Halftime Report: The Trade War and Stocks (March 6, 2025)

Host: Scott Wapner
Guests: Josh Brown, Bryn Talkington, Joe Terranova
Release Date: March 6, 2025

1. Introduction

In this episode of CNBC’s Halftime Report, host Scott Wapner delves into the persistent uncertainties in the stock market, primarily influenced by the ongoing trade war and recession fears. Joining him are financial experts Josh Brown, Bryn Talkington, and Joe Terranova, who provide in-depth analyses and insights to navigate the current turbulent economic landscape.

2. Market Overview

Scott Wapner opens the discussion by highlighting the unsettled state of the markets, noting a decline in the S&P 500 by 1.5% and significant pressure on the NASDAQ, particularly impacting the tech sector.

Scott Wapner [00:59]: "We start to come back a little bit but we are red yet again. The S&P down by 1 1/2 percent... the tech has been really in the crosshairs here."

3. Recession Concerns and Economic Indicators

The conversation pivots to the rising probabilities of a recession, with references to models from JP Morgan and findings from BCA Research indicating heightened recession risks.

Scott Wapner [02:24]: "Wall Street Journal today says the recession trade is back on Wall street, which you start to wonder whether some of the damage has already been done."

Josh Brown counters the immediate recession fears, expressing confidence in the resilience of the labor market and liquidity.

Josh Brown [02:24]: "I don't think you have to write with permanent ink recession because I don't believe that we're going to be doing this tariff stuff come summertime... given how strong the labor market is, given how much liquidity there is out there."

4. Impact of the Trade War

The host addresses recent tariff announcements, including the President’s declaration that Mexico won't face tariffs under USMCA until April 2nd, which had minimal soothing effects on the market.

Scott Wapner [00:59]: "The president posted a few moments ago that Mexico is not going to be required to pay tariffs on anything that falls under the USMCA until April 2nd. That really did little to soothe the market."

Bryn Talkington offers a contrasting view, suggesting that the trade war is escalating and reminiscent of the volatile period in 2018, anticipating further tariffs.

Bryn Talkington [04:26]: "I think this is just the beginning... I think we are just getting buttered up for more."

5. Sector Analysis

Financials and Small Caps

The discussion shifts to specific market sectors, with a focus on financials and small-cap stocks. Small caps, represented by the Russell Index, are down 16% from their highs, reflecting broader economic uncertainties.

Scott Wapner [04:04]: "The Russell 16% off of its high... Banks are down big. Private equity is down big. Tech's down big."

Bryn advises caution with small caps, attributing their decline to late-cycle headwinds, while Josh maintains a selective approach within the financial sector, highlighting opportunities in insurance stocks.

Bryn Talkington [04:26]: "There’s too many headwinds for small caps. And so I would still stay to the side of that."

Josh Brown [07:00]: "Insurance stocks... like LPL, Intercontinental Interactive Brokers, Robinhood... still look pretty good."

Tech Sector

Joe Terranova comments on the tech sector’s leadership challenges, emphasizing the lack of clear direction and the potential impact of upcoming jobs reports on economic sentiment.

Joe Terranova [07:00]: "The market is still searching for leadership... We’re not really going to get the glimpse of it tomorrow. But the effect of Doge and the layoffs... is going to begin to hit in the March and April reports."

6. Stock Highlights and Recommendations

Industrial Sector

Josh Brown introduces two new best-performing stocks: RTX and Otis. RTX, a merger of United Technologies and Raytheon, showcases strong revenue growth and is positioned to benefit from increased defense spending.

Josh Brown [37:24]: "RTX has seen double digit revenue growth in three of the last five quarters... I like this name Otis. I think we're going to get a breakout to all-time highs."

Bryn echoes the potential in the industrial sector, emphasizing the attractiveness of these stocks despite market volatility.

Bryn Talkington [39:38]: "These are not expensive names... plenty of companies here to invest in."

Tech and Semiconductor Stocks

The panel discusses the downward trend in major semiconductor stocks like Nvidia and Broadcom, cautioning against oversold sentiments without clear bottoming signals.

Joe Terranova [43:37]: "I agree with cutting the price target. I disagree with them on liking it because I don’t like it at all."

Josh Brown advises patience, suggesting that many semiconductor stocks are still in uptrends when viewed over a longer timeframe.

Josh Brown [25:15]: "I'm not looking for what just got hit the hardest... I'm focusing on what's hanging in there, the best."

7. Regulatory Updates and Treasury Insights

Scott Wapner highlights remarks from Treasury Secretary Scott Bessant, who addressed the impact of tariffs and regulatory burdens on banks, indicating potential deregulation efforts.

Scott Wapner [16:53]: "The Treasury Secretary... says, 'banks have been weighed down by unduly burdened, some regulatory requirements.'"

Bryn emphasizes the importance of deregulation for the financial sector’s growth and resilience.

Bryn Talkington [18:40]: "Private credit is doing the exact business that the banks were doing for 40 years."

8. Bitcoin and Cryptocurrency Volatility

The episode also covers the volatile landscape of cryptocurrencies, with Bryn speaking on Bitcoin’s resilience despite market pressure and ongoing regulatory support.

Bryn Talkington [40:34]: "Volatility is the price of admission... Congress is pro crypto, SEC will be pro crypto."

Josh Brown reflects on institutional involvement and the uncertain future of Bitcoin, hinting at upcoming events that could influence its trajectory.

Josh Brown [41:22]: "Until they actually start to accumulate like a billion worth of Bitcoin... I don’t know how much more mileage you get out of tweets and announcements."

9. Closing Remarks and Final Insights

In the closing segments, the panel reiterates the importance of selective investing amidst ongoing market uncertainties. They emphasize focusing on sectors and stocks that demonstrate resilience and potential for growth despite broader economic challenges.

Scott Wapner [46:35]: "You can always catch us live, weekdays at 12 Eastern only on CNBC."

Notable Quotes

• Josh Brown [02:24]: "I don’t think you have to write with permanent ink recession because I don’t believe that we're going to be doing this tariff stuff come summertime."

• Bryn Talkington [04:26]: "I think we are just getting buttered up for more [tariffs]."

• Joe Terranova [07:00]: "The market is still searching for leadership... the effect of Doge and the layoffs is going to begin to hit in the March and April reports."

• Bryn Talkington [18:40]: "Private credit is doing the exact business that the banks were doing for 40 years."

• Josh Brown [37:24]: "I like this name Otis. I think we’re going to get a breakout to all-time highs."

Conclusion

This episode of Halftime Report offers a comprehensive analysis of the intertwined challenges posed by the trade war and recession fears on the stock market. With insights from seasoned financial experts, listeners gain a nuanced understanding of sector-specific dynamics, stock opportunities, and the broader economic indicators influencing investment strategies. The discussion underscores the importance of selective investing and staying informed amidst ongoing market volatility.