← Halftime Report
Halftime Report
The Trade War and Stocks 3/6/25
00:44:16
Scott Wapner and the Investment Committee debate the trade war and how it’s affecting the markets and your money. Plus, the desk debate the trouble with momentum stocks and how to trade them. And later, Josh Brown reveals two more stocks on his “Best Stocks in the Market” list. Investment Committee Disclosures
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- [00:00]
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- [01:00]
Scott Wapner
I'm Scott Wapner and you're listening to CNBC's Halftime Report, the podcast the most profitable hour of the trading day. We record this live weekdays at 12 Eastern. Listen in. Carl, thanks so much. Welcome to the Halftime Report. I'm Scott Wapner. Front and center this hour, stocks and this trade war, markets remaining unsettled yet again today. We're of course trading it with the investment committee. And joining me here at post nine, Josh Brown, Bryn Talkington is in the Today and Joe Terranova. Let's check the markets here. We start to come back a little bit but we are red yet again. S and p down by 1 1/2 percent. There's the NASDAQ bottom your screen which is, you know, the tech has been really in the crosshairs here. So you know, Josh, I guess anything associated with growth and the economy has been under pressure. 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. 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. J.P. morgan, they have begun to model the recession probabilities which are going up. BCA research today says we are officially on recession watch. What's your thought on this market? What do you want to tell people?
- [02:25]
Josh Brown
So I don't think that 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. I think this is like the opening act of the reality show that is going to be this presidency. It's getting tons of headlines. People are having a lot of fun with it, you know, in the political media. But in the real world, it's not enjoyable for anyone. And the voices within the administration, outside the administration will get louder just basically saying, all right, we all get it, it's enough already. The enough already argument I think will eventually win out and we'll stop with these deadlines. April 2, April 8, all of that's going to come to an end at a certain point. And I don't think you could do enough damage between now and then to put us into a recession given how strong the labor market is, given how much liquidity there is out there, given, given how much the animal spirits are pent up and ready to roar in corporate America. So I think we'll get through it. You just have to look through it. I'm very proud to tell you that between the inauguration and today, I have placed zero trades in any direction related at all to my opinions on tariffs. I plan to be able to say that even a month from today and two months from today. And I genuinely think that that is the smart thing to do for most investors. If you're locally very focused on industrials, obviously you don't have that luxury. Like if you're running a book and you're trading those stocks, there are going to be huge shorter term impacts and you will have to react to it. I just don't have to.
- [04:04]
Scott Wapner
So, Brian, if you look at where this whole conversation within the market, within the market is most acute, it's several areas. I mean small capsules. The Russell 16% off of its high. Wolf research today of that group says not convinced the ultimate low has been made. Banks are down big. Private equity is down big. Tech's down big.
- [04:27]
Bryn Talkington
Take your pick what's not down. I mean the dollar is down too, right? So it's everything us is down. I think as it relates to small caps, I've been really consistent since last year. Did not think that was the trade. I think we were too late cycle. I think there's too many headwinds for small caps. And so I would still stay to the side of that. I think as it relates to the tariffs though, I actually disagree with Josh. I think this is just the beginning. And I think if you go back and look at 2018, I think we all have short histories. 2018 was incredibly volatile. We had eight drawdowns between 4 and 15%. Four of those drawdowns were 10 to 15%. A lot of that was around tariffs and actually those tariffs in China stayed, they stayed through the Biden administration. I think what we're going to start to see is in April one of the executive orders Trump signed on Inauguration Day was a America first trade policy memo. And that memo is expected to come out April 1, which goes through every country looks at every type of tariff. And so I think we are just getting buttered up for more.
- [05:32]
Scott Wapner
Well, it just depends what you think about and what think their, their pain threshold is. Right. If we, if we continue to have an unsettled market that gets worse.
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Bryn Talkington
Right.
- [05:43]
Scott Wapner
If the economic data continues to get worse, where you have some of these recession trades seemingly becoming closer to a reality, what does that mean?
- [05:57]
Bryn Talkington
We did not, that did not occur in 2018 at all. There was no Trump put there. I think as it relates to his, he's going to be a single term president. He has a very strong mandate that he wants to try to say the US Needs to pay less than they've been paying. And I think it's going to be uncomfortable. So I think, I think a 2018 kind of scenario is it should, should be on investors ideology.
- [06:22]
Scott Wapner
I mean are you getting more defensive within the market now as a result of that?
- [06:25]
Bryn Talkington
No, because I'm going to sit still, still right now. And so I think it's going to be ultimately like 2018 was opportunistic, Apple was down, Facebook was down. You have good opportunities. But I think that this is not 2024, this is 2025. And I think this playbook will not be short lived on the trades because we haven't even really started talking about China export controls. And I think that's one of the other reasons that Nvidia continues to, to me trade incredibly terrible even though their earnings are one of the best earnings in all, in all of the market.
- [06:55]
Scott Wapner
I mean the SMH is below its 200 day. That's more than 20% off its high. Joe, what do you want to riff on?
- [07:01]
Joe Terranova
Well, I think unfortunately the market is still searching for leadership and that's the most important thing. The leadership can't come from Europe. The leadership can't come from taxable fixed income. I've spoken to several taxable fixed income money managers this week. High yield investment grade, seeing a lot of inflows. So the market is struggling with the uncertainty. We've got this dynamic, good cop, bad copy. Market goes up, market goes down. I agree with both Josh and Brian. I think it's a moment to kind of sit back and see where the next leadership is going to come from. I do think you have to kind of be aware of what the labor market might look like in the coming months. We're not really going to get the glimpse of it tomorrow. But the effect of Doge and the layoffs and the tens of thousand, that's going to begin to hit in the March and April reports. And that certainly is going to show the economic contraction. So with that said, I think the possibility exists that maybe it's the quality factor, maybe it's the bond proxies that take the leadership overall itself. Last point on all of it. It's interesting because we've got this technical formation that everyone's talking about. And if we could show this chart from this week. You have the 200 day moving average which sits at 57:31. You have a series from Tuesday, Wednesday and today of higher intraday lows each day. We went down. We challenged the 200 day. We held, we held, we held. I don't know. I don't know, Bryn. I don't know, Josh, if it can be that easy. In my experience, you actually need to see the flush below to get the tradable bottom.
- [08:32]
Scott Wapner
The problem is, is, you know, you have all these areas. As I said, The KBW is down 7% this week. Citigroup and bank of America are each down 10% or around there, you know, week to date. So those have been weak. The private equity names thinking that, well, all of this uncertainty within the economy, what was thought to be almost a layup trade and was certainly treated as such after the inauguration, hey, there's going to be more deals, there's going to be more realizations. Private equity hasn't been able to do those for the last couple of years. So the flow is just going to be endless. Not so fast. They're keeping the Biden era rules in play on M and A and stuff like that for now. But with the uncertainty alone, private equity stocks, KKR is down 11 and a half percent. Carlyle, that's yours, down 9. We can start there with the financial stocks. They are a tell on what the outlook on the economy is.
- [09:29]
Josh Brown
Yeah, I sort of agree with that. But the one caveat I would add to what you just said, Judge, which is obviously of course true, is that most of these stocks are up at least 50% over the last 12 months. So being in an 8% drawdown or an 11% drawdown, it's not quite as end of the world as you might think. If you're just Looking at like a year to date chart. So yeah, they're way off the highs but I think people should be reminded this was the second best sector last year did better than big big cap tech. And these stocks still, if you pull the lens back, still look pretty good. Many of them still under accumulation. I've been talking about insurance stocks lately. Those haven't had the same pullback that let's say private equity stocks have. So you have to be a little bit more selective. Also one thing that we're not talking about is this newfound obsession amongst Lutnick and Elon Musk and that essence to talk about the 10 year. Here's the thing, if the 10 year falls they will point to it and say see that's proof that Doge is working and the US treasury bond is a better credit now credit. I would say no. If the 10 year yield continues to fall it's because people are really worried about the economy and it is 100% not a vote of confidence in whatever Doge is doing. No offense. And so we're going to get a jobs report at the end of this week week and that's going to have a really big impact on what the 10 year does in my opinion. And quite frankly I don't think we're going to be throwing a tick or tape parade for Doge if we lose another 10 or 15 basis points in that 10 year yield on the heels of a nasty jobs report. I didn't love what I saw with Challenger, didn't love adp. Probably not going to love what happens Friday. Don't think it's catastrophic. But judge to your point, that's going to continue to make it tough for the financial stocks if the bonds start pricing in bigger and bigger and bigger recession.
- [11:28]
Scott Wapner
Let me just cover a couple of things. The Treasury Secretary, you mentioned him, Scott Bessant, he's speaking as we speak here in New York at the Economic Club. It started at 12 noon. We're monitoring that for headlines. And then he's going to be on Squawk box tomorrow morning at 7am to speak more directly about all of the things that we're talking about right now. The beige book yesterday had numerous mentions of uncertainty. We have the layoff news today. S and P Global talks about the growth prospects being strained after the tariff plunge. You wanted to weigh in?
- [12:02]
Bryn Talkington
Yeah, well I think, I think Josh hone in on the 10 year is incredibly important. If we start getting the 10 years coming down, if it's coming down because the jobs number is bad, that all of a sudden then puts the Fed in a much more complicated position because are they, it's priced in what, three, three rate cuts.
- [12:21]
Scott Wapner
Oh, they're, they're in a pickle now, right?
- [12:23]
Bryn Talkington
I mean a pickle.
- [12:24]
Scott Wapner
They're now they're worried about growth slowing but at the same time they're worried about inflation picking up.
- [12:29]
Bryn Talkington
So I think they're going to have to pick the poison and I think if we get a bad, a few bad jobs reports, right, it is very lumpy. The Fed will pick the jobs number over inflation because the inflation number, the 2% is a made up number anyway. And I think they want to keep the jobs, the jobs intact and I think that that's going to be really important. So there is definitely a Fed put this year. We'll see what happens. But I definitely think the Fed is in a big pickle this year.
- [12:54]
Scott Wapner
I mean you could look at some of the retail trades. Gap's been terrible, Target's been terrible, Macy's bad. They just had weak guidance as well. So you pick the places within the market that you want to be. Gaps up today but nonetheless you get my point. I mean the other day it was down a whole heck of a lot.
- [13:12]
Joe Terranova
Well, the state of retail is you have to have the ability to manage margins in an environment where you're unsure of the effect of tariffs and then the hyperscalers are able to capture the market share and we've seen that clearly in the case of Walmart. Otherwise you're trading down to off price and the overall environment of higher for longer. I do believe that lag effect, we're beginning to feel the effect of it. Look, the administration is going to come back and they're going to basically say we wanted lower oil prices, we wanted, we wanted check, check, check the box. We wanted the Fed to cut the box. The box will be checked on that at some point.
- [13:50]
Scott Wapner
Right. You know, they're putting new ink in. There you go.
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Joe Terranova
And we have lower, when we have lower yield. So you know, in effect they're going to call that a success in what they're doing.
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Scott Wapner
So would you buy, would you buy the weakness in the banks? Would you buy the JP Morgan's or the Goldman's? So would you buy the private equity?
- [14:07]
Joe Terranova
Everything that I'm doing is reliant on how I observe momentum. And I keep saying to you, I don't see the V in momentum, I see the you. I want to see leadership evolve from somewhere else within the equity market. And I would love to see a flush below the 200 day moving average because that means you're going to get everyone out at that point. What am I looking to do in the financial sector? I am looking at names in the private equity space. I am looking at some of the asset managers. I told you yesterday I want to buy Amazon at some point. I think that's the mag 7. When you combine anthropic cloud services and the ability to step into live sports programming, that's the one Mag seven I want to own. So I'm waiting for all of that, that to unfold. But I think you get that flush first.
- [14:51]
Scott Wapner
We've had the Nasdaq below its 200 day a couple of days ago. Well, I did that.
- [14:56]
Joe Terranova
A lot of, a lot of the, the nondiscretionary capital is going to react to the S and.
- [15:00]
Scott Wapner
No, I understand but I mean the S and P is driven a lot by what happens in the Nasdaq because the names that we're talking about at the top of the market cap space, the Nvidia's of the world, Everybody owns, down 25% from its high Alphabet 16, Amazon 16, Microsoft 14 and a half. I mean Apple, not quite as much. I'll get to Tesla in a minute. But what do you want to say?
- [15:20]
Josh Brown
I have more financials on my list than almost any other sector right now. And I think back to my earlier comment, like, yeah, they're in drawdowns, but they are nowhere near being in downtrends. And like if I give you some of the names that are still firmly statistically in uptrends, just in finance, it's capital markets, it's financial services, it's LPL, it's Intercontinental Interactive Brokers, Robinhood still in an uptrend. Aon and AJG Gallagher. These are insurance names, both in uptrends. BlackRock still looks good. So like it's, it's. I still think, Scott, when you see markets that are acting like this, I still think from my playbook, I'm not looking for what just got hit the hardest. I'm not like, oh, what semiconductor stock just got rocked for 40%? Let me throw that in the book. I'm not saying that can't work. I'm still looking at the stocks that are holding up the best. And I'm finding them, believe it or not, in industrials and I'm finding them in finance. And there's nothing wrong with that. It gives you thousands of stocks to choose from.
- [16:27]
Scott Wapner
Wait, hold on one second. You just bought an insurance name, didn't you the other day? Didn't we highlight that from the insurance space. What was that one again?
- [16:32]
Josh Brown
Kinsale small cap not on this list. But stock looks great. Like there's look the old playbook. People have to shake this. The playbook from 2023 that worked well Any time the market got a little shaky, pick a Max 7 and buy it. It's probably going to be up a week later. I don't think that that's the playbook right now. The market's telling you that's not what's going to work. Right.
- [16:54]
Scott Wapner
By the way, the Treasury Secretary saying, quote, banks have been weighed down by unduly burdened, some regulatory requirements broken supervisory culture. There's a live picture of the economic club where the Treasury Secretary is speaking. We'll continue to bring you the headlines but you know Joe, that that remains one of the bullish cases around this group is that the. They're going to let banks be banks. Yes, again. And they're going to remove a lot of these regulations which have been deemed to be burdensome by investing investors by the very CEOs and by the regulators and the politicians.
- [17:30]
Joe Terranova
So I have my glasses on. I'm looking down because what also supports the ownership of financials and the reason that we have an overweight. It's a. It's our largest sector allocation and the strategy towards financials is the earnings and revenue growth is actually there. Arthur Gallagher the last four quarters, you're talking about 12% progressive. You're talking about 26%. How about brown and brown 12%. Bank of New York Mellon 15%. So the revenue growth a on 26%. The revenue growth supports the allocation in the direction of this sector.
- [18:04]
Bryn Talkington
But this happens. All this happens all the time. I think it's a really important point for investors is people are making or extrapolating why the financials are going down. We're going into recession. No M and A. We have another lead. These are just, just stories, stories, narratives. And that's where this is a great opportunity when you're getting weakness. The Trump administration and Bessant smart guy, they want deregulation. The two things. The reason why one of the biggest reasons why private credit has grown fivefold is Dodd Frank and Basel. Basel iii. Because all of a sudden private credit is doing the exact business that the banks were doing for 40 years.
- [18:41]
Joe Terranova
The lending, the lending, the replacing, the replacing the way.
- [18:45]
Scott Wapner
That's why it's gotten the name the shadow banking industry.
- [18:48]
Joe Terranova
Exactly. The only concern that I have is the absence of M and A is troubling. It's understandable given the uncertainty.
- [18:55]
Scott Wapner
Delay, we think. A delay, right. Yes. An early absence for certain, but there still is a belief.
- [19:01]
Joe Terranova
Why does it get better?
- [19:03]
Scott Wapner
Well, because you're going to get the deregulation, you're going to get theoretically a better economy towards the latter half. You may have the uncertainty that you have now, but it's not like the economy is completely falling apart. It's a growth scare.
- [19:17]
Joe Terranova
Okay.
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Scott Wapner
It hasn't been proven to be otherwise yet. Right.
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Bryn Talkington
The one, the one thing about M and A though is that like, and this was maybe just politics is, you know, J.D. vance is actually in line with Lina Khan on quite a few things. Is this president wants middle class jobs, they want to grow jobs. Do you think they all of a sudden want all this M and A that's, that's taking jobs away? I think the M and A is going to be very, very, very specific on being able to create jobs. Not to merge and then fire 30%. That's not going to.
- [19:45]
Scott Wapner
Let's talk about a couple of things that we haven't gotten to yet. I did want to get to Tesla. It's on a seven week losing streak. It's the longest ever. It was named today at Baird, which by the way has an outperform on the stock and keeps it there. They're not changing their ratings. They're just looking at it as a fresh, bearish pick because they expect some near term downward momentum to potentially continue.
- [20:10]
Josh Brown
You have a chance here if you truly believe that these catastrophic monthly sales numbers are about to reverse with the release of the new Model Y refresh. And you will make a lot of money in the stock from the long side. If that, like, if that's your thesis, like, pay no attention to Germany and Norway. Don't worry when the Model Y refreshes, all those numbers going to reverse, they could be up 100% month over month. If that ends up being true, what the bulls are saying, buy the stock right now. Not everybody agrees with that. Yeah, I would love to hear from you.
- [20:45]
Bryn Talkington
This is way more than. I don't think anyone's buying this car, buying the stock with 9,500 pe because of a Juniper model Y or the smaller Model 3. Like if you're doing that, that's a dumb idea. People are buying this, buying this company because they continue to grow.
- [21:02]
Scott Wapner
They haven't been buying it lately.
- [21:04]
Bryn Talkington
Right. But I mean this has historically been. When there's blood in the street, this has been an exceptional time to buy this company. And I think when you have robotics which are first going to come out on their assembly line, the robotics. And if you listen to Jensen what is all he's been talking about for months is robotics and all the money going into that. And so I think there's other verticals that have not even we haven't even seen besides the iRobot for a second that are actually going to be growing the company longer term outside of just the car.
- [21:31]
Scott Wapner
You need to weigh that you investors need to weigh in part with this note mentions again they still have an outperform on the stock. I'm quoting from the note. Musk's involvement with the Trump administration adds uncertainty to the demand side. It is that long lasting, who knows.
- [21:47]
Josh Brown
So funny that two months ago that was the reason to buy the stock. Now it's uncertainty. Look how the same news must involve it with the White House is super bullish. Now Musk's involvement with the White House is uncertain. Which is it?
- [21:59]
Scott Wapner
They continue to believe that it's a core holding though because they see it as a leader in real world. AI to your point, right. And put them on a scale and decide which one weighs more over the longer term.
- [22:10]
Bryn Talkington
And one point people keep bringing up Germany like there's people having signs not buying the not buying.
- [22:15]
Scott Wapner
Well the numbers, the numbers have been terrible there.
- [22:17]
Bryn Talkington
Right. But let's like why are the numbers terrible? So just like understand there's the narrative that everyone wants to believe which can be partially true. But also the Model Y is not made in the Model 3 is not made in Giga Berlin. It's made in Giga Shanghai. In November of 2024, Europe put tariffs on Chinese cars being imported of which the Model 3 got dinged. And so so all of a sudden the Model 3, which was a very good economical car is now expensive. And so that does not get told as part of the reason everyone's just like oh, everyone's holding fake signs that he's a bad guy.
- [22:51]
Scott Wapner
Retail by the way, isn't giving up the ship, if you will, because they've been buying the dip. According to JP Morgan's retail trader tracker they use the word massive buying in Nvidia and Tesla. So you know the cohort of investor that has pushed stocks like Tesla way up and Robinhood up, which is yours, which was initiated overweight today by the way at Canter and some of these other names doesn't seem to be dissipating. The retail investor still likes these stocks.
- [23:26]
Joe Terranova
Well and the retail investor also has the zero dated options available available to them as a tool so that's going to only increase the activity that you're seeing in the pure equity names themselves. Look, I think in totality the Mag 7 right now it's in a very complicated position. You have to try and identify which one you ultimately will believe, believe to be the winner. I mean Tesla is literally right back to where it was after that appreciation all the way up to 4,088. It's back to where it was the day of the midterm term election. It seems to me that Metta Meta seems to avoid a lot of the elevated volatility that we've seen in the last several weeks surrounding that Mag 7. Does that mean something to me it does. Looking at technical formations, I don't know if it's the relationship maybe that management has with the administration, you could factor that in. But there's certainly something to be said about their ability to navigate that volatile environment.
- [24:23]
Scott Wapner
Let me throw a couple other things at you. Our chart of the day is Marvell, which gave a very disappointing revenue forecast. The stock is plunging. I mentioned the SMH is below its 200 day moving average. It's down 10% over the past month alone. It's down 20% from its high. Which takes me to Broadcom, which is down again and reports tonight. How important is Broadcom's report at this moment?
- [24:50]
Joe Terranova
I think all it literally would do is give it a little bit of a bounce. I think the dynamic surrounding the semis is well entrenched. We've negated a lot of the bullish trends. It looks to me as if in video has been the one name somewhat insulated from entering a significant downtrend. I'm not saying it's still in, you know, the short term uptrend. What longer term it is in an uptrend.
- [25:16]
Scott Wapner
Well, guess how much it's guess. Nvidia is 27% off of its 52 week high. Yeah, and I guess how much broadcom is?
- [25:23]
Joe Terranova
Broadcom?
- [25:23]
Scott Wapner
27%.
- [25:24]
Joe Terranova
Right. And those were the two names perceived to be the winners. Those are the two names to perceive to be on the valuation basis, the better one. So all I can tell you is we've been slowly reducing our exposure to semis. Given what I've witnessed in the current quarter, I, I can't imagine we would be increasing exposure to the semis themselves. We own five names at this point. KLA Corp, Applied Materials, Qualcomm, Nvidia and.
- [25:52]
Josh Brown
Broadcom is a full blown bear market. The median, the median name in the SMH is right now in a 34% drawdown. The median name, which means a lot are significantly worse. I don't, I don't know that it's the all clear to just like close your eyes and buy them yet. Because you could have oversold stocks get more oversold. This could be a downtrend that lasts longer. The median RSI among these names is still 41. I want to see that like 31 before I just say, you know what, I don't care what's going on. One of these stocks to buy. I just don't think we've gotten to the bottom yet.
- [26:28]
Bryn Talkington
But it's like what's, what is. What is unique about this time is marvell. This time last year they had 765 million in datacenter revenues. That 1.365 billion Nvidia crushed numbers. AMD is crushing numbers. But the market's like, we don't care that.
- [26:45]
Scott Wapner
This is why when you've had money coming out of semis. There has been more optimism about software. The great comeback that CrowdStrike had really took a beating the other day. UBS cuts the price target, Josh, to 425. It's only a $25 dropdown, but nonetheless this stock had been in a nice uptrend. And here we are questioning it maybe at the moment.
- [27:08]
Josh Brown
Yeah, look, it's in this cohort of high beta, high octane growth stocks. And when they sell eight of them, the other two don't get spared. These things are traded in baskets. Also. You have a sell in the news. You had a company that had really good earnings, but everyone expected really good earnings. You know that based on how much the stock had gone up over the prior six months. So that's really all it takes. Sell the news, profit taking, momentum, washout. Why would CrowdStrike be higher? Makes no sense. What I do in situations like this, I already own it, so I'm not adding to it. I own it in the hundreds, low hundreds. But take the $361 mentally and just say, all right, right to $36 stock. The average Wall street price target, let's say is like 420 to 440. Can a $36 stock recover quickly to 42? Yes, obviously, yes. So it's a big dollar amount. The shares have pulled back in the last week or two. But in the grand scheme of things, we're still in a major uptrend here and I would not be reacting to sell side price target cuts.
- [28:14]
Scott Wapner
We'll take a break, but when we come back, I still Want to get Bryn's take on some of these Momentum names? I mentioned Robinhood today, but Palantir is down another 7%. Applovin is down another 12%. GE Vernova is down another 5. So these high momentum Vertiv Vistra, we're watching all of them. We'll do that coming up. Plus later, Josh Brown is adding two new names to his best stocks in the market list. We'll reveal them coming up.
- [28:48]
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- [29:20]
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- [30:19]
Scott Wapner
All right, let's get that take from Brinch to start for certain on what's happening with momentum, which continues to unwind. If there's a bounce, it's fleeting. And it's been what we've been seeing in Palantir, as I said, down another 7% today. Applovin for Joe down 12.5%. Vistra 7.5% down again. Vertiv almost 7% today. Dell Technologies almost 4% down.
- [30:46]
Bryn Talkington
Palantir. The air needed to come out of that balloon, right? Let's just all be clear about that. That stock got way ahead of itself. I sold a big position at the end of the year. The position I have left. I sold the April 110 calls like 20 points ago. I'm sure I can close those out at almost 100%. I just think this is really important for Investors who are just buying what's going higher. I mean, that's just a greater fool's theory. It's like, why are you buying what you're buying?
- [31:13]
Scott Wapner
I think that momentum. Joe, tell brands, tell Brin.
- [31:18]
Bryn Talkington
But he has a quality. He has an earnings, a quality screen. Right. So. And then he rebounds.
- [31:21]
Scott Wapner
App Lovin somehow made it on that.
- [31:23]
Bryn Talkington
But I will say, let's say for an etf, if you rebalance quarterly, it automatically makes you have a discipline. I'm not sure. I think investors are learning what their discipline actually is. And so I think whether it's Palantir or, you know, crypto, if you're buying Bitcoin, understand it has multiple 50% drawdowns over the last 10 years. Why can that happen now? It can absolutely happen. And so you've got to size everything correctly, don't get shaken out, but also have a reason why you're buying it. Except the other person just bought it the day before.
- [31:51]
Scott Wapner
I'm going on Amazon right now, so I'm looking for this book.
- [31:53]
Joe Terranova
It's called, you have to understand, Buy High. Sell Higher.
- [31:56]
Scott Wapner
Sell higher.
- [31:57]
Joe Terranova
Absolutely.
- [31:58]
Scott Wapner
Buy high.
- [32:00]
Josh Brown
They made a movie dynamic surrounding these things.
- [32:04]
Scott Wapner
And here's what's interesting.
- [32:05]
Joe Terranova
Over the last week. Over the last week. You're listening, Brent. I'll just speak to you about this. Over the last week, I've said Applovin and Palantir is going lower because I know how the algorithms are programmed right now. They are programmed to force price lower. Here's the remarkable thing about both of these momentum names. Guess what? They're still momentum names. Palantir, Josh. Not even below its 100 day moving average, yet Applovin today just got below its 100 day moving average. So you have to understand, when you pull the lens back on these momentum names, they still look really good. Our entry price on palantir, $16.
- [32:45]
Scott Wapner
Let me, let me just spin it this way then. Sure, sure. Your entry price makes the trades still look great. In the bigger picture, can the NASDAQ's price look better without stabilization in these stocks?
- [33:02]
Joe Terranova
No, no. I've said that to you over the. I have.
- [33:04]
Scott Wapner
Right.
- [33:04]
Joe Terranova
Over the last week, I've told you there's no V, there's a U. Right now, the environment, you have all of these algorithms, which are a force. You might not like it, but they are. They're pushing price lower. There's no indication of a V shaped bottom. It's looking like a U. And until something else steps forth and replaces that, what was leadership? No, The NASDAQ'S not going to look.
- [33:26]
Josh Brown
Like another component to this. Just for fun, if you're ever bored and you want to laugh, go ask to 10 retail investors what Applovin does. Right? Like just, just for the hell of a Palantir, for that matter. So one of the phenomena going on here specifically with some of these stocks is they have a lot of owners who don't know why they own them other than that prices were going up. And that works really great on the way up. The problem is it works really poorly on the way down because the selling becomes indiscriminate and almost regardless of fundamentals. I wouldn't argue that these two stocks as a result have gotten cheap based on this selling, but they're not being valued by anybody on today's fundamentals. So I think you have a phenomenon where the retail crowd very heavily owns these via options and or margin. And that form of leverage forces a lot of fast selling. What that ends up meaning is that they're not good barometers of anything. And I wouldn't be watching those names as the tell that the overall Nasdaq is about to look better or worse. For my money, I still think the price action in Alphabet, Apple, Microsoft are going to be more meaningful. And those stocks kind of just become a sideshow. They'll turn when they turn.
- [34:40]
Scott Wapner
All right, so we'll get to Bitcoin in a bit. But first I want to get the headlines with Silvana now. Hi, Silvana.
- [34:45]
Silvana Hanau
Hey, Scott. Good afternoon. President Trump is considering a major change to the US Participation in NATO. Current and senior officials tell NBC News News the president has discussed with aides the possibility of refusing to defend a fellow member that is attacked if they don't spend a set percentage of their GDP on defense. Now, that's a major shift from Article 5 of the NATO charter, which says an attack on any NATO country is an attack on all. A National Security Council official told NBC News, quote, president Trump is committed to NATO and Article 5. The House voted to censure Representative Al Green for disrupting President Trump's address to Congress. On Tuesday, 10 Democrats joined all Republicans in favor of the censure resolution, which is a formal way for the House to show its disapproval of a member's conduct. And the mega hit Broadway musical Hamilton is canceling plans to perform at the Kennedy center in Washington, D.C. next year. Producers said in a statement the show is acting against President Trump's recent takeover of the cultural hub when he ousted its leadership and took over as chairman of the board. Scott, I'll send it back to you.
- [35:57]
Scott Wapner
All right, Silvana, thank you so much for that. Silvana Hanau up Up next, we do have an update. The Josh Brown's best stocks in the market list just added a couple of names. We'll tell you what they are next.
- [36:12]
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- [36:40]
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- [36:58]
Scott Wapner
All right, let's do, let's do the. By the way, I found it. It's still available. Paperback. You can get your, you can't get it in hardcover. You get the paperback.
- [37:07]
Joe Terranova
Okay.
- [37:08]
Scott Wapner
All right.
- [37:08]
Josh Brown
Endlessly available, I'm told.
- [37:11]
Joe Terranova
I got boxes of my garage.
- [37:14]
Scott Wapner
All right, let's do the best stocks in the market list for Josh, who has two new names today. RTX is the first. I'll prompt you on the second. But tell me about rtx.
- [37:24]
Josh Brown
You know what really grinds my gears, Judge? People have like these blanket pronouncements like oh, the recession. Odds are going up, therefore industrials are probably going. Not really. Some of these stocks look even better this week than they looked last week. So let's talk about two of them. Rtx. This is like the merger between United Technologies and Raytheon. Now they can both supply airplane parts to commercial and also kill a lot of people. RTX has seen double digit revenue growth in three of the last five quarters. If you think that Europe and America have to continue to spend and Trump's going to do this thing with the ships and like this is where money is going to be made. It's an unfortunate part of life. But defense spending is going to be more important, not less important as time goes on. Stocks 19 forward PE expecting 7% earnings per share growth, 12% next year and they are accumulating the stock. It's got an RSI of 50 not yet overbought, 3% above the 58% above the 200. Yes, it's industrial but looks great the other one I want to give you is Otis. This is another industrial elevators and the like up 10% year to date, 7% in the past month, bucking the market trend. RSI is 64. They are buying the stock in green market, buying the stock in the red market. It's above its 50, it's above its 200 and it's a 24 forward, 22 forward penny. So it's not like you're paying up for some sort of a momentum stock. I like this name Otis. I think we're going to get a breakout to all time highs and in the case of RTX there are like multiple ways to win in that name even if the headlines continue to be bad about geopolitical whatever. So I like both these names and they work and they're both industrial.
- [39:14]
Joe Terranova
Josh is spot on. Now if you think about it, what are we seeing now? We're seeing goods over services business. We're seeing that the ism manufacturing is beginning to recover from the recessionary environment. You've got names in the industrial sector like Helmet, like Republic, services like Roland's that are working incredibly well. Heiko Corporation, another name. The industrial sector still is a sector of opportunity.
- [39:38]
Scott Wapner
What do you think Brian?
- [39:38]
Bryn Talkington
Yeah, I think that's, I mean it's in the, it's in the US You've got momentum there. These are not expensive names. And so I think that when people are not pulling out of the market, going to cash as we rotate how many people are going to continue to rotate to Germany? Right. I don't think that trade's going to last so long. Come back to the U.S. there's plenty of companies here to invest in.
- [39:57]
Scott Wapner
All right, we will take that break. I do want to talk to you about bitcoin. I want to get your take on what you see happening there because that's been really volatile and we've got some calls to do as well. We'll bring that to you Next foreign. Welcome back. Let's talk some crypto. JP Morgan today thinks that the pressure is going to remain on crypto for the near term at least you own which what you own the ibit, I bet.
- [40:34]
Bryn Talkington
Yep.
- [40:34]
Scott Wapner
I bet in Ethereum you don't own Coinbase anymore.
- [40:37]
Bryn Talkington
No.
- [40:37]
Scott Wapner
Okay, so what do you think? You agree with the call?
- [40:40]
Bryn Talkington
Just look at the technicals. 82 like 82,000 the 200 day for, for Bitcoin you really can't look at. I bet it hasn't been around enough. This is an asset class or this is security or whatever you're Going to call it a commodity that the buyers come in on drawdowns and buy the dip every time. We've seen numerous, 30, 50, 70% drawdowns. They come in every time. And then it makes new highs. And so I think we definitely have a Congress that is pro crypto. I think the SEC will be pro crypto. The White House is pro crypto. And so I think we're going to have a good four years. But understand, volatility is the price of admission. If you are going to tiptoe into this space.
- [41:17]
Scott Wapner
What about Josh Brown? Is he pro crypto? That's the question. Don't you own some, you own bitcoin, don't you know?
- [41:23]
Josh Brown
We own it. Like, we, we were one of the first RIAs to create a way for people to access it. We did that right before it topped for two years. Now it's twice as high. So nobody's really mad at us. But I, I don't know, I, I keep hearing pro crypto, pro crypto. But in the meantime, the price action says, all right, sure, but everybody already understands that. So until they actually start to accumulate like a billion, 2 billion, $3 billion worth of Bitcoin and like report that they're actually, they own it. I don't know how much more mileage you get out of tweets and announcements. So tomorrow is like the event. Do you know who's going?
- [42:00]
Scott Wapner
Are you going?
- [42:01]
Bryn Talkington
No.
- [42:01]
Josh Brown
Do you know anyone that's got, I'm assuming, sailor, I'm sure. So, like, tomorrow, is it a freak show? Is it all pump and dump people from Twitter or is it like Larry Fink? I don't know. Like we're going to find out together.
- [42:11]
Bryn Talkington
Maybe all of the above.
- [42:12]
Josh Brown
Yeah. So I'm in. I own it. I love you. Love you all bitcoin people.
- [42:16]
Scott Wapner
All right, let's do some calls. Some other calls, but besides the JP Morgan one. You got it again, Josh. 3M reiterated overweight today at Barclays. Best insulated from the tariff impact, they say, or certainly on the list.
- [42:27]
Josh Brown
Yeah, Very domestically focused. It's a turnaround story. I doubt that there will be no fallout from tariffs if the whole economy slows. Of course, 3M will feel it, but the stock's hanging in there, acting better than most of its peers. And I think that's exactly why. And again, I'm not looking for the hardest hit stocks to buy. I'm focusing on what's hanging in there, the best. Because if and when we turn, I think that'll be the new leadership. I Want to stay long here.
- [42:55]
Scott Wapner
Freeport upgraded Brin at Deutsche bank today.
- [42:58]
Bryn Talkington
Yeah, well, obviously we had the tariff talks yesterday. I've been looking at this to add to it. I haven't done it yet. They have gold and copper exposure. This is a commodity. If you're going to play in the commodity space, you really want to buy them low, don't follow the momentum, sell them when they're running up. But this, this here at 30, 36, 37, I think that this looks like good entry point that actually could have some legs the remainder of the year.
- [43:20]
Scott Wapner
Joe, I got a few stocks for you, but the one that stands out to me is First Solar because the price target got cut by a bunch at Janney to 171from256. They still like it, but they've dialed back their expectations.
- [43:37]
Joe Terranova
I agree with cutting the price target. I disagree with them on liking it because I don't like it at all. It's near a 52 week low. It's down 52% from its high from last summer. And the momentum is broken.
- [43:50]
Scott Wapner
Okay, say no more.
- [43:51]
Joe Terranova
Say no more.
- [43:52]
Scott Wapner
I don't think you have to. The setup is next. All right, let's do some setup because Costco reports after the bell as well today. It is on pace to end its ninth calendar quarter in a row. Positive. Jyoti owns the stock.
- [44:19]
Joe Terranova
Very high expectations here. And let's remember something with this stock, three of the last four quarters, the reaction to good earnings has been a sell off. Now, in each of those instances, you obviously wanted to take the other side of that. This is a company that is clearly, as I said before, managing the market, market margins, rather grabbing market share. And there's no reason to believe that that is going to discontinue. But be prepared. Tonight you potentially could see a sell off that's an opportunity to buy.
- [44:48]
Scott Wapner
But you think this is still in the sweet spot of those questions about where the consumer is and just what's happening with the economy.
- [44:57]
Joe Terranova
Absolutely. Walmart and Costco are differentiating themselves from the rest and they are taking dramatic market share from from Target, which looks literally awful on the charts.
- [45:07]
Scott Wapner
All right, Costco is, as we see, down 1.5%. We'll do finals next. All right, welcome back. We'll show you the S&P 500 because it just cracked its 200 day moving average. As the market gets thrown around a bit by the. Tariffs are on. Tariffs are pushed. Tariffs are back on. Tariffs are pushed. By the way, Scott Bessen, I mentioned that he's been Speaking at the New York Economic Club, the Treasury Secretary says over the long run, quote, I'm not worried about inflation from tariffs, quote, we could get a one time price adjustment, he says. And then he goes on to say, nothing is more transitory than tariffs if it's a one time price adjustment. So throwing out the T word is.
- [45:52]
Josh Brown
An adjustment for you. See what happened to we haven't seen the S and p below its 200 day since October of 2023. 334 trading days. So hello darkness, my old friend.
- [46:04]
Scott Wapner
What's your final. What's your final trade?
- [46:06]
Josh Brown
Josh, I forgot. No, seriously, literally forgot. Okay, acting well today.
- [46:11]
Bryn Talkington
All right, Bryn, one of my favorite ETFs, JETP. If you're looking to diversify out of tech, it has a max cap of a sector of 17 and a half percent positive for the paychecks.
- [46:19]
Scott Wapner
All right, closing bells now. I mean the exchanges now. You know what I meant. You've been listening to CNBC's Halftime Report, the podcast. You can always catch us live, weekdays at 12 Eastern only on CNBC.
- [46:35]
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