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Halftime Report
Threats to the Momentum Rally 2/19/25
00:44:09
Scott Wapner and the Investment Committee debate the rally’s momentum and whether it’s starting to fade. Plus, the desk share their latest portfolio moves. And later, we get to the Setup on some key names reporting tomorrow. Investment Committee Disclosures
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- [00:00]
Scott Wapner
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- [00:32]
Steve Weiss
Hello, I'm Ben Rizzuto, wealth strategist at Janus Henderson Investors.
- [00:36]
Carrie Firestone
Is a brighter future possible?
- [00:38]
Steve Weiss
At Janus Henderson, we think it is. We've worked to help clients achieve superior.
- [00:42]
Carrie Firestone
Financial outcomes and fulfill our purpose of.
- [00:44]
Steve Weiss
Investing in a brighter future together. We never forget that this means our.
- [00:49]
Carrie Firestone
Thinking and our investments are helping to.
- [00:50]
Steve Weiss
Shape millions of futures. At Janice Henderson, we're committed to helping you invest in a brighter future. To learn more, go to Janice Henderson.com 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, the rally's momentum, whether it is starting to fade or not. We'll discuss and debate that with the investment committee. Joining me for the hour today, Carrie Firestone, Jason Snipe, Steve Weiss, Joe Chernova on his way here. He will join us momentarily. We'll check the markets. Carl, told you, new closing high on the S and P. That's where we are. So we started pretty uneven today, Carrie, but we picked up a little bit of momentum as we come on the air today. Thank you, Tech. Some of the big names continue to work, but we do have a bit of uneven trade. How would you answer that question? Is the. Is the rally's momentum starting to fade? Yes or no?
- [01:59]
Scott Wapner
Yes. To be simple, it's fading even though we are at a new high. Right. So we are at a new high. So it's not fading a lot.
- [02:08]
Steve Weiss
Obviously feels like it's fading, and then you turn around and you're positive and at a new high again, because it's, it's. It's resilient at the same time.
- [02:16]
Scott Wapner
Correct.
- [02:16]
Steve Weiss
This market is.
- [02:17]
Scott Wapner
What we've had is some pockets of real strength, even if you look at a name like Metta, an enormous year so far, and financials as a sector have been extremely, extremely Heavy on the market, really moving higher most days. On the other hand, the exuberance generally is definitely weaker. We had euphoria after the election. There's an awful lot of optimism about lower taxes, a better business environment, less regulations, a lot of reasons that the market was enthusiastic. And now we're running into a reality where investors are questioning what is going to work and who is it going to work for. It's just not clear that all of the market and all industry sectors can possibly benefit from as much change as we're seeing. Every day. There's a new piece of change, whether it's the FAA or the FTC or the FDA or everything that begins with an F. I mean, agencies, that is, it means that people are worried and concerned about what might happen. And that's weighing on stocks, Jay, to.
- [03:25]
Steve Weiss
That point, you got the continued threat of tariffs. The President talking about 25% tariffs on autos, chips, pharmaceuticals. Threats not in practice yet. So the market, you know, can sort of look, look past that. A new Reuters Ipsos poll today says the share of Americans who think the economy is on the wrong Track rose to 53% in the latest poll. That's up from 43% in late January. Bank of America today talks about individual investors and the wall of worry being alive and well. Tactically bullish technical patterns remain in place. It's like what we've been talking about, Right. The market still feels like it wants to go up. Many international equity market indices also have positive setups. But sentiment suggests that individual investors are nonbelievers and that the wall of worry is alive and well. Can we continue to climb? It is the question. Yeah, and I think we can. I think you make a great point, Scott, earlier. You know, just in terms of the resiliency we have seen in the market, right? Yes. BREF has slowed down some over the last couple of weeks, but generally speaking, it has expanded this year. You know, when I think about the tariff talk, lots of little detail, delayed implementation. So we know these are negotiatory tools. That's been the playbook that we've seen thus far. But broadly speaking, when I think about.
- [04:45]
Carrie Firestone
What has transpired already, we talk about earnings.
- [04:47]
Steve Weiss
We've been talking about that over the last couple of weeks. You know, 16% earnings growth for the market. You know, we had expected to be around 12, so we're upside 5%, which is significant, 77% beat rate in terms of earnings. So led by financials, consumer services, consumer.
- [05:04]
Carrie Firestone
Discretionary, all having really, really strong years.
- [05:07]
Steve Weiss
So, you know, I Also look back to the inflationary, warmer inflationary prints we.
- [05:12]
Carrie Firestone
Had last week, which the market has easily digested.
- [05:16]
Steve Weiss
You know, so it's a mixed bag right now, but I'm generally more bullish than I am bearish. Weiss. Kerry sort of made the point and we've been talking about it the last several days of. A lot of people came into this year thinking that good returns were going to be a layup. You know, you had all this good feeling about what was going to be ahead. You've had a bit of uneven market action. It's still a resilient tape. We continue to hit new highs. I thought, interesting from you today, played into this whole thing. You're trimming your bitcoin holding, and maybe that is a sign of where overall sentiment and momentum can be viewed within the market. The fact that bitcoin's kind of stalled, you know, it stalled out, reverse a bit. So it's down eight and a half percent in a month.
- [06:06]
Joe Chernova
Yeah. So, you know, I said when I went into it and when I was in it that when the momentum dies, then I'm going to start getting out of it. So I only got out of about 20% of it. It's still been a positive trade. But look, it peaked at 105 roughly after Trump was elected and, and now it's going down. And I think that's a story in the market, frankly, is that the expectations Carrie pointed out was that, look, this is going to be the golden age for, for business can be the golden age for the markets, for investment. And none of that's proven true. You also had, when you nominated people like Kennedy and, and, you know, Tulsa Gap and Hegseth, he said there's no chance they're getting through. And guess what? They got through. So the point is, yeah, we all.
- [07:00]
Steve Weiss
Woke up, and we all woke up the next morning, too, and everything was okay. You know what I'm saying?
- [07:03]
Joe Chernova
Well, hold on, hold on.
- [07:04]
Steve Weiss
I'm just saying we all woke up the next morning, the market woke up the next morning, and we hit new highs on the S and P difference.
- [07:10]
Joe Chernova
You're living in the minute, I'm looking in the future. And Bobby Kennedy just took office. So what did you expect to accomplish? But that's not the point. The point is, is that things that we viewed were completely uncertain, that weren't going to happen, have happened. So now we look at tariffs and we keep saying 25% is a negotiating tool. Sure it is. But are we going to come out at 10%? Who's going to be the trading partners that are going to be blessed. Right. We used to look at Ukraine as an ally. Now Putin's not the dictator, it's Zelinsky. So the point is, there's great instability. Now the fda, you saw major headcount cuts there. The government's bloated. Unquestionably, every agency is severely bloated. But CEOs would feel much better if there were a communicated strategy as to why they're making the cuts, how they're going to make cuts. Because it's just like anybody lived in New York who could afford to be mobile. So the richest moved and you're left with those that are depleting your tax base. So it's the same thing. Employees in the government thought they had security, remission.
- [08:18]
Steve Weiss
What does this have to do with the market?
- [08:20]
Joe Chernova
It's got everything to do with the market. Because there's instability. It's not good for CEOs. CEOs aren't saying it, but we had a former governor of the set of the Fed when the question was put to him today, if you were a CEO, would you be making any investments? You'd be out. You know what he said? They'd be crazy too. So that's what has to do with market. So right now I'm not a major seller, I'm a trimmer, but I'm not putting new capital in either. So the, the IBIT proceeds are not going into it until I see a clear path regulation. That's not going away. We've seen no moves there. As a matter of fact, Vance has doubled down in saying that, hey, you know, big cap tech is too big. So the point of it is, Scott, and it all has to do with the market. If there's not investment coming from the corporates, I'm not. If there's not investment, ridiculous.
- [09:08]
Steve Weiss
Anything you're saying, I'm simply, literally thinking. I hear all you're saying. I mean, there are plenty of people who are on your side of the point of view and there are plenty of people who are on the opposite point of view. And the market somehow has been resilient enough to look through a lot of what it has deemed to be noise, right? And achieve this.
- [09:28]
Joe Chernova
How does it play out? Your question? Here's how it plays out.
- [09:31]
Steve Weiss
Who knows? Right now, earning, you know, it plays out. It plays out that earnings are up 15%. And that's why, that's why the market is where it is. Because it cares more about that today than it does anything else they cared.
- [09:43]
Joe Chernova
About it but it's not still going up. That's hitting a new high on very low volume on a vacation week. So money's not coming in all off the sidelines be of a flow show aside which is useless in terms of allocating that to the market and what you do there. Money's going to stay on the sideline. It's not going to start selling stocks because it's going to wait out see what actually takes. But in the meantime you'll see an atrophy and that's what you're seeing right now. I think that will continue. This is not a political statement. Nobody could sit here whether you're arch conservative, Republican, Democrat or liberal. Of course.
- [10:17]
Carrie Firestone
Course.
- [10:18]
Joe Chernova
And I'm none of those. Right. I'm a moderate and say there's stability. I know where the economy is going. You heard what you said the poll 53% said we don't like the direction. What do you think CEOs are saying? Private equity bankers I've spoken to them all. They're all flummox. They don't know where to go retire. You not see M and A and you haven't seen it.
- [10:42]
Steve Weiss
Joe, welcome.
- [10:43]
Carrie Firestone
Scott, good to see you.
- [10:45]
Scott Wapner
Thank you for showing us.
- [10:47]
Steve Weiss
What about the idea of whether the momentum of the rally's fading. Yes. Every time you want to suggest not you but the greater you want to suggest it might be this market says no I'm still really resilient. I've got my eye on the prize and the prize is earnings are going to continue to remain robust. AI is the and remains the most dominant stock story within the economy and you can see that through the news of the day. Microsoft new quantum computing chip. Apple new product today. Yes, we've been talking about Metta the winning streak ending but it ended after 20 straight up days. So that's where the money continues to go. You look at the flow show from as Weiss was talking about with bank of America Tech led the inflows biggest inflow since December.
- [11:38]
Carrie Firestone
So I guess the way I think about it and we talked about this yesterday is we've had three instances so far this year and they were all on Mondays elevated volatility market drops why on headlines consistent to what Stephen is talking about. We reversed the positive momentum of late yesterday which was really interesting by the way how we'd rallied into the end of the day. We reversed that overnight. We reverse that again on the conversation surrounding tariffs I think at a certain point if you're bearish and Steve, please don't think that's not what I'm saying. I know you're invested, but if you're a bearish, you're frustrated right now, right. You're frustrated because you're getting the headlines that you need to really shake out a market that from a sentiment and position standpoint, towards the end of 2024 was rather bullish. For sure. You're getting those headlines and you're not getting the actual negative response. So to your point, there's something underneath this market that is really acting as a very strong foundation and it's the reason why you have this resiliency. It's called earnings. It's called the disinflationary trend. It's called the Federal Reserve that. Yes, while they're pausing, yes, they're on pause. They still have intended that they want their next move to be another rate cut. And you have the. If the rest of the world. If the rest of the world should be so viewed so poorly in terms of investing. I don't want to invest in Brazil. I don't want to invest in Mexico. I don't want to invest in China or Europe. Why year to date are they performing so well? And they are clearly the targets of these tariffs. That's telling you something about the overall environment. Doesn't mean that we're in an environment we're going up 20, 25% like we did in 24 or in 23. But it's an environment where you could chase alpha, not look towards this perspective.
- [13:28]
Steve Weiss
Feels to me like it's only a matter of time before things roll over because of the uneven policy making, the poll of, you know, are people feeling worse off about the direction of the economy? Well, maybe they are today. I mean, egg prices obviously have a lot to do with that. Right. People trying to put food on the table. That makes you feel negative about the economy when you're spending 10 bucks for a dozen of eggs.
- [13:49]
Carrie Firestone
Okay. And if in fact that's the case, I think we will get a very clear understanding about how that traces out the market will. The market will display the type of price reversal that we've experienced three times already in 2025. And it will not have the immediate resiliency. It won't have the V shaped recovery. Over the next several days, you will see a deleveraging process. And I think what's critical is how do you respond to that? Because that's generally where people lose the most money. I love when the bears come out and say, as the market's rallying, we're bearish, we're bearish. We're bearish. The minute the market rolls over and it rolls over for about a week or two, they take the other side and say I caught it. And now they're trapped onto a deeper decline. I think you will have plenty of opportunity when this market begins to find its inflection point in the subsequent days, in the subsequent weeks to pare back your positioning. That's the right moment to do it.
- [14:45]
Joe Chernova
From my perspective, the sector's gotten really hit, has been defense. Right? That's right there. It's in spending. And you take a look at and I'm talking about, you know, the defense areas that are high tech, like Booz Allen, like Lighthouse. I mean, you take a look at the chart and Booz Allen, I mean, you know, I thought they report a good quarter, but they, they were one of the few to talk about the uncertainty. Lighthouse reported a good quarter with no talks of uncertainty. So the market is looking through to some that are highly regulated. Do you really want to be a biotech investor over the next, you know, who knows, six months here we know the FDA has been cut. So one of the companies we're involved in, they were told, look, it's at least two months. And we thought we'd get approval two weeks ago. But after the news came out over Friday and Saturday about the cuts and furthermore, you don't know what's going to go there. So why should biotech be where it is? To me, that's a source of funds.
- [15:42]
Scott Wapner
But don't you think we've got a big inflection point coming next week when in video reports now, I think that's.
- [15:48]
Joe Chernova
A couple of days. You know what they're going to say.
- [15:51]
Scott Wapner
I think it's no, we don't.
- [15:52]
Steve Weiss
I don't know.
- [15:52]
Scott Wapner
We don't know. I think it's.
- [15:55]
Steve Weiss
We don't, we really don't know the magnitude of what a.
- [15:59]
Joe Chernova
We don't know if they can beat or miss.
- [16:01]
Steve Weiss
Right. Well, I mean, it'd be a shocker probably if they missed, but the degree of the guide is going to be a pretty big determining factor. Speaking of, you have a new charitable trust, right? And you bought Nvidia. You added two stocks to it. We'll talk about one later. But Nvidia. Welcome to the Nvidia investing game.
- [16:21]
Scott Wapner
Well, I think welcome to 6% weight in the S&P 500. I think that that's a factor that should be important generally. We've made a decision not to own in video. We own Broadcom and have added to it at a firm but at the firm, but for, for the trust we thought a 6% weight in the S and P being naked. That stock is really a commitment and that's a statement that we didn't feel we wanted to make right now. And so we added we also think that the stock has been in a decline. It's recently come back but it was an opportunity to take advantage of it at a, at a price that was, you know, off, off the high. And there's, there's no question that with everybody spending $100 billion we just heard in the last few weeks on artificial intelligence, a lot of that goes toward their chips names which are dominant and will remain dominant.
- [17:16]
Steve Weiss
What about the non mag7ai names that have gone up a lot. UBS talks about that rally and says there is more to go despite strong performance. So it's not just the Nvidia's, it's not just the Metas, it's Palantir is over the last year is up 409% Vistra is up to 73 carries, Broadcom's up 83. Joe, you got that two Vertiv, Oracle, Arista, Dell, those are all up at minimum 40% over the last. Most of them up a lot more than that. Do I think that there's a lot more to go despite Joe, that the strong performance that we've already seen.
- [17:57]
Carrie Firestone
Some people might not like this but you're relying on price. You're relying on price until you come into an earnings report and you're greeted by an earnings report like you got today from Aristor Networks. Look exactly what was reported. Steve mentioned the guidance, the guidance overall so far for the S and P earnings season, Scott has not been good and it can't be good because how are you really going to guide with a degree of clarity and confidence when you're unsure what the effect of tariffs ultimately is going to be? So the guide came in a little bit short here for Aristor Networks and the street didn't like that. The street was expecting 15 to 17% revenue growth. All right, Aristor Network says we're going to give you 17% revenue growth. Right? That's not good enough, right? Maybe kudos to David Tepper because he, he got out of this stock a while back. So what has that done? Technically the stock is breaking down now. It's below its 100 day moving average. You want to look towards the low on that Monday, January 27th. The deep seek low I think was like 97 60. Does it hold above that level? That would be critical support. But clearly the momentum has reversed. And as I said in a lot of these names, you're relying on price until the earnings kind of smack you in the face and say, wait a second, okay, all the good news is priced in. And at that moment it's incumbent upon you to have a risk management management strategy to reply.
- [19:20]
Steve Weiss
Jason, you own a net.
- [19:22]
Joe Chernova
Yeah.
- [19:23]
Steve Weiss
And I think, you know, to Joe's point, you know, the guide wasn't high enough. I mean, that's a little bit of the perspective. But let me say this. You know, there's softness on Metta, right.
- [19:33]
Carrie Firestone
So Metta was 20% of their business.
- [19:35]
Steve Weiss
Just a quarter ago. It's now 15. But Microsoft has slowly ticked up from 18 to 20%. So when I think Oracle as well. Oracle as well. So broadly, when I think about, hey, most of their businesses with the hyperscalers.
- [19:48]
Scott Wapner
Right.
- [19:49]
Steve Weiss
So they're, they're not terribly outside of that mix.
- [19:52]
Scott Wapner
Yes.
- [19:52]
Steve Weiss
When you think about the uncertainty around these names, it does impact names like Arista and I think that's what the street is saying. There's some other tech names that are in the news. I wanted to get to calls on Salesforce initiated a buy. Top pick at redburn, which has made calls on a number of stocks today, Jason. I mean ServiceNow, they initiate a buy. That's you, Joe. You have Salesforce and ServiceNow. Adobe is really the only one that they're kind of lukewarm on. Kerry, which is, which is yours. They seem to be on the outside looking in to this whole revolution. At least that's how the market Joe has, has judged it to this point. Don't you think?
- [20:31]
Carrie Firestone
Look, the stock is down what, 15% over the last year. I'm of the belief, and we moved out of this name. I'm of the belief that while it does offer an interesting value proposition, I don't think you can ignore the fact that AI is cannibalizing a lot of the existing products. And that's just my view that that's being priced in. And one of the reasons why the stock is underperforming relative to names like you're. You're talking about ServiceNow and Salesforce.
- [20:57]
Steve Weiss
So Salesforce is $400, the price target. And ServiceNow, as I said, was also initiated with a buy, I believe Salesforce.
- [21:04]
Carrie Firestone
Reports at the end of the month. I think that you could expect here a very strong quarter based on AI. It's really a second derivative in that AI Halo story. Story rather. And let's remember, I mean, they've Made a series of acquisitions that are now becoming accretive. So I look at Salesforce, I think Salesforce is in a good place.
- [21:25]
Steve Weiss
You're looking to trim Salesforce, aren't you?
- [21:26]
Scott Wapner
Yeah, I think that Salesforce is a name that having had a really great performance over the last few months, you know, often you think about this company is moving with momentum and then, you know, they can hit a little bit of a hard patch the stock because there's an awful lot of, I'd say, promotion that comes with the CEO who's great, he's fantastic, but it's very sort of exuberant and excitement and then they have to perform and then you don't know if there's going to be an acquisition. So sometimes the best strategy with Salesforce is to trip when the stock is outperformed.
- [22:04]
Joe Chernova
Salesforce and ServiceNow can much better display what AI will do for them than what Adobe can. So I think that's part of the issue in the relative performance, number one. And number two, Adobe has. I'm not saying it's a limited product, it's got big products, but it's also ripe, frankly, for. For disruption with a high. And with other software makers.
- [22:31]
Steve Weiss
A couple other names. CrowdStrike target up again at Morgan Stanley, which their base case target seems to be 429. But they suggest despite the recent run and the recovery has been remarkable in this stock, they see further upside to their $550 bull case given positive revisions and potential reacceleration in one to two years.
- [22:53]
Carrie Firestone
Joe, it's really the cyber trade and it's been CrowdStrike fortunate. Palo Alto. Yes, we exited Palo Alto. We're still fine. We have Fortinet, we have CrowdStrike. But it's been the secular tailwind surrounding that thematic investment philosophy. And you could apply that obviously to places like GLP1 and the artificial intelligence and generative AI Halo. But cybersecurity is real and it's being represented in the performance and really the resiliency of each of these three stocks. Josh talked about it yesterday. That is one remarkable comeback that CrowdStrike has had since the summer. And credit Stephanie Link. I remember Stephanie was buying in the middle of the summer when that stock was in free fall.
- [23:41]
Steve Weiss
Anybody else you want to praise on the show today?
- [23:43]
Carrie Firestone
Just you.
- [23:43]
Steve Weiss
Trying to get in the face of everybody. My gosh, think of some more people. All right. Okay. Applovin, you want to talk about that one? Does anyone. Target raised to 600 at Citi. So we're. Or the Tepper Link, who else has made me share names? Well, in other names, I mean, on.
- [24:04]
Carrie Firestone
This one, I should pat myself on the back.
- [24:05]
Steve Weiss
Well, you will, but just talk about it first before you get to that point.
- [24:09]
Carrie Firestone
It was a remarkable quarter. I mean, and this company is out of nowhere really reporting the type of earnings growth that you can't find in a lot of areas of the market. The revenue growth and the acceleration in the revenue growth is being rewarded through price.
- [24:28]
Steve Weiss
And I said, yes, 600 bucks seemed like a reasonable price to you.
- [24:31]
Carrie Firestone
You know, how high, Scott? How high is high? I really don't think anyone knows the answer to that question. It seems high to me. It seems high to me. I thought the reaction the other day off of earnings, it looked like the stock got a little bit tired. But I'm not going to be the one to say, okay, this is the moment where the stock reaches a peak. This has been a remarkable story. It's been a remarkable story from well below. Underneath 100, you're seeing the continued revenue growth. You're seeing the affection in terms of it being accumulated in growth funds in the, on the institutional side. And I'm not going to be the one that say, okay, that's going to reverse. Why would it reverse at this point? The only reason would reverse would be on exhaustion of price because the earnings last week were certainly good enough.
- [25:16]
Steve Weiss
Why some move before we take a break? You're out of GXO after a long time.
- [25:21]
Joe Chernova
It's been a very long time.
- [25:23]
Steve Weiss
Why did you bounce this now?
- [25:25]
Joe Chernova
The quarter was not good. The growth is really slowed dramatically. They're essentially without a CEO. Malcolm is. Is retiring and I do think it's a good acquisition candidate, but I just can't own a stock because I think it's going to be acquired. Well, I'm not sure that the evidence for regaining that growth is apparent. So it's been dead money to. To negative money for an extended period of time. And at some point you just got to reassess. So I thought, get out. Let me see if they get things fixed and then I'll go back in.
- [26:00]
Steve Weiss
Okay, we'll take a break. When we come back to Builder Blues, homebuilders are selling off today. We'll find out how the committee is playing the names they own in that space. Plus, we have the trade on today's top stock in the S&P 500 hitting a record high today. We'll talk about it, we'll reveal it, we'll trade it next.
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Carrie Firestone
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Carrie Firestone
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Scott Wapner
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Carrie Firestone
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Scott Wapner
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Steve Weiss
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- [28:03]
Steve Weiss
All right, we're back. Housing starts were just flat ugly today. The biggest decline since March of 24. So obviously you look at the builders like Dr. Horton, Jason Snipe, which is yours? Yours, Excuse me. What do you do with this number? What does it mean? I mean housing is already dicey. You know that it is given where rates are. Fed chair Powell talks about it every five minutes when he has a chance to talk about the housing market just can't get out of its own way. Yeah, no, there's no doubt about it. And I think obviously, you know, 30 year, it's plus seven is absolutely an overhang for the sector. You know, for Dr. Horton, they're in the first time home buyer market. 69% of their homes are sold for less than 400,000. So I think there is some concern around there. They're obviously providing some incentives and giveaways for folks to draw folks in but that's hurting margins. So you know, it's a kind of wait and see moment for us here. We'll Kind of see through the buying season in the next couple of quarters what we like to do with the stock.
- [29:01]
Scott Wapner
But it's definitely under review for us.
- [29:03]
Steve Weiss
Yeah, Joe t, you own NVR. That's a 52 week low. You sold Dr. And Pulte and Lennar in the recent rebalance. But is it a good spot to be in any of these housing stocks these days?
- [29:16]
Carrie Firestone
So the homebuilders over the last 18 months, the correlation has really been number one, you had the earnings acceleration, you had the revenue growth acceleration. And that was despite what was beginning to build, which was the incentives. And if you were fundamentally analyzing the home builders, you were seeing, seeing those incentives and saying, okay, we're going to see a deterioration in that revenue growth and that earnings growth. And that's exactly what happened. I would say that the kind of the last leg that kept the homebuilders elevated last summer was the fact that the 10 year was continuing to decline below 4%. I think it got to 3.59 the day before the FOMC meeting in September. Well, guess what, look at the charts. That's the actual top in all of these names that we're talking about, like Lennar, like, like Dr. Horton, like Pulte and like NVR. So where do you go from here? I don't think they're going to step back on the incentives. I don't see a fundamental improvement there. I think it really has to come in the form of a critical reversal in where the tenure is. I think you need 50 to 75 basis points lower to say, okay, you could restart the positive momentum.
- [30:27]
Steve Weiss
Let's talk about CarMax. Kerry Oppenheimer took it off its top ideas list. We can look at the stock. What's your, what's your take on this name?
- [30:37]
Scott Wapner
Well, the stock has had a rough time over the last couple of years and if you look at the chart, it's really been up and down and up and down. The last quarter for CarMax was the first time where sales really started to pick up. They've invested a lot in their online platform, which is the best in the industry. And we really think we're speaking starting to see some momentum that we're going to build on in the current quarter and over the next few. So we like the way the stock's acting.
- [31:02]
Steve Weiss
You don't, you don't regret buying it?
- [31:04]
Scott Wapner
Well, we wish we hadn't owned it for the period when it's underperformed for sure. But now we think it's an attractive name. Yes.
- [31:10]
Steve Weiss
So the worst is behind it.
- [31:11]
Scott Wapner
Correct.
- [31:13]
Steve Weiss
Visa, top pick at Morgan Stanley. That's a record high today. You want to talk about that one? You own that one?
- [31:18]
Scott Wapner
Yeah. Well, Visa just keeps hitting new highs and it's been in the right place for these past 10 years. We've owned it most of our history at Orius. It's 20 years of visa and the stock's not even 20 years old. But it has taken over a greater share because more and more purchasing goes on cards. And they're the best technology company in the business. And they will continue to maintain that dominance, which grows as spending grows. And we look, we're not going to have any pennies soon. People are going to use credit cards more.
- [31:50]
Steve Weiss
Capital One, speaking of upgraded at B of A. That's to buy from neutral. The Target goes to 235. Joe. There you go. 206 is where it is now. They had 207, so they had to bump it up. If they're still bullish, which they are as they upgrade it.
- [32:04]
Carrie Firestone
Shareholders approve the merger between Capital One and Discover. This creates the largest credit card company in the United States. This benefits Capital One. They could focus on debit and credit the streets rewarding it. Capital One's balance sheet is, is in a strong position. I think both of those names work well until the merger is complete.
- [32:24]
Steve Weiss
All right, let's get the headlines now with Silvana now. Hi, Silvana.
- [32:27]
Scott Wapner
Hey, Scott. Good afternoon. The United States has declared the Sinaloa cartel, Grand Aragua, and other drug cartels as global terrorist organizations, according to a notice issued today by Secretary of State State Marco Rubio. The groups are a risk to US national security, foreign policy and economic interests. The move comes as President Trump has ramped up immigration enforcement against alleged gang members in the country. The US Aviation sector is calling on Congress to disperse emergency funding for air traffic control technology and staffing following a series of crashes that has raised questions about air safety. In a letter to Congress today, the sector's industry groups wrote that the FAA needed new technology and about 3,500 additional air traffic controllers. And the top US prosecutor in Washington has launched an investigation into threats against workers at the Department of Government Efficiency and has named Senate Minority Leader Chuck Schumer as a target of the probe. In an email seen by Reuters, interim U.S. attorney Ed Martin said said the probe was inspired by a phone call with a Doge staffer that Senator Schumer has yet to respond. Scott, I'll send it back to you.
- [33:41]
Steve Weiss
All right, Silvana, thank you very much for that. Silvana. Now Coming up, looking for growth outside the US where you can find the best opportunities right now, Big story. A lot of people are talking about that, including Bob Pizzani today in ETF Edge, which is next.
- [33:56]
Carrie Firestone
Are you still quoting 30 year old movies? Have you said cool beans in the past 90 days?
- [34:02]
Steve Weiss
Do you think Discover isn't widely accepted?
- [34:04]
Carrie Firestone
If, if this sounds like you, you're stuck in the past.
- [34:07]
Steve Weiss
Discover is accepted at 99% of places that take credit cards nationwide.
- [34:12]
Carrie Firestone
And every time you make a purchase with your card, you automatically earn cash back. Welcome to the now it pays to Discover. Learn more@discover.com credit card based on the February 2024 Nelson Report. The CNBC Investing Club with Jim Cramer.
- [34:27]
Steve Weiss
Is accepting new members. Get invested.
- [34:30]
Scott Wapner
Join the club. The CNBC Investing Club is for everybody. I joined to achieve financial freedom in retirement.
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Steve Weiss
Jim Cramer's the benefit you get that you can't get anywhere else. It's a great value. He teaches how to invest versus just what traits to make the return on.
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Carrie Firestone
Investment for the club pays for itself. Join the club. New members save with a special offer for unlimited time@cnbc.com joinjim terms and restrictions apply.
- [34:56]
Steve Weiss
All right, welcome back. Europe and Asia have been outperforming the US Since President Trump took office. Again, European banks are doing better than US Banks and China tech outperforming the qs. For more on this global rally with Bobzani and today's ETF Edge. We bring him in. Bob, this, we've been talking a lot about this this week that the bullish calls for investing outside the US have really picked up.
- [35:18]
Carrie Firestone
Yeah, it's, it's very interesting to watch. And one of the issues here is how do you invest overseas in the midst of potential trade wars. So I want to talk here with Perth Tolle. She's the founder and CEO of Life and Liberty Index and she runs the Freezer Freedom 100 Emerging Market ETF. They use personal economic freedom metrics to invest in countries like Taiwan and Chile, South Korea, Mexico, Poland, Brazil and others. Perth, you heard Scott there, there is a sudden spate of interest in investing overseas. Europe and China have outperformed the US in the last few months. Your Freedom ETF is up 10% this year. It's outperforming the US and emerging markets. Look here, like Poland, South Africa, Mexico, they're all acting better. Why is this happening? Just give us an overview of why global is suddenly in.
- [35:59]
Scott Wapner
Yeah, thanks, Bob. Yeah, this is cyclical. You know, sometimes the US Performs better, sometimes international performs better. Emerging markets coming Back this year after not having a great year last year. And the US Had a fantastic year last year. So this is why we diversify. And emerging markets can be scary, but we try to make it less scary by being in the places that are more free, that have better rule of law and have better protections.
- [36:20]
Carrie Firestone
Well, I want to get into that because there's a theory behind what you're having. It's just not buy overseas. Your ETF invests in emerging market countries with high freedom indices. Here's Taiwan, Chile, South Korea, Poland, Brazil. What are these freedom metrics that you're using and how do they help countries get ahead? You say they make a difference, these metrics?
- [36:38]
Scott Wapner
Yeah, absolutely. Emerging markets are full of autocracies, countries just coming out of autocracies. Sometimes, you know, investors want that growth from the emerging market space, but don't want to be funding the things that go on in some of these countries. So we try to make it easier for investors a safer way to invest in emerging markets by freedom waiting instead of market capitalization, weighting. So instead of having a large weight to countries like China, you know, before, before the war, Russia, Saudi Arabia, these types of countries, we have higher weightings. The freer countries like Taiwan, South Korea, Chile and Poland. And that has given us a lot of exposure to the freer countries which have better growth going forward and have more sustainable returns, more better recoveries from drawdowns, more resiliency, more efficiency in their use of capital. So we use both personal and economic freedom metrics from the Cato Institute and the Fraser Institute that have things like terrorism, trafficking, torture, and you know, as well as things like business regulations, rule law and so forth.
- [37:36]
Carrie Firestone
Now, I want to hit the issue of tariffs here because that's coming up in a lot of this on the tariffs. There are some countries like Chile and Poland, Poland, they have very low tariffs and some countries like India do not. They have very high tariffs. Where do you stand on this? Do tariffs help or hurt a country's economy and stock market?
- [37:54]
Steve Weiss
What's.
- [37:54]
Carrie Firestone
What's the right way to look at that?
- [37:55]
Scott Wapner
Yeah. So free trade is such a huge, important piece of economic freedom, which is a huge, important piece of our strategy. So we're absolutely pro free trade. And, you know, tariffs are a constraint on, on that. So we do not think that tariffs are helpful to the economy that's imposing them. You know, India has a low allocation in our fund. It's still in, it's included, but it has a low allocation largely because of their protectionist policies. I mean, they have the highest tariffs out of all of these countries. So, so yeah, absolutely. The tariffs are our view is that it would hurt the countries that are imposing them.
- [38:31]
Steve Weiss
All right.
- [38:31]
Carrie Firestone
We're going to have a lot more coming up on international investing on ETF Edge. It's 1:10pm Eastern Time. We're going to discuss all of this. The impact of tariffs on overseas investing, which countries have tariffs and non tariff trade barriers and which have pro fair trade practices. Here Pert's going to be joined by ETF industry investor Tom Leiden, former head of Veriti. That's ETF edge.cnbc.com Scott, back to you.
- [38:52]
Steve Weiss
Okay, Bob, thanks for that. That's Bob Zani. Straight ahead. We have more committee moves. Kerry has a new buy to tell us about as well. We'll tell you about it next.
- [39:19]
Scott Wapner
All right.
- [39:19]
Steve Weiss
Let's talk about another move once again. It is related to your charitable trust which you recently set up and you bought Bristol Myers.
- [39:26]
Scott Wapner
Yeah.
- [39:27]
Steve Weiss
Which has been down over a bunch of metrics month to date over three months. Is that why you bought it now?
- [39:32]
Scott Wapner
Well, no, bought it because this is a stock and part of an industry that has underperformed for many years. Bristol had a great portfolio of names like Eliquis, Optivo, Yervo, great drugs that have all come off patent. So they're suffering through a couple of years where drugs are going to be declining in revenues, but they're bringing on new drugs that are being added to the growth portfolio. And it's under 9 times earnings, 4.6% yield. If any industry can benefit from AI, it's drug discovery. And they've done that already with some of their new introductions. There's schizophrenia drug had help from AI in its targeting and synthesizing. And we believe that there are many other drugs in cancer and in autoimmune disease diseases that Bristol will bring on the market over the next few years.
- [40:20]
Steve Weiss
And you don't, you don't own that many names in the health care space now for, you know, the history you have in covering it and owning a lot of these stocks. So it's meaningful even more so when you choose one over theoretically everything else.
- [40:35]
Scott Wapner
Yeah, I mean this might be, you know, an early name start, but that's been a good decision not to own these drugs like they have not proposed, formed well for 10 years and it may be time that things are starting to improve on different levels for them.
- [40:48]
Steve Weiss
Okay, let's stay with health care for a minute because Silicon Valley is chasing the potential in the space as well. Kate Rooney, following The money with some exclusive new reporting for us today. Hi, Kate. Hey there, Scott.
- [40:59]
Scott Wapner
So startup Open Evidence is raising a fresh round of capital from sequoia at a $1 billion valuation. It is the latest major financing we're seeing in AI and Health Tech and a slice of the market that's catching a lot of attention here in Silicon Valley. It's also seen as an antidote to some of the fear around the more nefarious uses and the downside around this technology. Optimists think that I could help cure diseases and at least make burnt out doctors more productive. Open Evidence is working on that burnout problem with a chat bot for doctors. The company claims it's already being used by a quarter of US physicians out there. Founder Daniel Nadler pointed to how much higher the bar is for accuracy if you're going to be in a clinical setting. Their model was trained on only peer reviewed medical journals, so it wasn't connected to the Internet when it was trained, which he says helps the trust factor. And then Sequoia partner Pat Grady led this round. He told me the opportunity is massive in health care at the clinical side, back office, for example. But investors need to be picky.
- [41:57]
Carrie Firestone
There are a lot of great ideas.
- [41:59]
Steve Weiss
In health care, but it is such a complex system. It's really, really hard to cut through layer upon layer upon layer of sort.
- [42:07]
Carrie Firestone
Of barnacles that have been becoming crusted.
- [42:10]
Steve Weiss
Upon the boat of the health care system over the last several decades.
- [42:14]
Scott Wapner
Health Tech Overall brought in $3.3 billion across about 250 deals last year. That's according to Pitchbook, while Medtech brought in roughly 2.2 billion. And then funding is still massive out here, accounted for roughly one in four venture deals last year. Scott.
- [42:32]
Steve Weiss
Kate, thanks. It's Kay Rooney with that exclusive new reporting. Health care guys has done pretty well, up 5%. Plus, Joe, you have a lot of exposure here.
- [42:42]
Carrie Firestone
Yes, and there's two names that I would focus on when you're thinking about tech. The combination of healthcare and Tech Intuitive Surgical, which has worked phenomenally well the last five years. I think it's one of the best performing S and P health care stocks. One more recently, we don't own it in Jyoti. I don't own it personally, but it has very strong momentum and it's participating in that test tech health care story. That's Quest Diagnostics ticker symbol dgx performing relatively well. Edwards Life Sciences. Life Sciences. I'd like to own it. I think it should be working. It hasn't worked really Well, I would just put that on your watch list.
- [43:19]
Steve Weiss
Jason, your best name between AbbVie, you do have the IBB. Yep. UnitedHealth and Stryker. So I think I like Stryker the most. I think the medical device and when I think about the aging demographic and elective surgeries and those coming back online, Covid is long over. And I think that's the most profitable.
- [43:35]
Carrie Firestone
Piece of the healthcare business.
- [43:36]
Steve Weiss
All right. Up next, Santoli with his MIDDAY word. We're back with senior markets commentator Mike Santoli for his MIDDAY Word. Fair to say tired but resilient. Is that an accurate way to describe this market in your mind?
- [43:58]
Carrie Firestone
Yeah, I guess tired on one level or maybe, you know, just essentially in no hurry. I mean, it's because it's not as if it's been on a sprint and all of a sudden it used up all this energy. It's been much more of a March than, than really a headlong run to this high. And as we get to approach a new record high, it got there almost grudgingly. But if you go down the checklist of okay, should I be concerned about anything about the manner in which we got here, you don't come up with too much. Yes, it's a very selective market. Market breadth is again negative today, but the index is able to kind of hang flat there thanks to a couple of names to the upside, like Tesla. But in terms of credit being okay, I really the overall trend, I mean, sentiment has come off the boil. I think there is a window for greater volatility. We roll off out of these expirations this week, latter part of February. But when you're up this much in the middle of February, if you make a new high in February, really the rest of the year historically says nothing terribly nasty happens in terms of lasting downside. So I guess we can lean on that.
- [44:59]
Steve Weiss
Well, because the back half of February has tended not to be so great, maybe we're going to buck that a little bit. Again, we're above the closing high on the S and P despite any bit of negativity that anybody wants to point out.
- [45:12]
Carrie Firestone
Yeah, I mean, seasonals have obviously it's really just the atmospheric conditions. It doesn't mean something's going to actually make the weather bad. And I think that, you know, we're in this zone where even if it does, I think you'd consider it a pretty routine pullback if it does, you know, get a little bit of a hold on the indexes unless you you, you know, you're down 3 to 5%.
- [45:31]
Steve Weiss
From here all right, I'll see you on closing bell, Mike, thanks. That's Mike Sentoli. We'll do finals next. A little set up before final trades. Wal Mart is tomorrow morning. Joe, record high on Friday, which you own.
- [45:50]
Carrie Firestone
I would expect a measured outlook as it relates to the guidance. You have the uncertainty surrounding interest rates and tariffs, strong Q4, but the guidance is the key.
- [45:58]
Steve Weiss
What about Baba? That's tomorrow too. We've been talking a lot about that lately, obviously.
- [46:03]
Carrie Firestone
We sure have. I took a recent position and obviously I'm either going to look like a hero or a fool tomorrow morning. Baidu wasn't so hot last week. We'll see if AI is really acting as a significant catalyst for BABA.
- [46:15]
Steve Weiss
All right, I'll see on closing bell, of course. 3:00 Eastern. Dan Greenhouse will be with me. JP Morgan's Elise Ossenbach, Morgan Stanley, Sherry Paul and the venture capitalist Richard Williams will be here post 9. So we're looking forward to that. What's your final trade garment?
- [46:27]
Carrie Firestone
40% revenue growth.
- [46:28]
Steve Weiss
Okay, thank you for that. There's a nice look at that stock, Weiss Alphabet.
- [46:32]
Joe Chernova
It seems to have stabilized and is on the move. Back up, I believe.
- [46:35]
Steve Weiss
Jay ServiceNow they're monetizing their tools.
- [46:39]
Scott Wapner
Carrie CX natural gas producer, small cap stock.
- [46:43]
Steve Weiss
Okay, we are above a new closing high on the S and P yet again. We'll see how this day develops into the into the close. The exchange is 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.
- [47:01]
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.com halftime reportdisclaimer.
- [47:41]
Carrie Firestone
Check out the all new CNBC Sport Podcast where sports business and investing collide from media deals to team valuations, private equity moves and more. Catch the biggest business stories on the CNBC Sport Podcast. Listen on your favorite platform.