Halftime Report Podcast Summary: "Trading Around the Unsettled Market" (February 24, 2025)

Introduction

On February 24, 2025, CNBC's Halftime Report, hosted by Scott Wapner, delved into the complexities of trading in an unsettled market. Featuring insights from esteemed guests Joe Terranova, Anastasia Amoroso, and Steve Weiss, the episode explored the current market dynamics, sector performances, momentum trading, and strategic portfolio adjustments amidst economic uncertainties.

1. Market Overview: An Unsettled Landscape

Scott Wapner opened the discussion by highlighting the persistent volatility in the stock markets. Despite slight positive movements in the Dow, the S&P 500 remained marginally positive, while the Nasdaq trended downward. This mixed performance underscores the unsettled nature of the trading environment.

"Front and center this hour, the state of stocks, the markets, they still remain unsettled." — Scott Wapner [00:32]

2. Momentum Trading and Its Challenges

The conversation transitioned to momentum trading, particularly focusing on "momentum names" like Palantir, CrowdStrike, Vertiv, Applovin, and Robinhood, all of which experienced significant downturns.

"The unwind still looks ugly today... Palantir is down again." — Scott Wapner [02:08]

Joe Terranova offered a critical perspective on the sustainability of momentum trading, suggesting that the loss of momentum leadership could lead to increased market volatility and rotation into other sectors.

"I think we are in the middle of a process where money continues to rotate... we're seeing the quality factors working." — Joe Terranova [02:08]

3. Sector Performance: A Shift to Defensive Stocks

Amidst the momentum unwind, defensive sectors such as healthcare and financials began to show resilience. Steve Weiss emphasized the performance of quality factors over pure momentum strategies.

"While momentum is pulling back, you're seeing the quality factors working. You're seeing that healthcare stocks are performing well." — Joe Terranova [02:08]

Anastasia Amoroso concurred, noting the shift towards defensive positions due to emerging headwinds like tariffs and geopolitical tensions.

"Defense has definitely been the name of the game this month." — Anastasia Amoroso [07:59]

4. Economic Concerns: Stagflation Risks and Policy Uncertainties

The panel discussed the looming risk of stagflation—a scenario where inflation persists alongside stagnant economic growth. Steve Weiss highlighted concerns over government budget cuts and their potential economic repercussions.

"Stagflation is a real risk. When you cut that, you don't know how it's going to cut it." — Steve Weiss [05:38]

Joe Terranova echoed these sentiments, referencing statements from influential investors like Steve Cohen and Ken Griffin about elevated economic uncertainties.

"Steve Cohen... the best returns may be already been realized right in the market." — Joe Terranova [06:01]

5. Spotlight on Key Stocks: Palantir's Downturn

Palantir took center stage as its CEO, Alex Karp, addressed the market during a speech at the New York Economic Club. The company's shares fell sharply following decreased confidence in government budget reviews.

"Shares of Palantir closed the lows of the day after CEO Alex Karp at the Economic Club of New York was defending the US Government's efforts to review and cut costs on its budget." — Anastasia Amoroso [37:34]

6. Nvidia Earnings: A Potential Turning Point

The upcoming earnings report from Nvidia was identified as a crucial event that could influence market sentiment. Experts speculated whether positive outcomes from Nvidia could restore investor confidence and counteract the ongoing negative momentum.

"Nvidia reports on Wednesday. But Palantir had such a tremendous gain and now it's having such a tremendous unwind." — Scott Wapner [09:07]

Joe Terranova emphasized that Nvidia's performance might reverse some of the negative market sentiment, although he remained cautious.

"Nvidia has the ability to reverse some of the negative momentum... it's about the reaction to the earnings and the effect on the rest of the market." — Joe Terranova [10:33]

7. Portfolio Management: Strategic Adjustments

Steve Weiss shared his recent portfolio moves, including trimming positions in Vertiv, Meta, Uber, and Bitcoin, reflecting a cautious stance amidst market instability.

"I trimmed matter... reason to take some off the table." — Steve Weiss [27:40]

He further elaborated on risk management strategies, emphasizing the importance of not becoming complacent during market upswings.

"When things are going up and everything going your way, you tend to let things ride longer than they should." — Steve Weiss [42:07]

8. ETF Trends: Retail Investors Embrace Leverage and Inverse Strategies

Bob Pisani presented insights on the surging popularity of leveraged and inverse ETFs, attributing the growth primarily to retail investors seeking short-term directional bets and hedging opportunities.

"Assets under management of leveraged and inverse ETFs has grown dramatically. It was about 2% of ETF assets in 2016. It's almost 8% today." — Bob Pisani [32:58]

Douglas Jonas, CEO of Direction ETFs, highlighted the increasing usage of these products for both individual and institutional investors.

"Three quarters of that movement is coming from retail, maybe a quarter coming from institutions." — Douglas Jonas [34:29]

9. Notable Quotes

• "Stagflation is a real risk." — Steve Weiss [05:38]

• "Defense has definitely been the name of the game this month." — Anastasia Amoroso [07:59]

• "Momentum is pulling back, you're seeing the quality factors working." — Joe Terranova [02:08]

• "Nvidia has the ability to reverse some of the negative momentum." — Joe Terranova [10:33]

10. Conclusion: Navigating Through Uncertainty

The episode concluded with the panel acknowledging that the momentum unwind was not entirely complete, signaling ongoing volatility. The importance of diversification, selective capital deployment, and vigilant portfolio management were underscored as essential strategies for navigating the unsettled market.

"It's time to be cautious... you have to decide when exactly you deploy capital." — Anastasia Amoroso [24:52]

"A lot of things... it's a time to be cautious." — Steve Weiss [19:28]

Scott Wapner encapsulated the sentiment by reiterating the market's resilience and the potential for strategic catalysts like Nvidia earnings to steer future trading activities.

"The markets had a really remarkable ability to remain resilient and to be self-correct." — Scott Wapner [24:09]

Key Takeaways

• Market Volatility: The stock markets remain unsettled with mixed performances across major indices.

• Momentum Challenges: Momentum-driven stocks are experiencing significant pullbacks, prompting a rotation into quality and defensive sectors.

• Economic Risks: Stagflation and policy uncertainties pose substantial risks to market stability.

• Strategic Moves: Portfolio managers are adjusting their holdings, emphasizing caution and risk management.

• ETF Growth: Leveraged and inverse ETFs are gaining traction, primarily among retail investors seeking short-term gains or hedging strategies.

• Catalysts Ahead: Upcoming earnings reports, particularly from Nvidia, could play pivotal roles in shaping market direction.

For those navigating the current market, the insights from this episode highlight the importance of adaptability, informed decision-making, and a balanced approach to investment strategies amidst economic uncertainties.