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Halftime Report
The Year's Stretch Run 10/31/25
00:46:44
Scott Wapner and the Investment Committee discuss the market's massive week as a new trading month looms. The experts detail their latest portfolio moves. Josh Brown is back with his Best Stocks in the Market. The Setup is on next week's top earnings to watch.
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AT&T Business Announcer
Next level moment from AT&T business. Say you've sent out a gigantic shipment of pillows and they need to be there in time for International Sleep day. You've got AT and T5G so you're fully confident, but the vendor isn't responding and International Sleep Day is tomorrow. Luckily, AT&T 5G lets you deal with any issues with ease. So the pillows will get delivered and everyone can sleep soundly, especially you. ATT 5G requires a compatible plan and device. Coverage not available everywhere. Learn more@att.com 5G Network.
- [01:02]
Scott Wapner
I'm Scott Wapner and you're listening to CNBC's Halftime Report, the podcast the most profitable hour of the trading day. We record this live weekdays at 12 Eastern. Listen in. All right, Carl, thank you very much. Welcome to the Halftime Report. I'm Scott Woepner. Front and center this hour, the market's massive week. What we learned from mega cap earnings as a new trading month looms we will discuss with the investment committee. Joining me for the hour today, Josh Brown, Jenny Herring, Jim Laventhal and Kevin Simpson. We will check the markets and we'll show you exactly what we're doing. S and P, NASDAQ are good. Dow is virtually flat. We do have the final trading day of the month of October. I thought we should discuss what we learned in a week dominated by the mega caps because it's been the guiding light for this record setting rally. Josh, I want to go to you first as we sort of take everything in together. Amazon, I think we learned that US RE accelerated the fastest growth rate since 2022. As for app, well, the iPhone's back, there's no question about that. Even if AI isn't quite there yet and the China issues still remain Alphabet. Maybe the search fears were overblown. They top 100 billion in revenue for the first time ever. Microsoft Azure revenues up 40%. Big number there. And Metta their Capex explosion, if you want to call it that, they say 2026 CapEx is going to be quote, notably larger than this year. What was your big take for the week?
- [02:32]
Josh Brown
My Big take. My big take is we were doing show shows in January, February, March, and we were talking about collectively, everyone, if there is a bear case on the market this year, it's the trade war, potentially. But it's also if this AI Capex story falls apart or decelerates or somebody pulls out of the game in some meaningful way. We were saying, like the most extended stocks in the market, the largest market cap companies, would be very vulnerable to something like that. And I think the message, to answer your question, and by the way you're wearing the hell out of that sweater vest, and I like it, is we did not get that deceleration in CapEx. And actually we got the opposite. So we're getting acceleration and we're getting acceleration into 26. So if you were in that camp saying this is unsustainable, how many GPUs can these people actually need? There's no way these companies are going to continue to spend absent some sort of ROI to attach to the spending. Nope, not what happened. What actually happened was this is the year that it went from being optional and ambitious to spend to existential to not spend. We heard Zuckerberg say things like, I'd rather overspend by, you know, $100 billion than underspend. And so like that. To me, that's the biggest takeaway of this week. That's what we all come away with. And, you know, it's frustrating for the people that are looking for some sort of a turning point or some sort of a rotation out of, out of the tech trade, the trade and into something else. This story just has absolutely dominated the market all year. And while we have had other areas of the market perform, which is great, and I'm in those other stocks, this still remains the main event. The good news is, boy, what a way to go out. Even the stocks that didn't react well to earnings like, like Metta and Tesla, they're still giving you what you need to hear in order to remain confident. Is it overdone? Should the semiconductor sector have added a trillion dollars in five trading days? Maybe not. But like, big picture, the spending is going to be there, they are not relenting, and the financing is in place for even more spending to go into 26.
- [04:57]
Scott Wapner
Right. You know, I think maybe the most interesting development turns me to you, Jenny, in that, you know, Josh is right. You know, it's all about capex acceleration. We have made the case, and others have as well, that this market's good and this trade is good. Until you get a Crack in the spend. Right. But I feel like maybe this week was a, was an inflection point in the way that investors are going to view some of these companies and some of these stocks and the way they in fact are spending. And your Metta is squarely in that place where they say that their capex next year is going to be, quote, notably larger than this year. Any other company says, yeah, we're upping our capex, it's probably rewarded. There's a little bit I think of PTSD around Metta and their money and how much they spend and how much is too much and maybe there's going to be more scrutiny on that name going forward because they are going to spend a lot, as we call it a cap explosion. What do you think?
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Jenny Herring
I think that's right. And if you, if you think about every time I've talked about Meta in the last several months, I've said, you know, look, it's, you know, it's still fairly valued compared to its peers. It still has good earnings growth. But to us we're going to be watching their capital discipline because that, you're exactly right, it's the ptsd. And when did matter explode from whatever it was like $70 a share to the 700 and change? When that started was when Mark, Mark Zuckerberg got fiscal discipline.
- [06:28]
Scott Wapner
Yeah. Let's go to a three year chart of Meta as Jenny continues the story because it tells, it tells a good story. Just the chart alone. If you look at, you know, or even a little bit further than that, you can look at a four or five year whatever. But go ahead. I'm sorry.
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Jenny Herring
No, no, it's fine. So, you know, so I think that's the challenge with all of these is going to be where is that line between what you showed that clip of Mark before where he said I'd rather overspend by 100 billion? Well, you know what? He can afford to overspend by 100 billion right now. He couldn't afford to overspend by 100 billion several years ago. A lot of these companies can. But it's going to ultimately be a fine line between who overspends severely, who spends correctly. I don't know what's going to end up being right, a little bit of underspend or a little bit of overspend. We're in a very euphoric extreme kind of sense right now.
- [07:15]
Scott Wapner
Do you think the market is, is questioning the, the degree of spend because it's not sure specifically related to this company what the ultimate payoff is going to be because it doesn't seem, the market doesn't seem to have that question about the others.
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Jenny Herring
No.
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Scott Wapner
So why would it be worried about that with, with Metta?
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Jenny Herring
Well, I think it had to do with like that tax and their earnings and maybe that was a little disappointing. Like it might have been more granular. It might have been that Met has performed better than almost all of the peers year to date. So taking a little bit off the top wasn't the worst thing.
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Scott Wapner
Not more recently though, right? Not more recently.
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Jenny Herring
Look at it year to date. On a year to date basis, you still have matter up 14% versus like Apple up 8, you know, Tesla up 9, Amazon up 1. So you know, and that's, that's before this. But like on a year to date basis it was still one of the stronger ones out there. I don't know. To me it doesn't make great sense. I think it's something that's probably not worth overanalyzing. I think we paused for a couple of days. And the other thing is too, when you think about Meta versus an Apple, for example, that has got a better AI strategy and they're going to start to monetize that. They reported 28% growth in advertising. Just to give you like a little bit of, you know, versus versus Google where they, where they reported 14% growth in search. Like I'd rather have Meta's 28% growth in advertising versus Google's 14% growth in search. I'd rather reward that stock. I don't really know why it wasn't. I mean, maybe it's a cynicism. Make sense to me.
- [08:40]
Scott Wapner
Kevin has Microsoft and Meta and Amazon and Apple. So it's a. You're a good person to hear from after the week that was and how you're going to judge and how the market itself is going to judge what these companies are doing, what they're spending and what they're ultimately going to get out of it.
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Kevin Simpson
Last Friday I said Amazon was my final pick of the final trade, my pick of the week. I wanted to get into it before earnings. They blew it out of the water. We were looking for aws, we were looking for advertising. And they couldn't have been stronger. I thought the Meta numbers, to Jenny's point were very solid. I'm surprised that the stock has sold off to the extent that it has. But as you were having that conversation and talking specifically about Meta and this underperformance today, what popped into my head is aws, Azure, Google Cloud, those are revenue streams that those other Mag 7 names have that Meta doesn't. By choice, it's a closed ecosystem, which I think is to its benefit. So if anything, I would look at this opportunity as a means of adding to Meta or buying it if you don't have it, assuming you believe in the long term thesis, which I do.
- [09:44]
Scott Wapner
JP Morgan has an interesting note today. They talk about the love affair, the words that they use with Tech and the Mag 7. They think it remains extreme. The dominance of stocks continues to drive the largest consensus earnings upgrades. However, there is also emerging signs of a peak in sales and earnings revisions on the horizon, coupled with elevated price to sales ratios for Mag 7 stocks suggest a growing risk of a swing in risk reward and potential for mean reversion heading into the coming year. Thought that's an interesting note. Tony Pascarello of Goldman Sachs publishes on Fridays. Generally speaking, I do have his latest note which just moved a few moments ago. Whether shareholders like it or not, he says it was clear, absolutely clear from Q3 earnings that the hyperscalers are still on the gas. Again, I'm not smart enough to know where it all ends up, but I agree with this argument. There's no reason to sell your names with leverage to the AI supply chain. Today.
- [10:41]
Jim Laventhal
I think we're on the back stretch. Whether you're looking at this as a race of the large language models or the CapEx expenditures. This is a horse race and you're on the back stretch now. On the back stretch you're going to see one horse pull ahead and another one pull back and then it's going to change. Bryn talking to and sent me a couple of days ago a chart of AI traffic and it shows OpenAI is clearly the leader and the others, whether it's Claude, whether it's Gemini or some are leading one month and then giving up ground the next month. But we're on the back stretch. We haven't even hit turn three yet. So you know Metta may be having a bad week. Perhaps it's because Llama isn't getting as much press as maybe Gemini is this week. But again, that's just for now. These things will change. I don't think this even though I'm not in Metta, I don't think this is a time to sell Meta stock. I don't think this is a time to sell Google stock. I think there's a lot of legs ahead to this race and this applies as well, not just to the large language model but to the actual CapEx. Whether we're talking about Nvidia versus Broadcom, Broadcom versus AMD. These are all likely to succeed for the coming months. Will there be a time where this trade corrects a little bit? Sure, of course there will. January seems like an obvious candidate as people are holding off selling to cross into the next tax year. But again, just a correction.
- [11:56]
Scott Wapner
This race is far from the spend is incredible. It really is. Amazon is going to spend $125 billion for 2025. That's a raise from what was 118. Met is going to be a range of 70 to 72 billion. That's up from their prior range, Alphabet 91 to 93 billion above their prior range. Microsoft spent 35 billion in Q1. It's going to spend more than it's going to spend more in fiscal year 2026 than in 2025. I don't think anybody surprised by that. The question, Josh, I suppose is whether there's this brewing bubble in Capex and whatever else to the point where Michael Burry, who obviously of fame from the housing crisis in 08 puts a social media post out that says the following. And I think we produced this up so you all can see it. Sometimes we see bubbles. Sometimes there is something to do about it. Sometimes the only winning move is not to play. Cryptic as usual. Thought provoking as always. What do you think?
- [13:01]
Josh Brown
Well, I think, I think Michael Burry's right. Sometimes, sometimes when there is a bubble and it's so hard to understand whether or not it's a bubble based on future fundamentals that are about to deliver, which I think is what we would say like if we went back in a time machine a year, a year ago a lot of the same people were saying this stuff is a bubble. Well, here we are a year later. Most of these stocks are up double digits. Some of them are doubled and tripled that are in this ecosystem. So it's like all right, maybe you'll eventually be right that it was a bubble. But I mean come on, look what's going on right now. But so I do agree, like if you're not a professional short seller, you probably should not be spending a lot of mental energy trying to figure out like all right, now is when I want to make an aggressive bet against this trend because it could, it could, it could run you over, go on for years. But I want to go back to Metta. Why is that the odd man out this week and I think it's obvious and we didn't get into it and we don't have to spend a ton of time on this. But the street is not convinced that Zuckerberg strategy has a payoff. And they've now had by one journalist count five restructurings of their AI initiative in the last year. That's like unheard of. They're moving people around from one team to another. One day they're doing layoffs, the next day they're acquired or acqui hiring companies for billions of dollars just to get a few engineers. Like people are looking at that and saying, all right, this seems less focused than, for example, what Alphabet has been able to achieve. Which, by the way, Jim gets a ton of credit for having said, hey, it's too early for us to decide that Alphabet is lost. He was dead right, I was wrong. And the best metaphor for this maybe is not a horse race. Horse races are over in 30 seconds. It's a baseball season. And think about, think about. During the course of a baseball season, these teams, they get hot, then they go into a slump, then they get hot again. So I don't want to make too much about meta stumbling this week and overreact to the price action after one quarter. But if you ask people that cover Silicon Valley like, like the media, who speaks to executives in Silicon Valley, clearly Metta is the company where there is the least certainty about what they're actually even trying to do. They've got an open source model Llama, which is fine. Are they getting the same traction that Open Air is? No way. Not even close. So that's, that's why it's the Ghost of 2022. Everyone remembers how it was totally cool for Zuckerberg to spend and spend and spend on virtual reality projects. And then one day it wasn't. And it wasn't a 10% sell off, it was a 70% peak to trough decline in the stock. And so that's what I think people are skittish about. The other name that there was a lot of doubt about was Amazon. And I'm long the name and I've been wrong on this one too. It's finally working. I thought earlier this year, if there's going to be this capex boom, surely us is going to make the most hay. Did not work out that way. I thought last night was a statement quarter. I think they reminded everybody, hey, we're still the biggest. And this is the quote that I think the desk would probably find the most interesting. They said it's worth remembering that year over year, percentage growth is a relative term. It's very different having 20% year over year growth on $132 billion annualized run rate and to have a higher percentage growth on a meaningfully smaller annual revenue which is the case of our competitors little shade, little, little subtweet there. But US is still the biggest and they can't grow it. By definition you can't grow that materially faster than companies like, like an Oracle that are coming off of a slower base. So I do think it's a really long baseball season and maybe this is just a slump for Meta and they'll get back in the game just as we saw with Alphabet earlier this this fall.
- [17:14]
Scott Wapner
I want to go back to the Burry post and discuss. You know, if you look at Capex, obviously that raises a lot of questions. If you look at data center it obviously raises a lot of questions. I think even the people who say no, it's not a bubble now admit that it will one day be.
- [17:34]
Josh Brown
You're.
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Scott Wapner
You're inevitably going to overbuild maybe. Are you, are you also going to take on too much debt to do it right? Debt, as we've talked about so many different times, is the undoing of a cycle. Right. It's the thing that once it gets too far down the road as you're borrowing a heck of a lot of money. I almost said something that would have got me in trouble. A heck of a lot of money to build these data centers. The spending borrowing to fund AI data center spending exploded in September and October according to bank of America. We have a chart where you can see the incredible rise of borrowing to build which you know, obviously raises questions Wall Street Journal related to build more than a $7 billion data center for Oracle and OpenAI's Stargate. We get these announcements every day. Something to can I be concerned about.
- [18:30]
Jim Laventhal
Because this to me and I said this yesterday, I'm going to repeat it. It's Corporate Finance 101. The cost of capital is cheaper for debt than it is for equity. If you're going to say issue Oracle shares for the funding of a data center, you're probably giving up a return in on those shares much greater than if you use debt financing. But the thing about debt financing is you have to have something to collateralize it and in this case if you want to get meaningfully low interest rates and in this case you have that, you have that in these data centers. And I'm not suggesting that the data centers will be be put back to the lenders. What I am saying is yes, that's a fallback. There are cash flows from these data centers that underwriters of bonds can point to and say, yes, I feel safe enough with these cash flows that I'll charge Oracle 5 1/2% to finance this debt as opposed to what Oracle would have to do is give up probably 20% if it were using shares in the company to finance it.
- [19:26]
Scott Wapner
You know, the other, the other story I want to get to is a move from, from Kevin just because it's it. It's so far away from this new tech story to theoretically old tech. But a company, all that's old is new again. And that's IBM, which continues to prove itself that it has in many ways reinvented itself. It is no longer a financial engineering story as critics would have charged it to be over the last however many years under the transformation. And the current CEO has, has led this company on. IBM is pacing for its 10th positive week in 11. It's a record high as of earlier this week. There's the chart. It's pretty compelling, which is why you look at that and you bought more to your point.
- [20:11]
Kevin Simpson
We also went through a four year period where we basically made no money with IBM as it was churning and.
- [20:16]
Scott Wapner
Many gave up on it, by the way. Fed up by the period of, you know, the inability for revenue growth and what seemed to be left for dead in a new tech universe.
- [20:28]
Kevin Simpson
Given a few more months, we probably would have joined that list. I mean it was getting to the point where you saw all of these other tech names having incredible performance and IBM continuing to languish. Maybe the Red Hat acquisition didn't work in the early days, but it certainly becomes something, even if by accident, it's incredibly AI adjacent. Very profitable. Profitable Quantum computing is without question something that we're very excited about. Even the conversation where they can use some of the lesser expensive chips, I think it was AMD they were talking about to be able to run some of their quantum programming. So you've got an old school company with a new school mentality, nice dividend, incredible management and one of the best turnaround stories we've seen in recent times.
- [21:13]
Scott Wapner
You seem like you're still looking for opportunities to put more cash to work. You bought, you bought more sinkora, you bought more Allstate, you bought more Depot and you bought more Wal Mart. You don't need to go through and tell me why on each but the blanket sort of idea of what I said.
- [21:26]
Kevin Simpson
So the blanket idea is that none of those names have anything to do with AI.
- [21:31]
Scott Wapner
Yeah.
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Kevin Simpson
And our thinking is that if this trade is Bubblicious or whatever. The word was that maybe we need to expand our mindset outside of that and continue to build up some of these names that are out of favor. I think the forward P E on Allstate, I'll just point that one out, is like seven and a half. So it's different than everything we're talking about from a valuation standpoint that maybe we're seeing things stretch to the limit.
- [21:54]
Jenny Herring
Yeah.
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Kevin Simpson
Insurance companies have been very poor performers as of late and this may be something where it takes us a few years to pay off and maybe there isn't the rotation out of tech and the broadening of the market tomorrow or the next month or two, but I do think it will happen.
- [22:11]
Scott Wapner
How about Netflix? We need to hit that. Stock's up better than 3%, Josh. So you got the 10 for one on that. You know, the stock's been interesting coming off the earnings. There are now, you know, reports of possible interest in some piece or whatever of WBD. We shall see. But what do you think? It's down 9% this month. Market likes this move.
- [22:39]
Josh Brown
Yeah. So I've been in the name for a long time. It was added to my list of best stocks in the market and then it fell off that list on the heels of reporting the last quarter, which was really not well received at all. I said at the time here on the show I thought it was a ridiculous overreaction to something that was so arcane and irrelevant to the business. A minor tax dispute with Brazil, which was not in their guidance, cost them what what looked to have been an otherwise pretty good quarter. Guidance was good too. So I. I still don't quite understand why it hasn't recovered yet. It's starting to claw its way back above the 200 day moving average, but I don't trust it yet. If I were entering for a trade, I'd want to see another day or two of a follow through after today. Said maybe take a look Monday or Tuesday. As far as the reports on, I think Reuters broke the news that they engaged Molis to prepare a bid for Warner. So the thing is, I don't know if they just do that all the time whenever there's an asset for sale because they don't actually end up consummating any of these deals. Netflix is always in the conversation as a potential buyer. They so $500 billion market cap. They have a gazillion dollars in cash flow they could use, but they never seem to actually do it because, I.
- [24:02]
Scott Wapner
Mean, this story has, has moved a bit, right there was the, the, the marketplace took from a comment that I think it was their co CEO had made. Whereas, you know, we're, we're, we're builders, we're not buyers. But then Faber, David Faber obviously had reported. Okay, well if you want to talk about a group of companies that are definitely interested in some form or fashion, in some piece, if whatever, that they're on the list. And now you see this other reporting that they've hired banker to, to at least take a look at the idea. So maybe there's just certain things that are too good to pass up even if it flies in the face of what holistically they believe in and what the, and who they think they are.
- [24:48]
Josh Brown
I mean this is like this, okay? It's an incredible library, an incredible content producing studio, like one of, it's one of the crown jewels of Hollywood and globally, the titles that we're talking about here, you cannot emphasize enough how incredible it would be for any streamer, especially Netflix, to take things like the DC universe and Harry Potter and a library that includes things like Casablanca and not only put those things on the streaming service, but create brand extensions, new shows based on them, sequels, reboots, spin offs, 100%. But the price, if you take the equity market cap and then you add back in the debt, the enterprise value and you try to figure out like, all right, Maybe that's a 20%, maybe it's a 20% premium to wherever it's trading right now. Like you're Talking about a 70, $80 billion deal is that Netflix goes from doing no deals ever to buying something for $80 billion and assuming $35 billion in debt. It just sounds fantastical to me. I think that it's possible that they just are doing their due diligence and it's an intelligent decision to make a bid. What does it really cost them? I don't know how badly they want it. So look, I won't be the first person to know if this is really going to happen. I do find it interesting though that the street seems to be reacting positively and maybe they want Netflix to be more aggressive. I'm just looking at the share price today.
- [26:22]
Scott Wapner
Well, the split probably has something to do with it too, right? We know how generally speaking the market has rewarded companies that, that, that do that sort of thing. All right, good stuff. So we're going to take a quick break. We come back, we'll discuss your year end playbook. Brian Belsky, he joins us next. He has new market ideas and a new gig to go along with it. We'll discuss. And we also have Josh's best stocks in the market to come.
- [26:49]
AT&T Business Announcer
And now a next level moment from AT&T business. Say you've sent out a gigantic shipment of pillows and they need to be there in time for International Sleep day. You've got AT and T5G so you're fully confident, but the vendor isn't responding. And International Sleep Day is tomorrow. Luckily, AT&T 5G lets you deal with any issues with ease so the pillows will get delivered and everyone can sleep soundly, especially you. AT&T 5G requires a compatible plan and device coverage not available everywhere. Learn more@att.com 5G Network.
- [27:20]
Commercial Narrator
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 CNBC's Changemakers 2026 list spotlighting women who innovate, lead boldly and are transforming business. Do you know someone who is rewriting the future? Nominate them now@6cnbc.com changemakers I welcome back.
- [28:06]
Scott Wapner
Been a massive week for the market as we close out October S and P now pacing for its sixth positive month in a row. That's the longest streak since August of 2021. Joining us now, one of the early bulls 7,000 is the price target on the S and P. And he just launched his new firm today as well. He's Brian Belsky. He is the founder, the CEO and the CIO of Humorless Investment Strategies. Is that just so you don't have to come on and say you're honored and humbled every time because you just have it in the title now?
- [28:39]
Brian Belsky
Less is more, Scott. We're just going to try to keep it simple.
- [28:43]
Scott Wapner
Congratulations on the new gig. Congratulations.
- [28:47]
Brian Belsky
Thank you so much. Thank you so much. You know, we are blessed and fortunate to be in this business for a long time. I'm not going to tell you.
- [28:55]
Scott Wapner
Everybody knows anyway. 30 years. Go ahead.
- [28:58]
Brian Belsky
We've had amazing partners from BMO to Merrell to Piper to Dane Bosworth and I'm hearing from a lot of those people today and I'm just so honored to hear from them. And we're excited about what's coming next and we're going to hopefully continue to provide the same type of portfolios, the same type of research to all of our clients, existing and new clients clients. So we're really, really excited.
- [29:23]
Scott Wapner
You're still going to run multiple portfolios?
- [29:27]
Brian Belsky
We are. The portfolios and construct are going to be very similar. There's going to be some changes. But we're also very open to looking at other things in terms of how we're going to run money and what those themes are going to be. We're excited. I've been thinking a lot about how we're going to talk about starting a new company at the market top. Are we a market signal here? But we don't think it's a market top and we think that there's more to go in this cyclical part of our secular bear market. And we think there's more to go and we think next year is going to be very good. Not as good as this year, but very good is good.
- [29:59]
Scott Wapner
Why don't you think next year is going to be as good as this year?
- [30:03]
Brian Belsky
Well, we've had this monumental change in terms of how we're looking at markets especially kind of moving away from being more interest rate sensitive, more inflation dominated and of course moving away we think from the tariffs and a lot of the noise coming out of Washington. And that's why we said on air last time we were on your show we talked about how we think that actually 2025 is building the base in more of an argument for Goldilocks in 2026 and 2027. So we've had these exhaustive moves to the upside and downside. We think we're going to head into more normalization. And normalization, Scott, means kind of high single digit performance, high single digit earnings growth, a ten year treasury between 3 and a half and 4 and a half. And that's a really great environment for stocks. So you're kind of going back into stock picking. Even this week has been a great example of the clear delineation that's happening between stocks and tech land and financials and consumer discretionary. And that's really been our longer term theme in terms of being a stock picker.
- [31:10]
Scott Wapner
If you think that we're going to get only only high single digit returns, let's say next year. Are you also suggesting then that you don't think that the mega caps are going to continue to lead like they have because theoretically if you get such outperformance from those names again, because where they are in the market cap space. You would think that the S and P would return a better year than you're predicting.
- [31:40]
Brian Belsky
Yeah, it's a great comeback. And here's what we'd say. If our base case is high single digit, low double digit and we continue to see the earnings growth, I want to come into this and under promise and over deliver. That's what we've done our whole career in terms of forecasting the markets. We want the earnings situation to continue to improve. Improve. We actually think we're going to see stronger earnings growth really driven by financials. But you're right. I think the larger cap stocks, just like in 95, 96, really led the market. We're obviously seeing more of a broadening out. So we're not going to have this. What we think is more concentrated performance in the big caps, the larger cap stocks. We're seeing this semblance of broadening out and that's going to be very positive for the longevity of the secular bull market. But our base case is low double digit performance going back into the traditional performance of the stock market over the last 80 years.
- [32:34]
Scott Wapner
All right, I joke around with you because it's fun to do, but I know this is a big day for you personally and in your career. So congratulations once again. We're happy for you and we look forward to having you back on the set.
- [32:45]
Brian Belsky
Thanks so much, Scott.
- [32:46]
Scott Wapner
All right, Brian, be well. That's Brian Belsky. The headlines now with Kate Rogers. Hi, Kate.
- [32:51]
Kate Rogers
Hi, Scott. Getty Images just announced a multi year party partnership with AI Chat bot Perplexity. The licensing agreement will allow Perplexity to display images from Getty in its search and discovery tools, according to a press release. Perplexity meantime, will be changing how it displays images, including an image credit with a link to the source. Getty did not disclose financial terms for the agreement. Elon Musk's Space X is set to receive a $2 billion contract as part of President Trump's Golden Dome project. That's according to the Wall Street Journal, which reported reports that SpaceX will create satellites that track missiles and airplanes and that SpaceX will have a major role in two more Pentagon satellite projects, one for military communications and the other tracking ground vehicles. And France's culture minister announced today that the Louvre will upgrade security over the next two months, including anti ramming and anti intrusion devices, following that brazen heist earlier this month. Five arrests were made in connection to the heist yesterday, but there's still no sign of the stolen jewels. Scott, back over to you all Right, Kate.
- [33:53]
Scott Wapner
Thank you, Kate Rogers. Coming up next, Josh Brown. He's ready with his best stocks in the market list, spotlighting two surprising winners this year. We'll tell you which one's next.
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- [35:05]
Scott Wapner
All right, welcome back. Time for Josh Brown's Best Stocks in the Market. The spotlight today shining on who.
- [35:12]
Josh Brown
Believe it or not, Ford and GM are on my list of best stocks in the market. And this would have been very difficult to have predicted this spring when we were all worried about tariffs because of course, these companies were right in the automobile in general, that business was right in the crosshairs. But very quietly, these two companies have put together an unbelievable year. GM is up 32% in total return. Ford is up 41%. Best year for Ford since 2021. They're actually outperforming Tesla. So it's really an extraordinary thing. You know, a lot of people wake up in the morning and they ask themselves, what do I know that the market does not like? That's the way that they think they're going to invest. Sean and I, when we're working on this list, we think about things in the opposite way. We say, what is the market? No, that we don't. And in the case of Ford and gm, it turns out auto sales are much more heavily influenced by the stock market wealth effect than they are by the impact of tariff driven inflation. And that's really the story on these two names. People are feeling really good about their situation and they're going out and they're buying more Ford F150s. They're going out and they're buying Yukons and Denali's. And that's reflected in the results that that these companies have had. I think on it from a technical standpoint, I don't trust Ford. Ford has gotten to this $14 level a couple of times and been turned away. I really wouldn't pull the trigger here on a long until it can clear that and I want to see it do so with a healthy RSI in the 50s or 60s and high volume. If it can do that, I think it sets up for a really interesting trade. But not until on GM they're way ahead of Ford in many ways. Better, better expense, better control on expenses, more profitable. Instead of this silly dividend, they're doing a much better job returning capital via buybacks which investors seem to prefer these days. And I think what you want to do here with gm, you want to watch for a low volume pullback after this parabolic post earnings move. Let's say you see it in the mid-60s. That's where you want to get long the name. I think it's pretty clear that should present trends continue, they should have another good quarter in Q1. And look, this is a huge move for a non tech stock and it should be emphasized these companies don't break out like this very often. But I just love this idea that no one in a million years would have guessed that this would be the year these two names would perform the way that they did in light of all of this stuff going on in the backdrop. And I think it goes to show why we want to focus on price first and then try to understand the fundamental story of why people are buying.
- [38:06]
Scott Wapner
All right, Santoli's next with his midday word. We're back right after this. All right, let's talk to our senior markets commentator Mike Santoli for his midday word. So we set the whole show up with like the great takeaway of this week. What's yours?
- [38:34]
Mike Santoli
Well, I think that you've kind of made it through on trend with you know, some challenges I think to the bull case. Not fundamental existential ones but definitely mixed response to the mega cap tech earnings. But getting through the megacap tech earnings and having that basically build toward higher forward estimates for the index, that's a net positive. I think that this slightly hawkish turn in rhetoric from the Fed, it can be lived with if you do test the economy for exactly how resilient it is. And I think that's one thing the market's struggling with there definitely is a little bit of anxiety building in the parts of the market that are very levered to the consumer influence financial conditions for the consumer that you have to at least pay attention to. In general it's a pretty bad bet to sort of declare that in a strong year the S and P has peaked in October. It's like doesn't tend to happen. So you have to give credit to the seasonal bias and the fact that you've kind of made it through near the highs when you had some excuses along the way to back off more.
- [39:35]
Scott Wapner
Yeah. So what now as you move ahead? Right. It's a new month. Nvidia is going to be looming alpha there. We'll see what happens with the shutdown. We'd like to get some some data and the Fed debate too shouldn't be overlooked as a real key component about what happens in the months ahead.
- [39:51]
Mike Santoli
Based on what we've heard from a couple of non voting Fed presidents, it could have been a 9 to 3 vote for in favor of a cut as opposed to nine to one. So yeah, I do think that there's complications in the mix there. You're starting to see, you know, even going into the weekend the volatility index is ticking up and I know that these breadth concerns, I don't think they're fatal to the bull market. But I think you have to see how it evolves as you have another run of earnings next week, not from the max 7 and see if that can change the picture there in terms of participation.
- [40:20]
Scott Wapner
Yeah, it's. I'm glad you set it up that way because we'll discuss that next as we look ahead to a huge week, next week of non tech earnings. We're back up to this. Mike, I'll see you three. I will get away from tech earnings next week and talk about TripAdvisor and Marriott and McDonald's and DoorDash and others. Jenny Trip Yes. Thursday next week.
- [40:44]
Jenny Herring
Right. So it's a really important earnings report because what we want to see is that the legacy TripAdvisor is actually stable and that Viator is still growing just on fundamentals. This thing's ridiculously compelling. It trades at 8 and a half times earnings, has an 11 and a half percent free cash flow yield. But it's really about those legacy businesses and what they're doing right now. So should be a good quarter.
- [41:03]
Scott Wapner
You like Marriott? Should be Tuesday before the bell.
- [41:05]
Jenny Herring
Yeah, we love Marriott. So here's one that trades at 23 times earnings and has a super long history of Just growing consistently. Earnings growth ahead is 13 times, 12 times, 10 times. I think what I'm looking for in this is a read on the consumer. Josh made a point earlier on the autos where you said Josh, you know your investment is thesis is on if the trend continues of the consumer staying strong. We're seeing a lot of, I think we're seeing a lot of cracks and a lot of bifurcation in the consumer and Marriott's a great company to listen to to get a feel for for what the consumer is really looking like.
- [41:37]
Scott Wapner
Kev of McDonald's DoorDash and DraftKings which are all next week as well. Which one are you most excited about?
- [41:43]
Kevin Simpson
I could easily say DoorDash because I'm tepid on the other two. I think you know we like convenience. The expectations for numbers on DoorDash 40 to 45 cents a share that's going to be versus a loss of the same period last year. So if anything you want to look at DoorDash before the print.
- [42:02]
Scott Wapner
Jimmy, you got wind next week and Vertex and Apollo and Qualcomm.
- [42:07]
Jim Laventhal
I'm sorry you didn't mention that.
- [42:08]
Scott Wapner
Qualcomm.
- [42:09]
Jim Laventhal
Qualcomm is kind of the most important of those because they had that announcement earlier this week about the data center chips and it's going to be very curious to see what the analyst questions are about that the numbers are going to be what the numbers are. They're not going to have any of these chips in it. But what is the tone and verbiage from the analysts that's going to determine what the recommendations on the name are? Give me, come out after.
- [42:29]
Scott Wapner
Okay, give me something else. I don't want.
- [42:30]
Jim Laventhal
Yeah, when look when sold trimmed it at 126, is now around 120. I think it's a little expensive. Let's see if we get a price break there because I'd like to reload after that.
- [42:40]
Scott Wapner
You got four Pfizer as well. Jenny, you got Stanley, Black and Decker and you got Devon.
- [42:46]
Jenny Herring
Yeah, so I've had an interesting week this week. I've actually had half the portfolio report in the last week and everyone's coming in in line. But what's interesting about my. And by the way, I'm talking about the equity income strategy right now, dividend stocks. So what's been interesting is the response has been remarkably good. Like an in line, not as bad as expected I think. I think my stocks are beaten up this year. And so just these in line reports I'm seeing 3%, 8% 9%, 11% responses. I expect the same from all of those next week that they'll probably report just in line and it'll probably be well received because it's a relief that things aren't really that bad. And by the way, those stocks are all cheap, like 15 times, 8 times earnings.
- [43:25]
Scott Wapner
So there's one stock in particular that you have that's getting beaten up today.
- [43:30]
Jenny Herring
I've been waiting for it being up this week.
- [43:32]
Scott Wapner
I'll let you relax over the break and we'll do it next.
- [43:34]
Commercial Narrator
Okay?
- [43:39]
Scott Wapner
All right. Welcome back. We'll show fiserv it's having its worst week ever. They cut their full year guide. The stock is obviously not doing well. It's up there today, right now. But it is in the midst of the worst week ever. Down 48% on that week. Or what do you do something like this.
- [43:57]
Jenny Herring
This is so hard too. So, so I just want to say one thing. This happened on Wednesday. So Tuesday night we have Teradyne in the same portfolio. This is our growth portfolio. And I'm like, oh great, we're gonna have a great day tomorrow. Teradyne's up 20%. And then you just get slapped. So you can't even enjoy the victory. I always think it's like being a portfolio manager is like being a parent. You're only as happy as your least happy kid. So this is pretty unhappy. But what you do. So we own this going back to 10 years and our cost basis for the original accounts that owned it are $25 a share. We still have a really big gain. And you know, I always say this. Your starting point is today. And the starting point today is there's a new CEO. Is kitchen sinked at all. He's. It's still a great business. It's Clover, it's Zell. It's the backbone to major banks, technology and transaction processing. The new CEO is terrific. He's from pnc. He's brought over the president of the. The processing payments that JP Morgan. So it's a really good management team. So with the kitchen sink quarter, you now have a stock that said that's going to earn $8 a share. I think this is a trustworthy estimate because the guy has just taken everything out and put it all on the table. So you've got a stock that's trading at 8 times earnings. It should go back to decent earnings growth ahead. I don't think it's going to be double digit. But what you do now is if you have a tax loss, you take that tax loss. If you have a big gain, I think you keep holding it. Even if we take the tax loss, there's a really good chance we put it back in the portfolio 31 days later.
- [45:22]
Scott Wapner
All right, so you have a big gain, so you're holding it. Your fault.
- [45:25]
Jenny Herring
Well, it's mixed, right? Clients that came into us 10, 11, 12 years ago, they have a big gain. Newer clients have a big loss. So it depends on what your cost basis is.
- [45:34]
Scott Wapner
Okay. Okay. So it's not a one size fits all strategy on something like this because.
- [45:39]
Jenny Herring
I think long term. I think long term, the stock's okay.
- [45:41]
Scott Wapner
Okay, got you. Good stuff. Thank you for that. Finals are next. Let's do final trades. Josh, you're up first.
- [48:51]
Josh Brown
Rocket Mortgage. Great quarter. Very tough environment that should be getting better.
- [48:56]
Scott Wapner
Kevin Meta, Jimmy Cleveland Cliffs, and Jenny Bristol Myers. All right, well, at least three of the four in the green today. Tom Lee's joining me. Eric Woodring will be around for closing bell as well. And I'll see you then a couple after. You've been listening to CNBC's Halftime Report, the podcast you can always catch us live weekdays at 12 Eastern only on CNBC.
- [49:22]
Commercial Narrator
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 halftime reportdisclaimer.
- [50:02]
Scott Wapner
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