Halftime Report: Time to Buy the Tech Wreck? (February 28, 2025)

Host: Scott Wapner
Guests: Stephanie Link, Jim Labenthal, Jenny Harrington, Kevin Simpson
Release Date: February 28, 2025

1. Introduction and Market Overview

Scott Wapner opens the episode by addressing the current volatile market conditions. Despite the recent Personal Consumption (PC) data meeting expectations, the S&P 500 is on track for its worst month since April, and the Nasdaq is experiencing its worst month since September 2023. Factors contributing to this volatility include the Atlanta Fed GDP Tracker reporting a negative growth of -1.5% for Q1 and unexpected contractions in personal spending.

"[...] the Atlanta Fed tracker came in at minus 1.5%. All of that was net exports down 3.7. Excluding that, you're running at 2.2%. We are definitely slowing."
— Kevin Simpson [02:17]

2. The Tech Wreck: Is Now the Time to Buy?

The primary focus of the discussion revolves around the so-called "Tech Wreck" and whether the downward pressure on major tech stocks presents a buying opportunity.

Jim Labenthal shares his perspective on Nvidia, which has fallen below a $3 trillion market cap and is down double digits this week. He articulates a bullish stance despite the decline, citing strong earnings growth potential.

"I am happily adding to it. I do want to make a qualification here [...] Maybe we're in a correction. I doubt we're going to get a full correction, but I think if we do, it's going to be like last August, which was over in a month."
— Jim Labenthal [05:52]

Conversely, Stephanie Link offers a more cautious approach, highlighting that while tech giants like Amazon and Apple are down from their peaks, their year-to-date performance remains strong. She emphasizes that slowing growth rates are making high valuations less attractive.

"They are really not that off that much year to date. Amazon's down 5% year to date. Apple's down 5% year to date... when people are feeling bad, they just don't spend as much. I would not be buying any of these yet."
— Stephanie Link [08:17]

3. Stock Moves and Investment Strategies

Jenny Harrington discusses her strategy of writing short-term covered calls to generate premium income, particularly in volatile tech stocks like Microsoft and Robinhood.

"When you have volatile markets like we're seeing here, writing covered calls is an amazing way to buffer the downside, bring in premium."
— Jenny Harrington [07:50]

Kevin Simpson elaborates on his selective approach, expressing reservations about certain tech stocks like Tesla and Microsoft but showing confidence in others like Amazon and Alphabet.

"I'm underweight Apple and Microsoft and now I'm bigger in Nvidia."
— Jim Labenthal [11:10]

Additionally, discussions highlight moves in the momentum ETF, which has seen back-to-back negative weeks, impacting stocks like Conscript, GE Vernova, and Robinhood.

4. Momentum and ETFs Performance

The conversation shifts to the underperformance of the Momentum ETF, experiencing its worst weeks since December. Kevin Simpson notes significant declines in stocks such as Broadcom and Dell Technologies.

"Valuations along with the growth, along with the beating expectations and raising expectations, that's what I care about."
— Kevin Simpson [14:23]

Jenny Harrington mentions strategies like writing covered calls on Robinhood to capitalize on volatility.

"We netted a $7 profit selling a call on Robinhood. We added to the position this week and we actually wrote a call yesterday again bringing in another dollar for a March expiration."
— Jenny Harrington [16:38]

5. Cryptocurrency Update

The discussion briefly touches on the downturn in Bitcoin, which is facing its biggest weekly drop since the FTX collapse in November 2022. Jim Labenthal highlights record outflows from Bitcoin ETFs and mentions a Relative Strength Index (RSI) indicating oversold conditions.

"Bitcoin's RSI is now under 30, which suggests oversold conditions. So that is giving some investors hope that we find a bottom here soon."
— Jim Labenthal [21:45]

Jenny Harrington explains the strategy behind MicroStrategy, a company heavily linked to Bitcoin, emphasizing the use of leveraged plays and covered calls.

"We essentially got stopped out of it when Bitcoin got down to 80,000. This is a leverage play on Bitcoin."
— Jenny Harrington [23:07]

6. Diplomatic Tensions and Market Impact

A significant portion of the episode covers a tense meeting in the Oval Office involving President Donald Trump, President Volodymyr Zelenskyy of Ukraine, and Vice President J.D. Vance. Eamon Javors relays that the meeting was fraught with tension over a mineral rights deal, with Trump pressuring Zelenskyy for gratitude and agreement terms.

"Trump telling Zelensky his comments were very disrespectful. Trump telling Zelensky, you either make a deal or we are out."
— Eamon Javors [33:08]

This diplomatic fallout has had immediate repercussions on the market, causing the S&P 500 to drop approximately 20 points and the Nasdaq to decline further. Jim Labenthal expresses concern over the potential weakening of U.S. alliances and its adverse effects on the global economy and stock market.

"If the policies in foreign affairs is now to empower Russia and Vladimir Putin, I don't think that's good for the stock market. I don't think that's good for the global economy."
— Jim Labenthal [51:22]

7. Additional Stock Analysis

The panel continues with analysis of various sectors and stocks:

• Healthcare:
  Jim Labenthal praises AbbVie for its strategic maneuvering around patents and its strong pipeline, marking it as his top performer. Kevin Simpson also expresses interest in United Health, despite recent concerns over billing issues and executive misconduct.

  "They've excellently replaced that with Skyrizi and Rinvoak... it's a buy right here."
  — Jim Labenthal [55:43]

• Communications:
  Stephanie Link and Jenny Harrington discuss the performance of telecom giants like AT&T, T-Mobile, and Verizon, noting their rotation into "flight to safety" stocks with attractive valuations and dividends.

  "It's just that overall rotation... flights to safety."
  — Stephanie Link [56:11]

• Energy:
  Kevin Simpson highlights Diamondback Energy and Syncora (formerly AmerisourceBergen) for their strong earnings and strategic positioning despite market fluctuations.

  "Diamondback is a great company, EMP company and with great management, with real discipline."
  — Kevin Simpson [30:18]

8. Conclusion and Final Market Sentiment

As the episode wraps up, Scott Wapner summarizes the mixed market signals amid political tensions and economic data. The impending joint news conference at the White House remains a focal point, with potential further market implications based on its outcomes.

"Stocks were green across the board and you really had some nice price action coming into this hour. However, the market did turn lower as all of us were watching those extraordinary events inside the Oval Office."
— Scott Wapner [58:12]

Jim Labenthal underscores the necessity of separating politics from policy to maintain market stability and global economic health.

"We have to strip out politics from policies... that's what makes America a good country is America engaging in diplomacy."
— Jim Labenthal [51:59]

Notable Quotes with Timestamps

• Kevin Simpson [02:17]:
  "We are definitely slowing. Is it slower than 2.2? Is it in the ones? Maybe, but I don't think it's a disaster, certainly not a recession."

• Jim Labenthal [05:52]:
  "I did, I did. So I bought more 27 times forward earnings. [...] I think the bond market is easing for us."

• Stephanie Link [08:17]:
  "I would not be buying any of these yet. [...] the only one of the Mag 7 that we like and are starting to get interested in is Google, Alphabet."

• Jenny Harrington [07:50]:
  "Writing covered calls is an amazing way to buffer the downside, bring in premium."

• Jim Labenthal [51:22]:
  "If the policies in foreign affairs is now to empower Russia and Vladimir Putin, I don't think that's good for the stock market."

• Eamon Javors [33:08]:
  "Trump telling Zelensky his comments were very disrespectful. Trump telling Zelensky, you either make a deal or we are out."

Key Takeaways

• Tech Stocks: Despite recent declines, perspectives vary on whether to buy the dip. Jim Labenthal remains bullish on giants like Nvidia, while Stephanie Link advises caution due to high valuations and slowing growth rates.

• Market Volatility: The negative PC data and Atlanta Fed's negative GDP signal potential economic slowdowns, contributing to market instability.

• Investment Strategies: Writing covered calls and selective stock purchases are common strategies among the guests to navigate the uncertain market landscape.

• Cryptocurrency: Bitcoin is experiencing significant drops and record ETF outflows, though oversold indicators suggest potential bottoms.

• Diplomatic Impact: The heated Oval Office meeting between Trump and Zelenskyy over a mineral rights deal has rattled markets, highlighting the interplay between geopolitics and financial markets.

• Sector Highlights: Healthcare and communications sectors show resilience with strategic stock picks, while energy stocks like Diamondback and Syncora present growth opportunities.

This episode of Halftime Report offers a comprehensive analysis of the current market dynamics, blending stock performance insights with geopolitical developments to provide investors with a nuanced understanding of the financial landscape as of late February 2025.