Scott Wapner (3:06)

Nobody chases sentiment and momentum either up or down like Wall street strategists. Because you know when, when things were deteriorating you had, and I guess rightfully so at the time you had a number of targets come down. And now that we're in a new environment and three or so percentage points away from an all time high, you do have them going the other way. Deutsche bank today says they're back at 6550. They were at 6150. And they're also looking at estimates on earnings higher as well, taking those from 240 to 267. So it seems like many of the most dire predictions about where this market can go have all but dissipated. Not to suggest that people don't see volatility ahead or they're still aren't some serious questions that need to be answered. But the tone is one of yeah, we're probably going higher, we should go higher.

Stephanie Link (4:04)

Just focus on the fundamentals. The Atlanta Fed tracker Yesterday came out at 4, 6, 4.6% growth for the quarter. I mean I don't think we're there actually. But better than recession, which is what some of these negative strategists are talking about. Maybe you're running at about two, two and a half percent kind of growth. Personal income, that number still is on my mind. That came out on Friday, it was three, three times expectations. That is good. And then consumption, if you Average the last two months.4% that's good to solid. But that means that savings rate is actually going higher today. We got the jolts numbers up month over month. The total hirings also up month over month. And then the inflation numbers are coming down. I'm looking at the PC. I know that the Fed looks at super core and I know we should be looking at core to smooth things out. But. But Overall inflation at 2.1% is very healthy. What does this mean? Why is the market going up? Because the economy is hanging. It's better than hanging in. It's surprising people to the upside and that bodes well for earnings overall. We just completed earnings and they grew 12.3% in the quarter. That was higher than I thought. I mean I thought 9, 10%, 12% this year. I think you can actually see 10 to 12% for the full year. That's actually better than what I thought even a couple of weeks ago.

Scott Wapner (5:17)

There are still though, you know, those who say the worst of this trade war and the uncertainty is to come. The soft data is going to end up and in some cases already ending up in various parts of the hard data. The OECD today said the Trump tariffs are going to sour the global outlook. They cut the forecast for US growth sharply downwardly revised to just 1.6% this year and 1.5% next year. JP Morgan's trading desk Jay Snipes says tariffs are a net negative. When does this become fully apparent in the macro data, they ask? Well, our best guess is either July or August. If we get to the point that nonfarm payroll is printing materially below 100k and there is no change to the trade war rhetoric, this is a market that will crumble. Those are their words directly. Now the big question mark is the. And there is no change in the trade war rhetoric that that's what you're going to get. You believe that as we think about what this summer is going to hold.

Jason Snipe (6:18)

Here, a couple of things. I think Steph makes a great point just in terms of earnings. Earnings are obviously very positive. Close to 13, 13% earnings growth in addition to a 78% beat rate. You know, when I think about just the, just the s and P27%, 27 plus percent mega cap earnings growth rate, that's very significant. The other 493 were up around 9.4%. From a technical perspective, about 48% of the S&P is trading above the 200 day. So that was a very different number a quarter ago. So I think that's important to note. So I think that the bias is absolutely to the upside. I think the fundamental story is playing. Obviously Steph mentions inflation. Inflation was very positive. We've been talking about that for a while. But what I will say is a theme that played out in earnings for me was the lack of guidance and some pausing of guidance which speaks to some of the revisions downward in terms of the next couple of quarters. So I think it's going to be an interesting summer. I think we'll trade in a range but I think the fundamentals are positive, which keeps me constructive on the market.

Scott Wapner (7:24)

This idea that you've got these cracks lurking in the bond market market under the surface and you know, at some point, as Dimon said you know, late last week, there's going to be crack in the bond market. You know, we saw one. As I said, we've had a tremor of sorts once already that did not develop into a full blown quake because the White House backed off that level of tariffs on that on that day. And then the market certainly calmed itself. Is that still lurking or the market going to doesn't seem to care at all or really want to focus on that until it absolutely has to, if it ever does have to know.

Joe Terranova (8:05)

Right now the market is responding to, as Steph said, better than expected eco data, very strong earnings, strong revenue growth in some places. Maybe you had some earnings contraction related to margin compression and yields have kind of calmed and the market's looking at that. But I don't think that you could ignore that. In the third quarter we're going to have challenges as it relates to issuance and it's not just issuance here in the United States. It's going to be global issuance and it's going to be difficult, I think for global bond markets to digest that properly. So if there's going to be a period of consternation on this journey, you know, through 2025, I think it's ultimately going to be in the third quarter. You've heard me say I think we pushed all time highs. I'm not of the belief that we break out significantly above those highs in the near term in the thought in the third quarter because to your point, there's going to be issuance challenges, there's going to be bond market contention that I think has to be wrestled with. I don't think we're done pressing a 30 year yield towards five and a quarter. I don't think we're done with the conversation that a 10 year yield could go to 5% as well.

Stephanie Link (9:16)

Don't you think though that yields are going higher because the growth is actually better than.

Scott Wapner (9:19)

I think it's.

Stephanie Link (9:20)

I mean I understand the debt concern do I really do. But that's not new, Joe.

Joe Terranova (9:23)

You know, I think it's a combination of both. I Do I think it's a combination of both. I also think we have to see where this, this bill lands. Where ultimately, what does the bill look like in terms of spending and yes.

Scott Wapner (9:36)

Let'S see what deficit. See what happens. I think to just point, I mean, I do feel like that is alive and well in the market, that yields are elevated. More. More. So.

Joe Terranova (9:48)

Look, it's an issue.

Scott Wapner (9:50)

Nobody knows the exact reason. Okay. And I'm not going to pretend that I do either. But I talked to a number of people who are watching what's happening within the bond market and are fixated on where the deficit is. Not that those concerns are new, but that there's no wherewithal to do anything about it. And all we do is deficit spend and deficit spend and deficit spend. And now we're talking about a $4 trillion bill that Congress doesn't really want to deal with the deficit in any way. It's a kick the can down the road until the can gets run over by a truck for sure.

Stephanie Link (10:27)

And I have said for a long time, unfortunately, we are going to kick the can and it's going to be our children that actually have to deal with this, not us. Because no one in office or in Congress has any wherewithal to get anything substantially done.

Scott Wapner (10:42)

No, but you may have to deal with the ramifications of already escalating debt, the cost of funding it, nowhere with all to do anything about it. Oh, by the way, the trade war and the tariffs on top of it, which you saw what happened that day in the bond market. You know, there are some who were saying as that was unfolding, we weren't that far away from a crisis in the markets as a result of that policy.

Stephanie Link (11:06)

But what if, what if faster growth in the economy, faster GDP growth, what if that actually helps at least somewhat offset some of this deficit and debt concerns? I mean, we can outgrow our way out of a lot of things, of.

Scott Wapner (11:20)

Course, but not while potentially you are hurting growth with your tariffs.

Stephanie Link (11:24)

Okay, tariffs, certainly. But you know, M and A. M and A is common. Deregulation is coming. M and A is up actually 17% year over year.

Scott Wapner (11:33)

I know, it's terrible.

Stephanie Link (11:34)

Lower taxes. It's. But it's.

Joe Terranova (11:36)

That's like saying your.

Scott Wapner (11:37)

That's like saying your favorite football team got three wins this year. Last year they got one.

Stephanie Link (11:41)

Mine did, actually. No, I'm kidding.

Scott Wapner (11:43)

No, honestly, you know what I'm saying.

Stephanie Link (11:44)

I do, I do. But you have to start somewhere, Scott.

Scott Wapner (11:47)

Now, you're the third pick. You had the number One pick last time. Great. Congratulations.

Stephanie Link (11:51)

Thank you. Jet fan. Yes, no, I honestly, I mean I do think that the growth is going to be above trend because of the other parts, the of of the policies. We just got to get through the tariff thing. They started with the tariff thing. None of us thought that they were going to start with the tariff thing. We didn't think was going to be nearly as bad. There's a lot of unknowns. I understand that we're all worried about it, we're all thinking about it. But I do think there's light at the end of the tunnel on the other parts of what the administration is trying to achieve. And I think we're starting to see little small green shoots based on deregulation.

Scott Wapner (12:26)

When in doubt, buy tech. That apparently, apparently seems to be talking about Joe's momentum which by the way the MTM hits a new record high today. I presume that Jyoti is doing well also on a day when momentum continues to be off the charts. Nvidia, by the way, surpassing Microsoft in market cap. It's the most valuable company. No one seems to care much about anything if you're going to continue to buy tech. NASDAQ is trailing the Russell today. It's still having a great day. We told you is up more than 10% in the month of May and it's been pretty remarkable. Nvidia.

Jason Snipe (13:05)

Yeah, yeah, it's been, it's been a really good story over the last couple of weeks, obviously.

Scott Wapner (13:09)

Thank you.

Jason Snipe (13:09)

Now you know, the stock is up a little over 5% for the year. So it's finally positive. And I think one of the important news, you know that I over the last couple of weeks is this new chip for China, right. Which it's kind of go, which is a go around I think early part of the year is all about export controls and what is the story in blocking some of the semiconductor sales. But now that they're introducing this B33 30 chip and they're producing about a million of them, I think is is positive. I think these are the stories that are, that are important I think for investors to know, listen, it was a double beat, you know in terms of the, in terms of the print revenue was up 69%. Data center was up 73%, somewhat decelerating from some of the higher numbers we saw quarters ago. But again, bellwether, all roads continue to lead back to Nvidia and I think they continue.

Scott Wapner (14:02)

What do you guys make of this fact? According to bank of America's equity client flows, we're talking about institutional flows. That tech is nearing record underweight by active funds. That tech saw the biggest outflows for the third straight week. Positioning work suggests that tech is close to a record underweight. What does that say, if anything?

Joe Terranova (14:23)

What I would share with you and I could do that from the perspective of, okay, what's the personality of our strategy? Which, remember, it's equally weighted. So I'm in trouble if the Mag 7 are going to do what they did in 2023 and the early part of 2024. But our ownership of semiconductors has come down dramatically. It has been more of defensive technology where you've seen the positioning over the last six months. It feels as though we are in the midst right now of a little bit of a pivot. You're seeing a pivot away from that defensive technology, not in totality, but back towards semiconductors. Look, today you have semis up about 2%.

Scott Wapner (15:03)

Again, what's defensive technology? Because when you say defensive technology, I start thinking Mega Cap, it has up 10 and a half to 10% in May.

Joe Terranova (15:12)

I think Mega Cap has, has really become its own class of technology itself.

Scott Wapner (15:18)

Tell me what you're talking about.

Joe Terranova (15:19)

An example would be Intuit. Intuit is an example of defensive technology. Those type of old school, if you would, names seem to be where capital has been flowing to IBM. Another example of that. Right now it like looks, looks as though we're making a little bit of a pivot. And I think what's important is if I'm seeing in our momentum strategy that we're not really there on semiconductors as the pivot's coming. I know a lot of hedge funds are carrying very similar type of positioning because they're looking at the same things that ultimately we are looking at. So I think right now that arguably is one of the most important industry industry trades occurring in the marketplace. We where do we go on semiconductors? Is there follow through here? And if there is follow through, then for sure we're going back to all time.

Scott Wapner (16:05)

Let's see what Broadcom does this week. Right? Nvidia. Yeah, Nvidia was, was good enough to keep this going. What does Broadcom do on Thursday? Record high today. Why did you have that reaction when I said Broadcom?

Stephanie Link (16:18)

75% from the April lows. Nobody wanted it in April. Right. Everyone was selling it. Now all of a sudden it's up so much and the stock. Shouldn't you be happy?

Scott Wapner (16:25)

You sounded pain.

Stephanie Link (16:26)

I'm happy because I was buying it in February, March, April, May. But I'm just a little nervous that the expectations are super high. I think it's going to be a very good quarter. I love the diversification of this company. 31% of the revenues is AI. They're definitely going to benefit. 41% is software VMware we've talked about. Very synergistic. That's going to be positive too. I think it will be really interesting to see their, their kind of old school networking, broadband, cyclical businesses that haven't really done anything in the last several years. Does that start to turn? I think if that does, then the stock can continue its momentum. But if it doesn't, if it's just kind of a little bit of a small beat, small raise, which is what they usually do because they're very conservative. I think the stock sells off. That's not to say it's Armageddon. I would probably buy it if it fell another 10% or 15% or so. But I just think expectations are very, very high. I've cited the gross margins are industry high, 79% their operating margins at 65% industry high. If they don't materially beat those numbers again, it might just be a sell the news kind of thing. So that's why my reaction is what it is has nothing to do with the long term fundamentals. It's. I've done well with the name you have. I'm just a little nervous about it.

Scott Wapner (17:39)

On expectations, Citi goes to 276 today, I think. Where was the stock at 250, 254, 276 from 210. And Canor Fitzgerald says it's their top AI pick.

Joe Terranova (17:50)

So we've maintained positioning in video and in Broadcom and those are almost defensive semiconductor plays if you think about it. Because of the strength of their balance sheet. I almost wonder if semis continue to have this position rebuild. If you see capital begin to move to other areas of semiconductors. As example, amd, right. AMD is, is a stock that's had a very difficult six month period. Do you begin to see positioning rebuild in those areas at the expense of positioning in Broadcom?

Stephanie Link (18:24)

And I also think though, if you get any good news on tariffs or just get past tariffs, I think then the semiconductors can do better because they are the most exposed to China and to tariffs in general. So I think that's what will define how they do going forward.

Joe Terranova (18:39)

There's a good feeling that's been restored to semis and the question is, does it follow through?

Scott Wapner (18:43)

Let's hit that meta story today. Because we didn't get to it yet. That first of its kind nuclear power deal met has had a great run of its own. I think it was up around 18, 15, 18% in the month of May. Pippa Stevens is here with us at post nine. It's good to see you. This is a really interesting deal. Tell me more.

Stephanie Link (19:00)

Yes, so this is matters first nuclear deal and the company will buy all of the power generated from Constellations nuclear reactor at the Clinton Cloud Clean Energy center in Illinois as part of a 20 year agreement. Now the plant had been in danger of closing, but this deal gives Constellation the certainty and the money to invest in the plan and even possibly add another reactor. This is just the latest instance of big tech teaming up with nuclear. Driving these deals is of course AI's insatiable need for power. Alphabet and Amazon are backing small modular reactors while Microsoft signed an agreement last year to restart three three Mile Island. Now Constellation is well off its highs after rallying as much as 15% earlier segregate capital's Arthur Hyde said it could be due to the lack of price disclosure for the deal adding it's been a very crowded trade here. But Scott, the bottom line is that this is likely not the last deal of this kind that we're going to see.

Scott Wapner (19:53)

But thank you. You stay for the conversation too. So you're a huge believer. This to me is more of the power play side of rather than the mega cap side of. So rather than trade meta, I'd rather trade the Eatons and the Quantas and the Vernovas and the Constellations and the Vistras which you just bought Vertiv today, correct?

Stephanie Link (20:19)

Yeah. So in the quarter the hyperscalers free cash flow fell 11% collectively because they all spent so long, so much money on AI and they're going to spend, we've talked about this many times, $300 billion plus this year alone up 40% on AI. Many of these companies are doing power deals as Pippa just mentioned. We also have NRG, they bought 18 natural gas power plants. We had Blackstone Private Equity get into the mix in New Mexico in their utility purchase. So you're going to see many more of these in my opinion. And it all has to do with if you believe, and we've talked about this therefore four themes within the big theme. It's AI, you need more data centers, you need to upgrade the grid and you need power. It's all those kinds of same themes and you can play it any way you want. Scott and I have chosen to play it on the industrial side because I think that actually is my favorite theme for the next 10 years. But I think maybe they're over owned but they're not as owned as something like Nvidia. So Eaton said that there are 1.7 trillion megaprojects out there that are ready to be built. Only 16% have started. There's going to be $4 trillion of spend on electrification between now and 2050. 70% of the grid is over 25 years old. All of the companies that you mentioned had record backlogs and strong margins. So you could play it any way you like. Vertive I picked because it's down still 23% from its highs. I'm shocked this thing isn't up 10% today. I don't, I'm shocked actually the whole group isn't up more. But this company has a total addressable market of 52 billion. They're an end to end solution provider. So they capture a lot of various different customers. And I think that they are going to outgrow the industry which is going to grow about 9 to 12% compounded annually. They're going to outgrow the industry. 300 to 500 basis points, very strong margins. And Dave Cody is the executive chairman. We all know what he did at Honeywell and that was the other reason why I bought the stock.

Scott Wapner (22:14)

Joe, you own Constellation and Vistra too?

Joe Terranova (22:17)

Yes. The independent power producers are right now in the sweet spot in what you're describing. And that is really where Scott, the M and A is unfolding. The M and A is actually happening from companies like nrg, Constellation and Vistra. They are out there acquiring assets because they understand there is this incredible need for power related to AI.

Scott Wapner (22:43)

And to that, to that end you'll probably be reporting on this sort of stuff more often. This is just not that this is the first deal but it's likely, as Steph said, to lead to many more companies thinking about the same type of thing.

Stephanie Link (22:56)

And what's interesting here is that this is the first deal with an existing already operational reactor. And I think what it shows is that that time to market the premium for existing power is what's so valuable now. And so for the IPPS like the constellations, the vistras, the NRGs and they have that opportunity to capitalize with existing assets because while there is so much buzz around smarts, that's really a 2030 and beyond story. What data company, what data center companies need is power right here, right now. And that's what these IPs offer.

Scott Wapner (23:24)

All right, Stevens here, post nine with us. Good to see you. Thank you. The other big story, CrowdStrike reporting after the bell today, a new record high. Talk about trades that have been working. Stephanie, link back to you, both of you. You and Joe own CrowdStrike. Target today to 525 was 475 at Wedbush. That's Dan Ives. Greater confidence in the CrowdStrike growth story. He says his recent checks are showing the cross selling and monetization story is hitting its next stage of growth.

Stephanie Link (23:51)

Yeah. And the stock's up 41% year to date. It's at 30 times price to sales. So as you know, I've been trimming it just to take some gains but I actually am putting it into Palo Alto which is only up 8% this year and it trades at half the price to sell sales multiple. But I do think the first quarter, net new annualized recurring revenue, it could be as high as 200 million plus and if so the momentum is going to continue. Their goal is to get that number to 10 billion by 2029. And I, I think they're going to prove today that they are going to get there eventually if they can give us the path to that, to that growth.

Joe Terranova (24:24)

The margin story for CrowdStrike is very impressive. Profit margins running 74, 75%. Now you're looking at them creeping being up towards 78. EBITDA margins which are running in single digits. You're looking at those now moving up to 20%. So you know in the cybersecurity trade we basically have them all whether it's Zscaler, Octave Fort to Net Check Point, which was one of my favorite names, Palo Alto and of course CrowdStrike. I think there's very strong momentum here and for certain the spend is going to continue in this space.

Scott Wapner (24:57)

Space.

Joe Terranova (24:58)

And that's the reason why we remain committed to being invested there and on pullbacks. We want to buy more.

Scott Wapner (25:02)

Software in general has worked really well too in concert really with semi. Speaking of, you bought Snowflake we haven't seen in a minute.

Jason Snipe (25:09)

Yeah.

Scott Wapner (25:09)

But you bought it ahead of the earnings.

Jason Snipe (25:11)

I did.

Scott Wapner (25:12)

So tell me more.

Jason Snipe (25:13)

I did. Which, which is 52 week high today.

Scott Wapner (25:15)

Yeah, yeah, yeah.

Jason Snipe (25:15)

Which is generally not a story for us. Yeah, generally not a story for us at all. And buying into earnings. Right. So we got in around 180. But there's been a lot of momentum in the stock. The stock's up almost up close to 40% year to date. But you know, really what I like about this particular story. They pool all your data. They're a cloud of data and analytics platform that pools all your data. So you think about all the software platforms and again, I think what folks are looking for is actionable insights. And this is exactly the stream and play that Snowflake is in. Right? So and I think about the total addressable market is going to be at 3, $350 billion market by 2029. It's currently about $140 billion market. You know, the revenue growth is up 26% and this is again another company that $70 billion market cap. But they are experiencing margin expansion. That's why we continue to like this story.

Scott Wapner (26:09)

Good stuff. We'll take a break. Up next, our calls the day including two committee names hitting new 52 week highs. We are back in. Hey, I'm journalist Sam Sanders.

Stephanie Link (26:30)

I'm Poet Saeed Jones.

Scott Wapner (26:32)

And I'm producer Zach Stafford. And we are the hosts of a podcast called Vibe Check.

Joe Terranova (26:36)

On Vibe Check, we talk about everything.

Scott Wapner (26:39)

News, culture and entertainment and how it all feels. That's right, we talk about any and.

Jason Snipe (26:44)

Everything on our show, from real life.

Scott Wapner (26:46)

Issues like grief and to music and movie critiques. And that barely scratches the surface.

Stephanie Link (26:51)

Yes, indeed.

Joe Terranova (26:52)

And it doesn't stop there. We have got a lot to say, so join our group, chat, come to life, follow and listen to Vibe Check wherever you get your podcasts.

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Your degree without missing a beat. A different future is closer than you think with Capella University. Learn more at Capella. Eduardo Calls of the Day we mentioned this string of 52 week highs and stocks that have just been full of momentum. Joe mentioned Netflix earlier and rightfully so. It is a new high today. The price target to 1400 at Jefferies reiterating buy it was 1200. So they continue to bump it up. There's the stock. So it hit their target. Now they're like, well, not stopping here. 1400, Joe.

Joe Terranova (28:39)

Execution cost coming down. Content is something that they're delivering on. I mean it's literally the sweet spot of consumer entertainment. I still believe that this stock has more upside to go. And in addition to that, I always, or I should say more recently. And Jason, I think you have this as well. Spotify. I think you put Spotify literally in the same category in terms of the way the execution is going, the way that the consumer is utilizing the product, the way that they're delivering on the margin.

Scott Wapner (29:13)

Let's get a three year chart here guys, please.

Joe Terranova (29:15)

And the way in which ultimately it seems as though consumers are now almost looking at these companies like Staples. Yeah, they're looking at Netflix, they're looking at Spotify as something that is critical to their personal entertainment.

Scott Wapner (29:29)

That a run. Is that a run or what? 500% in three years.

Stephanie Link (29:34)

Crazy.

Jason Snipe (29:35)

It's crazy.

Scott Wapner (29:36)

Remember when that thing was at 400 bucks?

Jason Snipe (29:38)

Yeah, I do.

Scott Wapner (29:39)

After it was at 7.

Jason Snipe (29:40)

Yeah, yeah. And you know, I think it was a great quarter. 23% EPS growth, 12% revenue growth. But I think in the, in the theme that I mentioned earlier, you know, in our, in this earnings season where companies are removing the guidance, Paul Paulitzing guidance, they reiterated full year guidance, which I think is very important to note. I think the other thing is advertising. They expect advertising revenue to double again this year. So it's just been a great name. It's been to Joe's point, a staple in this environment where we're kind of concerned about the consumer.

Joe Terranova (30:12)

And they've done such a great job executing internationally. Yes, look at the revenue, look at their exposure internationally. You talk about 59% for Netflix and I'm going to mention Spotify again because I think it's important to do so. Yeah, it's 60 international as well.

Scott Wapner (30:27)

Yo, they got the levers now too with, you know, okay, you, you don't want to pay full freight. Well, we get to add tier you pay less.

Joe Terranova (30:34)

They want streaming.

Scott Wapner (30:35)

Right. BOEING Top pick 249 is the price target at Bernstein. New 52 week high. Stephanie, we talked about it earlier. Joe said, well, you had to wait a while. Here we go.

Stephanie Link (30:46)

Well, it's still down 19% in the past two years. So they have a lot to go, I think under the new CEO. And the turnaround, the better execution. I think the reason why the stock has done well so far is because their 737 build rates are actually outpacing expectations. 38 per month now going to 42. They got to get FAA approval but apparently company has a new management team that is more friendly with the FAA. So I think you're going to get that 42 per month. And then also you're seeing deliveries by the end, end of this year something like 500. That's well ahead of what I was expecting. It's a free cash flow story. So you want the planes delivered. We're at negative 2.2 billion in free cash flow now. I think you're going to get to 12 billion by 2027. That's the reason I own the stock.

Scott Wapner (31:25)

What about SLB, Steph? There's a call on that. 44 bucks is the target at UBS. I think it's 34. Yeah, 34. And change name to top pick over there.

Stephanie Link (31:36)

Yeah. And this is actually not at a 52 week high.

Scott Wapner (31:39)

It's down 11 and a half percent year to date. Down 23% over one year and it's 33% off its 52 week high. Not everything can be trading at a 52 week high.

Stephanie Link (31:49)

No, I know and I, and I think it is a buy here because the valuation but I think energy just trades so horribly at this point. And if you have a president and administration that wants lower oil prices, I think it's really hard to fight that, to be honest with you. This is best in class. They're the ones that are doing the best on margins on free cash flow. They also have a buyback program in place. So they're doing what they can control. But you can't control activity, unfortunately. And that's not where it's been.

Scott Wapner (32:16)

Okay, a break. And up next, we take you inside the ride share wars. But first, Silvana Hanau has our headlines today. Hi, Silvana.

Stephanie Link (32:23)

Hey, Scott. Good afternoon to you. New York New Jersey Mayor Ross Baraka sued the state's top federal prosecutors today over his arrest for trespassing at an ICE detention center last month. The charge was later dropped. Now the mayor, who is also running for governor, is claiming malicious prosecution and false arrest in his suit against interim U.S. attorney Alina Haba, that's a former personal lawyer for President Trump. Klarna is testing out debit cards in the US as it looks to broaden its business beyond its popular buy now, pay later business. The fintech company announced today it is piloting the Klarna card ahead of a countrywide rollout. It will be a debit card by default, but will allow users to toggle to one of Klarna's pay later offerings. And teenagers are increasingly turning to weight loss drug Wegovy, according to a new analysis reviewed by Reuters. The number of teens beginning treatment 50% last year, but that is still far slower than the uptick in use by adults. It's estimated that nearly a quarter of US Teens are living with obesity. Halftime report. We'll be right back.

Joe Terranova (33:37)

CNBC News Update is sponsored by Morgan Stanley, where old school hard work means bold new thinking.

Scott Wapner (33:51)

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Scott Wapner (33:54)

And I'm producer Zach Stafford. And we are the hosts of a podcast called Vibe Check.

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On Vibecheck, we talk about everything, news.

Scott Wapner (34:02)

Culture and entertainment and how it all feels. That's right, we talk about any and.

Jason Snipe (34:07)

Everything on our show, from real life.

Scott Wapner (34:08)

Issues like grief to music and movie critiques. And that barely scratches the surface.

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Yes, indeed, and it doesn't stop there. We have got a lot to say, so join our group, chat, come to life, follow and listen to Vibe Check wherever you get your podcasts.

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Joe Terranova (34:49)

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Visit ondeck.com for more information. Depending on certain loan attributes, your business loan may be issued by Ondeck or Celtic bank on Deck does not lend in North Dakota. All loans and amounts subject to lender approval. We're back around the highs of the day for stocks. The rideshare war is heating up between Waymo, Uber and Tesla. Deirdre Bosa is following that story and joins us now because there was some. Well, there was a call today about Waymo and there's been chatter about the others lately, too. What do we know?

Stephanie Link (35:32)

There's been a lot going on, right? And you know, really robotaxis. As you know, Scott, they've been a staple of the roads here in San Francisco for years thanks to Alphabet owned Waymo. But now you've got Tesla's big Debut.

Scott Wapner (35:41)

In about a week.

Stephanie Link (35:42)

The industry is gaining more mainstream attention. And you referred to this Wall street interest in that note today. Truist calls Waymo one of the most exciting businesses within Alphabet, which today is effectively being allotted no value in our view. Now when I sat down with Waymo's co CEO a few weeks ago, I asked her if they'd benefit from from being spun out from Alphabet, if they'd get more recognition, a higher valuation. But she said that it was important to have the financial support of that mega cap, a large part of how they got to 10 million paid rides and are rapidly expanding while Tesla is just getting off the ground now. Waymo success already impacting the rideshare complex. This is a slide that I wanted to highlight from Mary Meeker's latest report. One of the most closely watched reports in tech data shows that Waymo has gone from 0 to 27% of gross rideshare bookings in San Francisco in just under two years. That is now ahead of Lyft and it's gaining on Uber now in a few markets. We've talked about this, Scott. Waymo is partnering with Uber. But even as a platform, Uber faces new pressure. Both Tesla, Waymo, they have the technology, maybe the incentive to go it alone.

Scott Wapner (36:49)

It's a good race to follow. D. Thank you for keeping us up to date on who might win it or who thinks they might, if nothing else. All right, Joe and Joe and Jason own Uber. So how are we thinking about this from a shareholder point of view? From a shareholder point of view.

Joe Terranova (37:06)

From a shareholder point of view, I think what you have to be excited about is the remarkable turn of the balance sheet for this company.

Scott Wapner (37:16)

Uber's on a four day losing streak, by the way.

Joe Terranova (37:18)

Okay, so they announced a new new CEO. That's the first time they've had a CEO since 2019. Yeah, the momentum is kind of pulled back. It's on retreat. But look, long term, I want to look here long term, multi year period. In 2022, this company was not really throwing off any cash. This company is now investment grade. That's how much they've had. The dramatic improvement in their balance sheet. Free cash flow was $2.3 billion in the first quarter quarter in 2026, the estimate is that that's going to be $10 billion. So as a shareholder you have to like that. Why? Because you can continue to see that you're rewarded and you're going to be rewarded with continued elevated buybacks. That's the story for this company is the quality of their balance sheet.

Scott Wapner (38:05)

Is it an Uber Tesla race? Do you think of Alphabet as the Waymox angle? Dan Ives, within the last 24 hours I think it was said that Waymo will quote be at the kids table compared to Tesla. When it comes to autonomous.

Jason Snipe (38:23)

Yeah, I think it's somewhat of a separate story when I think about Uber, obviously I think about the platform, double digit gains in mobility and delivery. The Stock is up 38% year to date. And when I think about Waymo's growth in San Francisco now Austin, Atlanta as well, well, the rollout seems to be positive. But Steph and I were just joking about Uber is a verb these days. Right. So as it relates to a platform, I think that's where you want to be because there will be other products and other stories just like Tesla, but they're all running to Uber to get and secure that ride.

Scott Wapner (38:56)

All right, up next, Mike Santoli. He joins us with his midday word. We'll be back right after this break. Senior markets commentator Mike Santoli is here at post 9 with his first word for us. Yeah, I mean we're hanging on trade headlines, I suppose jobs report work. What's, what's top of mind to you? The market looks pretty good on trade.

Joe Terranova (39:37)

Headlines but I think the market is migrating in the direction of if there is restlessness and eagerness by the administration to book wins, then that starts to look like it's easier, it's a shorter path. It looks more like the administration folding or something like that where you're just getting a fig leaf deal like a UK type deal. Who knows if that's real but that's happening at the the same time where everything else is pretty benign. The character of this little pullback we've had over the last couple of weeks, we've now made a new recovery high. The trade is back on. And by the way, the Constellation stuff, all that, that just completely activates the sort of super aggressive all power stuff which is a very big part I think of like the retail trader kind of hunting grounds at this point. So all power that fitting together I think makes sense. And then the jolts numbers, what the retailers are saying is kind of like no real change in the hard data. The economy is kind of hanging in there fine and that if that's the case and volatility comes in, what everybody has told us for weeks is big money, still has to re risk, they're still underinvested. If this market is going to be calm and it's a don't short a dull Market type of take.

Scott Wapner (40:48)

Well, how about that stat I had at the beginning of our program from B of A? Their flow show active funds are like the most underweight tech.

Joe Terranova (40:56)

Yeah.

Scott Wapner (40:56)

When we're talking all about tech continues to go up. Yeah.

Joe Terranova (40:59)

There was, it's been a big whipsaw in positioning there. Now I'm a little skeptical of the whole like the active managers are underweight the Mag 7 because concentration limits prohibit them from owning 6 1/2% of Nvidia, 6 1/2% of Microsoft. They're always going to be structurally underweight but now more than you usual and obviously there's there's a bid there post earnings.

Stephanie Link (41:21)

Yeah.

Scott Wapner (41:22)

Monday too. Let's not forget wwdc, which we'll be live at, is a significant event.

Joe Terranova (41:28)

Yeah.

Scott Wapner (41:28)

Apple needs to live up to the hype. It's a big and highly owned stock. It may not be the most valuable one anymore. Thank you. In video today, Eclipse is Microsoft. But you know that matters, right.

Joe Terranova (41:37)

If it sort of stops acting as a drag because the Mag 7 is really diverged within it. And so I do think that yeah, if it holds the ground at 200 and and it stops being a thing to worry about in terms of the mega caps, then that is a net benefit. That said, look, at some point you might say, wow, we're back to 6,000 on the S and P already. What's changed? And that means you're pricing in a little bit more of a happy scenario that may or may not come.

Scott Wapner (42:03)

Thank you. I see on closing bell that's Mike Santoli. Coming up, the sector spotlight today on what is working in this market. Discretionary stocks, they keep moving higher. Find out where the committee stands next. All right. Discretionary is doing pretty well today, up better than 1%. The third best sector staff, Dollar General's higher today. Cygnet is jumping on a beat and their guide as well, Discretionary year to date is down 6% whereas staples is going the other direction. What about from here?

Stephanie Link (42:58)

Yeah, I mean if you think the economy is growing a little bit better than expected and the consumer is hanging in. More than hanging in, as we talked about earlier in the show and we have talked about the consumer for a very long time, I don't see why this part of the cyclical trade could not work. Right. I think it could. And some of these stocks are extremely cheap. And like a company like Chipotle, that's not cheap, but it is down substantially this year, 20%. They have the traffic, they have the products, they have the digital innovation and it's trading at a multiple that it hasn't traded at three years ago. Right. So to me, there are opportunities. We. Jason and I were just talking about the housing trade. I mean, it's been very, very frustrating. You need lower rates for that to work, period. Dr. Horton. I'll stick with Home Depot. I'm actually thinking about taking the gains that I have. I have very small gains, but I'm thinking about that because that's not cheap.

Scott Wapner (43:46)

Interesting. The lack of momentum got you out of Chipotle.

Joe Terranova (43:52)

It did.

Scott Wapner (43:53)

After many, many, many years.

Joe Terranova (43:54)

Yes, for many, many years. I've had the stock. I believe in the company. I believe it's. As it relates to.

Scott Wapner (44:02)

What do you mean, believe in company? I believe because I've owned.

Joe Terranova (44:05)

I've owned the company before.

Scott Wapner (44:06)

You believe in the company, you own it. Either own it or you don't.

Joe Terranova (44:09)

I believe in the company. I owned it before the inception of the etf. Because they have owned. They have owned Quick Serve, They've owned a Quick Serve restaurant. They've had the ability to attract the younger generation. And that younger generation goes to one place. They go to Chipotle.

Scott Wapner (44:28)

They only go to one place.

Joe Terranova (44:30)

That's the place in Quick Serve. They go to.

Stephanie Link (44:32)

They have the traffic.

Joe Terranova (44:34)

They're not going to McDonald's. The younger generation, they go to.

Scott Wapner (44:36)

They go to Cava. They go to Shake Shack.

Joe Terranova (44:42)

Not really.

Scott Wapner (44:42)

They go to Raisin Cane's. Have you ever been to Raising Canes? No, not publicly traded. Not that I know of anyway. J. Snipe, what about discretionary?

Jason Snipe (44:53)

Yeah, so I really like, you know, for me, AutoZone obviously is a nice play. You know, when I. When I think about how they've managed this kind of tariff story, you know, lots of concern, you know, in China, Mexico, you know, they continue to grow the commercial business. And when I think about also used car inflation, which is starting to come down. Auto. Used car. Auto sales are picking up a little bit and folks are just holding onto their vehicles for longer. So stocks up 16%. You know, you would think that they'd be in the eye of the storm, which they are in some respects, but they've managed it well.

Scott Wapner (45:26)

There was a positive call in Royal Caribbean today, too.

Joe Terranova (45:29)

Oh, that's such a great turnaround story. It really is. The balance sheet has completely improved and now you're seeing that they are getting the customer base from Asia, they're getting the customer base from Europe.

Scott Wapner (45:42)

You believe in that company?

Joe Terranova (45:44)

Not as much as I believe in Chipotle.

Scott Wapner (45:47)

Interesting.

Joe Terranova (45:48)

Believes in leadership.

Scott Wapner (45:49)

We'll follow that. We'll follow that. Final trades are next. All right. We're still at the highs of the day. We'll see where this day ends up with Dan Greenhouse, Tom Lee, a lot of strategists are saying we're going to a new high. What do you think he's going to say? Do you have any idea? You'll find out at 3 o' clock. I don't think there's much mystery, but we'll have a good conversation about it. Malcolm Etheridge with me as well. So I'll see you then. Final trade, Jason Snipe, I like AXP here.

Jason Snipe (46:28)

Credit losses came in the lowest level in eight quarters among ASP.

Scott Wapner (46:33)

Okay, thank you, Stephanie Link.

Stephanie Link (46:35)

I like KKR. Number one in the space, down 18%. I think you want to have Private Martin's exposure.

Scott Wapner (46:41)

Thank you, Jyoti.

Joe Terranova (46:43)

That younger generation, when they get their Chipotle, they're using DASH to get it. Dash about to make another all time.

Scott Wapner (46:50)

Another company that you really believe in. I believe in it. Amazing.

Joe Terranova (46:53)

I believe in the company because that matters. We own it in the etf.

Scott Wapner (46:56)

Of course it's own the stock. At least they know that you really care about the company.

Joe Terranova (47:00)

When you believe in it, you believe in it. At some point you're giving the inference that you're going to own it again, just buy it.

Scott Wapner (47:05)

But we'll see the exchanges now. You've been listening to CNBC's Halftime Report, the podcast. You can always catch us live weekdays at 12 Eastern only on CNBC.

Stephanie Link (47:19)

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

Scott Wapner (48:01)

Hey, I'm journalist Sam Sanders.

Jason Snipe (48:03)

I'm Poet Saeed Jones. And I'm producer Zach Stafford.

Scott Wapner (48:07)

And we are the hosts of a podcast called Vibe Check.

Joe Terranova (48:09)

On Vibecheck, we talk about everything, news.

Scott Wapner (48:12)

Culture and entertainment and how it all feels.

Jason Snipe (48:15)

That's right.

Scott Wapner (48:16)

We talk about any and everything on.

Jason Snipe (48:18)

Our show from real life issues like grief to music and movie critiques.

Scott Wapner (48:22)

And that barely scratches the surface.

Stephanie Link (48:24)

Yes, indeed.

Scott Wapner (48:25)

And it doesn't stop there.

Joe Terranova (48:26)

We have got a lot to say, so join our group, chat, come to life, follow and listen to vibe check.

Stephanie Link (48:32)

Wherever you get your podcasts.