Halftime Report – Episode: Trade War Tit-For-Tat (February 4, 2025)

Introduction and Market Overview

In this episode of CNBC's Halftime Report, host Scott Wapner delves into the ongoing trade tensions between the United States and China, evaluating their impact on global markets. Joining him are prominent investment committee members Josh Brown, Stephanie Link, Brian Belsky, and Jason Snipe. The discussion begins with a snapshot of the day's market performance, highlighting a modest uptick in the Dow and S&P 500, with the Nasdaq leading with a 1.25% gain, significantly propelled by Palantir's strong performance.

Trade War Dynamics and Market Implications

The core of the discussion centers around the escalating trade war between President Trump and President Xi, examining recent tariff announcements and their potential repercussions on the market. Scott Wapner references the White House's indication of a possible pause in tariffs affecting Mexico, Canada, and China, questioning whether the market has adequately priced in the looming trade tensions.

Notable Quote:

Scott Wapner [00:46]: "President Trump's going to be talking to President Xi at some point later today."

Josh Brown's Perspective on Tariffs and Economic Fundamentals

Josh Brown offers a nuanced take, emphasizing the uncertainties surrounding future tariff implementations. He notes that while initial tariffs posed a significant threat, the current economic indicators suggest resilience. Brown underscores the importance of focusing on company fundamentals and earnings, highlighting that strong margins across major corporations like Apple and Microsoft are bolstering investor confidence despite trade uncertainties.

Notable Quotes:

Josh Brown [02:01]: "We have no idea what's going to happen. It's out of our control. But what we can control is the fundamentals and watching fundamentals of companies and watching earnings."

Josh Brown [03:59]: "The economy is running strong. So we can handle it because the economy is very strong and it's led by the consumer, by income, by savings, by spending."

Jason Snipe on Market Volatility and Long-Term Investing

Jason Snipe addresses concerns about potential market volatility stemming from the Trump-Xi meeting. He argues that while headlines may cause short-term fluctuations, long-term investors should remain steadfast, focusing on fundamental investment principles rather than reacting to daily market noise.

Notable Quote:

Jason Snipe [04:34]: "For a long term investor, you already know you could safely tune all of this out."

Brian Belsky on Strategic Investment Amidst Trade Tensions

Brian Belsky emphasizes a disciplined investment approach, advocating for focusing on quality companies with strong cash flows and discernible earnings. He believes that maintaining a structured investment process allows investors to navigate volatile market conditions effectively.

Notable Quote:

Brian Belsky [07:52]: "If you stick to a discipline and a Process, that's how you dilute all of these types of volatile moves."

Technology Sector Spotlight: Palantir and Alphabet

The discussion shifts to the technology sector, with a focus on Palantir's impressive stock surge—rising 22% post-earnings—and Alphabet's upcoming earnings report. Belsky and other panelists analyze Palantir's growth in its commercial business and its positioning as a pure-play AI enterprise software company. Conversely, concerns surrounding Alphabet's future involve its AI initiatives and cloud services, with Snipe expressing cautious optimism while noting the stock's strong technical indicators.

Notable Quotes:

Angelica Peebles [19:02]: "Palantir has always been, but now with the commercial business growing, a pure play AI enterprise software company."

Josh Brown [17:53]: "It's the best performer last year in the S and P. It's the best performer again this year thanks to today."

Health Care Sector Analysis

The panel transitions to the health care sector, discussing the performance and prospects of major pharmaceutical companies. Josh Brown highlights Bristol Myers as a compelling buy due to its focus on immunotherapy and oncology, contrasting it with legacy portfolios facing patent cliffs. Bryn Talkington underscores the strategic value of holding dividend growth stocks like Merck and Pfizer, despite recent underperformance, emphasizing their steady earnings and robust dividend histories.

Notable Quotes:

Josh Brown [25:14]: "This is a name that looks like it's going to break the November high and just keep on going."

Bryn Talkington [28:18]: "We own the stock because of dividend growth, quite frankly."

Earnings Expectations and Stock Strategies

As the episode progresses, the panel previews key upcoming earnings reports from companies like Chipotle, AMD, Snap, and Uber. Each member shares their expectations and investment strategies:

• Chipotle: Predicted to see a 5.7% increase in same-store sales with muted stock expectations due to a previous 12% decline from peak levels.

• AMD and Snap: Belsky and other members express optimism, noting strategic additions to their portfolios based on product strength and growth potential.

• Uber: Jason Snipe lauds Uber's long-term growth prospects, despite current undervaluation, citing advancements in autonomous technology as a transformational asset.

Notable Quotes:

Jason Snipe [42:12]: "This is a company that probably is going to grow cash flow next year and the year after by 50%."

Josh Brown [41:12]: "The expectation is fairly muted."

Investment Committee Members’ Final Trades

In the final segment, panelists announce their latest trades:

• Josh Brown opts to reinvest in Deckers, highlighting its significant drop and potential for rebound.

• Bryn Talkington reveals positions in Nike and Shake Shack, emphasizing Nike's operational rebuild and Shake Shack's appeal to Gen Z consumers.

• Jason Snipe maintains his long positions in Uber and shares positive sentiments about Palantir's valuation despite its high P/E ratio.

Notable Quotes:

Josh Brown [44:51]: "I'm going to go back to Deckers. It's down 21% in the past week."

Bryn Talkington [35:43]: "Shake Shack is to Gen Z's what Chipotle was to the Millennials."

Closing Remarks

The episode concludes with a brief discussion on broader market sentiments and bond yields. Mike Santoli provides his midday insights, noting a net bias to the upside in the markets due to easing headline concerns, while cautioning investors to remain vigilant about ongoing tariff debates and sector leadership shifts.

Notable Quote:

Josh Brown [39:57]: "You have to be alert to the idea with health care starting to outperform, maybe there's some sort of emerging new leadership or character change to the market underway."

Conclusion

This episode of Halftime Report provides a comprehensive analysis of current market trends influenced by trade tensions, sector-specific performances, and upcoming earnings reports. The panel offers strategic investment insights, emphasizing the importance of focusing on company fundamentals and maintaining disciplined investment practices amidst geopolitical uncertainties.