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Halftime Report
Trading Strategies as Volatility Rises 3/13/26
00:44:01
Scott Wapner and the Investment Committee debate how to trade stocks as the volatility in the market and oil rises. Plus, the desk share their latest portfolio moves. And later, we take a look at the housing sector as mortgage rates continue rising. Investment Committee Disclosures
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AT&T business Wireless connecting changes everything. 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. Carl, thank you. Welcome to the Halftime Report. I'm Scott Wapner. Front and center this hour, stocks looking for some footing today after the worst day in a month. There is lots to trade. We will do it with the investment committee, as always. Joining me for the hour, Steven Weiss, Kevin Simpson, Jim Laventhalper in talking to show you what we're doing here, we we did have a nice rally at the open. It's all but disappeared. Crude is now moving up. It was lower. The market liked it. Now crude is higher, moving back towards 97 a barrel. Weiss I mean, this seems pretty, pretty obvious at this point. Stocks are going to have a hard time finding the footing that I suggest they're looking for as long as the Strait of Hormuz remains effectively closed despite efforts by members of the administration to ease concerns about that. There are plenty of concerns and that's why the market looks the way that it does.
- [02:05]
B
Yeah, and that's, that's something you can't spin if the administration is saying, look, we'll have the Navy escort, you know, it's fine, all this, it's going to open soon. You can't spin it because there are too many pictures of the ships lining up and too many announcements of nothing getting through. And that's what driving the market at this point, as you point out, because if you keep oil prices elevated for so long, you have the chance and you hear the R word more and more, meaning recession, of coming through. So, so my position has been, look, I'm keeping my cash. I don't want to catch falling knife. I don't know how far it's going to fall. I did in your absence, put on one trade, fta, which I thought come down enough and I'm going to close that trade out probably later today or tomorrow. It's just been, it's been a major loser. So this is not a trading market and my regret is that it's prone to doing stupid things. You know, you see something said, wow, how can that go down another 25%? And guess what, it's on its way down. So to me it's just keep your hands in your pockets. You have different strategies if you're long term or if you're intermediate term, short term, if you're long term. Look, frankly, any place you buy, if you buy the right stocks, they'll be higher in a reasonable time frame. But if you're a trader or you focus shorter, intermediate, then it's not so easy to determine.
- [03:28]
C
I'll just give people one more look. You throw WTI up intraday and then put the S and P intraday back up because it really tells the whole story. I know that we keep mentioning that, but how can you not just. Given the way that the, the market continues to trade, I thought it would be wise, I think two weeks almost into this conflict to take a look at what the major averages have done. S and P is down about 5% now, so you're, you're not in a pure 10% correction. But you know, the negative news flow has many on Wall street thinking that the risks are still decidedly to the downside. Goldman's Tony Pascarello says if there's asymmetry to the S and P, it's more likely towards the downside outcomes than upside. And that suggests local risk reward is not in favor of the bulls. How would you assess that, Brin? It's pretty obvious what you need to keep watching to decide whether this market's going to find a little bit of footing as we suggest.
- [04:32]
A
Yeah, and I think, you know, Tony also so appropriately said, time is the enemy around energy prices in the war. So I think all you need to do is look at what energy prices are doing to see what the market's going to do. I think we also have the 200 day moving average for the S&P is 6600. So we're only about 47 points away from that. I think people will continue to be skittish going into weekends. The longer this last, I do Think once again this, this crisis is not like Venezuela. The mullahs has been in power for four decades. I don't think they're going to lead easily. And so I think that that does rightfully have investors nervous that we don't want a long drawn out war. And so I do think this is going to continue to dominate not only the headlines, Scott, but just the markets. And so 6600 seems very plausible. That is somewhat gravity for the market. And so I think investors should be prepared if we have some more turmoil, that 6600 is really the next strong support for the S and P. And I do think, I'm talking my book and Kevin's book, this is a great time to be selling calls. And so I think that's where the premium's high on a lot of names. So you can sit still in your names and sell calls. And that's been a good strategy all year long. And so we'll continue to do that and collect that premium while we have this really elevated volatility.
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C
Jimmy, what's your view?
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D
Well, I'm sorry to make it as simple as what we've already said, but it comes down to the Straits of Hormuz. It really is that simple. And nobody knows, certainly not me, when they will open. But I do believe that when you get that announcement, however it comes, maybe it's actual ships flowing, maybe it's, I mean, we know we really can't rely on the word from the administration. I'm sorry to say that, but we've had too many false starts in that regard. When the market feels that the Straits of Hormuz are open and it is likely that the markets will go much higher. Now, one asterisk to that. We can't have the Straits Hormuz closed for a long time and then expect everything will be rosy when they reopen. So as I said yesterday, Scott, it really is in the month of March that we have to resolve this. After that there is lasting damage. Now, what does lasting damage look like? Well, we're going to be in the pre announcement season next week and if you start to see pre announcements from companies that will worry us, if you start to think that maybe the earnings might be affected for more than just the first and second quarter, that that's the sort of lasting damage that we need to look out for again, I think if you get this resolved by the end of March, we should be okay. But a lot of uncertainty here. The market's responding as it should.
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C
At least two more weeks, at least if your timeline plays out of volatility. If not, if nothing else. Yeah, Kev. So Michael Hartnett of Bank of America today with a headline on his note. Wall street ominously trading 0708 analog asset performance in 26 is more ominously close to price action seen from mid 07 to mid 08. Oil peaked July 3 of 08, the same day as the ECB hiked, one of the great policy mistakes of all time. 74 days later, Lehman bust global financial crisis in full effect as credit trumped oil. Then he finishes with this ominous sort of trading pattern, the analog back to2708. I don't know if you want to take a stab at that in the context of how you view what we're witnessing within the market today.
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E
Well, fortunately I don't because I read the note and I think that there's similarities that we can find in any disruption. So when you have a geopolitical event like we're seeing in the Middle east, it's easy to make these comparisons. I don't think the backdrop is the same, but I think Jimmy's point is the most important, which is if we can resolve this more quickly, that's going to be a more, a much more appropriate Runway for the stock market to recover.
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C
Does that seem like it's going to like what you guys, you guys play probabilities, right? I mean, that's what this whole game's about. It's the probabilities, not the ifs. So there are a lot of ifs. Like if you're, if you're saying, well, if this can get resolved quickly, does it seem like it's going to be
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E
so it's so easy to play political science expert. I'm not, I'm a stock person. So I can look at it and say I hope that it gets resolved and I don't know, but to the point of earnings, we're looking at double digit earnings expectation for 2026. If this oil price stays higher, it affects not just the consumer, but margins, corporations, and ultimately earnings. Which is why you said one to two quarters of guidance. If this gets resolved over the next two weeks, I think we can put it in the rearview mirror. If it doesn't, I think we'll need to worry about it. I don't know what the eyes are
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B
that, you know, it's not only about probability, definitely about probability, but it's also what's the risk? Do I have greater risk to the downside or do I have greater risk to the upside? Depending upon which I determine.
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C
So your probability weight that, Gosh, I don't know how you can answer that with any pure level of conviction.
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B
That's the point. And that's exactly the point.
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C
Because a headline of the about Hormuz or a movement in oil, you're, that's positive. You're probably going to have a rally rip like you have to be short.
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B
Yeah. Which is why you can't be sure.
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C
Which is why the battle right now is between getting more bearish and what some have called the so called Trump put. Citi today says investor positioning is becoming more bearish, converging towards levels seen during previous conflicts. However, the de risking is not yet at extreme levels, suggesting a measured response response rather than widespread risk off positioning. Barclays says investors still believe in the Trump put. Hence global equities are not down as much as in past oil shocks. Obviously nervousness is growing by the day and the longer the strait stays closed, the more stagflationary markets will turn. But that's the battle, Brin. Right. The battle between growing more bearish and the so called Trump put, among other things.
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A
Well, we may agree with the Trump put, but do the Iranians, so I mean, ultimately China has to step in, what have you. So this is to me like the Trump put I think is there. We're in the midterms, it already looks like the Republicans are going to lose a lot of seats. We have inflation going higher. And so if you just think about it from a put perspective, we can't have a prolonged war for a bunch of different reasons. But the most important, important one is just like the US Economy does not have the tolerance for that. We need to have oil prices come down and not get embedded in the, in the economy. And so, so I think the Trump put is there, but I do like to, to balance myself. Do the Iranians care about that? And to me, when it's like existential, their survival from the leadership perspective, I think that adds just like a wrinkle that's very hard to, to map out how this actually ends and what does that end actually look like?
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C
That's, that's true. Right?
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B
Yeah.
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C
Although I mean, let's be honest, you know, what, what is a, you know, perhaps fair amount of resistance today by the Iranians may not be tomorrow. We'll have to see how this all plays out amid other reports that we've got more apparatus, both human and technological and physical heading to that region.
- [11:46]
B
Yeah. And so if you do put boots on the ground, that extends the conflict, that extends the worry in the market that extends the concerns of forever war which I don't think is ever going to be on table forevermore. But you know, you've got the backdrop then going to Michael Hartnett's note which I disagree with. This is nothing like 0708 but there is an issue, there are headline risks and by that I mean that the. Why it's not 0708 because the banks are much better now, much better risk managers. They don't.
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C
I think he's just looking at some of the trading patterns. I don't think he's, he's saying that this is another. Oh, eight.
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B
Yeah.
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C
He's just looking at the way that you know, oil had moved, how central banks had, had reacted. We do have meetings next week from not only ours but European, the ecb. So he's just looking at the way that certain things have traded in different fallouts that have happened. Not. He is not. I don't believe we are in another pre 08 crisis but of that magnitude.
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B
Right. But a lot of people read and they see 0708 and that's the biggest fear. But what I'd say is that the headline risk is not just with the straight. The headline risk is when all these funds stop allowing redemptions. Now you fund redemption, what these just. Let's just do trading one on one here. You invest in a private credit fund. They then allocate that to loans. So theoretically all their capital should be in loans which are illiquid instruments. So when redemption comes, they borrow money from bank, you know, hedge funds.
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E
That's what we do.
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B
You know, if somebody wants to take some money out, we're in positions, we're not selling, we're buying, we're borrowing till ready to sell. So the banks are not giving out that credit. So the headline risk is BlackRock. And not saying they'll do it, they won't do very well capital wise. But a big name, a brand name like that says no more redemption. Private credit then that's when things get really, really ugly.
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C
Well, there is a view as well that the, the actual fundamentals of private credit are perhaps better than meets the eye, better than what the overall narrative may suggest. Until they're not until. Well of course with some exceptions, no doubt but there are always exceptions.
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B
Some no, but I mean but there are so many private credit funds out there that it's, it's just lunacy when I say some. I'm comfortable with the big ones. I'm comfortable with the big firms because they have very Very mature risk management. But you've got so many, you know, how many emails do we all get, you know, let me fund your business, you know, today. So lots have done that. Ubiquitous. That's the danger.
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C
Let's bring in Leslie Picker. She's following this story every day for us and for good reason. Staying ahead of it. There's, there's no question about that. So what do we need to know today Leslie?
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A
So actually Scott, we are seeing a bit of a rebound in alternative asset manager stocks today. Aries and Blackstone while they're leading the way, those shares up about 4% each but the majority have lost about a fifth of their value as. Yes, you guys were just talking about it. And investors have been yanking their capital out or at least trying to from some of the biggest semi liquid private credit funds. Now perhaps some of this optimism this morning stems from a new report from B of A which showed that amid a survey of 50 independent financial advisors in March, so pretty recent, 40% said they have seen increased client demand for private credit while 48% have seen no change in demand over the last 12 months. Now this is somewhat surprising given the surge in redemptions that we have seen seen as of late. And I think the disconnect can be attributed to the opacity of the fundamentals. As you mentioned Scott, defaults are rising among private credit borrowers but they're still below crisis levels. JP Morgan revalued its collateral this week based on software but it didn't take any losses. There weren't any margin calls. It was just a slight revaluation there. Now one thing to keep an eye on are these so called payment in kind loans which are what borrowers pay interest by taking on more debt than that has been rising across private credit portfolios. So this implies there could be a bit more stress under the surface but that can is getting kicked down the road. So I think there's just this disconnect Scott, of you know, what's really happening across these portfolios. You know, are the headline fundamentals believable? Are they something that can be trusted? And that's why you see just this gap between you know, maybe the sell off in the public markets versus the redemptions versus you know, a survey like this BofA1 which shows that people are still allocating to the space.
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C
Well, I mean headlines, narratives and fear are a pretty significant brew. Yes, that can obviously cause more concern than maybe, maybe there is going to play out and we'll see again soon. I know that because there's Going to be more to report. We appreciate you, Les. Thank you.
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A
Thank you.
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C
Leslie Picker. So, Bryn, you have been investing in some of the Blue Owl bdcs or maybe one, maybe more. What's your take at this point on where your concern level is, which if I recall hasn't been to a boiling point yet where it's been over the pot, but maybe it's starting to rise in temperature. You tell me.
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A
So I mean I keep adding to otf. Right. Which is is Blue Owl's tech fund. I know the team actually know the loans. They disclose the loans every single quarter. They actually have a small equity position in Space X. And I think you summed it up very well and so did Leslie. Is that are the fears overblown? Here's a good stat. Over the last 10 years, the top decile private credit manager did 12%. The bottom decile did 4. And so to me, what's been a bit frustrating is just this private credit is bad. Well, when you have an 800 basis point per year spread between the top and the bottom, this is the time where I think you've got to separate the wheat from the chaff. And I think that the managers we will, we will see your track record is what it says it is. Over the next year and a half or two, the managers that did good underwriting come out on the other side, I think will be big winners and the ones that don't, don't. I do think for private investors though, one of the reasons companies investors have gone to private credit is although over the last 10 years the top decile fixed income manager did 2% and so there's just still a big disconnect in terms of returns and also underwriting standards. And so that's really what I'm focused on. I feel really good about the team at Blue Al on the tech fund and how they underwrite. And I feel like this shouldn't be an $11.66, $0.69 stock.
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C
The financials have had a really tough go of it. Third straight down week. It's the first time that we have seen seen that since last fall, since October enough that UBS has now adjusted its model credit portfolio, shifting our financials trade from a long short basket to a more explicit short position targeting financial institutions with greater exposure to private credit risks. They're obviously the private equity and credit firms the financials, Jim, you have exposure in both areas.
- [18:57]
D
Yeah, I'll take the other side of the trade. This is what makes a market, frankly, I think the decline that we've seen across the sector over the last several weeks is healthy. I think it's a reset. If one has a base disposition that we're going into a recession, then yes, financials are not your call. I understand. We all understand. We just talked about what's going on in the Middle East. But we have to understand that beyond that, the economy is in very good shape. Whether we're looking at jobless claims, GDP, CapEx, and there's a lot of reasons to to expect that it can power through what's going on in the Middle East. And as I've just said, I think all you're seeing here is a valuation reset in the big names, whether it's money centers like Citigroup, whether it's asset managers like BlackRock, whether it's private markets companies like Apollo and that from this reset with a strong economy, you're likely to see good returns.
- [19:43]
C
It's been tough sledding for a lot of cyclical areas of the market, not just the financials. Industrials discretionary. Discretionary six negative week in seven materials worst month since December of 24 industrials worst day since April 25th. And Kevin Simpson has bought more Caterpillar. Tell me more.
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E
I bought more caterpillar yesterday, Scott. 685. This is a stock that we had sold because it was called away maybe a month, month and a half ago into Brin's point covered call. Writing in a volatile market is a phenomenal way to add alpha to your portfolio. But I like what you, you said, Steve, that it's not a tradable market. I agree with that. But I think it is an investable market. So for us, we're looking at this not as a trade, not as an idea that the stock can't go lower. And if this conflict drags out, I expect that it will. But we're accumulating a position in Caterpillar. Have been doing so for two weeks. At 685 yesterday, I feel like it was a great buy. I still have dry powder. If it's cheaper next week, Scott, I'll add another 1% to it.
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C
What do you think about that, Weiss? Do you own it too?
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E
Too?
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B
I do own it. I haven't sold any of it. No, I think that's absolutely right. It's an investable market where you're not. Where you're not prisoner to a time frame right where you have to exit like you would be with the trade take so much pain. So I like with cat look, CAD had gotten overvalued. I thought that it would grow into
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C
the valuation stock was like straight up to the right. Look at it up until the pullback that, that we've seen more, more into, you know, later February. Right.
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B
And I'll tell you why I didn't sell it. I didn't sell it because didn't get like Taiwan semi, which still my largest position. I sold that because the position just got unmanageable. So Big Cat was not at that position yet. So I think Cat and I didn't sell because I didn't want to pay taxes. I believed it would grow into the valuation at some point. So now I've got room to add a little. However, I'm just not adding to it because this is, is not going to be a 10 year old for me. You know, Microsoft will be this one.
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C
Let's talk about software which has had a nice rebound lately. Month to date, a lot of the names that have gotten crushed year to date have actually had a nice rebound. CrowdStrike, Palo, Palantir, Oracle, Snowflake. Among the names I'm talking about Morgan Stanley today puts out a note they call a rallying cry for software coming out of the TMT conference. Remember Morgan Stanley had its TMT conference in the last couple of weeks out the in San Francisco. They feel better, they say about the defensibility of our interest software coverage in regards to AI risks. It leads me back to, to Kev, you bought Intuit and you bought Palo Alto.
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E
Yeah, in our growth portfolio we were terribly light in software, Scott, so we lucked out when it rolled over. But literally in our trade meetings our team was like how much lower can it go? And Intuit is one where I don't think that there is disintermediation. I think if anything it's an adoption of LLM to bring them into the fold, make them more efficient. TurboTax, QuickBooks, Klarna. It's not just a retail stock. It's also a small business I think ecosystem that you're using this business software for years and years, decades and decades, you're probably not going to leave it. So we didn't think the stock was going to get much cheaper. We picked it up at 400 bucks. Stocks, we're up 10% on it and I think it's going to go higher. Palo Alto, Palo Alto is a trade where I think all of the cybersecurity kind of sold off on earnings. I don't know if it was guidance related or what have you, but with more, I think you need more cybersecurity that's kind of basic. But since the Iraq conflict, Iran conflict started, these stocks have really been on a tear. We like Palo Alto a lot. I can go through all the numbers. I'm not sure if we want to
- [23:17]
C
get bored but I think you know that the stocks sold off in part as you know, Anthropic and its Claude was introducing these new tools. It was just another area of disruption, fear.
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E
But I don't think it was justified. I think there's going to be haves and have nots. I think that the cybersecurity is going to benefit from a lot of this. So much so that they went in in February and I think they bought like $6 billion of their own shares late February. So I like that we're investing alongside.
- [23:45]
C
All right, so then there's Adobe. Let's take a look at shares. They have their earnings report. Report the stock is down 6%. It's not that the earnings were bad, record revenue, EPS beat. It's that the CEO Shantanu Narayan is going to step down after a successor has been appointed. He's going to stay as chair. But it is a big move from a very distinguished figure in the software industry. 15 price target cuts at least following their earnings. Many citing Mr. Narayan's departure in which Barclays does as well. They downgraded to equal weight from overweight. They say his leadership has been exemplary. But we think it will take time for a new CEO to effect change here. There were already questions about what was happening with this business relative to the AI disruption. Jim Leventhal, we've talked about this on so many occasions but we have to now because you still remain in the name Shantanu is leaving as CEO and lo and behold you're buying more just
- [24:44]
D
in my personal account. This is not something I need to get into an argument or a discussion with all of my clients about why we're adding to it. But the reason to add to it is basically I think the fears are overblown. I said yesterday in premonition of this that the results were likely to be good. They were, as was the guidance. But that it wasn't likely enough to put the bear case to bed. And, and that's, that's the case as we're seeing here. Certainly the CEO's departure is not something that I'm really happy about. However, it gives me the price action with which to add to it. I want to point out that the sales growth continues to be just a little bit above 10% for a company that has a price to earnings multiple of around 11. And more importantly than that, as they continue to grow sales and earnings, they're growing free cash flow. Free cash flow yield right now is of a lot, 11%. And what they're doing with that free cash flow is buying back Shares. They've retired 10% of the shares outstanding in just two years. They're going to continue doing that. So if the bare thesis, which is that AI is going to crush their business, comes to pass, or rather doesn't come to pass, the net income is going to continue to grow on a much smaller share count and I'm going to make out fine. In summary, I've done this many times before of buy companies that are down buying back their shares like crazy. Whether it's Citigroup, it's General Motors, it's worked out. It usually feels lousy at a time like this. I'm not expecting anybody to pat me on the back, but that's what I'm doing.
- [26:07]
C
You don't know General Motors anymore. I think it was the day one of the tariff news that you sold it.
- [26:12]
D
Yeah, it went down from there. It went back up, but I made good money on it. And both General Motors and Citigroup put in accelerated share repurchases which shrunk their share count meaningfully. And I'm seeing the same thing. Not an accelerated share repurchase here, but an effective decline of magnitude.
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C
You don't feel like you're on it. You don't feel like you're on a subway car to nowhere.
- [26:32]
D
Here, look, listen, you get that? No, I got it. Of course, anybody who's invested in a stock that goes down like this feels a sense of doubt. Of course it'd be foolish. Can I finish my thought before.
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B
Okay, I'm not be able to stop you.
- [26:47]
C
Go ahead. Please, go ahead.
- [26:49]
D
Of course, it would be foolish to think that you know everything about the future. Investing for the long run is making decisions, as you said, Scott, about the probabilities. The probabilities I feel are that this is going to work out. But right now I know it doesn't.
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C
Well, it's about risk management too.
- [27:03]
B
Yeah.
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C
Which, you know, honestly, I find it interesting that you. You don't feel you can defend this to your clients, but you can defend it. You want it personally. Yeah.
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D
And I'm not saying that I won't own it for clients, but one of the things I've known with my client base is they usually like to see see the stock, establish an uptrend. I think we can all agree that is not the case here. However, for me personally, I see the value here and I'm investing personally in it.
- [27:30]
B
Without the stock buyback. Right. What's earnings growth?
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D
Around 10%.
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B
Without the stock buyback, they bought back 10% of their shares. So you're saying. So you're telling me that it would have been 20% then?
- [27:45]
D
No, that's not the math. But the net income year over year was up about 12%, Steve.
- [27:51]
B
Okay. And the stock buyback has no impact?
- [27:54]
D
No, of course the stock buyback, that's my point.
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B
Yeah. So then on the same share, on the same share count base a year ago, the earnings growth would have been a lot less, right? No.
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D
Net income, not earnings per share, was up 12. About the earnings per share, I'm talking about net income.
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B
Well, but my question question was on earnings per share.
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D
Okay, your question was if what was net income growth and how would that
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B
is that their growth is based on financial engineering and the growth of the company has significantly declined. Cost had to have gone up. I'm not looking at an income statement at all. But I would tell you that, Jim, I remember you coming on saying, look, they got one more. You said this the last few quarters, one more quarter. If they don't produce that amount, and here you're going to say, well, they did produce. They beat their reduced guidance, but the CEO left. So you're buying the stock without even knowing who the new CEO is.
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D
What if they bring somebody disagree with.
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B
Let me finish.
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D
Let's you finish, okay, But Jimmy, there's
- [28:53]
B
no need for that, okay? No, there's no need for that. I'm talking to you, okay?
- [28:57]
D
So my point is you're talking to me with a tone that I'm. I'm not sure I'm going to respond to.
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B
Okay? So sorry, sorry, I'm not condescending like you. So you said you would sell each of last three quarters. You haven't yet. You're buying more. So explain that inconsistency.
- [29:11]
D
Yeah, well, I don't see it's an inconsistency. What I see is that the operational results of the company are frankly quite good and the share price has gotten cheaper. And so I'm willing to step in from that.
- [29:21]
B
All right.
- [29:21]
C
All right. We'll see how it develops from here. Okay? Maybe we'll have this conversation some other time. We're going to take a break. Will come back. Nvidia has a big event next week. In case you didn't know, it's the GTC and it's significant Christina Parzonevolo is going to join us after the break with exactly what we should expect. What might move the stock from here. Where we do have a move from somebody on this desk as well. We're back after this.
- [29:54]
A
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- [30:18]
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AT&T business Wireless connecting changes everything.
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- [31:35]
C
All right, gtc. That is Nvidia's big event. It is Monday and it comes at an especially important time for this stock. Christina Parts and Nevelis joins us now with what's at stake for a name that didn't trade well after earnings. Had a nice little move after that, but now obviously all bets seem to be off just considering what the the narrative is around the market.
- [31:56]
A
Yeah, to your point, shares just have been stuck despite hyperscalers. Also you talked about strong earnings, but hyperscalers pledging to grow spending through 2027 and Nvidia's order backlog topping $500 billion. Scott, the really question isn't about demand, it's the pace of that demand actually hitting the income statement beyond 2026. Bey at the conference, CEO Jensen Huang is expected to unveil a new chip using technology from Grok. This is a startup Nvidia acquired for roughly $20 billion. And unlike most AI chips which rely on external memory, high bandwidth memory, Grok's design puts memory directly on the chip, making it more efficient for inference the part of AI where the model actually responds to you in real time. Expect details also about Nvidia's push into high speed optical networking, using light to link thousands of chips together. Nvidia recently called themselves the largest networking company in the world. There's also a potential joint announcement with intel on custom CPUs for enterprise data centers. And then CEO Jensen Huang said he expects or we're expecting to detail Nemo Claw, which is Nvidia's new platform for AI agents. The move puts Nvidia deeper into software, potentially competing with the same cloud and enterprise partners it relies on for hardware sales. And I have rumors that there's going to be some stuffed lobsters being available at a lobster playground at this event. The options market is pricing in roughly a 4% move, which is kind of modest by Nvidia's standards. Last year was roughly 6% of GTC, with rivals Broadcom and Marvel already guiding through 2027. Nvidia sticks to quarterly guide. So any forward visibility from Nvidia could be the real catalyst here for this stock.
- [33:37]
C
Okay, interesting. Christina. Thank you, Christina. Parts and Evolos. So Nvidia Target goes to 215 at Daiwa. It's right ahead of GTC. Everybody's sort of thinking about this. They Rothschild and Redburn says unless oil goes to 150 and sucks the air out of the room, Nvidia will likely be the market's primary focus next week. Ordinarily it undoubtedly would be, but now you have so much other stuff going on that we'll see what happens. Bryn, you own the name, do you? You have high optimism coming before this event.
- [34:09]
A
I mean, this event every year is incredible. The last two quarters were incredible. But I continue to sell calls with a strike price of 200 because the stock just can't get above there. But I do think we're going to hear a lot about Vera Rubin, the new, the new chip which is apparently five times, five times as fast. And as Christine was talking about the light to connect that right now they use Copper. And so I think that's going to be really interesting. Let's see if Copper gets any, any movement off that. And so I think it's going to be a great event. We're going to see a lot about robotics. What's awesome as an investor investor is this event. Let us see what is the future of AI going to look like. And they always have companies they partner with and show off on stage. So I think it's going to be a great show. But I Don't think the stock can get over 200 anytime soon.
- [34:55]
C
I don't know, Kev. You bought more coming into the event.
- [34:58]
B
We did.
- [34:58]
E
We bought this in advance of the event specifically for what we expect to see. It's almost like this stock has been pushed to the back burner. And for that reason, we've made this our number one position in our new growth strategy. It's a 10% allocation. We're very excited. If it goes to 200 brin, that'll be awesome. From 180, I think you can write calls against it. But quick back of a napkin. I know this oversimplifies it, but just imagine if they make $10 a share in you put what multiple on it? 21, 25. 210 to $250 is really our base case. So I like it here. I think it's going to be a great week. And we're looking at this again not as a trade, Scott, but as a long term.
- [35:35]
C
We've got to hit matter real quick to the stock is down, I think like 3% plus on some negative news from the New York Times. There it is. I think the stock's the worst in the. In the mega cap group today they delay their rollout of their new egg AI model after performance concerns. That's according to again the Times performance. Felling short of Google OpenAI anthropic. What do you think about this?
- [35:57]
B
You own the style.
- [35:57]
C
Are you concerned about this?
- [35:59]
B
I'm not because this is just typical in the tech world. Now it's a heightened tape in terms of the volatility. But look, it's a timing difference. We see time differences all the time in technology, particularly with AI they're just very, very difficult to perfect. So rather than launch a product and we saw that with Gemini a couple of years ago, that didn't work out so well and set them back. Met us choosing not to do that. So I'm actually fine with it. It's a full position with me. If it weren't, I was just talking to Kevin about adding more. If it weren't full, I would add right here.
- [36:29]
C
All right, Frank Holland has our CNBC news update.
- [36:34]
B
Hey, good afternoon, Scott. Centcom confirmed today that all six members
- [36:37]
C
of a military refueling plane are confirmed dead after their plane crashed in Iraq
- [36:42]
B
while taking part in Iran war operations. Earlier today, military officials said rescue operations were still underway for two of those service members.
- [36:49]
C
The Pentagon said the incident was not the result of enemy or friendly fire,
- [36:53]
B
but the circumstances of this crash are still under investigation. The Teamsters union is urging the Department
- [36:59]
C
of Justice to block Paramount's takeover of Warner Bros.
- [37:01]
B
Discovery.
- [37:02]
C
The union submitting a report to antitrust officials outlining their concerns about the deal.
- [37:07]
B
The Teamsters claim the merger will consolidate power and eliminate jobs. And Amazon is reportedly planning to move Prime Day to June from July. The summer version typically coincides with back to school shopping. Bloomberg reports the shift would also move
- [37:19]
C
sales to Amazon's second quarter. Amazon has had to contend with competing
- [37:23]
A
events from Wal Mart and Target, who
- [37:24]
B
are investing in their online business and same day delivery.
- [37:28]
C
Scott would be a perfect time to
- [37:29]
B
get you an Eagles jersey, a Phillies hat, Phillies, by the way, number six on the MLB valuations.
- [37:33]
C
I'm just trying to help you out. Never, never going to happen. Frank, thank you. Appreciate the suggestion. Frank Allen all right, coming up, counting down to the Fed, a big meeting next week. So how now does the war impact the central bank's decision? We discussed with Steve Liesman coming up,
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- [39:32]
C
All right, welcome back at the Fed meeting of course next week, what will this war now mean for the central bank's decision? Let's bring in our senior economics correspondent, Steve Liesman. Nothing was obviously expected to happen really at this meeting. Does the war in any way change that?
- [39:48]
B
Steve it could change some of the outlook, some of the forecasts that we get. I think that the Fed's going to feel like it's in a pretty good place and kind of thankful that it paused at the last meeting. SCOTT because if you think about it, they're a little bit above, above neutral right now or where most people believe neutral is and they wouldn't mind going into this oil price spike being a little bit above neutral to put whatever pressure would come from inflation and the headline into the core. You do have some sneaky or sticky service inflation that's going to get the Fed's attention. So, so I would look, Scott I think what they're going to probably do is raise their maybe the long run outlook could go up a little bit, but certainly the expectations for inflation might rise a bit here too.
- [40:32]
C
Do they typically take a more wait and see approach at times like this, especially given the the unknown of where oil prices are ultimately going to go potentially and for how long they may stay there?
- [40:45]
B
I think when it's unclear, remember the old Tom Barkin concept, which was, you know, in the fog you pull over, I think that's where the Fed might be. If there was something very obvious, for example, monthly declines or substantial declines in the job market, the Fed would probably respond to that, almost irrespective of oil being higher. If there were a continued pressure on inflation, then the Fed would probably be hiking here. What you're looking at there are the probabilities we put back a little bit after today's data, some probability of a single cut this year. But that was all the way down to, I think it was below 50% yesterday. Scott or just a little bit above it maybe. But bottom line is we've already priced out, I don't know, two cuts already and we're trying to hold on to one cut here. And the question becomes will Kevin Warsh abide that or does he try to basically corral the committee toward an idea that he thinks they ought to be cutting.
- [41:44]
C
It will likely get continued descent at least at least one, you would think, just because that's been the norm from the obvious areas at the table. Steve, thanks. We'll discuss more in the days ahead. I know that that's Steve Liesman coming up playing the pullback in the home builders. The ITB now pacing for its worst month since 2024. And man, mortgage rates just hit a level that Diana Ollick's going to keep be the number next. Welcome back. You know, yields have been rising since the start of the war and that means that mortgage rates have to write. DIANE olich, that is right.
- [42:36]
A
Scott. They said mortgage rates have been rising all week but today the average rate on the 30 year fixed just popped up to 6.41% according to mortgage News Daily. That is the highest level since September 4th of last year. And remember we just touched 5.99% just a few weeks ago. We are now approaching where we were last year and last spring's housing market was not exactly stellar. Now homebuilders stocks had been moving higher today with the broader market despite a big miss from Lennar and its Q1 earnings. Lennar's chairman Stuart Miller said in a release that Q1 was defined by persistent headwinds, I.e. high rates, constrained affordability and cautious consumer sentiment plus geopolitical uncertainty. So Scott, it's going to be a rough run for the builders.
- [43:18]
C
It is interesting though that Lenore is up. DAI why do you think that is?
- [43:21]
A
I mean look, their markets were margin margins shrunk because they said that they're trying to get as many concessions in to get buyers into the door. And you know, they had that optimistic outlook that they are going to see more from the spring market. But again you're seeing these constraints with mortgage rates and if you see them move higher and higher and higher, it's going to be hard for them to get those buyers in the door unless they continue to buy down mortgage rates which they have been doing. But again, like I said, it hits their margins.
- [43:47]
C
Yeah, no doubt. Appreciate your insights. Thank you. Diane Olek. Jimmy, I mean housing can't catch a break.
- [43:52]
D
It really can not catch a break. And look, we're seeing upward pressure on the treasury yield curve. So this is unfortunately to be expected. But none of this goes to really help the supply issue which is facing the nation. I don't know how that gets solved in any short time frame. I mean I look at stocks like Home Depot and I want to get into it, but I just can't.
- [44:10]
C
Down 13 on the fundamental 13% in a month is is Depot. Kevin owns that. But the home construction etf, the ITB four straight down weeks, worst month it is tracking for now since December 24. You got depot.
- [44:23]
E
I'm fine with Home Depot and if you're not going to buy it yet, I wouldn't twist your arm on that one. But I think that when we look at some of these other names from a teaching moment, I'll just give you top build real quick because this is one. Scott we got stopped out of it yesterday at 360 down 34%. Luckily we only lost 10%. We bought it at 400 it ran to 550 and in a month it went from 550 to 360. So what would have been, could have been but for us. We took a 10% loss. We can live to fight another day, but there will be opportunities here. We need the 30 year, we need the mortgage rate to get below 6%.
- [44:55]
B
They are the ugliest charts I think there are of any group. I mean it's just crazy.
- [44:59]
C
All right, take a break. We come back, we'll do the setup next, some key earnings to discuss and to trade. And we will do that after this break. The setup micron, okay. Is Wednesday after the bell. Let's throw up the chart. It's up 47% year to date. So let's look at that. Not the rate interest, if you guys mind throwing that up, please. This stock has been a killer. I mean it's also like, I don't know, six months. Stock's been crazy right along with a lot of these memory names.
- [45:29]
E
The six month chart is insane. Insane.
- [45:32]
C
Let's look at that.
- [45:33]
E
If they, if they don't nail the number, I mean it could be a sell the news event. But the street's looking for $8.69 in EPS and a massive, a massive year over year growth. So this is the infrastructure story. We know at some point DRAM is cyclical. We're not close to the end of it. So I'm excited for this one.
- [45:50]
C
You don't get nervous going in with a chart that looks like that?
- [45:52]
E
I'm always nervous.
- [45:53]
C
Yeah, I know, but you know what I mean. Like these memory names, all of them have looked the charts all look the same.
- [45:58]
E
Well, that's why I'm saying it could be a sell the news event if they don't nail it. But no, I think the expectations are going to be met and surpassed. We'll have to look at the whisper number. But this, this, I can't believe I
- [46:08]
C
know there's a whisper number anymore. It's a screaming number.
- [46:10]
B
Yeah, you're right.
- [46:10]
C
I need to be good. All right, we'll take a break. We'll come back with the finals after that. The week up on Closing Bell with Glenn Kacher, Stephanie Link, Stephanie Aliaga, Warren Pies, Michael Ozanian. He's got his new MLB valuations and we will go through that. We'll see how this weekends, another volatile one at that. Brin, talking to your final trade, please.
- [46:33]
A
GPI Q targets, a 10 and a half distribution yield. Sell calls on the NASDAQ, good equity
- [46:38]
C
income, play thank you very much.
- [46:41]
D
Farmer Jim Citigroup we talked about the financials earlier and who knows how the economy will go, but the bantam ex IPO coming up should unlock the balance sheet at Citigroup.
- [46:51]
C
Okay, Nvidia is Kevin Simpson.
- [46:54]
E
We added to this in advance of gtc. The street looked at the earnings with a yawn. We're making this a core position for 2027 and beyond.
- [47:02]
C
Alrighty. Thank you.
- [47:03]
B
Steven Weiss Meta I mean, I think your downside risk is probably 600, but more than likely it's going to bounce.
- [47:08]
C
All right, Good stuff. Thanks everybody. I'll see you on the Bell the Exchanges 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.
- [47:24]
A
All opinions expressed by the Halftime Report participants are solely their opinions and do not reflect the opinions of CNBC or its 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 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 Snoring, gasping during sleep?
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