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Halftime Report
The Trump Bump and Stocks 12/12/24
00:44:13
Scott Wapner and the Investment Committee debate the Trump Bump as the President-Elect rings the opening bell at the NYSE. Plus, Adobe tumbling lower today, it’s our Chart of the Day, Jim Lebenthal is holding onto it, he explains why. And later, the Committee detail their latest portfolio moves. Investment Committee Disclosures
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- [00:01]
Scott Wapner
Support for this program is provided by Chevron.
- [00:03]
Jim Cramer
The Anchor offshore platform is utilizing breakthrough technology to enable us to produce oil and natural gas in the US Gulf of Mexico at pressures up to 20,000 psi. A new industry benchmark. Anchor is part of Chevron's plan to produce 300,000 net barrels of oil equivalent per day by 2026 in the US Gulf of Mexico, home to some of our lowest carbon intensity producing operations. That's energy in progress.
- [00:28]
Scott Wapner
Visit chevron.com anchor what's your boldest, truly ambitious life goal? Everyone has one and everyone deserves a.
- [00:36]
Josh Brown
Way to get there.
- [00:37]
Scott Wapner
That's why State street offers a wide variety of ETFs to give all investors.
- [00:40]
Jim Cramer
Access to the market and the chance.
- [00:42]
Scott Wapner
To reach their goals. Like with DIA where you get 30 US blue chip stocks in a single trade. Wherever you're heading, getting there starts here with State Street.
- [00:50]
Josh Brown
Before investing, consider the fund's investment objectives.
- [00:52]
Jim Cramer
Risks, charges and expenses. Visit ssga.com for perspectives containing this and other information. Read it carefully. DIA subject to risks similar to those of stocks.
- [00:58]
Josh Brown
All ATF are subject to risk, including possible loss of principal Alps Distributors, Inc.
- [01:01]
Jim Cramer
Distributor.
- [01:03]
Josh Brown
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, the President elect in the markets. A historic day here setting the stage for stocks in the new year. We will discuss and debate the road ahead for your MONEY with the investment committee today. And joining me for the hour, Josh Brown, Jenny Harrington, Jason Snipe, Jim Lebenthal, we're all at post nine. Want to show you the markets today. We are red across the board though we are hanging around the rim, if you will, at some round numbers. You know about the Nasdaq closing above 20,000 for the first time. It's a little below that. We're trying to eke towards 6100 on the S and P. A little bit of work to do there. But we do want to begin with what happened here earlier today. Really, you could say American exceptionalism on full display with President Elect Trump here talking about what is coming for investors with our very own Jim Cramer.
- [02:12]
Jim Cramer
I think you're going to see some very good days ahead. A lot of incentives are going to be given. You saw yesterday a billion dollar investment and we give you very fast approvals. Nobody, nobody has come up with that one yet, although it Seems pretty simple. I think you're going to have some great days ahead. We're going to do things I think that haven't been really done before. We're going to be cutting taxes still further. You know, we got it down to 21%. We're going to bring it down even below that. You pay 21 if you don't build here and meaning your product or whatever it is you're building. And if you do, we're going to try getting it down to 15%. But you have to build your product, make your product in the usa.
- [02:48]
Josh Brown
Okay, that's the President elect right here on the floor earlier today. Josh. It is optimism about the economy and Trump policies. Why investors are buying into this market like they are.
- [03:01]
Jenny Harrington
Yeah, we've had like almost, we've had almost two months of this. We had a month leading into the election as people started to believe it would be Donald Trump and his policies coming in. And then of course we had a furious rally immediately following the election and there has been follow through. And you don't have to love the political outcome here to recognize that even people who voted the other way are saying, all right, you know what, it is what it is. And my job now is to maximize for my business or from my customers or for my family what the opportunity set is in front of me. And I think overall that's the, that's where we are sentiment wise in the market. Maybe we've gotten a little bit carried away. And so when you just think about the internals here, I have a little bit of bad news, but then I have some good news and by the time I finish talking, everyone's going to feel great. Bread for The S&P 500 has now been negative on all eight trading days of the month of December. So far, not great. Eight days in a row more stocks fell than advanced. And if you have a portfolio and you're logging in to your Schwab or your Fidelity or whatever, I know you're feeling that, I'm just giving you the data that backs it up. Longer term breadth metrics are still all okay, 68% of S&P 500 constituents are still above their 200 day moving average. What we would consider to be a bull market for those stocks. But only 51% or above their 50. Okay. Technology breadth is the best. 70% of tech names are above the 200. But when you look at leadership judge, and this is really what I want to key in on, leadership names are working. You should expect this going into the end of the year. This is partly driven by the ETF effect. We're breaking daily records of money pouring into ETFs. Look at the way these names are trading. The top 10 market caps in the S and P, Apple, Microsoft, Nvidia, Amazon, Google, Metta, Tesla, Berkshire, Broadcom and Walmart. They have a median RSI relative strength of 73. The median percentage among those 10 names is less than 1% off the 52 week high. Look at a chart of Wal Mart. It looks like they just cured cancer. These stocks are ripping higher. Only two of these names are below their 50 day. The rest are on fire. And that's enough to move the chains. You might want better participation. Maybe it boomerangs back around and you get it. But for right now, the index level, the biggest names that matter the most are doing what they need to do.
- [05:28]
Josh Brown
Records. Alphabet most recent high yesterday. Amazon most recent high yesterday. Metta most recent high yesterday along with Apple. Your point is well made. And Jenny, UBS says there is more room for this rally to run. You get everything that's going on. We mentioned the optimism around the new administration. As we said, that was on full display here on the floor of the New York Stock Exchange today. And you have price targets that are eclipsing 7,000. You have optimism about rate cuts, albeit fewer and slower. Doesn't matter. People think that next year is going to be a really good year for stocks.
- [06:06]
Scott Wapner
Right. And so, so far, you know, I think like overly cautious has been my middle name. So I hear that and I think, okay, we're at 6,100 now to get to 7,000, that's plus 15%. We're still at 22 and a half times broadly on the market. And I think to myself, if I've been so overly cautious, like what can I do to get myself comfortable with that? And the only way I can get comfortable with that is to really go beneath the surface and say, all right, fine, there are a lot of overextended stocks out there. There's a lot of 30 and 40 and 60 times valuations. There's things that up several hundred percent year to date. And while the stories are good, the valuations aren't working. So how do I get there? I frankly go to my portfolio and I look at things like UPS at 13 times and Devon at 7 times and Bristol Myer at 11 times and ConAgra at 10 times. And I say those are good companies that have, I don't know, 6, 7, 8% earnings growth ahead and if they can expand their multiples by two, three, four times. Right. Maybe that's what gets us there. So when I look out to next year, the only way I can get behind the market actually being supported and actually being up is if everything that didn't really do the hard work this year starts to do the hard work next year. And I think that's possible, but I.
- [07:12]
Josh Brown
Think, why is that the only way you can get there?
- [07:15]
Scott Wapner
Because I.
- [07:16]
Josh Brown
It's like you're trying to. It's like you're.
- [07:18]
Scott Wapner
Yeah.
- [07:18]
Josh Brown
You're trying to trade in cards when you already have a good hand ready to be played in this market.
- [07:24]
Scott Wapner
No, I think it's because, you know, it goes to the conversation we were having two days ago where I said, first thing I read Monday morning were two things. One was a journal piece that said dividend stocks are poised to work. And then at the same moment almost, I read a piece from Bloomberg that said as high tech growth earnings are slowing, investors are looking for other places to invest. And then. And Steph was saying, look, I'm taking my money off, you know, out of this. And she was putting it into. I can't remember which. But this hasn't worked as well. So I think there's a shift out there. Right. That money is coming out of the things that have frankly gone up, in my opinion, what are too much. And this is, you know, where you said to me, do you really know they're up too much? No, I don't. But, you know, when you're playing the board game Clue, what is it you accuse or you suspect? I suspect they're up too much because I don't see how some of these companies. And we'll get into some later, I don't see how if you're only growing at 8 or 9% earnings, I don't see how a 34 times multiple is justified. I don't see how a 60 times multiple is justified. And so I think to me it's more trade around. And as we go into the year end, I think I'm really representative of people because my clients are pretty normal and they've got these big positions that are making them quake in their boots. I don't want to realize the capital gains until next year.
- [08:31]
Josh Brown
I don't know that you're representative of a lot of people. I feel like you're almost becoming more of an outlier in terms of being overly cautious in what feels like a pretty decent environment.
- [08:41]
Scott Wapner
But let me. I talk to individuals all day, every day. Yeah, right. And they're normal retirees. They're not the mega, mega wealthy. They're people have just normal portfolios.
- [08:51]
Josh Brown
Well, they're dividend. They're primarily dividend investors.
- [08:53]
Scott Wapner
Not necessarily, not necessarily. Like yes, those are one big sleeve of our client base. But I talk to a much wider swath. I talk to friends because people just ask, you know, I talk to friends, I talk to friends, husbands. I talk to clients, clients, kids. And they're nervous.
- [09:06]
Josh Brown
She talks to angels, everybody.
- [09:07]
Scott Wapner
Okay.
- [09:08]
Josh Brown
I talk to baristas.
- [09:09]
Scott Wapner
I talk to my point. But they're nervous when they've got a position in Nvidia that's suddenly become 12% of their portfolio and they don't want to realize that gain this year. And so they're looking out and saying, hey, if I can just make it three more weeks, I can take a little bit of that off the table and put it into things that don't make me as nervous.
- [09:26]
Jim Cramer
Rebounding.
- [09:27]
Josh Brown
Let's just dress it this way. Jason Snipe, is there, is there reason to be pretty optimistic? I'll just say it that way. Pretty optimistic about what lies ahead. The president elect right over there said there was. Investors are playing it like it is. Corporate America assumes it will be. That's why you have price targets in some respects that are 7100 or why Tom Lee told me yesterday that you're going to hit 7,000 by mid next year. Here's what he said. The reason I think markets do better in the first half is that there is going to be a lot of enthusiasm about a new White House. Some of the headlines that come, whether it's deregulation, etc. And we know there's still a ton of cash and a lot of low leverage on the sidelines. That's why stocks can rally and by the way, 11% and in a few months.
- [10:26]
Jim Cramer
We've seen that routinely the last couple of years.
- [10:31]
Jason Snipe
Yeah, no, I think there's plenty of reasons to be optimistic. Obviously the NASDAQ hit all time highs yesterday over 20,000. You know, and I think about sentiment and to Josh's point, I mean we've had negative breath over the last eight days but the generals have obviously come to play. Amazon, Google and Metta all up 10% this week with earnings, earnings deceleration going into next year. So when I think about the market going forward, I do focus on earnings. Now I focus on earnings going into next year, which we expect double digit returns. Pie was a little warmer than expected today. CPI yesterday was in line. Labor is still somewhat benign. I mean labor is relatively strong so for me, I think there's a lot to like. Sentiment has pulled back, I think a little bit with where breath has been over the last few days. But I think you'll have some tax selling in the beginning of the quarter, next quarter. But I think all in terms of just steam engines going forward, I think the market is strong. There's a lot of undercurrents that are pushing it.
- [11:30]
Josh Brown
B of A says the best is probably behind us. Bannister it's at Stifel says it's overextended. The S and P is expect a Correction to the mid-5000s in 2025. What do you think of that?
- [11:45]
Jim Cramer
I honestly can get completely behind that. Let's start with the first comment that you made there. The best is behind us. That may well be true. That doesn't mean that bad times are ahead. It means we're going to be good going forward. What if.
- [11:56]
Josh Brown
Why would the best. Let's sure you say I could get behind that. What do you mean you agree with it? That's your call. Yeah, the best is probably behind us.
- [12:05]
Jim Cramer
Okay, everybody stop for a second.
- [12:07]
Josh Brown
I'm going to drive the conversation.
- [12:09]
Jim Cramer
Okay, well then let me respond question I and you interrupted me in my.
- [12:13]
Josh Brown
Response, so let me respond what I'm asking.
- [12:15]
Jim Cramer
Okay, so let me respond anything.
- [12:17]
Josh Brown
Just answer the question for me, please.
- [12:18]
Jim Cramer
Okay, look, you've had two years in a row of 25% plus gains. That may be the best. Okay. That doesn't mean that we're going down from here to one year from now. It means you might get 8%, 7% in the 12 months ahead. And along the way, just to the question, as you phrased it, Scott, you might get a correction. That usually happens once a year. We didn't have one this year. I think everything in the setup to the question is perfectly reasonable. It doesn't mean sell your stocks and head for the hills. It just means be responsible going forward. Add a balance to your portfolio. Yes, Mag7 has done fabulously this year. It doesn't mean go out and sell all of them. It means add something that's not mag 7 to it. As you go forward into the year and maybe even in the new year, prepare yourself for a correction by adding some cash.
- [13:06]
Jenny Harrington
I think you were. I think you're right.
- [13:07]
Scott Wapner
I agree.
- [13:08]
Jenny Harrington
This is because we're not just talking about security selection. We're talking about position sizing. Sizing. And to Jenny's point, when you have people that are long in video and it goes up, I don't know it goes up triple as fast as everything else in the portfolio. You have to revisit the size. You may not have to make a decision longer out of Nvidia, but you have to say, like, is, is this stock now at a point where I have a material risk of one position wrecking my 2025? So I think that that's the mentality you want to go into any new year. Regardless of how great the gains were. It could entirely be that 2025 is a consolidation year where the earnings growth is not quite as fast, the multiple growth isn't there, we have a flat year. That happens.
- [13:59]
Jim Cramer
Maybe the earnings growth is terrific at the 15% projected, but maybe that's already been priced.
- [14:04]
Jenny Harrington
Right? So, so, so I think what you're doing now is you're saying, okay, I probably put on a lot of positions this year out of fomo. A lot of stocks were going up. I just added things. Maybe I don't need them all. That's one way to tackle it. Another way is position size. This thing has gone up 100% this year. Do I still want to have as many shares as I had when it was half the multiple? The answer is usually for most people, no. So I think it's entirely reasonable. But I don't love the framing that because we're up a lot this year, that's going to have some impact on how much we could be up next year because we have seen time and time again that's not how stocks work. And it's very frustrating when you play that kind of game. Like you had a roulette table. Well, you're the, oh, it was red this year. Next year has got to be black. No way.
- [14:51]
Josh Brown
You've said multiple times on this program, I don't care what a stock's done over the last five years, it's what it's going to do from here. But then you're using that same logic in reverse, saying, well, now stocks are up 20 something percent back years.
- [15:05]
Jim Cramer
Clarify.
- [15:06]
Josh Brown
I don't think they're going to be as good now. I'm not suggesting they are. Who knows?
- [15:11]
Jim Cramer
No, look, we're all sitting here trying to predict the future. There's an element of error to it. And yes, you're correct. I don't look back and say, hey, just because a stock or the market's done this, that means it has to do this going forward. What I do look at is valuation. That is, that matters to me a lot. Josh, you just mentioned, hey, maybe earnings aren't as great, but I Think we're all going to acknowledge that earnings are going to grow next year unless something cataclysmic out of the blue happens. Earnings are going to grow and they're going to grow nicely. My comment about looking about what's happened over the last two years is we're not at the same multiple that we were at two years ago. Just flat out not on the market overall. Now what it tells me, and I know this is where Jenny is, is that pick your stocks and I will make choices. Not everybody will agree with them. I am underweight the Mag 7 as we go into 2025. I'm making a move today. Scott. I hope you don't mind if I bring it up right now but you know, trimming Microsoft, not because it's a bad company, but because I want to buy something else. I need some funds. I'm staying fully invested for now. We'll see what happens in 2025.
- [16:09]
Josh Brown
Trimming.
- [16:09]
Jim Cramer
I need funds.
- [16:10]
Josh Brown
I need funds to buy United other stocks. You could, you could trim something else. Why not one?
- [16:15]
Jim Cramer
Right? Because in this business you've got to sell high to buy low. Right. And at 35 times forward earnings I think that Microsoft is a little pricey. I'm not saying it's a bad company. I'm not saying that a year from now, two years from now it won't be higher. But what I'm saying right now is as I need funds to buy something else. That's a very inviting target for me.
- [16:34]
Josh Brown
What are we to make of what's happened with the mega caps recently? Josh, I throw that to you. It's Apple trying for its 10th straight a day of record intraday highs. Okay, that's never happened before. 4 trillion in market cap is on the doorstep. We can show what the market cap is now. It's not on there but hopefully we'll get that on there because it's close. Closing in Alphabet. Best week since April. It's up nearly 11 and a half percent. Met as best month since February. Amazon gets its target raised today. It's also been hitting record highs.
- [17:07]
Scott Wapner
Oh, I want to answer this one for you.
- [17:09]
Jenny Harrington
By all means.
- [17:09]
Scott Wapner
Thank you. Late. But. But correct me if you think I'm.
- [17:11]
Jenny Harrington
Well, I'm just going to jump it in the middle.
- [17:14]
Scott Wapner
Six words. Late stage FOMO and professional window dressing.
- [17:18]
Jenny Harrington
Yeah, I don't hate that. But I would throw in one more thing. The number one factor of the bit of the best performing stocks for the last couple of years in addition to earnings growth rate is earnings consistency and high Margins. And Apple answers the high margins part in spades. Maybe the best business ever created in the history of the world. Such an. It's a, it's a one decision stock. It always has been. Even when it's going down, people say, all right, it's been going down. That's a reason to buy. Now it's going up. They say, oh, it's going up. That's. That's an even better reason to buy. It's a high margin company that's gone through a couple of years of pretty weak growth and now the page might turn next year. I think it's crazy that this stock is now at a 78 RSI for the first time since July. And if you just were trading on headlines, there's really nothing in the news that would tell you why all of a sudden this thing's gotten rerated. But undoubtedly it has. So I think it's a stock that people just want to make sure they have in their portfolio as it melts higher if they're underweight. And a lot of people are underweight because it's a huge weighting in the index. So I think that's a pretty good explanation.
- [18:27]
Josh Brown
Are we really, I mean, we could have this debate to are we late stage? Are we as late stage as we thought we were months ago? What if we're in a renewal because we think that earnings are going to grow more than we thought, that the economy is going to maintain its strength for longer than we initially expected?
- [18:45]
Jenny Harrington
Top sectors on the year. Tell me this is late stage. Communications tech up 47%. Tech up 39. Discretionary up 37. Does that sound late stage to anybody?
- [18:55]
Josh Brown
Jenny says we're late stage.
- [18:56]
Jenny Harrington
I think late finance from financials number four.
- [19:00]
Scott Wapner
Okay, well, I think it's late stage.
- [19:01]
Josh Brown
Because based on what?
- [19:02]
Scott Wapner
Based on the multiple. Because to me, like, there needs to be just some reasonable thought in this. And even if you look at Apple, it's trading at 40 times earnings now. Right. And what are earnings growing at?
- [19:12]
Jenny Harrington
No late stage for Apple or late stage for the market.
- [19:15]
Scott Wapner
I was talking for Mag7. Oh, you know, that was the question, right? Mag7 are all up this much.
- [19:20]
Jenny Harrington
I'd be really honest with you though. You seem to be very skeptical about AI and you have been for years.
- [19:25]
Scott Wapner
Oh, no, no, no, no, no. Hold on. My skepticism on AI is only on the companies that have had all the benefits so far.
- [19:32]
Jenny Harrington
But you were skeptical before they had the benefit.
- [19:34]
Scott Wapner
No, because I just think it's too narrow. Like I was at the Goldman Financial Services conference this week and you have everything from American Express to Regions Financial talking about how amazing AI is going to be to improve.
- [19:44]
Jenny Harrington
What if they're right? Are we late then? Are we late stage? If they're right.
- [19:48]
Scott Wapner
Well the money has been concentrated in a few names where you have them up 3 and 4 and 5 and 900% this year. Spread it out because there are a.
- [19:54]
Jenny Harrington
Lot of financials are up 40 something percent. You don't think it's spread out like they're 13% of the S&P now trading.
- [20:01]
Scott Wapner
At like 13 times multiples.
- [20:03]
Jason Snipe
Okay.
- [20:04]
Scott Wapner
But they have more room to go. But they're spread but they're like the best there.
- [20:07]
Jenny Harrington
You own these stocks. They're doing well.
- [20:09]
Scott Wapner
But here's my point like sorry financials and health care. Those should be some of the best beneficiaries of AI. Why are there these huge multiple differentials by the way? You can take a financial with the same earnings growth as Apple.
- [20:21]
Josh Brown
What do you think you think of a financial stock should have the same multiple as Apple as one of the. One of the hyperscalers And I.
- [20:29]
Scott Wapner
Well let's just go.
- [20:30]
Jenny Harrington
Let's look at some of them do.
- [20:31]
Scott Wapner
Hold on but I'm talking about Apple for example if I'm saying late stage and so is a. Is Apple hyperscaler and I don't think so. But let's just say Apple's got what is it like 9% earnings growth trading at 40 times. American Express has like 23 to 25% earnings growth ahead trading at about 24 times. Which of those do I want to buy? And by the way Amex is a total beneficiary of AI. So that's what I'm saying. Like I think it's late for the companies that have high single digit earnings growth and trading at 40 times. I think it's early on other things where it had. Where the money hasn't got a benefit.
- [21:05]
Josh Brown
Let's talk about a stock before we go that has not gotten much benefit if any from AI Adobe chart of the day because they're tumbling today the guidance was disappointing. It's the worst day since March. 5 price target cuts, a downgrade. You own it. Look at that. It's 12 and a half percent if you. If you lengthen out.
- [21:25]
Jim Cramer
Do I have to look at that?
- [21:26]
Josh Brown
If you show me a year to date as well which tells a better story than that one you'll see what I'm talking about because it's like. It's like this.
- [21:34]
Jenny Harrington
This happens once a year. Do they need leadership change.
- [21:37]
Jim Cramer
Well, okay, that's actually a great question because people who are on the call will say, look, this is boring. There's nothing exciting. It's not like when you talk to some of the tech leaders and you come off of those calls like, you know, Marc Benioff and you're like charged up. All right, Mark Benioff says, whatever the agent, you know, I'm not in the stock. You know what it is. And like the stock goes nuts. The next day you get off Adobe's call and you're like, that, what? You know, what do I do?
- [21:57]
Jenny Harrington
What's their answer? And all of these things that seem like they're going to eat their lunch.
- [22:02]
Jim Cramer
So I don't think anything's going to eat their lunch. I mean, we can have a debate about that. I think we would all agree. We use Adobe. I think their Firefly Plot product is showing a lot of growth. And look, their annualized recurring revenue is up just, just north of 10%. I really think this is overdone, but I think the point that it's a boring stock really looms large here. Now let's just talk about it at the midpoint of the guidance that they gave. And Scott, you're right, the headlines are disappointing guidance. You know, I'm going to put perspective on it. It's less than 1% below where the guide where the estimates were. So I'm trying to, you know, does that merit a 13 12% drop?
- [22:38]
Josh Brown
But I put perspective on it, which I think is more important when you give me a year to date again, please look, it is what it is right there. So you go to the top of that move at the beginning of the year to like this culminating to where we are today when every other air related heavyweight is like this.
- [22:55]
Jim Cramer
Yeah, Scott, I hear you. I mean you're speaking facts and it's pretty frustrating for me. But what does give me comfort, and this is where Jenny might come in, I don't know. But you know, this is now trading below 24 times earnings. So I told you a minute ago that I was trimming Microsoft at 35 times earnings. You know which one has a better projected growth rate going forward? It's Adobe. But nobody cares because it's like, it's Adobe. I got it. And Josh, you made a point earlier. You know, the bigger going to get bigger as flows come into the market. I think this is what you're saying about passive ETFs. That's not going to go to Adobe. I will say this. I'm not adding to it right now for very simple reasons. There's just no catalysts for here. But I am going to hang on to it. But I am going to hang out. I am going to hang on to it because really, to Josh's point, I don't think anybody's going to come in and eat their lunch. Maybe I'm wrong. I just don't see that Adobe's everywhere. Let them grow.
- [23:43]
Jenny Harrington
But I think the reason for that multiple in a market where software stocks have been rallying furiously is that there are legitimate concerns that some of these new AI visual tools are going to enable people to work around the Adobe ecosystem that so core to the creator economy. If there are ways around that now being created and Adobe doesn't have like this kind of electrifying presentation about their answer, maybe it's time for somebody else to be in the seat I'll dance with.
- [24:15]
Jim Cramer
I want to say one more thing. I'm sorry, but you know, this is a stock that has surprise to the upside on earnings 20 quarters in a row. This is what they do and it bothers me. Okay. They guide below again less than 1% versus expectations and then they exceeded. I really wish they'd stop. And Josh, you're making a fabulous point. Maybe it is time for management change. All that said, I'm comfortable holding it at now 23 and a half times forward earnings.
- [24:38]
Josh Brown
Last point. Go ahead.
- [24:39]
Scott Wapner
Okay, but maybe, maybe it's not that they actually need management and maybe this goes back to me saying fomo, right? There is a group of stocks out there that just have like judge factor that people just like owning and they like now I, like, I thought, I was thinking like, but here's the thing, like if you were just to take the numbers on Apple and Adobe on paper, right, 24 times, they both have a 9, 10% earnings growth. Like Adobe is more, more attractive, but nobody cares because it doesn't have that like cachet. No one wants to talk about it. And there's something that's kind of broken out there both in the stock market and I've heard, you know, I read an interesting thing the other day about politics where once you turn these things into entertainment, right, you start personifying that, personifying companies or politicians or whatever it is. And if we personified these companies, then there's a lack of objectivity and the objectivity would tell you Adobe is the better buy.
- [25:29]
Jim Cramer
You.
- [25:29]
Josh Brown
You want to play?
- [25:32]
Jason Snipe
Yeah, no, I mean I think it's an interesting conversation. Like the part for me that I, that I take in consideration is what's as an example what's going on with software versus the semiconductor. Right.
- [25:44]
Josh Brown
What's your favorite software stock?
- [25:46]
Jason Snipe
Because it's not service now. Service now. Right. Because I think when we came into this year it was all about where the capex was going. Right. And the idea was that the capex in the software industry was going to slow and that hasn't happened. Instead we've talked about a lot of the capex from the hyperscalers and what they're spending now. We're talking about profitability and use cases and that's why companies like ServiceNow and other software names that are really that.
- [26:12]
Jenny Harrington
Stock as hard this service. Incredible. Yeah. Yeah. I think, I think when it's very easy to look at this multiple is lower than that multiple.
- [26:20]
Carl Quintanilla
Right.
- [26:20]
Jenny Harrington
The harder part is why and why and will it persist? I don't. I'm not saying I have the definitive answer but at least identifying why don't people care that Adobe keeps beating earnings? Why are they selling it off when it barely misses? I think it has nothing to do with the earnings. I think it's concern about future earnings being impaired by a competitive disadvantage. If that market narrative proves to be wrong, there's a lot of money to be made.
- [26:48]
Josh Brown
Hold on. Not to put you on the spot, Jay, but I want to go back to that service now. Chart what I don't have this off the top of my head so forgive me and I don't mean to, you know.
- [26:57]
Jim Cramer
Yeah.
- [26:57]
Josh Brown
Make you come up with an answer if you don't know top of your head either. What happened in the. Looks like the beginning of the summer where the stock took off. Was it our earnings report that set this thing off on fire?
- [27:09]
Jason Snipe
Was earnings have summer.
- [27:11]
Jenny Harrington
Yeah. Let me help you just say so.
- [27:13]
Jason Snipe
Much no and that 100% but earnings have been solid. Bill McDermott has. Has done a number of partnerships that obviously continue to drive the stock and I think, I think it's about use cases. I think workflows are. Everyone's trying to figure out how to optimize my business and I think ServiceNow plays very well in.
- [27:31]
Josh Brown
That's good stuff. We are just getting started right here. We got a lot coming up, Jim. Just adding to a beaten down health care name. We will discuss that. Plus a big call on one of Jenny's best performing stock this year. If you missed the run, don't worry because Goldman says it's going to go another 30%. And later an update on the committee's top contrarian ideas for this year. We're back in just two minutes.
- [27:55]
Jim Cramer
Support for this program is provided by Chevron. The Anchor offshore platform is utilizing breakthrough technology to enable us to produce oil and natural gas gas in the US Gulf of Mexico at pressures up to 20,000 psi. A new industry benchmark. Anchor is part of Chevron's plan to produce 300,000 net barrels of oil equivalent per day by 2026 in the US Gulf of Mexico, home to some of our lowest carbon intensity producing operations. That's energy in progress. Visit chevron.com anchor hey, I'm Ryan Reynolds.
- [28:28]
Josh Brown
Recently I asked Mint Mobile's legal team if big wireless companies are allowed to raise prices due to inflation. They said yes. And then when I asked if raising prices technically violates those onerous two year contracts, they said what the are you talking about? You insane Hollywood. So to recap, we're cutting the price of mint unlimited from $30 a month to just $15 a month. Give it a try@mintmobile.com switch.
- [28:51]
Scott Wapner
$45 upfront payment equivalent to $15 per month.
- [28:53]
Jim Cramer
New customers on first three month plan.
- [28:54]
Scott Wapner
Only taxes and fees extra speeds lower.
- [28:56]
Jim Cramer
Above 40 gigabytes of details is it.
- [28:59]
Carl Quintanilla
Time to reimagine your future? The right business skills may make a difference in your career. At Capella University, we offer a relevant education that's designed to focus on what you need to know in the business world. We'll teach professional skills to help you pursue your goals like business management, strategic planning and effective communication. And you can apply these skills right away. A different future is closer than you think with Capella University. Learn more at capella. Edu.
- [29:43]
Josh Brown
We're back. Eamon Javers has breaking news for us. What do we learn?
- [29:46]
Eamon Javers
Scott that's right. The Department of Justice and the FBI are hosting a news conference right now in St. Louis, Missouri. They're announcing the indictment of 14 North Korean nationals in a long running, years long scheme to send IT workers into American companies in order to generate profits for the North Korean government. This is a fascinating scam, Scott, because it involves subterfuge, global intrigue, and lots and lots of money that the US Government says is going to the North Korean regime. They are. The way this works is the North Koreans are desperate for money. They take their very advanced, highly trained cyber team, send them into corporate America to apply for jobs remotely, and then they earn money doing the actual work inside corporate America up to about $88 million in this particular case, the Department of Justice says. And then while they're inside the IT systems of major American companies, they also are giving access, access to that information to North Korean intelligence. They are in some cases planting malware, conducting cyberattacks. And it's all because major American corporations, particularly in the IT department, Scott, have gone fully remote in many cases. And so they're not even interviewing people in person for jobs anymore. The way this works is the IT workers in North Korea apply for jobs remotely. They might get a zoom interview or something like that. They obscure the fact that they're in North Korea. They have accomplices in the United States. The companies hire them, send laptops to the accomplices addresses in the United States and then the North Koreans access those laptops at laptop farms inside the United States in order to do the work. So an advanced and sophisticated scheme that really takes advantage of this push to remote work we've seen across corporate America. I'm told, Scott, that this problem is impacting companies across the Fortune 500. Back over to you.
- [31:41]
Josh Brown
Really, really incredible story. Eamonn, thank you for that news. That's Eamon Jabbers in Washington. As you see, Sima Modi has a newsflash for us now on Intel. Seema, what can you tell us?
- [31:51]
Scott Wapner
We've been watching the Barclays Technology conference on the west coast where Intel Co CEO David Zinsner just spoke.
- [31:56]
Jim Cramer
He said they've kicked off the process.
- [31:58]
Scott Wapner
To potentially take Altera public and that his team is engaging with outside investors.
- [32:03]
Jim Cramer
He also said that they're looking to.
- [32:06]
Scott Wapner
Probably sell some of its position in mobileye. So the two of these companies that it's been growing internally now looking to free up some cash and streamline the business further, which I know is something that investors have been pushing for. We're looking at shares of intel trade close to session, highs at around up about 2.3% on the day. Scott, we'll keep you updated.
- [32:24]
Josh Brown
All right, appreciate that. Thank you. That's your moment. You buying it back?
- [32:29]
Scott Wapner
No, it's frankly exactly why we sold it, which is that it sounded like the new board, like the board and was really short term focus. We were in it for a long term win.
- [32:37]
Josh Brown
Let's talk about a new purchase from Jim. It's buying more of United Health. So can you tell me a little bit more about this, please?
- [32:46]
Jim Cramer
The answer is probably obvious. I mean, to start with, I was pretty surprised how much it was down last Friday. It's continued all week. Look, we can talk at length about a broken American medical system, how difficult insurance companies are to deal with. The answer to that is not what happened to the UnitedHealthcare CEO, that is flat out wrong. I am a capitalist. There are other ways of fixing the problem. And in the meantime, as a capitalist, this is a company, whether you like it or not, that is likely to make a lot of money. It was getting back on its feet from a share price perspective before this happened. Now it's 12% cheaper. I'm adding to it. I needed to raise funds to do that, which is why I sold Microsoft. So this is more of a tax. Obviously there's a societal aspect in this. Look, I don't believe we should be killing people if we disagree with policies.
- [33:34]
Josh Brown
Let me ask you this. We tried to have this conversation in a smart way since this whole thing happened. The stock's down 12% since the shooting. What if, and I've asked this to other shareholders because I think it's important to discuss that. It feels like you're a little dismissive of the issue that has bubbled over not only on the surface but into the zeitgeist here now of insurance company practices and the debate and the discord that's developed now as a result of that and what that could potentially mean for the long term performance of some of these companies.
- [34:18]
Jim Cramer
I mean to be dismissive. So let me everybody just for a second. I don't mean to be dismissive. It's a great point. I didn't want to flood the airways a second ago for those business practices to change. I think what people are expecting as they sell the stock is that the government's going to get involved. Scott. I think they're going to say that government is somehow going to put their finger on the scale to go against UnitedHealthcare. My response to that is regardless of whether that's right or wrong, I don't think it's likely to happen. For a very practical reason, this government coming in in January of next year has got a lot on its plate. I mean, a lot. I don't think they're going to get through all the things that they planned to get through a month ago. And I don't think this issue rises to the top. I could be wrong. I could very well be wrong. But I don't think it rises to the top versus other things that this government is going to try to attack in the year 2025.
- [35:07]
Jenny Harrington
The lawyer for the, for the young man is going to put the system on trial. This is going to be in the headlines for the next 18 months almost relentlessly. What we saw immediately following the killing, and I know there are people saying it's unrelated lol. Sure it is. Is a change in the policy of how much anesthesia people are getting during procedures. The question is not is UnitedHealth good or bad, like good or evil? That's not worth debating. What we're debating is will the company itself choose to proactively undergo a business model change so as not to appear in the headlines as the villain for the next 18. So what will that mean for profitability? Because right now you're right, this is an extremely profitable business. That might not be a great look for them to be that profit.
- [35:57]
Jim Cramer
Look, I'm sorry to be cynical, but I don't think it's going to.
- [36:00]
Jenny Harrington
From Jenny.
- [36:00]
Scott Wapner
So this is another one where when we get new portfolios a lot, they come in with a huge United Health Care position. You see it in Nvidia, you see it in like Pfizer, ExxonMobil mobile, and you. And I don't know why, but for years, one of the first things we do is chop a big part out of unh. And the reason's been outside of all this. Here's been the rationale. Right now, I think it's trading about 34 times earnings, right? That's rich. It's got 9% ish earnings growth ahead of it. And we've taken that because it's always been rich. And we've taken that and we said, in addition, they earn. They create 400 billion a year in revenues and 25 billion a year in income. And there's no way that whichever administration it is, and this is, you know, this is years back. There's no way that the government's not going to look at that. And at some point it's going to become under.
- [36:46]
Jenny Harrington
How much revenue comes from the government here?
- [36:48]
Jim Cramer
It doesn't the Medicare Advantage. I mean, it's not almost all of you.
- [36:52]
Scott Wapner
Here's the point.
- [36:53]
Jim Cramer
There's no way you're going down a deep hole here.
- [36:55]
Jenny Harrington
I'm just saying.
- [36:56]
Scott Wapner
Okay, but in our opinion, this thing was always going to be a target. Never in a million years.
- [37:00]
Jenny Harrington
What if the Doge Boys. What if the Doge Boys.
- [37:02]
Scott Wapner
And they make too much money?
- [37:03]
Jenny Harrington
So this is important actually, right?
- [37:04]
Scott Wapner
To the Doge boys.
- [37:05]
Jenny Harrington
What do the Doge guys love more than anything else on Earth? It's to be retweeted. What if they decide that this is going to be their next cause, Celebrate and they want to look at Medicaid, Medicare, the government pay for healthcare companies to be as profitable as this one. I'm just, I'm not saying it's going to happen. It's not going to be great for the stock.
- [37:25]
Scott Wapner
It's clearly a target and I think it's been a target for way longer than okay.
- [37:29]
Jim Cramer
But the point you're bringing up which is absolutely valid has been weighing on the stock for two years.
- [37:33]
Josh Brown
Unquestionably, we're showing here UnitedHealth down 10% in three months. It's down 12% since the incident, which was what, a week or so ago? 10 days.
- [37:44]
Scott Wapner
But it, if you can, can you expand that chart out for the last 10 years? Because it is a hockey stick. If you look at it over. Yes, it is time period.
- [37:51]
Jenny Harrington
It looks like a tobacco stock, quite frankly. It's straight up. Yeah. It's remarkable how, how well this company has done.
- [37:58]
Scott Wapner
Right. And I think it's a victim of its own success in that it's just, it's too expensive, it's gone up too much. And people don't like this, this kind of business.
- [38:04]
Josh Brown
All right, let's, let's stop there. Contessa Brewer has the headlines for us. Hi, Contessa.
- [38:09]
Scott Wapner
Hi there, Scott. Great to see you today. Okay, so an ex FBI informant accused of lying about President Biden and his son Hunter has now agreed to plead guilty.
- [38:18]
Josh Brown
Court documents show that Alexander Smirnoff plans.
- [38:20]
Jim Cramer
To enter a plea at a hearing next week. He was indicted in February for claiming.
- [38:25]
Scott Wapner
The two Bidens accepted $5 million from.
- [38:27]
Jim Cramer
A Ukrainian energy company. Prosecutors say those allegations, which became a.
- [38:33]
Scott Wapner
Centerpiece of the Republican investigation into the.
- [38:35]
Josh Brown
Bidens, the allegations were fake.
- [38:39]
Jim Cramer
Metta announced Today it donated $1 million to President elect Donald Trump's inauguration fund. That donation comes just weeks after Trump.
- [38:46]
Scott Wapner
Met with Metta CEO Mark Zuckerberg at Mar A Lago.
- [38:49]
Jim Cramer
Inaugural donations are a common way that.
- [38:51]
Scott Wapner
Businesses try to build a positive relationship with incoming administrations.
- [38:56]
Jim Cramer
And Checkmate, an 18 year old, just became the youngest ever world Chess champion.
- [39:01]
Josh Brown
Go Keshe Damaraju of India to defeated.
- [39:03]
Jim Cramer
The reigning champion this morning in a.
- [39:05]
Scott Wapner
Two and a half million dollar battle in Singapore. He's a teenager.
- [39:09]
Jim Cramer
The two duked it out for 14 games.
- [39:13]
Scott Wapner
Halftime returns right after this.
- [39:19]
Josh Brown
Hey, I'm Ryan Reynolds. Recently I asked Mint Mobile's legal team if big wireless companies are allowed to raise prices due to inflation. They said yes. And then when I asked if raising prices technically violates those onerous two year contracts, they said, what the are you talking about? You insane Hollywood. So to recap, we're cutting the price of mint unlimited from $30 a month to just $15 a month. Give it a try@mintmobile.com Switch $45 upfront.
- [39:45]
Scott Wapner
Payment equivalent to $15 per month New.
- [39:46]
Jim Cramer
Customers on first three month plan only.
- [39:47]
Scott Wapner
Taxes and fees Extra speeds lower above.
- [39:49]
Jim Cramer
40 gigabytes of details.
- [39:51]
Carl Quintanilla
Is it time to reimagine your future? The right business skills may make a difference in your career. At Capella University we offer a relevant education that's designed to focus on what you need to know in the business world. We'll teach professional skills to help you pursue your goals like business management, strategic planning and effective communication. And you can apply these skills right away. A different future is closer than you think with Capella University. Learn more at Capella. Edu.
- [40:40]
Josh Brown
Welcome back. Want to show you some stocks on the move. Steel stocks. Take a look at these today because a lot of them are selling off in a reasonably big way. We can take a look at letter X. Can we show those letter X. U.S. steel, Cleveland Cliffs, Nucor Steel Dynamics, the latter two, the bottom there were downgraded today at UBS. But Cliffs is down 8%. That's the biggest loser. I don't know Jimmy if that's in sympathy with. But yeah, you know, since it's come out more definitively in the last couple of days that you know, the current administration, the next administration, the Nippon U.S. steel deal ain't happening.
- [41:16]
Jim Cramer
Right.
- [41:16]
Josh Brown
Okay. As we figured it wasn't going to anyway but now it's like kaput, nailing it. Okay, how does that play a role in this if anything? But the downgrade seems to be today's drawdown news.
- [41:28]
Jim Cramer
Yeah, we just got the downgrade. I haven't had a chance to read it. I mean in the overall steel sector there's been a lot to be negative about, most notably pricing for steel and the demand from the auto sector. A downgrade today kind of catches me by surprise, Scott. I mean really, is there something new in this that we didn't know? I don't think so. Regarding your question about weaker than expected.
- [41:48]
Josh Brown
Fundamentals and also valuation issues, that's for Nucor margins to remain pressured. So you might talk about steel prices. You've been making the case, I think all year long that steel prices are depressed.
- [42:02]
Jim Cramer
They are depressed. So this is, I don't want to say something stupid but this has got to be close to trough in terms of steel pricing. Again, I just don't think there's anything new in the report. But you asked a good question about U.S. steel. It does appear that's dead. I wouldn't want to own U.S. steel right now. I mean it looks like they're just going to get picked apart or even worse, just left to go to their own demise and have, have mills and furnaces closed down. You know, regarding Cleveland Cliffs, which I own, they just made a strategic purchase. They're, they're making money. Obviously steel prices and demand weigh on them, but they're trading at a multiple 6.4 times enterprise value to EBITDA. That to me says there's a lot more upside. I will say this and this is important for the next couple of weeks. There's going to be pressure on Cleveland Cliffs from tax loss harvesting, no question about it. And that may be why it's down more than the rest.
- [42:50]
Josh Brown
Well, it's down, wow. It's almost cut in half this year. So it's been, it's been tough.
- [42:54]
Jim Cramer
Tax loss harvesting is going to, is going to work here, unfortunately. Work against it.
- [42:58]
Josh Brown
All right. Mike Santoli is next with his midday word. We are back. Our senior markets commentator Mike Santoli joins us now. You know, I'm sure you have some thoughts on the breadth of this market underneath. The mega cap surface is not has not been great for the last week.
- [43:16]
Jim Cramer
No, that's right back. We're working on the ninth straight session of negative breadth today. So essentially every trading session in December, you've had more stocks down than up. So you, what you have is a kind of subsurface pullback. This is that soft patch that, you know, a lot of the historical trends will tell you occurs in the first half of December. I think bigger picture, you know, the markets are like intense selling pressure. It's not as if people are necessarily really revising their general outlooks. But you know, we're trying to table the hard questions until early next year. In other words, Yep, Fed's going to cut next week even though the data are ambiguous and maybe we're kind of going to be stop start when it comes to Fed policy, weekly claims, let's not get excited about a little bit of an uptick, but you do have a deceleration in the economic surprise index in the last few weeks. So all that stuff is, is in the mix and it comes down to a matter of whether you think policy is going to really extend or hypercharge this current economic expansion or if you feel as if, look, earnings are going to broaden out and the old story is going to kick in and it doesn't matter that we already had two straight 25% up years and, and valuations are elevated.
- [44:23]
Josh Brown
Thanks, Mike. I'll see in a couple of hours on closing bell that's Mike Santoli. We're going to take a break. We come back, we've got an update, a trade update on some under the radar names that Josh flagged for us last week. Go through a number of other stocks that we want to trade, too. And we'll do that after this break. Give you an IPO update. It service titan right there. It is now open for business, going public today on the NASDAQ. You can see the current prices about 105. It did open at 101. It priced at 71. So it's up almost 50% in the early trade here. And we'll keep our eye on that. Final trades next. Oh, you know what? No, I'm sorry. We're going to talk about it here. My bad.
- [45:05]
Jenny Harrington
Well, I think there's two things worth saying this year. We've had about $28 billion worth of IPO activity, which is a pretty big improvement over last year, but still way too low relative to the average. This deal is interesting to me because of the area of the economy address it addresses. This is soft software for companies that dig swimming pools, landscaping companies. My landscaper, Frank Paccioni, I would show this to him and say how? I would say, frank, maybe this could help you manage your business better so that you could scale. And he would say, josh, get the hell off my truck. These types of businesses have not been technified historically. Service businesses. I love the story. I'll be watching this stock with great interest. Shout out to Frank Paccioni and son. We love you.
- [45:54]
Josh Brown
I'm debating whether I should have really just gone to break.
- [45:57]
Jenny Harrington
Yeah, we did a commercial anyway. How about that?
- [46:00]
Josh Brown
We'll do finals next. All right, 3:00 Eastern. I will see you on closing bell. Looking forward to that. Ankur Crawford, Rick Heitzman, we'll talk some tech. Chris Heise, Max Kettner as well. Some final trades.
- [46:15]
Jim Cramer
Farmer Jim, Cisco Systems. Look at what it's done over the last three, three months or so compared to the last two years. I think it's a good analog for what Adobe may do.
- [46:23]
Jason Snipe
Jason Snipe, KKR PE exits will double next year. I like this one.
- [46:28]
Jim Cramer
All right.
- [46:28]
Scott Wapner
Jenny Harrington, Dominion Energy. I bought this earlier in the year. It took off like a rocket and it's since faded. So now you can get back in with a 5% yield.
- [46:34]
Josh Brown
Okay. And Josh Brown, I bought the Uber Dip yesterday.
- [46:38]
Jenny Harrington
Felt much better after hearing from the CFO at Barclays. All is well. Don't really think the stock should be in the 60s.
- [46:44]
Josh Brown
Yeah, I mean the stock has not had a good run really since the election. Getting a little bit of a lift today. All right, we're going to follow the market. I'll take you through that final stretch. We hanging around the hoop, as I said, on some round number 6100 on the S and P. We'll see if we can get back to 20 on the NAS. I'll see you then. You've been listening to CNBC's Halftime Report, the podcast. You can always catch us live weekdays at 12 Eastern only on CNBC.
- [47:13]
Carl Quintanilla
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 Is it time to reimagine your future? The right business skills may make a difference in your career. At Capella University, we offer a relevant education that's designed to focus on what you need to know in the business world. We'll teach professional skills to help you pursue your goals like business management, strategic planning and effective communication, and you can apply these skills right away. A different future is closer than you think with Capella University. Learn more at Capella Eduardo.