The Unsettled Market 3/3/25

Summary

Halftime Report: The Unsettled Market (Released March 3, 2025)

Hosted by Scott Wapner, CNBC’s Halftime Report dives deep into the tumultuous currents of the financial markets, providing real-time insights and expert analyses. In the March 3, 2025 episode titled "The Unsettled Market," host Scott Wapner and panelists Joe Terranova, Shannon Sokosh, Jason Snipe, and Stephen Weiss dissect the latest market developments, sector performances, and broader economic concerns shaping investor sentiment.

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1. Market Overview: Navigating Unsettled Waters

Scott Wapner kicks off the discussion by highlighting the persistent volatility in the markets:

“Front and center this hour. This unsettled market is falling again. Tariff Tuesday looming large.”
(02:04)

Joe Terranova concurs, emphasizing the non-V-shaped recovery trajectory:

“It is not going to be a V shaped recovery and that's important to understand it's going to look like a U.”
(02:48)

The S&P 500’s struggle is a central theme, with technical analyst Jonathan Krinsky noting that the market is not yet poised for a durable low, suggesting ongoing testing of the 200-day moving average.

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2. Tech Sector Under Pressure: MAG7’s Decline

The technology sector, particularly the Magnificent Seven (MAG7) stocks, faces significant headwinds. Joe Terranova points out the sector’s underperformance amid broader market uncertainty:

“The MAG7 are underperforming. The rest of the world is outperforming.”
(03:30)

Shannon Sokosh adds that the US equity market is increasingly distancing itself from tech-heavy indices, with a notable rotation towards financials and defensive stocks:

“There is an acknowledgment that the cyclicality, this value trademark, that maybe these large cap tech names aren't quite as... they're becoming more asset heavy.”
(04:45)

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3. Spotlight on Nvidia: Growth Slows Amid Rising Competition

Nvidia emerges as a focal point of concern. Despite impressive earnings, the stock has faltered due to escalating competition and geopolitical tensions:

“Nvidia, 79% revenue growth. One year ago we're talking about 265% revenue growth. And you're looking at probably 40 to 50% revenue growth.”
(10:51)

Stephen Weiss criticizes the sustainability of Nvidia’s growth, citing increased competition from companies like Apple and the impact of Chinese demand through intermediaries:

“The only time it's really traded, quote unquote well, was pretty recently into the print, five days or so into the print.”
(08:04)

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4. Strategic Shifts: Underweighting Tech and Embracing Defensive Plays

Responding to the tech sector’s vulnerabilities, analysts like Adam Parker and Joe Terranova advocate for reducing exposure to MAG7 stocks. Joe Terranova outlines his strategy:

“My strategy has a significant underweight to technology at 22%. We rolled into 2025 that way.”
(09:27)

Stephen Weiss echoes this sentiment, highlighting his move away from tech giants like Tesla and Amazon due to uncertain growth prospects:

“I was still negative on the market. Not bearish, but still negative and looking to raise cash.”
(07:46)

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5. Cryptocurrency’s Volatile Surge: Bitcoin’s Potential as a National Reserve

The episode delves into the speculative realm of cryptocurrencies, sparked by President Trump’s announcement of a strategic crypto reserve. Bitcoin surged from $78K to over $95K in response:

“The prospect of President Trump's new national crypto Reserve sent Bitcoin from 78K on Friday to over $95,000 this weekend.”
(24:00)

However, skepticism arises from panelist Stephen Weiss, who critiques the viability of Bitcoin as a stable reserve asset:

“Reserve currencies are stable. They’re not risk assets. This is purely corruption.”
(25:50)

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6. Private Credit ETFs: Innovation Meets Regulatory Scrutiny

The emergence of private credit ETFs garners attention, particularly following regulatory pushback from the SEC. The recent launch by State Street faced immediate challenges:

“The SEC sent a letter to the company saying there were significant remaining outstanding issues.”
(35:48)

Mackenzie Segal of Bond Blocks explains the complexities of integrating private credit into ETFs, emphasizing the importance of liquidity and valuation compliance:

“These private credit assets have no correlation to public markets... This is a powerful diversification tool.”
(40:56)

Stephen Weiss cautions retail investors about the inherent risks:

“If you're getting a yield so much higher than what Treasuries are giving you, you have to ask yourself what’s the risk I'm absorbing for that?”
(42:30)

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7. Broader Economic Concerns: Tariffs, Stagflation, and Consumer Sentiment

Tariffs remain a looming threat, with experts debating their long-term impact on inflation and economic growth. Stephen Weiss predicts the onset of stagflation:

“I really believe that there's a strong possibility of stagflation. Stagflation is when the economy slows and inflation increases.”
(20:05)

Gary Quintanilla highlights mixed economic signals, noting that while personal income rose by 0.9%, consumer spending dipped by 0.2%:

“Personal income was up 0.9% and spending was actually down 0.2%. That was a big miss.”
(23:08)

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8. Sector-Specific Moves: Insurance, Retail, and Cybersecurity

The report also covers strategic shifts in various sectors:

• Insurance: Upgrades from firms like Argus, driven by pricing power amid inflation.

  “The pricing power that these companies have had as it relates to inflation.”
  (34:14)

• Retail and Consumer Goods: Chipotle's stock receives an upgrade despite austerity measures, reflecting confidence in the company's ability to navigate tariffs without passing costs to consumers.

  “CEO Scott Boatwright saying, no, we're not passing on the effect of tariffs to the consumers Chipotle.”
  (33:16)

• Cybersecurity: Emphasis on firms like Check Point, with state-funded initiatives bolstering the sector:

  “Cybersecurity is the dominant theme right now in technology and you have to own some of these names.”
  (16:00)

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9. Closing Insights: Final Trades and Future Outlook

As the episode concludes, panelists share their final trades and outlook:

• Shannon Sokosh focuses on the healthcare sector, identifying both offensive and defensive plays.

  “Healthcare. There's offense and defense here.”
  (46:11)

• Stephen Weiss discusses his cautious stance on the market, highlighting recent stock trims in companies like PDD and SLB due to overvalued positions and unfavorable economic projections.

  “I think that's why I'm out of it completely now.”
  (43:40)

Joe Terranova underscores the continued rotation from technology into financials and real estate, emphasizing the importance of monitoring ongoing tariff negotiations.

“How much has been priced in. Let's look at where things look vulnerable, where they look like they've been overdone.”
(45:15)

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Key Takeaways:

• Persistent Volatility: Markets remain highly unsettled with no clear V-shaped recovery in sight.
• Tech Sector Challenges: MAG7 stocks and major tech firms like Nvidia and Tesla are underperforming amid growth slowdowns and increased competition.
• Shift to Defensive Plays: Investors are moving towards financials, cybersecurity, and defensive sectors in response to market uncertainties.
• Cryptocurrency Speculation: Bitcoin's potential inclusion as a national reserve sparks both optimism and criticism.
• Regulatory Hurdles for Private Credit ETFs: Innovative financial products face significant regulatory scrutiny, highlighting the complexities of integrating private credit into mainstream investing.
• Economic Indicators: Rising tariffs and potential stagflation pose risks to inflation and economic growth, while mixed consumer data signals cautious spending behavior.

This comprehensive analysis provides investors with a nuanced understanding of current market dynamics, sector-specific challenges, and strategic shifts necessary to navigate the ongoing financial turbulence.

Transcript

[Scott Wapner]

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[Shannon Sokosh]

Bank of America is proud to be.

[Scott Wapner]

The official bank sponsor of FIFA World Cup 2026.

[Jason Snipe]

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. All right, Carl, thanks so much. Welcome to the Halftime Report. I'm Scott Wapner. Front and center this hour. This unsettled market in video is falling again. Tariff Tuesday looming large. We will debate and trade all of it with the investment committee. Joining me for the Joe Terranova, Shannon Sokoshi, Jason Snipe, Stephen Weiss, let's get you set up on the markets here we are red across the board. We did have that big pop Joe on Friday, but nonetheless we've been uncertain and unsettled. And Jonathan Krinsky at btig, the well known technician there says we're not done yet before we put in a durable low. Though he does say that what we saw on Friday could be the start of a bounce, he still says his conviction remains high. We're going to take out or at least test test the 200 day moving average on the S&P 500.

[Joe Terranova]

I think, well, testing the 200 day moving average on the s&P 500 obviously means we've got further downside ahead. And I think what I can agree with is that you use the word at the beginning in your intro, unsettled. And that perfectly describes exactly where we are right now on March, March 3rd. We have a very unsettled market. You have the loss of leadership coming from momentum names. You have several people trying to say, okay, is that sell off in the momentum names over? Do you run back towards those names? It is not going to be a V shaped recovery and that's important to Understand it's going to look like a U. So if you're focusing on names like Applovin and Palantir, you're not rushing in just yet to buy these names.

[Jason Snipe]

Well, app right, they announced buyback.

[Joe Terranova]

They announced a buyback that's up modestly. I think the low last week was, was 288. We're trading, I don't know, maybe $30 above that. So unsettled is the perfect word. We don't have the benefit of earnings. I keep emphasizing earnings are the exact reason why The S&P 500 saw the gain that it saw year to date. The Mag 7 are underperforming. The rest of the world is outperforming. And I think if you're going to do anything right now, look at your MAG7 exposure and say to yourself, Am I overweight the MAG7? If I am, maybe give consideration to some other names in the 493 and at a bare minimum introduce an equal weighted strategy.

[Jason Snipe]

Shan, what do you think? Do you feel like we've got more work to do before we can find some stability for the overall market, especially tech?

[Shannon Sokosh]

Well, I think. Let's talk about tech, Scott. So I think that's really the question here. And you've been asking this question for a couple of years. Can the US Equity market do well without tech? And I think the challenge here is, is that whether you want to call it the cyclical trade or the value trade, you know, it's really moved away from technology. But I think what's important, and Joe just made this point, if you look at the S&P 500, the S&P 500 overall, you know, we're not seeing a large to small rotation, which, you know, is what we're looking for, but we're really not seeing that large to small rotation. So if you think about technology and you think about the valuation differential, that vulnerability of those valuations, potential questions around CapEx what do the buybacks look like over the next couple of years? I think what you're seeing is that you're seeing areas of strength in financials. You're seeing credit, for instance. You're seeing a bit of a rotation to defensive stocks. Now, whether that makes sense for staples over utilities or health care over utilities, you know, we can, we can certainly talk about that. But I think most importantly, Scott, is what you're seeing is that there is an acknowledgment that the cyclicality, this value trademark, that maybe these large cap tech names aren't quite as they're not the bastions of safety that perhaps they were two years ago because they're becoming more asset heavy because they require a monetization of this theme. So I think what we're seeing now is we're seeing a normalization in some of those names. But our view is that you can see the US Equity market perform this year, albeit perhaps to Joe's point, without earnings. We're going to see a little bit of macro focus in these next few weeks. That micro focus is really what we need to drive earnings forward and then to drive the momentum in the market forward.

[Jason Snipe]

Weiss. The Nasdaq's down six and a half percent from its high of December 16th. The S&P is down 3% from, from its high. And obviously one of the reasons for the weakness in the market at the index level specifically is in video, which is down again. 5. Take a look at Nvidia today. Yeah, it can't get any footing from earnings. It's been down about 5% today. It's off more than 11% year to date. It is the big issue along with momentum. You're out of it completely now.

[Stephen Weiss]

I am out.

[Jason Snipe]

When did you sell the rest of it?

[Stephen Weiss]

I sold the rest of when they reported earnings. So it's, I didn't get it on the upswing in the earnings because it went into the green. I saw the wind, you know, start to go into the, into the red. Look there, there are a few issues with, with Nvidia in my view. One of them being that with Apple, for example, you start to see them make their own chip and others all have plans to. It's got competition. Also it's been reported that in video is that China is buying the Nvidia chip through other countries. So I think that's an issue for them. And then finally when you take a look at, at, at what tariffs could do and Taiwan semi has been called out for tariffs. That stock's really gotten hit. It's not reflected here, but they'll pick up the excess capacity.

[Jason Snipe]

Well, there are videos, we think, according to the Wall street journal of $100 billion investment in the U.S. something you may hear more about as the afternoon progresses.

[Stephen Weiss]

Right. Most of which frankly has been announced already. So. But the point during video is, is that a lot of people didn't even know why they owned it. They owned it for momentum and they owned it because they want to sell taxes. And I think part of the hit to technology overall is that those that came into the year saying, okay, I'm going to wait to sell until the next year 25 and hopefully pay lower taxes or just delay my taxes for a period. They said, you know what, I can't hold on anymore. So it's a combination of factors. I hit that in tech. But it's really notable that the only two of the 12 sectors that are down year to date in the S and P are information technology, which is tech and consumer discretionary.

[Jason Snipe]

I obviously heavy weighting towards Tesla and Amazon.

[Stephen Weiss]

Exactly. And I actually am still negative on the market. Not bearish, but still negative and looking to raise cash. That's one of the other reasons I saw.

[Jason Snipe]

All right, shareholder snipe. What about Weiss saying, you know what, you know, you got all these cross currents now in the name, hasn't traded well since earnings. The only time it's really traded, quote unquote well, was pretty recently into the print, five days or so into the print. That's it. Yeah, that's it.

[Carl Quintanilla]

Yeah, yeah. And guess what? The print was obviously solid. It was up 70%. You know, sales were up 70%, earnings were up 70% year over year. $35 billion in revenue on the data center, which is up 93% year over year. We were expecting $42 billion for the guy, that guy, to 43. But to Weiss's point, I think export controls are obviously a concern. You know, there is some third party selling via China, you know, where folks are buying their GPU chips. There is absolutely continued demand, but I think, you know, it's obviously decelerating. We can't see 100% year over year growth in these, on these, you know, these metrics, quarter after quarter and year after year. So I think that's what a little bit of the digestion is.

[Jason Snipe]

Adam Parker's kind of seen enough Joe, to go slightly underweight tech. Now he had been overweight, especially the mega caps. Then he went to market weight and admits today we didn't lower our recommended weighting enough following the initial downgrade in early February. Now he takes it to 28%, slightly below the benchmark, but nonetheless he continues to think that big cap tech, especially if not overall tech's going to have a bit of an issue for the foreseeable future. Not a huge sell down, but not any kind of performance to make you sit back and say, whoa, that was great.

[Joe Terranova]

Not the outperformance, not the narrow concentrated performance of the last two years. Adam and I are in complete agreement. My strategy has a significant underweight to technology at 22%. We rolled into 2025 that way. So we're benefiting from that. Even on a day like today, you could see that when technology is clearly struggling. I think it's, and Jason said this, and I keep emphasizing this over the last several weeks, but it's the deceleration in revenue growth and that's in fact exactly what it is. Nvidia, 79% revenue growth. Okay. One year ago we're talking about 265% revenue growth. And you look out into the future, four quarters from now, you're talking about probably 40 to 50% revenue growth. So, so you're not going to pay the exorbitant premium that you did in 23 and 24 for that slowdown in growth. And you're seeing some of that slowdown in growth in other areas of the Magnificent Seven. I candidly think where Nvidia is right now and unfortunately to a certain extent it's been gamified and we've talked about that on the show, these zero dated options, the intense activity that's going on in the option market that drives it on a particular day. But I really think that Nvidia might just be in a prolonged consolidation phase and I think the viewers and investors overall are very unfamiliar with that type of a setting. But if you go back through the course of history, it's not uncommon.

[Jason Snipe]

Had drawdowns, Tesla's had drawdowns. Jason, I mean that stock's been right in the mix too of kind of, you know, sentiment gauges about where we are now. This is somewhat idiosyncratic, has, you know, its own issues related to the fundamentals of the business and you know, Musk and all that. Stocks down 22% in a month. It does get some love today once again from Adam Jonas over at Morgan Stanley, reiterated as their top pick. But you can't look for, I don't think a stabilization in the Nasdaq if you've got Tesla and in video unsettled at the same time.

[Carl Quintanilla]

There's no doubt about it, Scott. And I mean Joe makes a point obviously on momentum, which is obviously broken apart and that that story has played.

[Scott Wapner]

Out over the last four few weeks.

[Carl Quintanilla]

That's not new whether it's Tesla, Applovin, Palantir, Microstrategy to name a few recent networks is one of the names that we hold. There's been a lot of steam pulled out of those momentum names. The yields have obviously come down tremendously over the last couple of weeks. But I think that the market is obviously resetting on these names that have had. There's been a lot of Multiple expansion earnings have been good. We've talked about that. That in earnest over the last few weeks. You know, earnings up plus 16%. But the broadening is real. There is a, there is a rotation and that's why you're starting to see other sectors like Staples start to perform.

[Jason Snipe]

Weiss, Vertif, Vistra, Dell, Constellation, they're all down again. I mentioned the buyback at Applovin, but you know, Joe's not convinced that that's, that's got a lot of steam behind it right now because the stock's been so dramatically upset. There are a number of names within that universe, but Vertiv is right up there too. Yeah, these stocks, when they go down, they go down in bunches.

[Stephen Weiss]

Yeah. And look, Vert has gone down for a number of reasons. It's the perfect storm. And as I think I mentioned last week, I let some go. One of the issues is we don't know how much they source from China, so we don't know what the tariffs will be. Now, they won't tell you because I've asked. However, I believe they could pass on prices. We've seen some hits to the data center theme that I do believe that you could see overcapacity near term for all the projects get built. They have international exposure as well. So, you know, the market was paying up for international exposure if you take a look at the foreign markets. But I'm not so sure that's going to continue. So it's the perfect storm of everything that started when they reported last quarter, which I thought was a great quarter, but the book to build going forward wasn't what I thought it would be. So candidly, I don't know what I'm doing. The stock, the stock selling at a premium market, but the growth is also at a premium market. And I do think that is sustainable growth. So right now I'm staying with the part of the position I have, but it's not a lot of fun watching go down every day.

[Jason Snipe]

Joe Marvell's down was down 4% earlier. Broadcom's down again. That, like in video, hasn't done anything except go down for the most part, is down 17% year to date. It does report, by the way, this week and JPM reiterates it as one of their top picks.

[Joe Terranova]

It's very difficult to try and identify a name in the technology sector right now that really has strong momentum, even just. Just back to the conversation for a brief moment. The mag7 so far, I think meta is the only one out of the seven it's actually higher year to date. So it's, it's somewhat, it's somewhat inconsistent with history where you see that universal rotation out of a sector like we're seeing right now with technology generally, you'll still be able to find some winners underneath the surface in the technology center.

[Jason Snipe]

CrowdStrike. CrowdStrike's kind of been one.

[Joe Terranova]

I mean, yes, cyber security a little bit, yes. Cybersecurity is, is still doing well. I'll ignore that. But I think overall all of these technology names, we're talking about, semiconductors, even software names, software names had held in there over the last several months. They're breaking down as well. And you just thankfully, I think thankfully the market overall hasn't broken down further. Really what you're seeing is this internal rotation where money is going out of technology going into, you want to call them defensive sectors, fine. But it's going into other areas of the market like financials, like health care, even into real estate as yield pull back to 418.

[Jason Snipe]

What do you think about CrowdStrike tomorrow after the bell, by the way, which reports earnings?

[Joe Terranova]

The cybersecurity names have all performed remarkably well in an environment where the rest of the sector has not done well. And I like that relative outperformance going into the print. I think on any pullback, buyers will resurface just alone on the premise of what they were able to overcome last summer.

[Jason Snipe]

Right.

[Joe Terranova]

So if they there's a misstep in this quarter, I think investors are going to look at that, say, okay, George Kurtz and the management team, they recovered from a dramatic misstep last summer. They'll be able to dramatically recover from this as well. So I think on any pullback it's a buying opportunity. I think cybersecurity, given what we know is going on in the world, the entirety of it, the Palo Alto is the fortinet. We'll talk about another name later in the show that I think really wins in the cybersecurity space. That's a mid cap name. Cybersecurity is the dominant theme right now in technology and you have to own some of these names.

[Stephen Weiss]

Well, it's also the area that the DoD is not cutting and funding will increase in cyber. So we know for sure that's the only clear area we'd see.

[Joe Terranova]

Yeah, I was just going to say.

[Stephen Weiss]

It could change in a day or.

[Jason Snipe]

Two or an hour. Right. The other thing, Shan, is that JP Morgan says they're still cautious on this group, I mean on tech that, you know, they Think the rotation out of Tech and the Mag 7 and out of the growth names like the momentum ones that we were discussing is going to keep rotating into software, that the crowd strikes of the world are the place you want to be. There's, you know, some other names we'll discuss later that are getting set to report their earnings too. What about that call from semis to software?

[Shannon Sokosh]

Well, I mean to, to, to Joe's point, I mean, you've seen that and you. Semis are, you know, semis are a tough space, you know, at this juncture. And if you think about what's the driver for that, you know, is there an inventory gluttony, you know, what is the spending look like? Is there going to be some of this capex oscillation at the hyperscalers? So I think there's a lot of questions in terms of software. I do think that you want to be thoughtful about where you think companies are sort of going to be forced to spend. I also think that you should be thoughtful not just about the US government, but also, you know, potentially technology spend outside of the US and in Europe. And there's a lot of talk right now in terms of, you know, potential German investments in defense and infrastructure. I think that we spend a lot of time thinking about what is the US Doing. And I think more importantly, if you think about things like where's the funding, where's the liquidity coming for buying technology. Individual investors are just trying to digest all this news. Institutional investors are looking at their cost of capital and seeing where should I put my money now that it's a little bit more expensive, especially with the unwind of the carry trade. So the answer to your question, Scott, is there probably are opportunities and software you need to be prescriptive. But I think more importantly this rotation from semis to software, we probably haven't quite hit, hit the bottom of that or that or the, the apex of that particular rotation, at least for the next few weeks.

[Jason Snipe]

And by the way, there are more strategists who are, who are coming out when they sort of look around the world to think what's going on, other markets versus here, here that appear to be moving closer to Weiss's point of view that, you know, it's time to be a little more cautious on US Equities. Last week it was Lerner, Keith Lerner from Truist, he took down US Equities. Today BCA research downgrades US equities to underweight for their first time in more than five years. Now you could say, obviously it's because of the uncertainty created by tariffs and other things which we think are going to go into a effect tomorrow. So called tariff Tuesday. Canada, Mexico, China. We'll wait for the final announcement on whether that's actually going to take place and then the number that corresponds to it. Weiss, the administration continues to try and make the case that tariffs are not going to cause more inflation or slow growth. You got some pretty smart and successful investors who disagree with that. I mentioned the comments a couple times over the last couple of weeks because when Citadel's Ken Griffin talks, people listen. It's not like he's a foe of the administration quite obviously by virtue of his support and his dollars. But yet he made the case a couple weeks ago, quote, the uncertainty and chaos created by the tariff dynamics between us and our allies is an impediment to growth. Warren Buffett weighed in this weekend. He doesn't talk that often. Well, he did this weekend about tariffs.

[Scott Wapner]

Listen, tariffs are actually, we've had a lot of experience with them. They're an act of war to some degree. How do you think tariffs will impact inflation over time? There are tax on goods. I mean the tooth fairy doesn't pay up.

[Stephen Weiss]

You always have to just.

[Scott Wapner]

And then what? You always have to ask that question in economics, always say and then what prices will be higher 10 years from now and 20 years from now and 30 years from now?

[Stephen Weiss]

All right, we think so. I agree with both people you cited, Warren Buffett and Ken Griffin. Look, here's how, here's how I look at it. I really believe that there's a strong possibility of stagflation. Stagflation is when the economy slows and inflation increases. We are seeing the economy slow. And when you take a look at what the tariffs are and I'm even assuming that the 25% go to 10%. But even if you assume that the margins on a lot of the companies that make up the S and P just won't be able to accommodate that.

[Jason Snipe]

Cost in a Goldman today lowers S and P earnings estimates.

[Stephen Weiss]

Yeah, yeah.

[Jason Snipe]

He gets a little more defensive in his sector play. Do you see Atlanta Fed gdp?

[Stephen Weiss]

Yes.

[Jason Snipe]

Today, last week was a big deal when they went negative to 1 5. Negative 1 5. Well they saw the ISM today which was a miss a manufacturing PMI and they take first quarter down to eight.

[Stephen Weiss]

Yeah. So look, you've got I believe a very nervous consumer, the consumer. We keep talking about resilience of the consumer, resilience of the economy, earnings growth. But that was Then what we're seeing now in the, in the, in the last 30 days or more since this election is 75 executive orders that we don't know the impact for. The problem with executive orders versus legislation. Legislation gives you a clear insight into the rationale. It's what they think will happen into enforcement. So we can follow the rules of the road here. We're not even sure that there is a road. So that makes the consumer nervous. Add on to that the cuts you're seeing in the government, the cut you're seeing at Starbucks right now, you basically where companies didn't necessarily want to come out and say we're cutting, now they've got cover because you're seeing the very government where you've seen the most stability in jobs.

[Jason Snipe]

Your point, your point's well taken because, you know, if you look at what's taking place so far with, you know, Doge and all of the things that they're said to be doing, you, you, because you say that Congress normally has the purview on a lot of this stuff. You need, you neither know the rules nor the road.

[Stephen Weiss]

Right?

[Jason Snipe]

I mean, you're trying to figure out what are the actual rules of the road if some of the cuts right now are being made outside the purview of Congress. But all that's just adding to obvious uncertainty for CEOs, for investors with CEOs, definitely what Steve Cohen talked about that, that a week or so ago, Ken Griffin's done it a couple of times. Buffett weighs in on, on tariffs and other big name investors clearly have as well.

[Stephen Weiss]

Can you say one more thing? So if you take a look at the margins of GM, they're 6%, right. We've got retailers that are around 10 to 15%. We've got grocery stores that are single, low, single digits. How can they absorb the price increase? They can. GM's not going to manufacture cars at a loss, so prices will go up. It's an inescapable, logical conclusion.

[Carl Quintanilla]

And I think what's, what's important to note is personal income was up 0.9% and spending was actually down 0.2. That was a big miss.

[Jason Snipe]

And that was the big surprise of last week.

[Carl Quintanilla]

You got it. So the consumer is absolutely being more cautious. We're hearing it from the guidance. The big one for me was obviously Walmart, a stock that we don't own, which has done very well in their, in their consumer base, but they are guiding lower. So I think that's important to note that, listen, tariffs are inflationary. The Consumers doesn't want to eat that whole pill.

[Jason Snipe]

Yeah, I mean the other place to look in this market for insight into risk appetite is clearly Bitcoin, which was upset all last week. It has not traded well as you know, lately. It did get a boost over the weekend though as the President announced plans for a strategic crypto reserve. Mackenzie Segal is following that money for us. Mackenzie?

[Scott Wapner]

That's right, Scott. The prospect of President Trump's new national crypto Reserve sent Bitcoin from 78K on Friday to over $95,000 this weekend. It's also been pushing crypto aligned stocks higher even as token prices begin to slip. Coinbase and strategy as well as bitcoin miners Mara and Riot are all on the green as investors react to plans for a U.S. reserve official. Five digital assets, Bitcoin, but also Ethereum and three high volatility tokens, Solana, XRP and Cardano. Now this is uncharted territory. The US doesn't buy stocks or other investment assets, though that could change with the country's new sovereign wealth fund. But as of now, traditional reserves, gold, oil, even cheese serve strategic economic or security purposes. But these tokens functions function more like tech stocks and sovereign assets to be held on the country's balance sheet. Now critics argue this is speculation, not strategy, especially with a $2.1 trillion deficit. Even industry bulls are questioning whether taxpayer dollars should be spent accumulating volatile digital assets like Cardano, which surged 70% on Sunday. Now all eyes are on Friday's White House crypto summit where investors are looking to see whether Trump's AI and crypto czar David Sachs unveils a digital asset buying strategy.

[Jason Snipe]

Scott McKenzie, thank you for that setup. That's Mackenzie Segalis Weiss, I'm curious as to you trimmed the IBIT etf.

[Stephen Weiss]

Yeah, it's getting, my holding is getting down pretty low.

[Jason Snipe]

I would have thought maybe you're reinvigorated as a result of what Mackenzie was talking about and maybe buy a little bit more if for no other reason. Even though you've never gotten your arms around the fundamentals or your brain for that matter, you just don't believe in the fundamentals or around it. You were in it for a trade on. On the momentum because of the new administration's apparent love affair with it.

[Stephen Weiss]

And I stay too long. Look, I'm still up on the trade marginally. You know, I haven't seen on the way down stopped out. But here's how I look at first of all say it's reserve currency is ludicrous reserve currencies are stable. There's not a lot of volatility in it and they're not risk assets. This is purely a risk assessment asset, as has been proven out over the last number of months a year, number one. Number two, you can't use it for trade. So state. So reserve currencies are used to trade around the world and you can't use it for trade because of the volatility. So to me, this is, this is purely, to me, this is pure corruption. Right? Trump's got a crypto business. That's why he, he's doing it also to appease his voter base. Call it for what it is. Now, we don't even.

[Jason Snipe]

You can call it for what it is.

[Stephen Weiss]

I am calling for what it is. And I think most recently your opinions.

[Jason Snipe]

Are representative of Steve. We should need a little disclaimer. Representative of Stephen Weiss only and not in any way an indication of what cnbc, Scott Wapner, Jason Snipes Gosier or Joe Terranova think about that.

[Stephen Weiss]

You're absolutely right. You're absolutely right. But. But we don't even know if he has the power to name a reserve currency, to declare this a reserve currency. So we have to see now, given what his mandate has been with Congress, maybe he can, but I'm not there.

[Jason Snipe]

Look, real quick, I gotta go.

[Joe Terranova]

I heard this news this weekend and everyone said to me, oh, this is a reason why Bitcoin? I mean, are you kidding me?

[Stephen Weiss]

This is nothing valid.

[Joe Terranova]

This is nothing different than what we knew going into the election and on election day. Yes, you have an administration that looks to be favoring ripple towards Bitcoin and crypto currencies. That doesn't mean today you're buying it on this announcement.

[Jason Snipe]

Let's get to Dom Cho. He has a news alert for us regarding Anthropic. That's right, Judge. So the Amazon backed AI company has.

[Scott Wapner]

Closed a funding round raising three and.

[Jason Snipe]

A half billion dollars that now values.

[Scott Wapner]

Anthropic at sixty one and a half.

[Jason Snipe]

Billion dollars in a post Money valuation. That round was led by Lightspeed Venture.

[Scott Wapner]

Partners, also Salesforce Ventures, Cisco Investments, Fidelity.

[Jason Snipe]

General Catalyst, D1 Capital Partners and Jane street amongst others. They plan to use the money to what else? Advance their development of next gen AI products and services.

[Scott Wapner]

So an interesting move here. Amazon backed Anthropic $61.5 billion company for market value.

[Jason Snipe]

Scott, I'll send things back over to you guys. I appreciate you, Dom. Thank you. That's Dom Chew coming up. Told you about that new ETF to capture investor interest in private credit last week. Well, now the SEC is raising the red flag. Bobzani has new details just ahead. First though, we have calls of the day. We are back on the half right after this.

[Mackenzie Segal]

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[Scott Wapner]

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[Jason Snipe]

All right, welcome back. We have a number of calls to get through today. Check point software Joe upgraded to overweight that's at Piper Sandler. They take the price target up $40 to $260 from 220. They like the moment momentum. They think it's going to improve, the narrative is going to get better and they might be able to get double digit growth in the future which will drive increased multiple expansion.

[Joe Terranova]

And this is the cybersecurity name that I was referencing at the top of the show. It kind of flies a little bit underneath the radar. Israeli based company pressing towards what is an all time high reasonable value, reasonable valuation rather somewhere around 30 times. It's a mid cap sized company at around 25 billion since the election. By the way the E is the Israeli ETF has been very strong. Israeli second leading exporter of technology in the world check point is playing squarely in the cybersecurity theme that's right now dominating the bullish narrative of markets.

[Jason Snipe]

Jason, Joe and Steve all own Uber. Jason, I'm going to give you this reiterated over outperform, excuse me, At Evercore today you can take a look at the stock as well. 115 is their new price target. They believe in ride sharing. They think it's going to kick start the physical AI revolution and they are bullish. And they also, by the way, are bullish on the long term growth prospects of Waymo. What do you think?

[Carl Quintanilla]

I would agree with this call, Scott. I mean obviously it was a really strong quarter in my opinion. You know, revenue was up 6.8 billion, which is 5 billion more than it was year over year last year, which was a really strong number. Gross bookings were up, the guide was 17 to 21%. Now the street viewed that as being conservative. So the stock sold off around 8%, which I thought was a tremendous buying opportunity. They're converting cash flow at 90%. So I think this stock, the ecosystem, this robo taxi news was a little bit of an overhang early on, but I think the street is starting to understand that story and that's why continue to remain bullish on Uber.

[Jason Snipe]

Weiss, as much as you're getting a little more cautious on the, on the market, you've made that clear through many moves that you've made. What about Uber?

[Stephen Weiss]

Well, as you call, I sold some of it, I guess a couple of weeks ago after Ackman came out and I agreed with this tweet but moved it up. I don't see him taking over the stock, but it brought attention to it taking over the company rather. So look, I just think the economics, the good news is on Robotaxis, I don't think they're going to be for a while. The bad news is I can't figure out the economics. It's going to cost somebody more and that cost is either going to hit margins for Waymo and for Uber. I mean Waymo loses money or it's going to increase the cost of a ride. Either way, you know, will slow down the growth of those companies.

[Joe Terranova]

Do you think if the economy slows that Uber will feel the effect of it or do you think because it's a fluent rider, if you would, that they're impervious to that?

[Stephen Weiss]

I think that they've got some cushion against it, some protection, such as business riders and for the affluent. However, I do think the marginal buyer is going to think Twice about that. And where there is mass transportation, go to that. Yeah.

[Joe Terranova]

I don't know if we've seen Uber really go through a weak economic period that they had to navigate.

[Jason Snipe]

Chipotle upgraded today. Overweight price targets 70 from 65 at Morgan Stanley. What do you think?

[Joe Terranova]

And this is where the tariff conversation comes into play. CEO Scott Boatwright saying, no, we're not passing on the effect of tariffs to the consumers Chipotle. We're going to eat the tariff ourselves and individually. So I think this stock is for a restaurant.

[Jason Snipe]

How novel.

[Stephen Weiss]

Yeah.

[Jason Snipe]

I mean how many times raise prices?

[Carl Quintanilla]

Yeah, they they a ton.

[Jason Snipe]

They may be more than anything any other Quick serve, whatever you want to call them have had the ability to raise prices over the last like five years more than anybody else.

[Stephen Weiss]

And if they don't your appetite.

[Joe Terranova]

I was getting to that. And there's your ability to say, okay, no, we're not going to pass through the tariff effect, but guess what? We raised prices on you three months prior and six months from now, we're going to raise them again.

[Jason Snipe]

They've amortized the price increases over the last five years.

[Stephen Weiss]

It got in front of it.

[Jason Snipe]

Yeah. Allstate Joe, I'll tell you what insurance companies stocks have done. Well, obviously this gets upgraded at Argus.

[Joe Terranova]

Just gets upgraded now, huh? Look, we talked about just anyone who's got homeowner insurance, auto insurance, you're paying those premiums. You know the pricing power that these companies have had as it relates to inflation. And collectively, whether it's Truck Chubb or Progressive or Allstate travelers, they're all working really well in a financial sector that's taking some form of leadership in the market here over the last six months.

[Jason Snipe]

All right, Courtney Reagan has the headlines for us today. Hey, Court.

[Scott Wapner]

Hi, Scott. The death toll has risen to two people on the suspected car attack in the West German city of Mannheim today. Police say the public is no longer in danger in the city center, but wouldn't confirm if the incident was an attack. The state interior minister told a German news agency the suspect was detained and is being treated at a hospital for his injuries. US Airline industry group wants helicopters to be barred from some routes near Washington's Reagan National Airport, with exceptions for essential military or medical emergencies. Reuters reporting that according to written testimony ahead of a House hearing tomorrow, the group will call for requiring military aircraft to use a key safety program near larger airports. And instead of boycotting, boycotting President Trump's.

[Joe Terranova]

Address to a joint session of Congress.

[Scott Wapner]

Tomorrow, some Democratic lawmakers are inviting former federal workers to the speech to protest the mass layoffs. A White House spokesperson told the New York Times the Democrats were, quote, exploiting the American people for political points. Scott, back to you.

[Jason Snipe]

All right. Appreciate that. Thank you, Courtney Reagan. Up next, new developments in the story we brought you last week about that first of its kind private credit etf.

[Scott Wapner]

Well, we'll see.

[Jason Snipe]

There's some issues around that Bob is on. He's following that money. He'll tell you exactly what's going on next.

[Scott Wapner]

Are you still quoting 30 year old movies? Have you said cool beans in the past 90 days? Do you think Discover isn't widely accepted? If this sounds like you, you're stuck in the past. Discover is accepted at 99% of places that take credit cards nationwide. And every time you make a purchase with your card, you automatically earn cash back. Welcome to the now it pays to Discover. Learn [e-mail] credit card based on the February 2024 Nelson Report. Find YOUR hustle. CNBC make it's new online course, how to start a side hustle. Three industry experts break down proven paths to success.

[Jason Snipe]

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[Jason Snipe]

We're back with an update to a story we first brought you last week on a new private credit etf. All the rage, of course, is private credit. Bob Ozani has some new details. As the SEC says, maybe not so fast. Talk to us.

[Scott Wapner]

Well, not exactly, Scott, but we want to bring you an update on this story we brought you last week, the Spider ssga, Apollo Public and private credit etf. That's a mouthful. But it launched last Thursday. It allowed retail investors to buy into private credit assets. And late on that day, the SEC sent a letter to the company saying there was, quote, significant, significant remaining outstanding issues, close quote and listed worries centered on the fund's liquidity, its name of the use, its use of the name Apollo in the title and its ability to comply with valuation rules. State street did respond Friday night, saying they would revise the name of the fund as soon as practicable, presumably removing Apollo's name clarified that the fund's illiquid products will not be exclusively tied to Apollo and that other broker dealers can provide quotes. And finally, that the fund's net asset value, or navy will be calculated on a daily basis. State street told CNBC they would have no further comments at this time. Still, trying to get private credit and private equity into an ETF wrapper is all the rage right now. Let's talk about this with Joanna Gallagher. She's the co founder of Bond Blocks. She recently launched a competitor, the Bond Blocks Private Credit CLO etf. Joanna, I want to talk to you about your fund, but I got to ask you about this. You, you had had a lot of experience filing ETF registrations. You know a lot about this, you know a lot about the sec. It seems to me unusual for a fund to become effective and then get a lot of questions after the fact from the sec. Is there any sense of what happened here? I know this is at your fund, but can you educate us a little about the process?

[Mackenzie Segal]

It's very notable. It's not that it has never happened, but it's a notable part of the process where usually issuers want to satisfy those concerns of the SEC as they're bringing them up in the registration process that makes sure that you know in the way you're going to run your compliance programs, where you're going to run your portfolio, everything's buttoned up before you go effective. So while it's a technicality that you know you could go effective before you satisfy some of those questions, it's more of a standard best practice, good relationship with the SEC and also sort of translates to investors due diligence that they understand that everything went through to the satisfaction of, you know, the oversight of the sec.

[Scott Wapner]

And people have to understand normally when you apply for a fund you have it's 75 days, usually it will become effective unless there is issues that the SEC might have. They did have some issues. They were extending it a few times but then they just went public and then afterwards they had, oh, we have other issues. That's what's a little unusual.

[Mackenzie Segal]

It's a, like I said, it's a technicality in the registration process. And you know, I think that State street did address those issues the next day. I think this whole part of the registration process and you know, putting private assets into an etf, it's really important to satisfy those liquidity and those valuation issues so people understand how it works.

[Scott Wapner]

Let me talk about your fund. You've got a competitor private credit CLO collateralized loan obligation ETF and invest 80% of the assets in private credit collateralized loan obligations. Just very briefly, how does this work? Why is this a good way to get at private credit?

[Mackenzie Segal]

Right. So PCMM holds close and close are packages of loans to small and middle market and mid sized companies in the United States that happen to be private. These loans are used by these companies to run and operate their businesses. Every Day in a cielo, you might have about 100 of these loans. PCMM owns 42 close. So, so this packaging of this, of these, of these private credit loans into the ETF allows investors in the case of our product PCMM, to have direct exposure to over 4,000 of these, of these loans, the coupon payments that are much higher in these loans and so higher coupons, low duration, ultra low duration and you know, true diversification. This is a hat trick of a product in lightness.

[Scott Wapner]

What, when you buy into private credit like this, what exactly are you getting? How do you use something like this in your, in your portfolio? What does, what place does it have? Okay, so for the viewers, explain this.

[Mackenzie Segal]

So first, it has a very attractive yield profile. You know, this portfolio is yielding over 8% at this moment. But that true diversification point, I don't want to, I don't want to over, I want to pause on it because private assets, assets like these, private credit assets have no correlation to public markets, either fixed income or equity. This is a powerful diversification tool that wasn't accessible by investors until PCMM came to market. This, this portfolio is also 80% private credit exposure. So that's important, you know, in comparison to competitive products delivering a full portfolio, this exposure is incredible. The higher yields and the low duration also means that it's a low volatility product and that's what clients are looking for right now. Investors are so trying to scramble to get access to these two private assets.

[Scott Wapner]

Okay, this is a lot to digest, folks. We're going to have a lot more coming up on the use of private credit and private equity in ETFs. That's coming up on ETF Edge 1:10pm Eastern Time. Joanna is going to be joined by Todd Sohn. He's the head of ETF at strategicas. We'll talk about the risks of investing in private equity credit in ETFs and whether all this interest represents some kind of peak at all. Interesting debate here. ETF edge that cnbc.com Scott, back to you.

[Jason Snipe]

All right, Bob, appreciate that. Thank you very much. I mean that's the obvious thing that would have you think of is is this some sign of, you know, peak private credit to which those who are in the business of private credit would laugh and say not even close. In fact, we probably aren't even in the middle innings of it. What's your thought on all private credit.

[Stephen Weiss]

Is a real asset class and it's grown as an asset class because banks have really cut back on their lending because of regulation. What could happen is if Trump does loosen the regulations on the banks, you could see them getting into it, but I don't see them going to the risky side of it. Now there, there are so many private credit funds out there that not ones.

[Jason Snipe]

That have been highly accessible to retail investors.

[Stephen Weiss]

So you have to ask yourself, you know, for ETFs, yeah, you're not completely agnostic as to how they perform, but you, you are somewhat less, somewhat less concerned if you've got to build your next fund off your firm performance. So I would not invest in it in this type of economic environment if I are a retail investor. If you're getting a yield so much higher than what Treasuries are giving you, you got to ask yourself what's the risk I'm absorbing for that? And to me, I just don't think retail should play it.

[Jason Snipe]

All right, I'm sorry. We do have more moves from Steve Weiss to document. We'll tell you about him next. A couple more moves to get through Weiss. You trimmed PDD and the K web.

[Stephen Weiss]

Yeah. Not a lot of thought went into it unfortunately. But the reason I did that, I've stopped comment. Yeah. I was just opening myself up. It's a short term since media trade term treat and when I have those I put stops it because I don't want them to be perma holds.

[Jason Snipe]

You sold slb?

[Stephen Weiss]

Yeah. So SLB never got to be a full position.

[Jason Snipe]

Yeah.

[Stephen Weiss]

You know, I bought it because of the quarter and then because I thought with the deregulation on, on drilling that would be good. But I just don't think that the oil company is going to drill that much because they'll lower the price of the commodity. That won't be good for slb. So that's why I'm out of plus.

[Jason Snipe]

They'Ve gotten used to not drilling as much as people thought and doing other things with the capital.

[Stephen Weiss]

Exactly. Like giving it back to shareholders. Like Jason. Who owns those?

[Jason Snipe]

Santoli. We, we got him next with his midday work. Senior markets commentator Mike Santoli is here with his midday word. So we have tariff looming. We had a really big bounce on Friday, which you've been wondering whether that was legit in any way.

[Scott Wapner]

Sure.

[Jason Snipe]

What do you think today?

[Stephen Weiss]

I think it's legit in the sense.

[Scott Wapner]

That look, it's, it could have been.

[Joe Terranova]

Swamped by other factors just because there was a mechanical month end bid. And it's interesting to me that we're kind of holding right there at least testing and testing, figuring that out the tariff deadline, the jobs report, the idea that we're looking at a perhaps pretty likely government shutdown within a couple of weeks.

[Scott Wapner]

I don't think that means it's, it's.

[Joe Terranova]

Necessarily all bad or the pressure is going to keep piling on. But it does keep investors from feeling like there's an all clear moment out there. And so you kind of shortly.

[Scott Wapner]

Shortly.

[Joe Terranova]

How much has been priced in. Let's look at where things look vulnerable, where they look like they've been overdone. And I think that's what the market's doing right now. Bitcoin's 4% off the morning high. Tesla's only up 2% after down 32 week and it's kind of like the market's trying to find a way in video. If it cracks 115, that doesn't look great. It's obviously above there right now but that's kind of going to get you below the deep seek low. And yet the rest of the market is trying to hang in there and not really give full credence to the the macro downgrades. We're seeing.

[Jason Snipe]

I'll see on the bell. Yeah, finals are next. We'll take you through the final stretch today. Bryn Talkington, Malcolm Etheridge, Dan Greenhouse, Jeff Richards of notable capital. Shan, what's your final trade?

[Shannon Sokosh]

Healthcare. There's offense and defense here.

[Jason Snipe]

Okay.

[Stephen Weiss]

Weiss, Taiwan Semi I think it bounces and news will be good this week.

[Carl Quintanilla]

Jay Snipe at V Sky Rizzi continues to work.

[Joe Terranova]

Joe T. In the financial sector, the sector you should be focusing on. Trade web.

[Jason Snipe]

All right. We will watch the markets. Keep your eye on Nvidia lows of the day. Tesla is now negative. All things that will follow into the final bell today, the closing bell. I mean the exchanges. Now you've been listening to CNBC's Halftime Report, the podcast you can always catch us live weekdays at 12 Eastern only on CNBC.

[Scott Wapner]

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.comhalftimereportdisclaimer.

[Shannon Sokosh]

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