybody wants to own it at these levels, but you do and you have. And what's your outlook here?
- [22:31]
Shannon Sokotian
Well, I have a small position left right of and you know, selling. I bought it originally at 27 last year. So it's just like a monster move. This is one of the few companies from a year ago that was like all in on AI. They already had a proven track record with what they're doing with the government and they just changed their whole business model. And so I think you have people love Alex Karp, like Elon, you're still going to get 38, 53% revenue and earnings growth this quarter. So I think the chart tells you, even though it looks very exponential from a chart perspective, I think it marches higher tomorrow because people love this stock and love Alex Karp and there's still so few companies that are just squarely focused on implementing AI. It's in Video, Palantir, Cloudflare and probably just a few other companies that are pure plays. And so until you get more pure plays in the public market, Palantir I think is going to continue to attract an outsized share of capital regardless of Its price to sales or PE or etc, etc.
- [23:32]
Scott Wapner
Outsize is a good word you use because as we showed on that chart and the return over one year, it's 545%. It stayed in the Jyoti.
- [23:42]
Jim Leventhal
It has and the rules have kept it there since January of 2024. And there's no way that I would have the ability to do that. But this is a company that also has very strong margins as it relates to free cash flow. 42%. The revenue growth for a software company, the organic revenue growth at 35% for 2025. It's very difficult to find, find another software company that is able to do that. So I understand the valuation is rich at 229 times. I understand the skepticism. If you look at the analyst community, there's 31 analysts that cover the stock. The 12 month price target is $116. There are 51% holds and there are 16% sells, only 33% buys. So I think a lot of people are skeptical about this. And this is a classic example of a momentum name that continues to run higher. Could it pull back? It absolutely could. That's the nature of the volatility that these names capture. And you have to understand that if you get.
- [24:46]
Scott Wapner
You've had. I'm going to switch gears to another stock, Tesla. Yes. You've had a sample size large enough to suggest or at least question where momentum was within this name. It stayed in the etf.
- [25:04]
Jim Leventhal
It did.
- [25:05]
Scott Wapner
It did not get bounced.
- [25:06]
Jim Leventhal
It stayed in the etf. And I had, I guess privately I was almost wishing because of the agita that this name brings up so frequently.
- [25:17]
Scott Wapner
Give me a three month on this.
- [25:18]
Jim Leventhal
That it wouldn't be.
- [25:20]
Scott Wapner
That's a ton of that. I mean relative to what other stocks have done. And that doesn't necessarily look like momentum to me on that chart.
- [25:26]
Jim Leventhal
Okay, so three time frames, one month, six month and 12.
- [25:31]
Scott Wapner
One month, it's negative.
- [25:33]
Jim Leventhal
So one month, Tesla one month. Tesla is actually, I don't believe it to be negative. I think Tesla over a six month period is negative on a one year basis.
- [25:44]
Scott Wapner
Tesla negative by 2.3% over one month.
- [25:48]
Jim Leventhal
Okay, well the data, I'll go with you on that. But those three time frames, if you.
- [25:53]
Scott Wapner
Pull it up, you might have been one of those guys. You say the data don't matter. Well, the data matters to me right now. So it's negative over one month. Three months shows chop.
- [26:04]
Jim Leventhal
So where's the momentum over the last year? Tesla is up 55%, 55% you have over the last month. Tesla being higher?
- [26:15]
Scott Wapner
No, negative. Tesla is down over one month. You said it was higher. All right.
- [26:20]
Bryn Torkington
Rules, Joe, rules.
- [26:21]
Jim Leventhal
Yeah, I know. I'm going to have an issue with the.
- [26:23]
Scott Wapner
We got an issue here in the.
- [26:25]
Jim Leventhal
Data, so I'm going to. I'm going to go with. You make a mistake, did you.
- [26:29]
Scott Wapner
Did you need to bounce this?
- [26:30]
Jim Leventhal
No, no, no, there's no mistake. No, because in a one year time frame, it is 55% higher. On a one month time frame. I disagree with you. You're showing that. That it's negative. I'm showing that it's positive.
- [26:41]
Scott Wapner
What do you mean you disagree with me? Guys, what's the story in the back in the control room? Is the stock up or down over one month? We're showing it. It's down. It's down. Okay. It's down. All right. We're talking past each other.
- [26:54]
Jim Leventhal
No, I think we're disagreeing on this.
- [26:58]
Bryn Torkington
A little sweat glistening on you.
- [26:59]
Scott Wapner
No.
- [27:00]
Jim Leventhal
Shannon, Peek right there. What does that show anyway? It comes in. If you were to rank the seven.
- [27:05]
Scott Wapner
Garbage in, garbage out.
- [27:08]
Jim Leventhal
If you were to rank the seven, seven mag, seven names. It comes in as number five. So I would put it somewhere on the cusp maybe. I wish it wasn't in there. But it remains in there with the other six.
- [27:19]
Scott Wapner
Okay. All right. To be continued, I think. Right. We'll discuss this in the break.
- [27:25]
Jim Leventhal
We got to settle this.
- [27:26]
Scott Wapner
We'll bring you some information as we get it. Coming up. Well, we have more rebalance news from Joe on crypto. What can I tell you? I mean, see if the numbers match up there. Back after this.
- [27:47]
Shannon Sokotian
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- [28:59]
Joe Terranova
That comes from making courageous decisions, partnering.
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Shannon Sokotian
With local communities to grow programs and services, and expanding healthcare access to those.
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Joe Terranova
Who need it most.
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Shannon Sokotian
Together, we're building a healthier future. Learn more@mycare.org.
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Joe Terranova
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Shannon Sokotian
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Joe Terranova
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- [30:03]
Scott Wapner
Okay, welcome back. The debate continues. Yeah, because I see conflicting stuff all over the place, including what someone just sent me on social media. So I don't know what to tell you on that. Joe might be off the hook. He might be in real trouble. We'll see. Let's do some more. Because as part of the rebalance, you added crypto names block, Robinhood, PayPal and Coinbase. You take us through that because it does follow a note that was out last week suggesting that crypto equities should be bought.
- [30:39]
Jim Leventhal
Okay, again, purely based on momentum here, this isn't so much where quality is the overriding factor. The quality method metrics, debt to equity, return on equity and revenue growth in particular, revenue growth are particularly strong for these companies. So that kind of allows it to get to the next step. Remember the first screens momentum. The second screen is quality. But it is without question the overwhelmingly red hot nature of the momentum. The reason why these four crypto names were added.
- [31:12]
Scott Wapner
Brian, you have Robinhood out of these four? Correct. Is that the only one?
- [31:16]
Shannon Sokotian
Yep, correct. Yeah. I mean I'm surprised that I thought Joe added Robinhood before. I'm surprised that hasn't been in there. It's been such a strong momentum name, so it's great to see that in the strategy. I will say where I've noticed after earnings came out last week with Robinhood, it's finally somewhat I felt like some resistance. It's been around this 9108 for about a month, which really, really isn't very long. But it does feel like it's taking a breather here because it's had such a monster move. But I will say, I mean, from a ui, from their desktop, from their innovation, this continues to be, I think, one of the more exciting finance crypto companies out there.
- [31:58]
Scott Wapner
All right. There seems to be an issue, as pointed out by one of our viewers, that if you use closing prices from June 30 to July 31 or July 1 to August 1, you get different results. If you use July 1, then you're right. If you use July 2 or June 30, the other calculation works. Okay.
- [32:27]
Jim Leventhal
We should be using we have a.
- [32:30]
Scott Wapner
Team of investigators clearly on this, investigative reporters on this. We do have our investigative AI supposed to solve this. It is. But again, it depends when you look for the open or the closing prices. But I could tell you our, our deep team of investigative chart people are on the case and they will, they will get that to you as soon as possible.
- [32:56]
Jim Leventhal
Maybe we're going to do the news.
- [32:59]
Scott Wapner
Now, which presumably is better than what we've just done.
- [33:04]
Shannon Sokotian
Bertha Coombs, timing an issue here as well. Scott.
- [33:07]
Joe Terranova
New York Governor Kathy Hochul said that she is looking at options to redraw.
- [33:11]
Shannon Sokotian
State congressional lines, quote, as soon as possible.
- [33:15]
Joe Terranova
This Normally happens every 10 years.
- [33:17]
Shannon Sokotian
Governor added that she was looking at several options, including litigation and introducing a.
- [33:22]
Joe Terranova
Measure that could go on the ballot in 2027. At the announcement, the governor was flanked.
- [33:28]
Shannon Sokotian
By Texas Democrats who fled the Lone.
- [33:31]
Joe Terranova
Star State in a bid to block a GOP redistricting plan there. Ukraine President Volodymyr Zelensky said foreign mercenaries.
- [33:41]
Shannon Sokotian
Are fighting for Russia after visiting the Kharkiv region Monday. Zelensky said that the mercenaries were from countries including Pakistan and China. China has denied any involvement and the.
- [33:55]
Joe Terranova
New York Post is moving to California, at least part of it.
- [34:00]
Shannon Sokotian
Axios reports that the subsidiary of Rupert.
- [34:03]
Joe Terranova
Murdoch's News Corps will launch a new L A based newspaper called the California Post early next year. According to News Corp. Louisiana has the.
- [34:12]
Shannon Sokotian
Second largest concentration of Post readers and.
- [34:15]
Joe Terranova
90% of the Posts digital readership lives outside of New York.
- [34:21]
Shannon Sokotian
They should just do page 6L A because that's really what I think a.
- [34:25]
Scott Wapner
Lot of those folks are looking at, probably. So. Bertha, thank you. Bertha Coons straight ahead, ETF Edge and more of Joe's moves. We're back after this.
- [34:39]
Joe Terranova
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- [34:55]
Scott Wapner
Businesses that are selling through the roof, like Untuck it make selling and for shoppers, buying simple with Shopify, home of the number one checkout on the planet. And with Shop Pay, you can boost conversions up to 50%. Businesses that sell more sell on Shopify. Upgrade your business and get the same checkout Untuck it uses. Sign up for your $1 per month trial period at shopify.com podcastfree all lowercase go to shopify.com podcastfree to upgrade your selling today. Welcome back. We're gonna get to ETF Edge in just a moment, but our team of investigators has gotten to the bottom of this. And I can report that according to NYSE and NASDAQ powered data, that Tesla is in fact down 2.3% over the last month. If you use the closing price on July 3rd, the closing price on July 3rd to today.
- [35:53]
Jim Leventhal
May I respond, please? If you use a one month time frame which some services are utilizing, you will show a 5% return because they are taking the opening price of Monday, July 7th. The Fourth was a holiday. The Fourth was a holiday.
- [36:13]
Scott Wapner
Right.
- [36:13]
Jim Leventhal
And from Thursday's close on the 3rd to Monday the 7th, Tesla had that big decline. That's the difference.
- [36:22]
Scott Wapner
All right. So you can feel better about yourself based on that. And we will go with the confirmed information from our investigative team, our investigative data team, which has crunched the numbers from the New York Stock Exchange. And then I guess it's how you define.
- [36:39]
Jim Leventhal
I guess it's how you define one month.
- [36:41]
Scott Wapner
Yeah, well, I mean, with that holiday thrown in there, most people would define it by the actual month, but that's very arbitrary. Now, Leslie Picker has today's ETF Edge high led. Leslie.
- [36:53]
Joe Terranova
Hey, Scott. Thank you. And with stocks bouncing back today and most of the big tech earnings behind us, investors who are overweight, those names often find themselves stuck between taking the tax hit and diversifying. Our next guest is taking an approach that could help investors. Joining us is Bruce Levine, CEO and head of ETFs at Astoria Portfolio Advisors. Bruce, you're working on essentially a large cap 350, 351 fund. How does it work and how might it help investors?
- [37:23]
Scott Wapner
Thanks, Leslie. Yeah, so a 351 fund is a.
- [37:26]
Shannon Sokotian
Relatively new thing in ETF land, but it's based on some tax code going.
- [37:30]
Jim Leventhal
Back into the 1950s around corporate formation.
- [37:33]
Scott Wapner
And so what it lets you do is at the very launch of an.
- [37:36]
Jim Leventhal
ETF just one time, the day before it lists, investors can provide.
- [37:43]
Shannon Sokotian
A portfolio.
- [37:44]
Scott Wapner
Of securities that meet certain diversification guidelines. And if they provide those, they can.
- [37:49]
Shannon Sokotian
Get back our fund and so they can achieve.
- [37:53]
Scott Wapner
Think of it as tax free diversification.
- [37:56]
Jim Leventhal
Out of some very concentrated overweight names.
- [38:00]
Scott Wapner
And I was just looking before I.
- [38:01]
Shannon Sokotian
Got on here at Nvidia for example at the start of 2022 it was trading for $30 a share.
- [38:08]
Jim Leventhal
So anyone who's held a sizable position.
- [38:10]
Scott Wapner
In video for example is got some.
- [38:12]
Jim Leventhal
Real concentration issues and it's hard to.
- [38:15]
Scott Wapner
Find other tax solutions that do what the 351 does.
- [38:20]
Joe Terranova
Yeah, it sounds like this would be something kind of prime for the time of over concentration, particularly in some of those Mag 7 names over the past few years. How popular of a strategy you mentioned it goes back to the 1950s in terms of the tax code. But you know, based on today, how popular is it and how might kind.
- [38:40]
Shannon Sokotian
Of technology play a role in the advent of this? Yeah, they're getting more popular.
- [38:45]
Jim Leventhal
There maybe been about 15 or 20.
- [38:47]
Scott Wapner
Launch something like that. You know I think they, they got.
- [38:53]
Shannon Sokotian
Popular because of these crazy over concentrations.
- [38:56]
Jim Leventhal
That people are having because stocks are.
- [38:57]
Shannon Sokotian
Up 2 and 300% in mostly in the tech sector.
- [39:01]
Scott Wapner
Although they also solve legacy issues from.
- [39:03]
Shannon Sokotian
Years ago when people inherited stock repeated.
- [39:06]
Jim Leventhal
People work at a company and have big, you know, insider holdings, that kind of thing.
- [39:10]
Shannon Sokotian
So you know we see more of.
- [39:12]
Scott Wapner
These happening going forward and I think.
- [39:15]
Jim Leventhal
The word is just starting to get out there now.
- [39:17]
Joe Terranova
All right, thank you for sharing that with us. We're going to continue the conversation over at ETF edge.cnbc.com I will send it back to you Scott.
- [39:27]
Scott Wapner
All right, Les, thank you. That's Leslie Parker coming up. We do have more from Joe's moves in his etf ETF from the financials and elsewhere. And I can promise you that one month will not be mentioned at all.
- [39:56]
Jim Leventhal
We're back.
- [39:56]
Scott Wapner
More moves from Josie etf. You bought Morgan Stanley out of the financials. Do you own others? You own others?
- [40:02]
Jim Leventhal
JP Morgan is in there as well.
- [40:04]
Scott Wapner
Okay.
- [40:05]
Jim Leventhal
Goldman Sachs very close to being there. I own Goldman Sachs personally. The reason why Morgan Stanley not Goldman Sachs. Debt to equity ratio a little bit better for Morgan Stanley.
- [40:15]
Scott Wapner
Wait a minute. So Goldman Sachs has been one of the best performing financial stocks that I can think about, right? Yes, it's up 26% year to date. It's up 54% over 12 months which you told me that you use all of these metrics including the time period that I said I wouldn't mention.
- [40:40]
Jim Leventhal
Yep.
- [40:41]
Scott Wapner
Plus year to date, plus one year. And you're telling me that Goldman Sachs is not in the ETF because it's debt to equity ratio.
- [40:51]
Jim Leventhal
So I wish we could hit the rewind on what I just said. I said they were both very close to each other. The reason why Morgan Stanley goes in is there are three elements that we're looking at in the quality factor screen revenue growth, return on equity, debt to equity. Morgan Stanley has a slightly better debt to equity ratio than Goldman Sachs.
- [41:14]
Scott Wapner
All right.
- [41:15]
Jim Leventhal
I own Goldman Sachs personally by the way and would love Goldman Sachs to be in the ETF because I think Goldman Sachs is a fantastic company and I've owned it for the last three years.
- [41:26]
Scott Wapner
Okay, that being fine, like it's an anomaly about the scoring here. I mean this stock has been fantastic to own out of the financial space.
- [41:37]
Jim Leventhal
It's been an incredible stock and the metrics and the reasoning behind why it's not in there is. So I wanted in other words a better performer. I want to know why it's a.
- [41:47]
Scott Wapner
Better performer over 12 months in JP Morgan.
- [41:50]
Jim Leventhal
So I want a better performer over.
- [41:52]
Scott Wapner
Correct year to date.
- [41:54]
Jim Leventhal
But the JP Morgan you're having, listen, you have to have a process and this is rules based. So it has a process and I will question, I will look at it and say look, it feels to me like Goldman Sachs has been phenomenal. Why is Goldman Sachs not in there? So I came to the set today knowing that anyone would say well why don't you have Goldman Sachs if you have Morgan Stanley? And I've got the answer for you just like I have the answer for Brin when she asked me why we don't own Dell. Bren, we don't own Dell because the return on equity and the debt to equity is negative.
- [42:27]
Scott Wapner
Okay.
- [42:28]
Shannon Sokotian
But the revenue growth and earnings go ahead. Brian is actually. Well, I am curious once again. I think you have a great strategy but going back to Tesla like within the model I own Tesla myself calls I am curious like within Dell but within Tesla revenue and earnings have just been going correct down into the left. So if you so that it makes it in the strategy, it's great. But it's peculiar.
- [42:55]
Jim Leventhal
So it's interesting because what I can see is the movement. So you have 125 stocks and you see the movement from where it was three months ago, six months ago, nine months ago. And if it was A chart. I could tell you that Tesla continues to decline in those rankings and fall lower and lower for exactly the reasons that you're citing. It scores well on a 12 month momentum basis as it relates to revenue growth and the balance sheet metrics. You're correct, that is deteriorating.
- [43:26]
Scott Wapner
All right, we'll take a break. Santoli joins us on the other side. Welcome back. Senior markets commentator Mike Santoli is here for his midday word one in which you suggest you are cross examining the bulls. Yes. Or at least the market itself appears to be doing that.
- [43:58]
Jim Leventhal
Right. And the basic underpinnings of the bull case, you know, weren't really disturbed by what happened on Friday. I think there's a reevaluation in terms of exactly how resilient the real economy is to, you know, waiting for the next Fed rate cut. But guess what, now we're like likely to get one in September in the market's estimation. So that's the offset. I think it's being treated as generally a normal seasonal shakeout. Whether I doubt it was a one day wonder, but you never know. The IQ. So the leverage part of the market is up 1.7%. That's part of the formula. NASDAQ 100 leads and consumer stuff that's rate sensitive is getting a little bit of a bit. I cannot ignore.
- [44:39]
Scott Wapner
Russell's up 1.3.
- [44:40]
Jim Leventhal
Yes. And that was hit hard. And actually, you know, got, got the worst of it on Friday. And you just can't ignore that we're memeing again. I mean this is the day, you know, Palantir reports that stock is front running the numbers, whatever they're going to be. I was saying earlier the Joby Aviation deal for Blade Helicopter, you know, it's, it's marginal but it activates a certain part of this market. And you got the quantum stocks that up for no reason because that's the only reason they go up. And so, you know, all that stuff is part of this market at a time when people are suggesting, look, we got support not too far below us. So they're going to try to dip buy on the Monday morning. We'll see if it lasts.
- [45:20]
Scott Wapner
All right. Yes, we will and we'll see in a couple of hours. That's Mike Santoli. Finals are next.
- [45:48]
Jim Leventhal
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.
- [46:03]
Joe Terranova
All right.
- [46:03]
Scott Wapner
We told you last week that Jeffrey Gundlach was going to let the Fed decision marinate. And now he has had a jobs Report thrown into the stew. And now he's going to join us today. It's an exclusive 3pm Eastern on the closing bell. We'll get his take, his investment ideas and where he thinks these markets are going in the months ahead. And I hope you'll join me then. Brin, your final trades. What?
- [46:24]
Shannon Sokotian
Let's stick with Tesla and then you can see sell the October 17th, 3:40 calls and collect $15 for two and a half months.
- [46:32]
Scott Wapner
Thank you very much, Farmer Jim, Delta Airlines.
- [46:35]
Bryn Torkington
I hear that Joe added it to the Jyoti.
- [46:37]
Scott Wapner
Now you're pandering to Joe.
- [46:39]
Bryn Torkington
I mean, I'm giving a little pat on the back. I mean, can we let him up from dunking him all. All hour? I mean, let's just give him some air.
- [46:46]
Jim Leventhal
Dunking me.
- [46:47]
Scott Wapner
All right, all right. Because you did it. You did add it to the Jyoti.
- [46:49]
Jim Leventhal
Yes.
- [46:50]
Scott Wapner
All right, Shan, what's your final trade?
- [46:52]
Joe Terranova
Financials are seeing a pickup in dealmaking. Goldman Sachs hold off on their second round of layoffs.
- [46:58]
Jim Leventhal
One health care name that we added was IDEX. It's veterinary diagnostics. It's up 26% today. You sold.
- [47:06]
Scott Wapner
You sold Lilly.
- [47:06]
Jim Leventhal
Sold Lilly kind of focus on IDEX. IDEX will make a run towards the 2021 high at 706.
- [47:12]
Scott Wapner
Now you can focus on the end of the show and we'll see on the closing bell. You've been listening to CNBC's Halftime Report, the podcast. You can always catch us live weekdays at 12 Eastern only on CNBC.
- [47:27]
Shannon Sokotian
All opinions expressed by the Halftime Report.
- [47:29]
Joe Terranova
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 or follow a particular strategy, but only as an expression of an opinion. Such opinions are based upon information the.
- [47:52]
Shannon Sokotian
Halftime Report participants consider reliable.
- [47:54]
Joe Terranova
But neither CNBC nor its affiliates and.
- [47:56]
Shannon Sokotian
Or subsidiaries warrant its completeness or accuracy.
- [47:58]
Joe Terranova
And it should not be relied upon as such.
- [48:00]
Shannon Sokotian
To view the full Halftime Report disclaimer.
- [48:02]
Joe Terranova
Please visit cnbc.com halftime reportdisclaimer@ Capella University, learning the right skills could make a difference. That's why our business programs teach you relevant skills you can take from the courseroom to the workplace. A different future is closer than you think with Capella University. Learn more at Capella Eduardo.