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Halftime Report
Trading the Market Volatility 10/16/25
00:49:55
Scott Wapner and the Investment Committee discuss the market volatility and how to trade it. Plus, the desk shares their latest portfolio moves. And later, Josh Brown shares two more stocks being added to his "Best Stocks in the Market." Investment Committee Disclosures
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- [00:00]
Podcast Host/Advertiser
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- [01:02]
Scott Wapner
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 very much. Welcome to THE Halftime Report. I'm Scott Wapner. Front and center this hour, the return of volatility. The market's still on track for a positive week. We discuss and debate the road ahead with the investment committee. Also have plenty of moves to tell you about today. Look forward to doing that. Joining us for the hour, Josh Brown, Carrie Byrd, Stone, Malcolm Etheridge, Bill Baruch. Volatility on full display, really? Today we were nicely green. We're still hanging on in the nasdaq, but the S and P and the Dow have since gone negative. The shutdown rolls on, the trade war rolls on. The Russell is still having its best week since 2024. It's in up 5%. We're watching that. It is the largest decliner gold, another record high. That's like a broken record, obviously. But Josh, even with this volatility back, it doesn't feel to me as though people are really changing their big picture view. Goldman's Tony Pascarello today, whom I love to quote, says this remains one of the most dynamic market environments I've ever seen, looks at the banks as a litmus test on many of the big questions that exist and says, quote, I thought the takeaways from Q3 earnings were very encouraging. And what that does for me is it underscores why people remain bullish because earnings and the expectations that they are, in fact, even though they've just started, they're going to be encouraging. What do you think?
- [02:34]
Josh Brown
Yeah, I think that's a really important point that Tony makes and that you raise. And it's a good place to start because when you actually listen to the calls, and I couldn't do all of them this quarter, but I listened to the big ones. It's not as though the banks are telling us they're gangbusters in everything related to AI and capital markets and everything else is, is moribund. It's the opposite. They're seeing opportunity in every segment of the economy. It's not to say that there aren't problems, there's always problems. But the big picture according to the banks is that the consumer, the quote unquote resilient consumer, that whole idea, nothing that transpired during the course of last quarter and nothing they're seeing on a forward looking basis tells you that that is is changing at all. And that I think speaks to just broad strength across the board. And you don't even really have a housing thing going yet. And housing is 20% of GDP. So if that part kicks in as rates very slowly come down, the ten year moderates, mortgage rates come down further, if you get that 20% of the economy back into a higher gear combined with how well everything else is going to, I don't see why you'd want to make huge changes. One thing I want to call out here because we're in earnings season. We all know how important technology company earnings are to the S and P, to the outlook, to sentiment, to multiple etc. Etc. The tech sector actually has estimates being raised since the start of this earnings season. So as recently as June, the Street was looking for 15.9% year over year earnings growth for this quarter and now they're at 20.9% and that's not in a long period of time. I think they're looking at all these deals being announced and they're figuring out, oh, this is more revenue for Microsoft, this is more revenue for Nvidia. And they've had to take those numbers up. By the way, they've taken Apple's numbers up as well. We don't have those reports right now, we'll get them very soon. But if you've got the financials reporting blockbuster quarters, which is what they've done, and now you get technology companies as the follow through, why would you look at this market and say, you know what, I want to make a hard pivot and do something totally different than what's working. No one's going to do that, right Carrie?
- [04:51]
Scott Wapner
Because you know, people view what's happening with China and the shutdown as noise. They're both going to get figured out. Interest rates been coming down. That's been positive for things like the Russell Fed talked about the balance sheet and ending the runoff in coming months. The market took a little bit of a move higher on that. Is this a stock. Stay the course, Keep your eye on the ball, avoid the noise. Market still.
- [05:18]
Carrie Firestone
Yeah, Scott, I think that's a good way to look at it. We've got earnings that are going to be reasonably strong. When Josh talks about what the banks are saying, I'd like to point out something that I also consider a real positive. We have had very little IPO activity until this year. We've had deals coming through. There have been acquisitions in health care and technology, in security and software. There have been a number of companies that look to be filing their IPO soon. I think that's going to continue through the year. And as we know, we've had a massive amount of share repurchasing over the last several years. So just bringing in more new companies is very positive. If the trade talks calm down or be resolved, which is what we've seen in the past. History is repeating itself over and over with the president and, and threats and negotiations with the situation in the Middle east resolving to a large extent, I think that the only problem people have in the market is level of valuations and concern about what's happening with AI, and I'm not as worried about that right now as some people are. So as earnings come through, I think that we can see the market hanging in here, not being too troubled and hopefully will get some very strong numbers at the end of this month.
- [06:39]
Scott Wapner
Even, even those who Malcolm, are troubled. If you want to use that with the, with the multiple. It's not, you know, for the conversations that I've been having of late, and some of them have been with, you know, very important money managers, it's not derailing their overall view. And they'll say, well, okay, yes, stocks are a little expensive. It's not like there's a lot that's necessarily cheap. But the NASDAQ today, like the multiple of the NASDAQ at its peak back in, you know, early 2000, I don't know what it was off the top of my head, but it wasn't even close to what it is now. So there's in that view and like the Paul Tudor Jones perspective, you might not love the multiple, but there's a lot of potential Runway ahead before you even get close to what they would consider to be crazy town.
- [07:32]
Malcolm Etheridge
Well, I think the big bank CEOs take a cue from Jamie Dimon and try and give us a little bit of tempering, telling us to curb our enthusiasm a little bit whenever they deliver these big numbers, especially in record breaking quarters like we just got done having. Right. But I heard the CFO of JP Morgan say this is the busiest summer I've ever had with respect to dealmaking in M and A. Right. And you guys were just talking about the big banks and the impact that that's had on the rest of the the markets. We've had 100, more than 150 IPOs through September so far this year. Another 50 or so slated to happen this year. That alone tells you where the appetite and the risk sentiment is for the rest of the market. Everything else to your point, Scott, is just noise. So investors have been able to look past the shutdown, the tariffs, the everything else and say this is a market I still want to be long. It's not a place I want to be looking to get out.
- [08:23]
Scott Wapner
That's why Citadel Scott Rubner says, talking about conviction among retail traders, it remains extraordinary that demand for call options has outpaced puts for 24 consecutive weeks. That ties with Nov. 23, the longest streak ever. So he points to that. The data only goes back to 2020, but nonetheless it gives you a pretty good picture about where the bets are being placed in this market. The retail radar from JP Morgan tells a very similar story. Yes, we had an escalation in the trade war with China. You know, the president yesterday says yeah, we're in one now. And obviously Friday escalated things and it caught the market a little bit by surprise, which is why you got the big sell off that you did. However imbalance, if you want to look at it that way, remains according to the retail radar, JPM robust plus six and a half billion in terms of money coming in versus money coming out from from retail. That already exceeds a strong year to date, average of 6.4 for a couple consecutive weeks. Bill Baruch, to me you are representative of both of those stats. You're representative of the point of view that I've articulated from the conversations that I've been having. They are representative of what I think we've heard on the desk already. You bought more spy okay playing on the S and P and you bought more of a the ijr which is the small cap etf. Tell us more.
- [09:51]
Bill Baruch
We de risk through the middle part of the summer. I thought the run up was going to meet some seasonal headwinds, was going to meet some jargon around a potential Fed rate cut. That hasn't happened. We trimmed that ETF basket. It complements our overall main portfolio that I discuss in the single names here all the time. And what I did was just get the rest of that cash to work in that main portfolio. So it represents about 10% of an entire 80, 20 or an entire 6040. So the S& spy in the IJR, they sold off pretty sharply on Friday. I was, I was really surprised to not see any follow through the start this week response against the 50 day moving average. And then we had Fred Chair Powell on Tuesday who comes in and talks about an end game to Kutty. So I think right there you saw the Russell 2000 respond. The IJR is a little more slimmer of a, of an index. And so we leaned into that potentially on the week you have a breakout in the small caps. So we'll see how the week finishes. And then as for the S and P, we're talking about valuations at the desk. You look at relative valuations, which 40% of the S&P is eight names. If you look at relative valuations, the Mag 7 is right in the middle of the range it's been over the last decade. So I don't think it's overvalued to some regard. But, but if we respond against the 50 day moving average as we have and we're going to rally potentially, I want to make sure that that ETF slice that we have in these portfolios is now fully allocated.
- [11:18]
Scott Wapner
The no follow through from Friday's deep sell off immediately reminded me of the guy in Airplane who pulls the plug on the Runway lights for a moment and then he's like, just kidding. And that's why over the weekend you got the hey, all will be fine with China. And then the market, that's why the market rebounded on Monday the way it did.
- [11:41]
Josh Brown
What's so great is we now have like we now have these heat checks and these gut check instruments that trade 247 in the crypto markets and it was an absolute slaughterhouse in the crypto markets Friday night into Saturday morning. It's, you know, it's recovered, not all the way since then, but like that's where that risk off appetite was being expressed. With all of the publicly traded companies closed in the US and Asia, etc. They go to the crypto market for liquidity and maybe to get, to get negative on something. Maybe to express a bet that cycle plays out. That used to take a week. Yeah, we don't even need the stock market to be open to completely play that whole ballet out. And we're in the third act of the ballet by the time it's Monday morning. And, and Trump is saying, I don't worry about China. You know, it's amazing, like the speed with which we price risk, reprice risk and then put it back to where it was. And things that used to take a week or a month now only require a couple of hours.
- [12:43]
Bill Baruch
Bitcoin is actually off today, too. Speaking of its back down, futures are back at 108,000. So we've seen a lot of that recovery on the week. Dow now retreat. And just to mind you too, we still have a lot of cash to get to work. We've trimmed in the main portfolios. They discussed the same single names all the time. We have eight and a half percent to go. And we discussed it in the past where I took a cautious approach. This is just taking that step forward. But again, I am surprised in crypto. Crypto did fall out pretty sharply as Josh talked about.
- [13:12]
Scott Wapner
Kerry, are you. So I want to find out like what these moves, what view they express from you. Trimmed Amazon, Metta and Alphabet, and here we are a week or so out from earnings. So what makes you want to do those moves before you even hear from these companies?
- [13:28]
Carrie Firestone
Most of the reason that we trim them is because they were so large as positions in our portfolios. So these are stocks that we've been overweight for years and that overweight has expanded and expanded. And when you're running a portfolio that's diversified and you have positions that are close to 10%. I mean, they weren't at 10%, but no, you're getting it today. Eight and a half, 9%. It's prudent to just reduce that when we look at just what's happened with the market. And also earnings growth is likely to slow somewhat. It's still going to be decent, but we've had such enormous gains in earnings over the last few quarters.
- [14:08]
Scott Wapner
You just feel like you're just reducing a little bit of risk.
- [14:12]
Carrie Firestone
Exactly.
- [14:12]
Scott Wapner
But you still expect you're going to hear good things from, from all these companies and you're just willing to have a little smaller position size than you did.
- [14:19]
Carrie Firestone
Yeah. Plus if you sell something, you buy something else and we put the money to work.
- [14:23]
Scott Wapner
Oh, I will get to that, too.
- [14:25]
Carrie Firestone
That's why it went. It didn't come out of the market. It Went into other names.
- [14:28]
Scott Wapner
I got you. Microsoft named a core holding today at Morgan Stanley Alphabet target to 288 from 234 at Goldman Sachs. We can look at Meta too. The Target goes to 870 at Goldman as well from, from 830. And of course Dan Ives is out today. We believe tech stocks will be very strong in the year end. Could be up another 10%, another 10% for the rest of the year. What do you think about that call?
- [14:53]
Josh Brown
Look, I think there are beneficiaries of the uptick in capex spending and you know, some of these names we're talking about are very high on the list. One of the things that I thought was interesting were the comments coming from Oracle. They're like a World 2025 eventually. These are some of the things that they talked about. And this goes directly to this mega cap tech trade. They said they delivered over 600 AI agents embedded across all its applications. So you hear a lot about what's the use case, what's the roi, blah blah blah. Oracle is finding ways to save its customers money right now by implementing AI. I think this feeds into the low firing, low hiring employment situation. They also talked about specific customers where they're doing things like 70% reduction in manual tasks for financial crime investigation. Like it's, it's not a story about like blockchain, like maybe someday we'll use these things. Companies are spending money now because they think there's an ROI now or like in the near future. And so if you're worried about earnings season or you're worried about valuations, the number one thing is will the numbers come through and so on. These stocks, I don't disagree with carry if they've become outsized positions in people's portfolios. You have a job to do, you're a professional. It would be nice to be able to own max position in every one of these stocks, but it's not realistic. Number one, there are other things you want to invest in and number two, you're expanding. You're just pushing the chips out and taking more risk if you never sell anything. So I like what she's saying, but I do think these earnings are going to come through because the spending has not stopped. I'll tell you when I hear that it stopped, it just hasn't. And that's what I think the story is that we're going to hear from these companies in, in a week or so.
- [16:43]
Scott Wapner
I mean the efficiencies, the, the productivity that you talk about was a big topic out where I was in Beverly Hills at the case Summit speaking with Robert Smith, obviously one of the kings of the enterprise software industry who talks about very much the same thing, the introduction of agentic AI and how it is going to be so transformational for these companies and the way that you're talking about it with Oracle that we don't even fully understand it yet, but we certainly will and what it's going to mean for the bottom lines, the profitability of these businesses, which is interesting to me that Josh talks about how much positivity there is behind the stock and the chart tells its own story. You don't need words to tell you what that chart means, means for where the stock has gone yet you're Malcolm trimming it today. Tell me more.
- [17:33]
Malcolm Etheridge
Yeah, so this had a lot more to do with how fast the share price has moved in relation to our clients basis in the stock versus the company itself. So I think to Josh's point, Oracle is doing a great job of improving the margins of its customers, its core clients. However, the margins Oracle seeing itself as it leans further and further further into this multi cloud strategy are significantly lesser or at least reportedly significantly lesser than that of like an Amazon Web Services or a Google Cloud. And that's a little bit concerning if you consider how much the share price has moved up from about 150 back in April all the way up past 300 recently on all of these announcements really based on one core client which is OpenAI. And so OpenAI happens to be $300 billion worth of business for the next five years for Oracle. And if they happen to miss on any of those metrics, that's significant. Plus you have Sam Altman who's come back to the well multiple times with Microsoft, who is their initial partner in this and renegotiated terms in one way or another. So if they're likely to do that to Oracle, those margins that Oracle has to play with aren't very good there. So not saying Oracle shouldn't have accepted the business. Obviously you want to be in business with Open Air right now they're the best looking person at the dance. However, for that to be your one key client that's driving everything in the cloud services business just look like a great place to be trimming to me because with the amount of news we've gotten since their earnings about a month ago, it's basically chopped sideways around 300 a share. It hasn't really moved very much on any more of those announcements and so to me just looks like a great place to be taking profit.
- [19:07]
Scott Wapner
If there's a software show me story in all this, a SaaS show me it's got to be Salesforce, which last check was up on the outlook that they have given towards 2030. There's a stock and it needed that move. There you see it back it back out for me though, guys, because that tells the better story. You know, this stock is, is obviously has had a decline and then it's been a sideways mover because it has been, I guess it hasn't yet shown the market what it's looking for to make sure that it is not going to be, you know, become obsolete, that that software is not going to be killed, that SAS is not going to be so disrupted by AI that it's going to directly impact this business. You sold this stock at the end of August, beginning of September. So what do you make of the outlook and the broader debate over this name? Because I feel like the debate over software and being killed by AI is so acute around this particular company.
- [20:05]
Carrie Firestone
Well, this was a stock that we struggled with and we have owned Salesforce since we started Aureus and I was there for the IPO when Benioff came into Fidelity. I don't know, 2001, 2. So we know the company well. The, the benefits from AI and all the spending they're doing, we believe are more focused on client support and not the whole sales effort, which is what the clients need. They need software for. They need benefits from AI and we're not seeing that yet. We've had a lot of promise. We've had a lot of discussion from the company about where it's going and what they're going to do and when they're going to see revenue and profit enhancement. And it's been slow. So we just decided to step away and, you know, we'll watch it. We'll watch and see when there's an opportunity.
- [20:58]
Josh Brown
There's a macro cloud hanging over the sales forces of the world where you're looking at the labor market, which is clearly, some would say, decelerating. Others would say it's literally weakening. It's not like catastrophic, but it does point to lower headcount at large enterprises. Not just, not just in the United States, but probably all over the world. It's not that companies are firing everyone, but they're slow to hire because they're not sure how much mileage they can get out of all this AI spend they've been doing and how many employees that keeps them from having to hire. So if you're a Salesforce, one of the tailwinds for growth is having large enterprises hiring millions of people. Those are new seats or new heads to place the software we're with. So it's not a Salesforce specific problem, but it's a Dow stock. It's the most visible of the SAS names. And I think that that mentality right now that's out there in the ether is weighing on this name. People don't think there's going to be an expansion in, in in headcount at companies even if the economy stays good.
- [22:07]
Malcolm Etheridge
For Salesforce, though, it's not just a headcount problem. It's more of a technology and design problem. The fact that I can do lot of what Salesforce can do. We use AI in our business literally every single day. And a lot of the tools that are coming that I demo on a regular basis, they're coming for Salesforce's key components. The thing that's really saving them right now is there's an embedded level of trust among large enterprises. Banks, hospitals, those guys with a salesforce that a lot of these upstart AI companies can't really get into yet. So the best.
- [22:37]
Josh Brown
Right?
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Bill Baruch
Right.
- [22:38]
Josh Brown
If you can write your own tasks and workflows as a smaller midsize business in a way that you could not have done three years ago because you can't afford $1 million engineer in house. If AI is going to give your people the ability to work around these large SaaS platforms and write your own programs, that's like literally a sea change in the way we think about purchasing this type of software.
- [23:05]
Scott Wapner
You know, we've been following the alts managers and private credit related stocks. They're having a nice move this week finally. And if you look at they're down again today and they were trending for a pretty decent week. We do continue to watch the fallout from those two bankruptcies we've talked a lot about. See, Even Apollo down 2% is still slated for a near 6% gain week to date. It's been a nice bounce back, if you want to call it that. The Tricolor and First brands bankruptcies obviously have been very much in the news. I was just out, as I was just talking about in Los angeles at that case summit, which is a gathering of ALTS managers and RIAs. I asked Oak Hill's Glen August about this very issue, whether these are in fact the first cracks in private credit. Listen, there's always idiosyncratic credit risk, but.
- [23:55]
Bill Baruch
If you look at where the economy.
- [23:56]
Scott Wapner
Is, if you look at where the equity markets are today. If you look at the balance of where we are from, inflation, growth, etc. I'd say the backdrop is still reasonably solid.
- [24:06]
Josh Brown
But that's not to say there's not.
- [24:08]
Scott Wapner
Risks in the market. That's a big question, whether it really is idiosyncratic or are there going to be other issues that we need to pay attention to? Jamie Dimon was asked about this on the JPM conference call. Want you to listen to how he addressed it. I shouldn't say this, but when you see one cockroach, there are probably more.
- [24:30]
Josh Brown
And so everyone should be forewarned on this one.
- [24:35]
Scott Wapner
Leslie Picker has been following the money for us. She joins us now. We're getting our flashlights out. We're looking in the corners of the room, anywhere we can see to see if there are more cockroaches to pay attention to. And there are some other issues on the table today that I know you're following. Tell us more.
- [24:54]
Leslie Picker
Yeah, you're right. Whether it's a cockroach or a water bug or something else entirely remains to be seen. But you're right, Scott. We've spoken a lot about these recent auto bankruptcies and the potential for more than last night unrelated to those two situations. Zions Bank Corporation put out an 8K saying it would take a $60 million provision and a $50 million charge off related to two loans. Zions filed a complaint against the borrowers in connection with that. Write down noting that Western alliance is also looking to recover some money from those borrowers, far worse. So then In a separate 8K filed earlier today, Western alliance said it believes its existing collateral covers the obligation in question. But you can see shares of both of those companies hit hard today. Zion's down nearly 9%, Western alliance down nearly 8%. Investors concerned about the credit cracks are looking to put the pieces of the puzzle together. And as you mentioned, Scott, initially the market thought that the two auto bankruptcies could drag down private credit, leading some in the industry, some leaders to respond throughout the week.
- [26:02]
Josh Brown
These really weren't private credit stories and they were mostly an issue in the public markets. We didn't have any exposure to those two names and most of our large peers didn't either. I think that as as more facts come out, likely they're going to be pretty isolated incidents. What I've read what potentially fraud involved. But I think investors are probably a little bit nervous. Are there more credit problems to come? And I can tell you our portfolios continue to do very well.
- [26:35]
Leslie Picker
So to understand why the private credit industry is on the defensive, just take a look at the stocks of J.P. morgan versus Blue Owl in the month following Tricolor's bankruptcy and the subsequent failure of First Brands. And as it became clear that direct lending was a small fraction of the exposure, the stocks rebounded a bit over the last week or so. But as you mentioned, Scott, down today.
- [26:58]
Scott Wapner
Yeah, Leslie, thanks so much for that comprehensive look at what's happening here. I'm feeling you're not going to be finished with your reporting around this issue, which I don't feel like is going to go away anytime soon. You want to just wrap this, Josh, real quick on any thoughts you might have before we go to break?
- [27:11]
Josh Brown
No, it won't go away because the labor market will continue to soften. The Fed is the not in a rush to do 50 basis point rate cuts. And a lot of these loans. We know from reporting at the Financial Times, in the Journal and Bloomberg over the last couple of years, there's a lot of competition to make these loans because everyone's raised money and they got to put the money to work or else they have to return it. And nobody wants to return money. Can't bill on money that you return. So what do you do? Ease the covenants up a little bit. Payment in kind financing, extending loans like this. We know this has been going on and it's an isolated incident until there were 10 of them. Then there's. What is it? 10 isolated incidents. What are we talking about? This cycle has been playing out since the Renaissance. We understand this. It doesn't have to mean the whole world cracks. But one of the problems is historically we've looked at things like credit spreads. We've looked at junk bonds versus investment grade corporates or we've looked at the spread between the yields on junk bonds versus Treasuries. Useless because interestingly enough, the issuers that make up the H Y G, the jnk, they have never been better companies in those buckets. So you're not going to see the cracks there. Historically, that's what we would look at. You're still seeing pretty tight spreads. So I'm looking at the BDC. There's an ETF BizD, this is a VanEck product. It's the VanEck BTC Income ETF. This thing is challenging or hit below the Liberation Day lows. This thing violated the April level and it pays a pretty high yield, nominally at least. What we know is that dividends will be cut in the BDC space.
- [28:54]
Scott Wapner
They already have. They are being as we speak are being.
- [28:56]
Josh Brown
We also know on a parallel track, people that have put a lot of money to work in private credit are now asking more questions than they were asking three months ago. These companies might, these lenders might have absolutely nothing to do with first brands. It doesn't matter. Everyone's got the flashlights out, as you said. And as that plays out, probably more will be revealed. And the best case scenario is we do flush out some of the more loosey goosey stuff and we clean it up and the economy doesn't fall apart and it gives us time and we don't have to have a crisis. That's the best case scenario. We know what the worst case scenario is because we've seen it. So I think it's too early to ring alarm bells. But this idea of like, no, no, no, it's just first brands, everything else is cool. Absolutely no way. Remember I said it.
- [29:44]
Scott Wapner
Yeah. That's why we're looking around. Josh, thank you for that. We'll take a quick break. More committee moves from Bill and Kerry and Josh's best stocks in the market list as well. We're back after this.
- [29:59]
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- [30:29]
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- [31:00]
Carrie Firestone
What made you confident that you could do something that hadn't been done before? I have no fear of failure.
- [31:06]
Podcast Host/Advertiser
Trailblazing women, changing the game.
- [31:08]
Bill Baruch
One of my favorite pieces of advice.
- [31:10]
Scott Wapner
Think about what your boss's boss needs.
- [31:13]
Carrie Firestone
Leadership can look in many, many different forms.
- [31:16]
Podcast Host/Advertiser
It really does come down to just trusting yourself.
- [31:18]
Leslie Picker
Life is short and you just gotta.
- [31:20]
Scott Wapner
Think big to accomplish big things.
- [31:22]
Podcast Host/Advertiser
Julia Borsten hosts CNBC Changemakers and Power Players. New episodes every Tuesday, wherever you get your podcasts.
- [31:45]
Scott Wapner
All right, stocks have continued their slide as we were just bumping in with the dow down about 230. The S& P is negative by about 1/2 of 1%. Just to keep you up to date here, we're 30 minutes past the hour of noon committee moves I mentioned. We have more. You bought Trans Dime?
- [31:59]
Bill Baruch
Yeah.
- [31:59]
Scott Wapner
Bill Baruch, Why?
- [32:01]
Bill Baruch
Yeah, well, we have some cash to get to work and this is a name that we like long term. And it's been under a lot of pressure this year. You know, August report gap down. We don't have. We own Palantir, we own Leidos. We have some, you know, some exposure software, slight defense. But aerospace, we haven't had anything. This, this gets us in aerospace, we think there's good value as we look out 18 months, multiple is at 30. One is a little high, but it's a little lower than where its average is. So we've, we've lean into it. It traded down yesterday. We'll keep, continue to watch it. About a one and a half percent position brings our 10% cash hoard down to eight and a half percent.
- [32:41]
Scott Wapner
Okay, let's do this new buy. Carrie, because it's Roper Technologies that's not adding to a position that's fully new.
- [32:48]
Malcolm Etheridge
Correct.
- [32:49]
Scott Wapner
Tell me why this company? Let's look at it.
- [32:51]
Carrie Firestone
It's a stock that we've watched for a while. It's an industrial, it's a holding company. It's made acquisitions over the year. And it's a company that supplies services. You can say so. Software services, but a variety of services to industries like utilities, government, health care. Across the board, they, within their verticals have been growing cash flow in the teens over the last 10 years. In each one of them, the stock has come down. There's been fear, a lot of fear about how AI is going to disrupt all of their businesses. We have not seen that happen. And we've been following the company company closely. And at this price, which again has come down and having freed up cash from some of our other positions, we decided to start a new position in Rupert.
- [33:37]
Scott Wapner
Okay. Why did you trim Booking Holdings? You've had that for a long time, haven't you?
- [33:40]
Carrie Firestone
Yes. Also been a great stock for us. It's really been fantastic. And everyone thought, well, after Covid people were traveling, then they would stop traveling. Meanwhile, the stock has continued to go higher. It hasn't been hurt. We see it as a great Platform. We, we still own it. It's become a big position, just really big. And that was why we decided to trim.
- [34:00]
Scott Wapner
You've sized up positions in CoStar, in Waste Connections, Applied Materials, Wabtech well, and UnitedHealth. UnitedHealth. You trying to. You play this run in health care?
- [34:12]
Carrie Firestone
We had bought it when it totally collapsed. And the stock has been coming up. We think that it's on track to resume its original growth rate or close to it over the next few years. You see insurance premiums are coming up. Costar commercial real estate is starting to do better. A mat. It was a small position. We added to it. Wattek boned it a long time again. It gave us an opportunity. The stock came in and Waste Connection, you know, that's a fairly very solid anti cyclical company. Nothing to do with air. You're going to pick up the trash.
- [34:43]
Scott Wapner
Yeah, there's a few of those out there.
- [34:44]
Bill Baruch
Great company WebTech.
- [34:46]
Malcolm Etheridge
Love that one.
- [34:46]
Scott Wapner
All right, let's get the headlines with Bertha Coombs. Hi, Bertha.
- [34:48]
Bertha Coombs
Hi, Scott. A federal judge says immigration officers in the Chicago area must wear body cameras during enforcement actions or interacting with protesters. The judge said in a hearing today that she is expanding a temporary restraining order she issued last week, which requires officers to wear identification and limited the use of tear gas. The National Transportation Safety Board says faulty engineering on the Titan submersible led to the deadly implosion that killed five people on the way to the Titanic wreckage back in 2023. The NTSB's final report, issued late yesterday, found that the submersible sustained damage from previous dives that weakened it. Oceangate, which operated the vessel, declined to comment. And Illinois Governor J.B. pritzker won $1.4 million playing blackjack in Las Vegas last year. Spokesperson for the billionaire governor said today he reported the winnings in his latest tax filing after winning it while on vacation. Pritzker's office added that the governor, who is seeking a third term, will donate the money to charity. There are some who say he might also put his hat in the ring in 2028, but who knows?
- [36:09]
Scott Wapner
All right, well, we know we can play blackjack, right, Bertha? Thanks. Bertha Coombs. Coming up, Josh Brown's best stocks in the market. After this.
- [36:23]
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- [36:53]
Josh Brown
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- [37:35]
Scott Wapner
We're doing Josh Brown's best stocks in the market and it is related to this incredible run that we've seen in gold. Let's look at gold as Josh gets his thoughts together for this because it plays one plays right into the other. Right. I mean, the move above 4,000 and what feels like it just doesn't want to stop.
- [37:55]
Josh Brown
Yeah. So for people that are investing for themselves and not professional investors, they don't have this situation where they can't just buy gold themselves. If you're an equity portfolio manager, you have to use the gold miners to get exposure. And if you did, you're in luck. Today this is the best year for the gold, gold miners, silver miners, copper miners ever. The metals industry group is up an astounding 91% this year. That almost never happens for any industry group, especially not this one. So what I'm not going to tell you is here's a dirt cheap stock that you can buy before everyone's ever heard of it. But what I will say it's probably the run is probably not over because gold, the commodity, had been running way longer than these stocks broke out. So in April, I pitched Newmont as a best seller stock in the market on the show. Rather than running my fat mouth, I should have just bought it for myself and held it. Newmont is up, I don't know, 60, 70% since then. You can't buy this name right now. It's just way too extended. The one I want to talk about is Anglo Gold Ashanti instead. It's not as well known. It's $38 billion market cap. There's a special situation here that I think gives it more gas in the tank from these levels, even though it's been up a lot. And I want to tell you about it. Number one, historically this has Been a very inconsistent business in terms of how much of their money they've paid out as a dividend to shareholders. In February, they told the street, we're going to now pay out 50% of net income of $0.50 as a baseline out of our net income. And then we're going to have this variable. But it won't be as variable as it used to be. They're finally giving some clarity on what that return, capital return to shareholders will be. And obviously shareholders liked it. The other thing they did a couple of years ago was they moved their domicile from Johannesburg to the UK and it took them two years. But finally this summer the Russell indices added them officially. So they're in the Russell indices. And that I think has opened up the world to institutions to invest directly into the company. So this has lagged the other names in terms of investor appetite. And I still think it's early enough that there's some gas in the tank. I would tell you the 50 day has been extraordinary support. Since the stock broke out in August. I would be trailing this with a stop loss at the 50 day. It's about 15, 16% of risk for a name that easily can go to 100. If you think gold is going to 5,000, which now seems to be like a magnet dragging the price of the metal up there, I wouldn't say it's going to happen tomorrow. So if you need to own an equity and not gold, I think this one has more room than Newmont and some of the other names that are larger and more well known.
- [40:43]
Scott Wapner
Both Newmont and Anglo, record highs today. Worth noting as you look at the charts and the nice gains you're seeing. And Bill, you own Newmont?
- [40:49]
Bill Baruch
Yeah, yeah, we own Newmont. I'll say for Ashanti, great regional footprint. A lot, lot of these, a lot of these names obviously run a time. Newmont's made really timely acquisitions and a lot of the names like a core, they've made a lot of great acquisitions over the last year, especially in the back end of last year that have played out to really give them, you know, well, revenue well deserved moves this year. What I would say is backing up the truck, just kind of looking at this in general. Not only are gold prices higher, energy prices are lower as well, their input costs are lower. So these things are going to be free cash flow juggernauts. I think over the long term. I think this is, this is the early stages, maybe the first quarter of a cycle move here. So I think there's a long Runway you still don't need to chase it. But I don't know how much the pullback is going to be.
- [41:37]
Scott Wapner
First quarter, they put up a lot of points in the first quarter. See if they can hold that.
- [41:41]
Josh Brown
Ideally you want, you want to buy on a pullback and I think people should, I don't think people should like just look at a stock that's, you know, up huge over the last three days and say I'm going to bet there's a fourth day. I think you buy these names when they're red, when gold pulls back. If you're bullish on the space from an intermediate or long term, that's the way, that's the way to do it. The problem is these stocks are not letting you in.
- [42:04]
Bill Baruch
All right.
- [42:04]
Josh Brown
They're not relentless.
- [42:06]
Scott Wapner
It's been a breakout year for a big sector. Well, a key one at that. We'll talk about it next. All right, welcome back. We're seeing a breakout in the biotech names. XBI, IBB, those are the ETFs, the major ones that track the area. 52 week highs. As we turn to the former Fidelity Health Care and biotech fund manager elite Carrie Firestone. This breakout legit, what would you be doing if you were still running those funds and what would you be thinking.
- [42:41]
Carrie Firestone
About this, how much further they can go? This is a group that has underperformed the market for years, I mean many years now. And I've also said on this show a number of times that it was the turn for biotech. I mean something's going to happen because there's no other industry beyond technology where you can have more upside side potential from AI than health care and biotech. I mean talk about what you can do about personalized medicine or being able to create drugs from with so much more information from the market they're serving.
- [43:16]
Scott Wapner
But if we knew that, why weren't these stocks doing anything until recently when we just started, you know, looking at what looked to be a breakout?
- [43:23]
Carrie Firestone
Yeah.
- [43:23]
Scott Wapner
What was the like why is now legit and before wasn't what you said should have been been anticipated by the market and was obviously known? Right.
- [43:31]
Carrie Firestone
Well, I'd say there have been problems in the industry. There's been expiration of patents that has been going on for the last few years. A number of the major, I guess the big wave of explorations that are hitting the industry that will affect the biosimilars and drug generics is passed. We're moving into this new era and it was the blip ones that really changed the idea that there can be enormous new categories in biotechnology and health care treatment, new conditions that can be, I would say, not just augmented and improved, but saved.
- [44:05]
Scott Wapner
Well, what I've always been interested in the fact that while you have such expertise in this space, you only own Amgen and that's in your charitable trust. So why.
- [44:14]
Carrie Firestone
Okay, so for the last several years, as I've said, when there has been no interest in the market and still these overhangs, we haven't owned these stocks, there's still some belief in many corners of the world, including some of my Orius partners. And I respect exactly what they think, which is that we're not done yet with expirations on the, on patents, and that there are other ways to play it, such as use Thermo Fisher, for example, and other companies that are tangential to the health care industry. You know, Danaher would be that kind of name. Not, not purely companies that are made or break on new discoveries and then approvals. But I believe that it's the time to really start to look at and own these names. Amgen is a stock that's up more than the S and P, I mean, slightly more 15%. Ish. The BTK was up 28% since April 10th. From the bottom there, you're starting to see more interest. There will be IPOs, there have been secondaries, There's a lot more M and A activity. And you know, we think this should continue. I mean, I definitely feel that way.
- [45:24]
Scott Wapner
Okay, we want to show you the 10 year yield which is dipped below 4%. It's at 397. The market has obviously weakened a bit as well. Really being dragged down today by financials. That sector is far and away the worst, down almost 2%. As a group. You have cities down 2.3%. Bank of America is down 2, by the way, the airlines, they're really weak. United airlines is down 8%. Americans down almost five and a half. Delta down two and two thirds percent. I mean, if you're worried about an economy that is slowing down maybe even more dramatically than some people think it is, or that the labor market is going to as well, theoretically you would have a decline in stocks like airlines, like financials, and then you would think that you would have a decline in yields as well. So we'll stay on top of that story. We'll take a quick break and we'll come back after this.
- [46:46]
Bill Baruch
Okay.
- [46:46]
Scott Wapner
We want to continue to follow the story of the 10 year yield, which is below 4% for the first time since April if there's a way to back that chart out to show it it one would have to believe it was around the Liberation Day low period. Whether it was on the day itself, I'm not, I'm not clear. But you can clearly see the move lower if we can look at it that way. And what you guys think of the two year by the way is the lowest since 2022. So show the two year yield as well guys as the, you know the market anticipates rate cuts furthermore from the Fed which is why the two year would obviously be moving lower as some suggest it's the Fed follows the two year, not the other way around. So I'm wondering how you guys are thinking about this move, Josh, in yields and what it might mean for stocks.
- [47:38]
Josh Brown
I mean it's, it's like one day. So I don't want to make too much of it. But just for people that aren't fully understanding why we talk about, about bonds on the show when we're usually here to talk about stocks, it's another way of gauging risk appetite. And when yields are falling, that's because people are buying, people are buying bonds. And why would they be buying bonds? Sometimes risk off, sometimes asset allocation. So I think on a day like today when you have banks like Zions and Western alliance and you've got some concern in the financial sector and then you see that coincide with falling yields, people get nervous and that's why we're talking about it. But like you know, if we see yields falling for 10 days, that's different than, you know, so I don't want to, like, I don't want to start.
- [48:24]
Scott Wapner
No, I know you don't need, you know, we don't need to do that. But it's noteworthy in and of its first time since, since April, you're below the 4% threshold. The stocks we talked about earlier, some of the private credit related names, alts managers, private equity, the ones who are sort of all in, all inclusive in some respects.
- [48:43]
Josh Brown
That's more notable to me is the share price of the private equity and private credit giants. These are very well run companies, nothing's on fire. But they can't catch a bid. They can't catch a bid. Despite all the positive comments from their non alternative cousins, JP Morgan, Goldman Sachs, Blackrock. It's a little strange.
- [49:04]
Scott Wapner
Yeah, I mean do you own Carlisle or KKR?
- [49:08]
Josh Brown
I own CG Carlisle.
- [49:09]
Scott Wapner
Okay, so you got Carlisle, but it's KKR is down almost 4%. Blue Owl, which we were showing you down three and a half. Aries is off about three, Apollo's about three. Malcolm, you have, you have thoughts on, on what we've been talking about in nearly every show for the better part of a week or so. And Leslie Picker's been helping us follow the money there. But this is an interesting, interesting story as it has, you know, moved into other areas of the market too, like the regional banks that Leslie was reporting on as well.
- [49:39]
Malcolm Etheridge
Yeah, I own Carlyle personally. I own Blackstone personally. I think there's a ton of embedded deal premiums in those funds that once they finally get a chance to transact, will be realized and be valuable. The management fees that those guys collect are astronomical, and that's what really matters. But I think the fear over private credit can't be overblown when you consider just how many payments in kind loans there are buried underneath the surface, which is basically an agreement between the lender and the borrower that instead of us collecting our interest and principal the way we normally would, we'll just make you a new loan to cover the interest and principal for some time. That is on the rise. It's the highest level it's been since 2021. And I think we're finally starting to see those cracks, to keep using that word that are forming.
- [50:22]
Scott Wapner
We're in a, we're always in a react first, ask questions second kind of marketplace anyway. And when you, and when you start talking about the bond market and credit, which is obviously much deeper than the stock market is, people just have PTSD as well through prior periods of extreme volatility crises.
- [50:45]
Josh Brown
Well, sometimes smoke is fire. We had, we had, you know, it's, it's a little over two years ago we had multiple banks go to zero banks.
- [50:53]
Bill Baruch
This week they're having some volatility as well.
- [50:56]
Josh Brown
Signature bank. Yeah, like it existed. It was a thing.
- [50:59]
Carrie Firestone
Well, the first Republic.
- [51:00]
Josh Brown
And then the next day it was not a thing. First Republic. Like it's not Silicon Valley. It's not, it's not always, it's not always just smoke. And I think rationally people are looking at that and they, they're asking questions now and maybe they'll get satisfactory and answers those questions and this will blow over.
- [51:15]
Malcolm Etheridge
We've also been predicting the end of private credit for a while now. So maybe it's not the thing that ultimately ends up being the fire. It's somewhere else. We're not looking.
- [51:24]
Bill Baruch
Subprime auto loans and then Philly Fed manufacturing. We don't have any economic data coming out. That was a Pretty big miss this morning. That was a little bit of a heartbeat on where is the economy right now with the government shutdown going on, not to mention the government is down.
- [51:36]
Scott Wapner
We'll get a good. Sorry to interrupt you. We'll get a Good read at 3 o' clock this afternoon. Schwab's Liz Ann Saunders among those who will be with me then. Mohamed El Erian is going to be around too and he'll be here on set. So we'll have a good conversation about all things markets coming up. You want to give me a final?
- [51:53]
Bill Baruch
Yeah, Goldman Sachs. Go to that one.
- [51:55]
Scott Wapner
Okay.
- [51:55]
Malcolm Etheridge
I'll give you Microsoft earnings in a couple of weeks. Better improved margins.
- [52:00]
Scott Wapner
Okay, who's got Schwab? All right.
- [52:03]
Carrie Firestone
Yeah, had a really strong quarter. Added a trying to front run.
- [52:06]
Scott Wapner
Liz Ann Sonders.
- [52:08]
Carrie Firestone
Love Lizzie and love. Listen, she works for them. She could talk about anything. $13 trillion in assets and they keep growing.
- [52:16]
Scott Wapner
Okay, good stuff.
- [52:17]
Josh Brown
Josh Brown toast Green on my screen.
- [52:21]
Scott Wapner
Okay, There is still some green on the screen, mind you, but obviously the market picture is looks a little bit differently. Information technology as a group is still green, as is health care. But we'll see what happens when I see it. 3. You've been listening to CNBC's Halftime Report, the podcast you can always catch us live weekdays at 12 Eastern only on CNBC.
- [52:46]
Podcast Host/Advertiser
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 andor 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 we all.
- [53:26]
Health PSA Announcer
Take good care of the things that matter. Our homes, our pets, our cars. Are you doing the same for your brain? Acting early to protect brain health may help reduce the risk of dementia from conditions like Alzheimer's disease. Studies have found that up to 45% of dementia cases may be prevented or delayed. By managing risk factors, you can change make brain health a priority. Ask your doctor about your risk factors and for a cognitive assessment, learn more@brainhealthmatters.com.