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Halftime Report
The State of the Tech Trade as SK Hynix Opens for Trading 7/10/26
00:43:52
Scott Wapner and the Investment Committee debate the state of the tech trade as SK Hynix begins trading at the NASDAQ. Plus, the desk share their latest portfolio moves. And later, we hit the latest Calls of the Day. Investment Committee Disclosures
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- [00:00]
Narrator/Advertiser
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- [01:02]
Scott Wapner
Carl, thank you very much. We are moments away from that interview. Elon Musk joining our Julia Boorstin will take you there live as soon as that is ready to go. I'll welcome you to the halftime report. In the meantime, I'm Scott Wapner. We're going to focus today on the state of the tech trade, Apple and that new intraday high it is approaching. SK Hynix is now open for business at the nasdaq. A lot of focus on what's been happening in tech. I've got Steve Weiss, Jenny Harrington, Bill Baruch and Kevin Simpson alongside today. We do have a mixed market picture. How do you see things again? I'm going to break away at any moment here for this interview that we're waiting for. But you want to just give me your opinion on the markets while we wait for this.
- [01:45]
Steve Weiss
Yeah, I think, look, it's at this point it's got to be catalyst driven in terms of the tech stocks. In terms of the stocks because there seems to be a propensity to take some profits and the and that goes back to mu. Now we see Nvidia finally breaking out above not breaking out but above 200. And that again is news driven. Apple trading lower. That's news driven. So I think that's where you are, that it's tough finding the marginal buyer to come in at these levels to drive these meaningfully higher. So it doesn't mean the story's over. It means that the market's nervous about when the story ends and particularly nervous about anybody comes any of those companies that are the big spenders in AI coming on their call and saying we're slowing down. I think it'll be okay for me to say that because they found another use for the compute that they're buying and they're building another business as well. But the others that could really take the trade down quite a bit.
- [02:39]
Scott Wapner
Kev tech is the top sector this week. So the DIP buyers, they showed up. You figured they would. You didn't know exactly when but you figured they would and they did. Michael Hartnett at Bank of America says the Mag 7 is still the key to this overall rally. He says so long as the MAGS that is the MAG7 ETF, let's show it to you because he needs it to hold the 200 day moving average 65. Okay, as long as it holds 65. Can we see that please? Can we see the MAGS ETF investors will likely reload longs or bullishly rotate rather than retreat from risk assets. So there it is. 6753 needs to hold 65. How do you see this?
- [03:22]
Kevin Simpson
It's the right place to be because these are the companies they're gravitating, gravitating towards the companies that will deliver earnings. And I agree with everything Steve said about the setup because it's not just about whether or not companies beat whether they beat by a penny, whether they beat the whisper number. I think everything comes down to guidance what the expectations are and if you don't deliver. We saw this with Samsung already this week. You're going to get slammed. So it'll be interesting to see which of the MAG7 embrace the earnings reports and flourish and which ones suffer but we know we'll get a little bit of both.
- [03:57]
Bill Baruch
I agree totally with what Hardnet saying. We've been saying it for a couple of weeks. In fact right after that Nvidia earnings I mean Micron's earnings report, remember the day after you saw all the spenders they were getting tagged as Micron was up and memory was running for us. I looked at that as capitulation on the fear of capex and not saying that capex next earnings report is higher than expected is not going to derail a name matter was our biggest concern out of the magic seven. We've seen really that capitulation on the CapEx story has made a U turn and we've seen the Magic 7 really outperform since then. Our our base call in the second half of the year is Mag 7 is going to outperform. I love what we're seeing in a name like in video waking up right here. I mean it's basically maybe up 10% on the year flat over the last month. It hasn't done anything. It's digesting. Holding the 200 day moving average really constructed this week. Apple making highs. You know, we're getting cash to work for for new clients that have come in and new monies that are coming in. I'm trading the Target, Nvidia Broadcom. I think these are buys right here
- [04:57]
Scott Wapner
and it's going to run well. There is a lot of money that continues to flow into tech. More from the flow show from bank of America. Almost 19 billion into tech which is on track for a record. I don't think that's going to surprise anybody. But you have had as these stocks have pulled back, you have had some money going back in there. You're on target for $183 billion in inflows in 2026. As I turn to you, Jenny, you know, the makeup of the market's been changing. I think that's been obvious to everybody. But this week was a reminder that it's not going to change fully.
- [05:26]
Jenny Harrington
Right.
- [05:26]
Scott Wapner
You look at the equal weight which has been setting new record highs almost weekly over the last month is down a half a percent this week. It's not a surprise that technology is leading as a sector and then you have the equal weight which is off. So how do you see it here?
- [05:42]
Jenny Harrington
Well, I think Weiss is exactly right that from here on it's got to be news driven. So I just finished writing our quarterly letter and what I was talking about was for the second half of the year, everything's supportive. Right. You've got these unbelievable earnings growth that we just had. Interest rates are pretty visible. There's a favorable regulatory environment. And so I think we need to wait for the news of earnings to come in to see which way we go from here. So we're up 10% on the year and do earnings then boost us to up 20% or do they just support a plateau? And I think the challenge, Scott, of all that good news is we need to remember that Q1 earnings came in at plus 29% growth. Year over year. Expectations had been for up 13% growth. So now we ask ourselves the huge move that they had in Q2. Is that anticipating another total blowout?
- [06:32]
Scott Wapner
Yeah, we're expecting 24 and a half
- [06:34]
Jenny Harrington
percent earnings, but it's already there. Right. So now we're expecting 24%. Don't forget we were expecting 30 13. We got 29. Now we're expecting 24. If we get 36, does it blow it out? Or if we get 24, are people like, hey, yeah, we expected that. And that's why these, these prices already ran up. So do we plateau because things are truly great or do they exceed? And that, that news, that news is going to start flowing in the next two weeks. I'm kind of excited, you know, I'm excited to see what comes our way.
- [07:01]
Scott Wapner
I think earnings are going to be great. I think, you know, Steve's right. And I think, you know, it's, it's not going to be a shock to anybody in the fact that, you know, unless the hyperscalers suggest they're cutting back their spending, which is not going to happen, you're not going to be an Amazon and go now to the debt market and then come out in four weeks, three weeks later, and say, well, we're going to slow down the throttle on the spending. There's no indication whatsoever that Metta is going to do that either. It's the best Mega cap month to date. It's up 19%. It's the top S and P gainer today, up some 6%. It leads me to Kevin Simpson. First to Kevin Simpson, then to somebody else who's making a move here, too. But you bought Meta today as a new buy, Correct?
- [07:47]
Kevin Simpson
We added this to the growth portfolio. We have not owned Meta for some time, and for the past two years it's been a constant criticism of their AI spend. And I think what's the pivot was this week for us is that now they're going from just blindly spending to a path, at least for how they can produce revenue within this AI ecosystem that they're building out. So I like a lot of the things that are doing, whether or not The Muse Spark 1.1 is anything that really translates to profitability. I don't know. The fact that they're able to sell some of their space within their compute makes them a competitor to some of the things that we're seeing with Google, with Amazon. And it's not just a media company or an advertising company. They're branching out a little bit. And I like what we see.
- [08:32]
Scott Wapner
Yeah, that's how Zuckerberg sees it. And he's saying as much. He tells an interview I think is a backstop. Even if for whatever reason, we don't need all the compute ourselves or for any number of reasons, there's a very large amount of demand that I think you could sell it long term, like aws. Or Azure or Google Computer. He sees what they've done. They don't have a cloud business at Meta and he says, I want a piece of the pie. And you're buying into that vision.
- [08:58]
Kevin Simpson
I think it's a great idea. Now the only thing that would scare me a little bit is why do they have extra compute? Because of all the spend that they've done. But I like the fact that they're branching out. I like the diversification, I like what they're doing with hardware. This is a neat company. I'm happy to be back in it.
- [09:12]
Bill Baruch
They're on the verge of that bottom of the ninth inning comeback right here. I mean, the, they just needed to deliver and execute and finish the job here, but they're on the verge of doing it. I mean, from a PE standpoint, they're at the lowest level since late 22, early 23. So if they can deliver here, I mean, it could really be a great one.
- [09:30]
Scott Wapner
I was going to come to you off the top of the story because you flagged that you had bought more Meta and then we got the news from Kevin that he established a new position. So it sort of took a little bit of precedent. But what about your theory behind why you just did this?
- [09:43]
Steve Weiss
Yeah, so as you recall, I bought more early in the week when it was down. I texted you guys last night after the close and said I bought in the open when the shares were down. I don't know if it was in the open just before, but the shares were down eight or nine bucks, which made no sense to me. So it was a good opportunity to pick up more. Now this is a monster sized position. I don't think I've ever had this size position. So I'm going to cut back on what I've added recently. But the reason I was perplexed is because, let's look at this way of the Max 7, who are the visionaries there? Right? The CEOs that have come into Apple, to Microsoft, to Alphabet. They've come in as managers. You've got Zuckerberg, who was a visionary, right? So that visionary, in my view, is going to be ahead of the others as they innovate with AI. And what he's saying is not that we bought too much, but that if you're worried about it, I'm looking at other uses for it and I paid so low for it that I can sell at a premium. That's phenomenal. So what are the big, you know, I'd say clouds over the stock. It's been okay. We don't see how Meta's going to make money off AI. Well, he's just told you how he's going to do it. And there's so much need for cloud. There's so much need for compute. They're going to be right there front and center. So look, I don't want to say he's playing chess and he is playing checkers because they're brilliant CEOs in their own rights, but that's why I bought it.
- [11:06]
Scott Wapner
In addition to, I think that chart. Excuse me to interrupt you real quick. I think the chart is representative of investors trying to figure out what he is playing.
- [11:15]
Steve Weiss
Yes.
- [11:15]
Scott Wapner
Whether it's chess, checkers or some other game. Well, I think that's what the chart.
- [11:24]
Jenny Harrington
I think that chart has more to do with like the big flows in and out of Tekken. And I don't know that it's that small specific. You know, we added to this two weeks ago at $555 and we weren't saying like, oh, hey, investors have lost faith. We've said, hey, the broader markets pulled all.
- [11:37]
Scott Wapner
No, no, I think I'm going to stop you. I think there have undoubtedly been instances in time in this name where investors have questioned the faith and their belief in where they were deploying the amount of capital that they were spending. I don't think that's even debatable.
- [11:53]
Jenny Harrington
Okay, agree. And like, you know, I've said many, many times, way back when we were entering the stock several years ago and it was like sub 100 and we were saying, hey, this year of capital efficiency is coming. Yeah, all of that. All I'm just saying is like the last two months, I don't know that it's as stock specific as it's been market specific, because we've just seen huge swings.
- [12:10]
Scott Wapner
Oh, sure. And I just to be clear, I'm not addressing the last two months. I'm looking at that chart of a year to date at minimum and longer term.
- [12:18]
Jenny Harrington
I agree.
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Scott Wapner
We, we've been promoting this exclusive interview that Elon Musk was expected to give to our Julia Boorstin, which is now apparently no longer happening. Want to bring in Julia Boorstin who's been in Sun Valley. Julia, do you want to explain to us exactly what happened here as this was imminent?
- [12:36]
Julia Boorstin
Yeah, we were expecting to start an interview with Elon Musk right now at noon Eastern. We just got word that he has to postpone. Obviously, it would have been great to talk to him in his first TV interview since Space X went public, There is so much to talk about. I mean, look at today, Space X shares are trading below where the stock traded for its first trade. It's well off its highs since that IPO just a couple weeks ago. And we were really looking forward to hearing his thoughts on Grok 4.5, which just launched on Wednesday. He's been retweeting some information about how much more efficient Grok is then the. The rival platforms and specifically around this question of cost. Now, of course, Scott, this comes on the heels of yesterday, my interview with Sam Altman when He talked about OpenAI's new models and how much more efficient they are. We really seem to be in a moment right now where all the AI players are focused on cost efficiency. So we would be very curious to hear what Elon Musk says about that and also how he answers the question about how they're managing their own costs as component costs go up and they're trying to deliver lower costs for their customers. So a lot going on here. But if we look at Space X shares now trading down nearly 3% today at $148. So. So Scott, we hope he will give us a new time for this interview, but we've just heard that he is postponing.
- [14:07]
Jenny Harrington
Okay.
- [14:08]
Scott Wapner
It's an unfortunate development for sure. But you'll let us know what happens from here. Julia, thanks so much. That's Julia Boorstin. We'll will continue just to keep the ball in the air here for a moment because, Kev, you do own Space X and I think one of the issues that, you know, I think investors are having a hard time figuring out how to value this company, a literal out of this world. Tam that they've talked about revenue projections that are, you know, astronomical and how they can in fact reach those, those targets. How did you get past that to decide you wanted to own this?
- [14:45]
Kevin Simpson
Well, we're down a little bit on it as most investors are at this point. Sub 150, we have a small position in it. You can make the argument for the bull case that they have the dominance, the monopoly with respect to the Falcon. Obviously we know what they can do with Starlink, again, almost monopolistic. And then the Elon Musk factor, which we put a massive premium for better or for worse. Sometimes he doesn't show up for an interview. Would have been awesome because what I was most interested in hearing about was just his thoughts on whether or not Tesla, which we also own in the growth portfolio, and Space X might be thinking about it together.
- [15:18]
Scott Wapner
That's the Issue hanging over. Hanging over everything. Did you buy this stock? Because you, you look at that as the, as a catalyst, potentially a combination of Space X and Tesla.
- [15:31]
Kevin Simpson
We definitely did not because we wanted to own both with the mindset that maybe you can't from a legal perspective perspective bring these companies together. But I think under the surface a lot of a merger has already taken place. If you think about the AI effect, whether it's with respect to Tesla or with respect to Space X which literally has AI and Grok and X. I think that there's a lot of synergies that can take place whether or not there's ever a formal merger or not. But these things trade with incredibly high multiples for people that have been in Tesla for a very long time. You know that you can sort of fly up, fly down, ride with these ebbs and flows. And I think we need to expect the same thing with Space X. If this trades down close to 100, Scott, we'll double down on it for sure.
- [16:15]
Scott Wapner
Yeah, I mean have the lockup issues as an overhang too. I figured that this had, this had a Bill Baruch written all over it.
- [16:22]
Bill Baruch
We don't own it.
- [16:23]
Scott Wapner
I know why it's.
- [16:24]
Bill Baruch
Well, it's on my radar and we typically don't buy in our model portfolio those names that after such earliness of going public. But I like you didn't mention the colossus and the cursor acquisition that that is really training their models. I think this is really a great story for the now and I mean they're going to, they could scale. This is the largest supercomputer and it could scale to 1 terawatt. And so I think here is, is really the. Take a look at it as the market digested. I really talked about the open of going above 200. These things sell off 50 to 70% while we're there. I think we can settle out here for a few months, kind of see what an earnings report can give. But I think you have to be excited about what's around the corner for this name.
- [17:08]
Scott Wapner
All right, well we'll see what happens if, if he does in fact reschedule the interview and we do hear from Elon Musk will certainly be the first to, to let you know. You want to just wrap up the, the meta part of our conversation because I didn't mean to cut you off but we had to get to what we thought was going to happen. What's your last thought here on Metta?
- [17:26]
Jenny Harrington
The last thought is that it's trading at 20 times earnings. And it's gone from this huge free cash flow producer to like no free cash flow. But at the same time, they have $200 billion a year of revenue from their social media business and that's growing at 28%. So you've got to believe that they probably get back to free free cash flow positive. And I think that Mark has proven over and over that he is focused on, focused on efficiency and that he'll continue to be. And the comments today on how to use that computer and that data, like that's what he says. I'm going to maximize the returns and go where it makes sense. So I think of the Mag 7, this continues to be where we're the most comfortable. It's the only one we still invest in.
- [18:00]
Scott Wapner
Okay. So I look at a Space X and I say, hey, why not Bill Baruch? I look at SK Hynix and I say, why not a Steve Weiss? I mean, it's the kind of thing that I almost would have expected you to say. Yeah, I established a little bit of a position here as it opens for business. The largest ADR listing ever in this country up at the NASDAQ. 26 and a half billion they raised. You see how it's trading. You know the Micron story, because you've been in and out of that name at periods of time. Memory is really at the epicenter of the debate right now within tech. So what about this?
- [18:33]
Steve Weiss
Yeah, you know, it's a good point because it's actually a little less the valuation, a little lower than Micron. My miss was not on this. My miss was on Micron because I sold it all, as I said, on Monday. And then it got down to a level where I least thought I could trade it. So, look, I don't think it's over for these companies. My only statement was, I've made a lot of money in it. I bought it start by at 350 when they missed the first quarter, when the market thought they missed the first quarter and they had it. So when you have that kind of return, you sort of got to say, you know what, do I want to be piggish about it or do I want to take profit? So I took the profit. I also am sitting in a significant amount of cash. To me, what we ever, what we saw. And I think it's coming to be true. My belief has always been there will be no deal with the Iranians. And any deal with the Iranians is going to be broken. And because it's not, it's not the religious part of the government you have got to worry about. It's the Republican National Guard who launched the attacks. So what does that mean? What that means to me is that oil prices are going to go higher and that could pressure the market with inflation. So, so I'm looking for opportunities to deploy that cash because I do think that after the initial shock, the market will see through it. I can't time that initial shock. But nonetheless, I just want to be, you know, I want to be opportunistic. Mike, you know, Meadow is one example of that. If Micron got down to around nine and a quarter or so, Bill can give me the support level, I think I'd get back in. Or if I like how it's holding
- [20:07]
Scott Wapner
around here, I like the way that our Christina Parts Nevolous has framed Hynix as a bigger, cheaper, closer to Nvidia than a Micron as she joins us for the nasdaq. She's been covering this from the outset. So what do you make of how this is opened?
- [20:23]
Christina Parts Nevolous
Liquidity was great. They didn't hit the, you know, normally they want to put out 8 to 10% of the share offerings. Those 177 million shares, it opened at 11.5 million. But you can see the share price well above the 149listing price, you know, so 16% higher right now. Retail was involved as well, maybe not so much on a volume gain but in terms of the number of orders. So they did play up. And that raises the question how is everybody funding this bid right now? 173, 16% higher. A lot of shares out there. Are they using money from Micron? Are they using money from chips? Are they using money from the ADRs that did close lower in Europe or South Korea? So that is something we have to ask ourselves in the coming days especially as the options market provides their leverage products as of Tuesday. But overall this is seen as a pure play for high bandwidth memory and that is the memory that is used in the air infrastructure. It's the the number one supplier to in video too. So that's why I had that pitch to all of the shows that this is the direct line to Nvidia. We know that they have a good relationship there. Micron is part of it, but is just not on the same scale when it comes to the market share roughly SK Hynix is roughly 56, 58% of the high bandwidth memory. You have Samsung and Micron just around 21%. But Samsung's definitely catching up.
- [21:44]
Scott Wapner
Yeah, Very good stuff all day today thus far. Christina, thank you. That's Christina Parts and novelists, you guys are holders. Bill of, of Micron Jefferies today says longer term they'd rather own DRAM than hyperscalers.
- [21:57]
Bill Baruch
It's our largest position. It has been for, for a long time. I've had at the table on it for a long time. I think the big switch earlier this year was in February when they announced at the end of last year but they spun out or they ended their consumer business and really to focus focus on this high bandwidth memory. This earnings report that we saw a couple of weeks ago was out of this world. I think one of the top five earnings reports we've had since the start of AI, you know, early 23. I think this, this here is really what you think about is yeah, they're smaller share than Hynix has. But what also is, I mean just the growth and then exiting the cyclicality from that consumer business and shifting the focus. They're sold out through 2026. You can assume the high bandwidth memory sold out further and through 2020.
- [22:40]
Steve Weiss
7%. Is that 40%?
- [22:42]
Bill Baruch
Yeah, you could assume potentially more than that. So I think it's still a great place to be. It's an ebbs and flows. There's a lot of support at 850, 900 if you're looking for that. But I think that it's going to stay a low multiple and if it does go through that rerating and goes to a 20 multiple at some point it's going to be a lot higher. And that's where you have to think about maybe, maybe a top.
- [23:00]
Christina Parts Nevolous
Good.
- [23:01]
Scott Wapner
Good luck trying to figure out the directional movement movement of the semis. Right. The SMH has only had four trading days where it moved up or down less than 1 1/2% over the past month.
- [23:10]
Steve Weiss
Crazy.
- [23:11]
Scott Wapner
I mean it's enough to drive people crazy because just when you think that it has bottomed, then it, you know, it goes, it goes down. You see it go up and then it goes down again. You see it go down, then it goes up 15%. Pullback JP Morgan says sets the stage for outperformance though therein lies the debate in this space that the market's trying to figure out on semis.
- [23:33]
Jenny Harrington
Yeah, I mean it's so hard. I think about that quote, you know that old market quote that says the market can stay irrational longer than you can stay liquid. And I tweak it to the market can stay irrational longer than I can stay sane. And this is a Little bit like that. Because even as we're talking Bill and you say micron at 20 and that's where maybe you sell out and we know that it's kind of grown into its multiple. There's so much, much speculation here and there's so much, there's so many ifs, ands or buts. Like, you know, I was at that JP Morgan energy conference a couple of weeks ago and Jamie Dimon made an off comment that he'd spoken to someone who showed him software that could reduce the energy efficiency, that could improve the energy efficiency of data centers by 60%. Like that. What if that comes around on memory? What if there's one small move on, on some kind of software that improves memory? How do these fare then? And you see so much competition coming in with Samsung doing huge developed, you have no idea. The whole point is how do you know?
- [24:27]
Bill Baruch
And Micro invested $3 billion into the US infrastructure for semiconductor ecosystem yesterday.
- [24:33]
Jenny Harrington
They get the return that they need on that to justify these valuations with
- [24:37]
Bill Baruch
the US in the White House from the semiconductor space in the recent years has paid off.
- [24:41]
Jenny Harrington
Okay, but here's the other thing. Like you made a comment on, you know, they're sold out through 2026. That doesn't say sound far enough along for me to justify an up 200% move this year. They're there. But, but this goes to. Is it an investment or is it a speculation?
- [24:54]
Bill Baruch
This is just like video 23.
- [24:59]
Jenny Harrington
Maybe, but who knows. And then, and then also, and this goes back to our conversation before, how much of that's already priced in? When you have a stock run up 200%, it's pricing in those earnings for 27, 28. So it's already a best case scenario.
- [25:12]
Bill Baruch
A 20 multiple is where I think that's when it gets egregious.
- [25:15]
Jenny Harrington
Historically traded at five times. But to your point before, yeah, it's gone from the mercury mercurial nature of like consumers like these, you know, to corporations. And sure, that evens it out. But the point is there's so much ambiguity, there are so many ifs, ands or buts that it's a hard space to trade. And I think, I think right now you trade it. I'm not sure it's really investable because the cash flows are frankly too ambiguous.
- [25:37]
Steve Weiss
Every stock is ambiguous in terms of the future. You just connect enough dots. Yes.
- [25:42]
Scott Wapner
Okay.
- [25:42]
Steve Weiss
You can't, you can't predict with certainty what any stock's going to.
- [25:46]
Jenny Harrington
But I can tell you like Sabra Health Care in my portfolio that's 90% leased to like skilled nursing and retirement community. There is far more predictability on that.
- [25:54]
Steve Weiss
And what's the average annual return on, on a read or something like that?
- [25:58]
Jenny Harrington
You know that it's much lower.
- [25:59]
Steve Weiss
Of course it is. So if you want to take risk, you want to outperform the S and P, that's a great product for people that want to buy their product that wants it. But in terms of predicting stocks now and I don't think you're ever going to see a 20 multiple in my.
- [26:11]
Bill Baruch
I don't think so either.
- [26:11]
Steve Weiss
It's, it's a commodity stock. But I'll tell you where all 10, isn't it?
- [26:16]
Bill Baruch
Yeah, yeah, yeah.
- [26:16]
Steve Weiss
But 10, if you go through the history of the PE, you'll see 10 is the peak. Now there are moments got a little higher but these stocks generally trade mid single digits. But all roads lead to Taiwan semi. So whether you're meta making your own trip or Apple. Let me finish. Or you're, or you're in video, guess what you need capacity. Taiwan semi. So to me that remains the cheapest and most predictable because they're not pricing their production based upon what prices are in the market. Spot prices. You want their capacity, you pay for it and that's it. So they're, they're the most predictable of any of the semis.
- [26:53]
Jenny Harrington
It's just hard right now and like we own Tearadyne for the same reason, right. Because everything needs to go back to testing. And the more complicated, complicated chips get, the harder and the more important testing is. Bottom line is it's a hard place to be right now. And I think you're better off being a trader with your instincts and charting than an investor like me who needs to see out with great clarity and great certainty the next three years of revenues in order to come up with a valuation.
- [27:14]
Scott Wapner
All right, we're going to take a break. When we come back, we'll have more committee moves to get to. We got one from Steve Weiss coming up. Certainly get into that bill upping his exposure in a beaten down part of the market. We'll run you through the trades when we come back. Now is your time to get into a new Dr. Horton home by taking
- [27:33]
Kevin Simpson
advantage of its national red tag sales
- [27:36]
Scott Wapner
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Narrator/Advertiser
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Scott Wapner
Every Mazda SUV offers you an elevated
- [28:23]
Steve Weiss
driving experience and refined performance. Discover it at your local Mazda dealer.
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Narrator/Advertiser
Today, our trip up the coast was perfection. With my Sapphire Preferred card, we earned three times the points on gas, online, grocery and dining.
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Scott Wapner
It was amazing.
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Narrator/Advertiser
Chase Sapphire preferred the card that's preferred for a reason. Cards issued by JP Morgan Chase bank and a member FDIC subject to credit approval terms apply.
- [28:58]
Scott Wapner
All right, we got some committee moves to tell you about. So you're back in a name that you've traded around for the last few years. FTAI Aviation. You bought it back after selling out of it completely in May.
- [29:10]
Steve Weiss
Yep. So the history is I bought the stock originally in the 40s and traded out of it at about 110. Got back in when it came back 90s. And I look at it, it's, it's down significantly. What I look at now is a country is a company that's really undergoing a massive change. So it used to be just an air, you know, aircraft engine leasing company and maintenance company and now they've taken lots of capital, they've gotten in and have turned into a power generation company. So it's no secret that aircraft engines are being used to power generation data centers. So I just thought it got down to a level both on a valuation because it's trading at about 70 times EBITDA, which is very cheap when you compare it to GEV and to others. And on a P E basis, it's also going to be in the teens on 27 numbers. So to me it's sort of like an orphan stock. It's not widely followed. Now I'm down the trade. Right. It's a recent thing that I put on, but I'm going to stay there for a little while and see what shakes out. It's part of the whole trade as well. So it's got all that volatility. So look, I'm not going to carry this down to 200, but I think there is pretty good upside here.
- [30:23]
Scott Wapner
Okay, got Bill's move is related to gold, which is coming off its worst quarter since 2013 you bought more of the miners, so you bought a gold ETF and more the gdx.
- [30:33]
Bill Baruch
Yeah, we've been a little bit of a rebalance. In January we, we trimmed GDX and we sold CEF to go into OU and Z to cut out the silver exposure. It was great timing, but now we've seen this market beaten down. Now you have seasonality and gold picking up here in July, which I like quite a bit. And the chart is actually pretty constructive kind of building out here now. The one thing I really find to be the biggest catalyst is we had the Kevin Warsh press conference in June post Fed meeting and it was taken very hawkish. We still see the odds of a rate hike later this month at about 30%. We still see the odds of a rate hike later this year by the end of the year at 50%. I do not think that they're going to hike rates and in fact I think his press conference delivering that hawkishness, he's misunderstood. And ultimately what we're going to see, just like the tariff billboard on Liberation Day, just like the antics around Iran and nuking them, I think what we're going to see is this incrementally walk back over time. How else do you go the economy goose the stock market into the midterms? And I think gold is a great way to play it.
- [31:32]
Scott Wapner
Oh, interesting. You have a thought?
- [31:34]
Jenny Harrington
Not really. This is another one where I think it's just, it's too speculative, you know, and it's funny because yesterday I was going through some clients portfolios and they are, there are some legacy like gold and SLV positions in there and I was sitting there trying to think about like how do I as a fundamental investor say this should be up another 20%? I don't think you can can. I think the only way you can do that is from a technical perspective. But from a fundamental perspective there's never a great valuation case or a great cash flow case on gold. It is speculative, it's based on other people's behavior. It's not, you know, it's not an investment.
- [32:06]
Bill Baruch
Well, here's the reason why it's down this year so much is because last year, fomo. Hold on. Last year, July of last year, gold became a tier 1 asset officially because of Basel 3. This was talked about for 10 years and no one really realized it came into effect of last year. Central banks have been buying gold because of that, because it is as good as cash, the de dollarization trade. But if it's going to be on your balance sheet. And the oil exporters now don't have the cash flow that they think that they need or the oil purchasers have to spend more. Well, how are they going to raise that capital to make up for that? Well, they're selling gold on their balance sheet and that's what we've done.
- [32:42]
Jenny Harrington
But there's no way to wrap actual dollars around that. And that's the challenge. It's like, and you can see too that huge move that they both had
- [32:49]
Bill Baruch
silver and gold and that's why it's investment.
- [32:51]
Jenny Harrington
Right. But that was purely based on speculation. That was purely based on.
- [32:55]
Scott Wapner
Can you then just, can you tell us then? I'm sorry to interrupt you, but the punchline then on why you own Freeport and how that if you're still like the mining space in some regard, why copper is different.
- [33:06]
Jenny Harrington
Right. So Freeport's more of a play on copper and copper. Like as we, you know, as we build data centers, as we build electric cars, you see the endless demand for copper. And on that one you can see a much more clear cut scenario on how the copper miners are terribly productive and make lots of cash over the next years. And this is like I'd be more comfortable again owning a gold miner perhaps than, than, than gold itself. Than gold.
- [33:29]
Bill Baruch
We did increase miners as well, but I would say copper, yeah, this could be in supply deficit and it's going to, that supply deficit is going to increase over time. I think miners there set up well, too.
- [33:37]
Scott Wapner
All right, we're going to move on to Kate Rooney who has a CNBC news update for us. Hi, Kate.
- [33:41]
Christina Parts Nevolous
Hey there, Scott. President Trump has removed members of the bipartisan Election Assistance Commission. That's the agency that helps oversee voting systems and voter registration forms. The move follows resistance to Trump's push for proof of citizenship requirements for voter registration and comes after a Supreme Court ruling expanded presidential authority over independence independent agency boards. Meanwhile, a deadly wildfire in southern Spain has killed at least 12 people with 23 others still missing. Officials say some victims were found inside burned out vehicles while trying to escape those flames. The fire has scorched nearly 8,000 acres as extreme heat grips most of that country. And finally, a dangerous heat wave is building as well across much of the US with forecasters rather warning of unusually high temperatures in the days ahead. A strong heat dome is expected to grip large parts of the lower 48, raising concerns for heat illness, power demand and outdoor workers. Officials are urging people to limit time outside and stay hydrated.
- [34:42]
Scott Wapner
Scott, back over to you all right, Kate? Thank you. That's Kate Rooney. Mike Santol is next.
- [34:53]
Julia Boorstin
Good morning.
- [34:54]
Scott Wapner
Good morning, students.
- [34:56]
Julia Boorstin
Soccer teaches us teamwork, leadership, geometry, art,
- [34:59]
Bill Baruch
physics and a lifetime of lessons we
- [35:01]
Julia Boorstin
can take with us long after we leave the field.
- [35:04]
Scott Wapner
That's why bank of America and US
- [35:06]
Julia Boorstin
Soccer are committed to helping bring soccer to every school.
- [35:12]
Scott Wapner
Soccer is officially in session.
- [35:15]
Julia Boorstin
Raise your hand to help bring soccer to schools@b of a.com socceratschools our trip
- [35:20]
Narrator/Advertiser
up the coast was perfection. With my Sapphire preferred card, we earned three times the points on gas, online, grocery, grocery and dining.
- [35:27]
Scott Wapner
It was amazing.
- [35:28]
Narrator/Advertiser
Chase Sapphire preferred the card that's preferred for a reason. Cards issued by JP Morgan Chase bank and a member FDIC subject to credit approval terms apply.
- [35:35]
Kevin Simpson
Thursday, July 16 CNBC Sport and Boardroom join Fanatics Fest for game plan groundbreaking ideas shaping the future of sports and entertainment. Request your invite@cnbcevents.com gameplan.
- [36:02]
Scott Wapner
Senior Markets commentator and overtime co anchor Mike Santoli joins us now for his midday word. How do you feel like you're going to assess this market for the week?
- [36:11]
Mike Santoli
Look, we kind of held its ground, actually. Marginal progress. If you just look at how the S and P has managed to perform in a lot of the hardest hit stuff in the beginning part of this month did not knock things off course. So that's a net positive. I think over the course of the last few weeks you've had positioning reset into a more neutral spot. I don't think it's by any means like, you know, underweight or screaming by or anything like that. But a lot of the overcrowding and overstretched momentum positioning is taking care of itself. I don't know that semis have truly answered the question. Was that an important crescendo top that we got to a few weeks ago? They're bouncing, they're kind of push and pull. I think that's okay as long as the rest of the market hangs in. I do think the bar is very high for earnings. I think pretty much everybody would agree with that. It's probably going to be supportive. The denominator is going to hang in there for the P E a lot of valuation compression in the big cloud platforms. We'll see if that really dictates what happens in the next couple of weeks.
- [37:09]
Scott Wapner
How do you feel about the financials which are going to kick things off later next week?
- [37:14]
Mike Santoli
Yeah, I think it's one of those deals where it's kind of a widely acknowledged good environment. The capital markets side of things seems like it's Fully reflected in a lot of these stocks. I am sensitive a little bit to what they're going to say. We have to keep in mind that this is the quarter when a lot of the, the kind of supply chain disruptions for most companies and then also the capital markets dislocations that happened around the war might be felt a little bit and kicking into the second quarter. So I'm alert for the idea that there are things we're not really considering there, whether it's on the consumer front or elsewhere. But I always come down to banks usually do fine but then the stocks don't trade great off the news. So we'll see if that holds.
- [37:55]
Scott Wapner
All right, good stuff. I'll see in a little bit. Mike, thanks. Coming up next, calls of the day. One big bank. Speaking of naming three committee stocks top picks into earnings, we debate them next. All right, we told you earnings are just around the corner. HSBC today has their top picks into the Prince, Abbvie, Caterpillar, Marriott, Abbvie.
- [38:28]
Bill Baruch
Bill, it's about our number 15 name. They've had 7% earnings growth. Skyrizi and Renbach. They have really made up the lost revenue of Humira. I think they're expected 24% revenue growth here. The stocks only point I think 7% on the year. It's breaking out and trying to break out. I like health care quite a bit outside of tech and I think there's, I like Lilly a lot as well and I think there could be some great momentum that continues from here.
- [38:51]
Scott Wapner
Kev Caterpillar, Yes.
- [38:54]
Kevin Simpson
It's not just an AI story or an AI adjacent story. Power generation, mining infrastructure. I think it's a multi year play. The stock is up a lot, 65% on the year, 132% over the past 12 months.
- [39:07]
Scott Wapner
We're not selling Marriott Jenny.
- [39:10]
Jenny Harrington
So this is one that we've owned in our growth strategy since the growth strategy was started in 2013. It's as my friend Steve Weiss says, a permanent compounder. Also when we talk about earnings and certainty and clarity of earnings, this is a company that you can like really rely on on right now. Earnings for the next three years are mid teens and they should stay that way. Now it's a little expensive. It's trading at 30 times. It's got a 3 1/2% free cash flow yield. It's up 22% year to date. So like maybe you don't buy it here and now. Maybe you wait for a blip at some point because the market will do that. To it. But this is truly the kind of stock that you can put in your portfolio and hold for a decade or more.
- [39:46]
Scott Wapner
How about Lamar Advertising which you own today to neutral from bottom at Citi target to 160 which is basically where it is.
- [39:55]
Jenny Harrington
It's so tough. So this is up over 30% this year and and my challenge is in our dividend strategy. So the challenge here is that I bought it not the second time I've owned it, but I bought it not too long ago. I am long term on it, but I have a huge capital gain. The dividend's down to 4% now. What a great company. It's Billboard. So in this crazy world that we live in, it's the only place where you're sure that people will actually see your advertisement. Everywhere else it's hit or miss. But billboards, they're going to see them all the same. It's pretty expensive. There's not that much upside left. I don't think that's what, that's what the analyst report also thinks. There's like limited upside and that's real. So I'm in this tough spot of you know, do I just realize the gain? Do I replace the 4% with something that's got 5%? But I also have an incredibly high, high quality company with an excellent management team and a really indelible business. It's a tough call. I'm not selling it yet but I'm not too far off.
- [40:48]
Scott Wapner
Pepsi downgraded to neutral from buy. The target at Citi goes to 145 from 170.
- [40:55]
Kevin Simpson
Yeah, I agree with the downgrade. The demand in North America has been atrocious. This is a very small position Scott, actually in our growth portfolio which seems weird but it's part of the Russell 1000 growth stocks down 5% on the year. I wouldn't get in front of it in our dividend portfolio with a huge position in Coke that's up 20% on the year. I like Coke, have a Coke.
- [41:16]
Scott Wapner
So you agree with the downgrade but you're going to hold to hold it
- [41:19]
Kevin Simpson
because it's part of an index. I have to have a slight allocation there. But our conviction is what Coke.
- [41:23]
Jenny Harrington
I hear one comment on Pepsi.
- [41:25]
Scott Wapner
Yes.
- [41:25]
Jenny Harrington
So as you can imagine with that dividend Yield creeping to 4.4% on such a high quality company I have been able to resist but start diving into in on research and it's such a bummer because I keep hitting roadblocks and like between GLP ones and the weakened and the potentially weakening US consumer and the fact that they're North American business. It showed some glimmers of health. And then in this last earnings report it faded again. I don't think you want to get in front of Pepsi. It's still not that inexpensive. You know, if it comes down another 20 or 30% then it gets attractive, but. I know, right? But I need the numbers to come down that much to warrant the valuation that compelling.
- [41:59]
Kevin Simpson
It reminds me of Nike.
- [42:01]
Jenny Harrington
Yeah, and the GLP ones like the GLP1s are scary for companies like this. Even with all their beverages, they have a huge snack business. So I could not get to a point of comfort. And I really wanted to like, I really wanted this in my portfolio.
- [42:13]
Steve Weiss
Real quick, I want to ask, would you add to cat here? I sold half my position. I think it's way overvalued.
- [42:18]
Kevin Simpson
I can't. We have a 5% max holding. It's kind of trimming.
- [42:22]
Steve Weiss
If you didn't have that, would you add to it?
- [42:24]
Kevin Simpson
Probably not. I think it's up against the threshold per to perfection, but I don't want to be out of it. I do think it's a multi year story, but just like with your micron, I'd buy it on weakness.
- [42:32]
Scott Wapner
Okay.
- [42:33]
Bill Baruch
I like United Rentals.
- [42:36]
Scott Wapner
Oliver Renick Options actions next. Oliver Renick live at the CBO in Chicago with today's options action. What do you see there?
- [42:59]
Kevin Simpson
Hey, Scott. We're seeing a huge amount of bullish appetite for Circle, the crypto network that just got regulator approval to establish a national trust. Bank shares are up more than 5% and options volume is 4 times heavier than the 30 day average. With about 200,000 contracts traded in in circle and it's 78% of them calls. With almost 3 times as many calls bought versus puts. There is a lot of short term speculation happening right now. The top five contracts all expire today and range from the 69 to 80 strike calls, which of course are very low probability. There is a lot of excitement about how crypto technology is disrupting the derivatives market. But circles still down 70% over the past year. And the biggest trade today was actually someone selling the 85 strike August 21 calls and using that money to buy half a million dollars of 55 strike puts. It's a very bearish position, Scott.
- [43:57]
Scott Wapner
All right, I'll see you at three o', clock, Oliver. Thanks, Oliver. Running setup coming up next. All right, let's do the setup. Some non B banks. Weiss UnitedHealth next Thursday.
- [44:08]
Steve Weiss
Yeah, look, Steve Hemsley's come back. As we know he's the former CEO, was staying the chairman. I think it continues to be beat to the upside and that they surprised in the quarter to the upside. He's just ruthless in getting costs under control and going back to what made them such a permanent compounder in the past.
- [44:27]
Scott Wapner
Okay. Fastenal next Monday. Bill, you own that name?
- [44:30]
Bill Baruch
Yeah. It should be real gauge on the US industrial economy. I think they benefited from reshoring and energy. I have high hopes that they can. They can do well here.
- [44:39]
Scott Wapner
Jenny Koenig.
- [44:40]
Jenny Harrington
Yeah. So we talked about this last week because Barron's had an article saying they're likely to trim the dividend. They are likely to trim it. And with that I think the stock has been de risk. It's trading at 8 and a half times next year's earnings. It's a well managed company. They have a great product line within the huge threat from GLP1s. They have on average better products. They. So I think they could have a crummy quarter and the stock could still do well next week. At which point I'll probably get out if it does have a nice pop.
- [45:03]
Scott Wapner
Okay, I was going to ask you about that. Okay, we'll do finals after the break.
- [45:20]
Steve Weiss
All right.
- [45:20]
Scott Wapner
3:00 clock this afternoon. Closing bell. The professor Jeremy Siegel will join us. Dan Greenhouse. Kevin Gordon Warren Pies. And the American Century CEO Jonathan Thomas out from Lake Tahoe. Beautiful Lake Tahoe at that. Can't wait. We're going to go this way this time. What's your final trade, Weiss?
- [45:37]
Steve Weiss
I would have come to me first to Dick. Sporting goods stocks correct A little bit. It has these peaks values but still the top play in retail in my view.
- [45:44]
Scott Wapner
Okay, Jenny, what do you have?
- [45:46]
Jenny Harrington
All right. Clorox, a dividend aristocrat with a 5% yield trading at 17 times. As petrochemicals return to pre war pricing and supply chains normalize. By the way that's their biggest cost. This stock should get a pop.
- [45:57]
Scott Wapner
Thank you very much. Bill Baruch.
- [45:59]
Bill Baruch
Nebulous AI infrastructure. Ultra growth story. It's sold off a 40% from its recent high into big support. I think it snaps back quickly.
- [46:08]
Scott Wapner
Super volatile area of this market. Interesting final trade from you up about 3%. Kevin Simpson. What do you got, Scott?
- [46:18]
Kevin Simpson
I got in video I keep coming back to this ticker. Blackwell continues to outpace. The demand is unbelievable and they're finally now approaching $100 billion per quarter.
- [46:29]
Scott Wapner
All right everybody have a great weekend. I will see you a little bit later on the closing Bell. The exchange begins right now.
- [46:35]
Narrator/Advertiser
All opinions expressed by the Halftime Report participants are solely their opinions and do not reflect the opinions of CNBC or its 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 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 halftimereportdisclaimer Thursday, July 16
- [47:10]
Kevin Simpson
CNBC Sport and Boardroom join Fanatics Fest 4 game plan groundbreaking ideas shaping the future of sports and entertainment. Request your invite@cnbc events.com gameplan.