B (2:59)

All right, speaking of commonality, Microsoft and Meta, they have one thing in common. Taking that charge. You know, investors don't seem to like surprises. Other than that they seem like pretty good reports. Stuff other than raising the capex. Was there something else in those two reports that you didn't like that you think justifies these downside moves?

C (3:16)

No, I thought these quarters were, both of them were very good expenses. That's the, that's the sensitive point for all of these stocks. How much are these companies spending? We know they were going to spend $400 billion in CapEx. The, the big ones, the big names this year. Now it seems to be even a little bit more so. For me, I looked at Microsoft and I was, I'm not, I was not an owner yesterday, I am now an owner today because I'm, I'm looking at this report and they beat in all three segments, they grew. They beat revenues by 3%. They had commercial bookings up 111% year over year. Their RPO is, grew 51%. That's future. Look at revenues to come. Azure. I know everyone wanted 40% Azure growth. They got 39%. I think that is silly because it expanded 200 basis points. But that was the sticking point. They wanted a clear beat. I think that still is very, very positive. And so to me, down 3.54% when it opened this morning. I started adding to a position, you.

B (4:14)

Know, in all fairness, that 40% was kind of the whisper number. They did actually beat the estimates according to street account. But the 40% was kind of that number out there in the street lurking. I want to go back to that rpo. I was actually talking to the team about that. Up 51% year over year, about $300 billion. And it doesn't account for open air.

C (4:29)

That's right.

B (4:30)

So it could be even bigger. We made such a big deal about Oracle and their rpo. Why do you think investors are just shrugging off Microsoft?

C (4:36)

They're just look, the Stock was up 28% headed into the print and they were expecting a big beat. Beat a bigger beat in Azure. Really? That was really the story the last couple of quarters. The company has been able to beat their azure numbers by 300 and 400 basis points. So this, this only 200 basis point beat is the reason why I think you're just seeing a sell the news. There's nothing in here that is alarming whatsoever. And if you want to go into matter, we can go into matter because.

B (5:03)

That you let us there stuff.

C (5:06)

I'm going to go there. I added to that this morning too because I think down 12% is absolutely sick silly. Look, I mean I was not happy that expenses went higher. None of us are happy that expenses went higher. But the higher expenses are leading to very strong growth. You're going to see 21% growth this year in total revenues, operating margins at 40%. If you look at what they actually reported in the quarter, they beat revenues by 400 basis points and grew 26%. Operating margins also beat at 40.1%. The family of, of apps that actually beat as well. So you see the revenue is coming in in better than expected and so the spend is working. And also by the way, they're seeing ad impressions up 14% and price per ad up 10%. They're seeing monetization. That is exactly what I wanted to see. So not happy at all about expenses, but down 12% after you see this kind of growth. So you're now at 21 times forward estimates for 21% plus growth.

B (6:09)

Steph, you came ready to talk about yet all the metrics right at the tip of the tongue there, Jim, I don't leave you out of this one. You own Alphabet. I mean everything was pretty good. Everything was pretty good. One of the things that really stuck out to me was the Gemini numbers, the monthly numbers, I mean trailing open air by a lot. It was 650 million a month compared to like 800 million a week. So there's a big gap there. But is that encouraging when you're seeing that growth from Gemini? At the same time the search numbers beat expectations.

D (6:36)

Yeah, the search numbers beating expectations is very encouraging. So is the fact that the cloud services, Frank, were up 34% and YouTube's doing well, etc. Etc. I mean basically this is a multi cylinder engine that is firing on all cylinders. I think what is intriguing though is where you started which because if you go back five months ago, we had a big controversy in the markets about what exactly was going on with the search business at Alphabet, at Google. And you'll remember Eddie Q, senior vice president at Apple, was testifying that on Safari they were seeing Google search queries going down that evening. Just to remind everybody, that evening Google came out with a press release saying, hey, we're seeing search queries going up, including On Safari. Now that I have been unable to square those two facts, those two statements since then, and what we've had in addition since then are two earnings reports from Alphabet that clearly shows the search business is growing really quite well. And they, they figured out how to use artificial intelligence, whether it's the AI overview Gemini, they have many different ways that they are figuring out how to monetize and use AI. So I think in this controversy, this, this conflict that I can't resolve, it's now clear that Google Alphabet was right and the search revenue is going to terrifically. Let me go also to the cloud business. As I said, up 34%, increasing margins. You've got a huge backlog. I think the backlog was up 45%. A lot of that coming from companies like Anthropic. So there's just a lot of things going right at Alphabet. Steph, to what you said about Metta and the valuation, totally agree. I'm not in that stock. But the valuation, you know, where it is on Alphabet is similar. Meaning that there are probably future gains ahead. I will say this regard to the overall market, whether it's meta down Microsoft. Look, the markets don't go up every day. You know, the last several days we've kind of gotten accustomed to in video. I know we haven't talked about it, but in video, adding $200 billion of market cap a day, guys, that's not going to continue every day. Let's take a breath here.

A (8:36)

If I could react a little bit first. I think better now is actually cheaper.

C (8:40)

Yes, it is. Than Alphabet 21 times versus 24 times alpha.

A (8:44)

Alphabet's quarter. Jimmy, you're, I mean, that was a fantastic quarter quarter and the strength of YouTube is, is remarkable. I heard David Faber on the network talking about this with Mike Santoli. If you think about YouTube, the valuations probably right now rivaling Netflix.

D (8:57)

That's why it's right there.

A (9:00)

So it's remarkable what they've done with YouTube. But Steph, I just want to ask you because some people have said to me this morning, well, okay, why is better utilizing the debt market? And any, any reference, any engineering of utilizing debt from these Mag 7 companies is something that the marketplace is going to frown on and say, okay, here we go, we're going back to the 90s.

C (9:24)

We're not going back to the.

A (9:25)

No, I don't think we are. But.

C (9:26)

But I know, I know what you're getting. I know what you're getting at. I don't really care how they.

B (9:30)

Well, clearly you don't care. You bought more.

C (9:31)

Well, of course.

B (9:32)

But is it concerning for them to take out $25 billion in bonds? And if this is concerning, why wasn't it concerning when Oracle did Oracle issued?

A (9:39)

It is concerning. It is. I mean, the day that Oracle made the announcement is the high. The stock has, has not traded higher. That was it. It went parabolic and it has gone down. So, no, Oracle loves debt. Not to the degree that that matter is. Not to the degree that Oracle is in terms of its endearment of utilizing debt. But I don't know, you just look at it. You say to yourself, well, why is matter?

B (10:02)

Why are they issuing, Right.

A (10:03)

Why do they have to issue 25 billion?

C (10:04)

Because they probably. Well, they do see growth. I mean, to raise the expenses from 114 to 116 billion up to 1 16, 118 billion just this year alone. And then they said next year is going to be noticeably more than this year. I mean, that is huge. These are huge numbers.

B (10:20)

These are huge numbers.

C (10:21)

But, but my point is, is that while I'm disappointed in it, right, they're seeing results like the family of apps, right? 25.9% growth. It expanded 410 basis points sequentially. That's crazy growth for a company of this size.

A (10:35)

So you think we could trust management more than we were years ago when they were spending money and we were like, wait a second.

C (10:42)

Because we weren't seeing the results. See, we are seeing the monetization here. And the price per ad tells you that a 10%, that's very impressive. And they were one of the first to see monetization. And so they obviously see it. They want to build momentum off of it and they want to. They're going to increase expenses at. As a result, look again, for the third time, I'm not happy that they're spending more, but if it wasn't leading to results, that's where I would actually sell the stock.

B (11:06)

Very quick, I was talking to somebody who's an investor. Are you concerned at all that they're offering these notes that. I think it's 1.4% above treasuries? I mean, is that something that concerns you at all that. No. Okay.

A (11:15)

I could tell you in Talking to people that manage taxable fixed income portfolios, they obviously think there'd be overwhelmingly strong demand for what is investment grade paper.

B (11:25)

All right.

D (11:25)

I think this is just corporate finance, by the way. I mean, this is what you actually get taught in corporate finance. Let me finish. Well, okay, but your, your disapprobation, if I can use that word, is simply because. Simply because you're used to not talking about debt with these companies. But if you think about the cost of capital, issue debt for issuing equity, like these guys say, look, we want to keep more equity to ourselves. Plus the. They're using this debt to finance data centers, right? And they're looking at the data centers and saying, we have these cash flows that we can see coming in from the data centers, or at least that we project coming in. And that more than covers the interest expense. I mean, again, this is like what they teach in business school. I'm not trying to be snobby about this is what they teach in Business School.

C (12:08)

$50 billion megawatt, 5 megawatt project in Louisiana for a data center that they've got to fund for next year. They have one also in Texas. This as well. They're just going to continue to build out. And so I'm okay with them doing whatever. And I think you're right on, on the point of just this is cork fans.

A (12:25)

I agree with both of you. I think you're both correct. And look, we've seen others, Apple, on an annual basis, they've issued debt. So for years, it's not like this is unique. But I do think the market is sensitive to, okay, we have this new innovation and, and are we going to fund it with cash from operations? We like that. Or are we going to fund it with debt? We don't want to go back to.

B (12:50)

That place, simply that. Or is this the street maybe at least today, saying you might be spending too much money. Like, for example, Metta, they raised their capex guidance, but at the midpoint it was only $2 billion, which seems like nothing now. It's a lot of money, obviously, but.

C (13:01)

People bought this because it was the end. It was the year of efficiency. It was the decade of. Three years ago, the decade of efficiency. So now they're like, okay, now we're done, right? I mean, we all expected some discipline and we didn't get it. So I get the, I get the reaction. I think it's an overreaction. I think it's an opportunity to buy. A phenomenal growth story that dominates the industry. 60% of the world uses Facebook or Meta or Instagram or any of their products. That's enormous, an enormous moat.

B (13:31)

What about Microsoft? So this overreaction, the fact that they're a cloud business that's actually gaining market share, they're going to get all of open air compute business. It seems like they're attracting some other AI workloads. Doesn't their spending seem at least more justified than Meta? Even if you think Met is unjustified, doesn't it seem more justified considering the upside they have?

C (13:49)

Yeah, but also their operating margins are up 230 basis points year over year and the expansion and that's not. So that's not going to be the case for, for next year from this year because of the, because of the spend. But their operating margins at Microsoft, I mean, I had to take a double take on some of these numbers. They were really quite good.

A (14:07)

Yeah, I thought Microsoft was down the middle of the fairway. There was nothing really to be troubled by. I don't think down 2.7% is, is that troubling either, given that we heard the announcement several days earlier with Open Air where they were given 27% of the company and had a very clear agreement in place through 2032 and the stock responded to that. So I don't think you make very much of what you see going on post earnings at Microsoft. I think maybe to Steph's point, Metta, yeah, that's a battleground conversation. And to Jimmy's point, Alphabet, positively, that's a battleground conversation as well.

D (14:46)

And maybe just to try to continue to tie this up in a bow, I mean, let's note that the equal weight S&P 500 is up about a half a percent percent today while the NASDAQ is down.

A (14:54)

Say that again, Jimmy.

D (14:55)

The equal weight. I know, I know. My equal weighted Jyoti equal weight S&P 500 up half a percent. What's the NASDAQ down? I'm not looking right now. 8, 10 of a percent. We were due for a little bit of a rotation. And if these earnings are the catalyst, big deal. I mean, look, these stocks are up so much. I'm trying to tie this up in a bow. They don't go up every day. And the rest of the market can perform once.

C (15:16)

And we are seeing a broadening out to day today, to your point. But guess what's leading? The banks are leading and that's because they all had great earnings. They rallied and then they kind of settled in a little bit. Right. They haven't been doing very much. I think that after you listen to Powell yesterday, and even if they don't go another 25 basis points in December, you're going to see a steeper yield curve and that should absolutely help the net interest income story for all of these banks. And we're starting to see M and A, I mean, Huntington bank, they made two deals in the last four months. That's, that's great and that's very positive. And I think people are appreciating those good earnings. I think eventually they're going to rotate back into tech and they'll appreciate the growth that we're seeing at tech.

B (15:57)

We're going to get more on the Fed in just a minute. But Jim, you said this rotation is not a big deal. Guess what is a big deal? The two earnings reports we have after the bell today, that's Apple and Amazon. Right now we're joined by somebody else who's a big deal, Steve Kovac. He joins us now with what to expect out of Apple. Steve?

E (16:12)

Yeah, Frank, and thanks for that, by the way. So look, I'm here in Cupertino right now. We're going to get those results after the bell about 4:30pm Eastern. And what we're looking for is that momentum that we've been hearing about over the last month or so since the iPhone 17 launch, what that actually looks like in this report. So this report's only going to reflect the first several days of iPhone 17 sales, but analysts are already super optimistic, expecting high single digit revenue growth for the September quarter. And then the guidance which we'll get on the call will be also a very similar revenue growth picture too. And that's something very important to keep in mind even as Apple sits out the conversation. And one other thing to pay attention to is services. This is the end of their fiscal year 2025. So we're going to get the full year services number which is going to expected to surpass $100 billion for the first time. That's really been the growth engine of this company as the iPhone has kind of slacked off for the last several years now. But that of course is turning around. And one other thing to pay attention to is China. We've been getting so many signals that that base model of the iPhone 17 is selling quite well in China, in part because of the subsidies from the government giving customers there a discount. We saw some signs of recovery in China and in the last earnings report and we're expecting that to continue this time. Frank.

B (17:35)

All right, our Steve Kovac waiting For those Apple results after the bell. Steve, thank you very much. Turning to all of you guys, last thing you mentioned tariffs and also what's going on in China. The fact that the president made a deal to reduce some of the tariffs imports out of China. Joe, is that a tailwind for Apple? I mean is that something that you see moving the stock higher just longer term?

A (17:56)

I think that tailwind was built into the market already earlier in the year. I think more recently and I go back to August as being a significant moment that allowed the positive momentum we're seeing in Apple right now to actually catalyze and that was in the Oval Office when we saw Tim Cook with the President. That seemed to be a moment where things have shifted. More recently it has been about the uptake in the iPhone 17 looking a lot better than iPhone 16. Steph, I don't, I don't know if you agree with this, but I do think we're seeing an improvement in the environment in China and I think that's important for Apple because the last several years, the revenue deceleration that we've witnessed, which really has been absent from this company relative to its mega cap peers, what it needs most is it needs that revival from China. I think we're seeing the early signs of that.

C (18:47)

20% of the iPhones main in China and that's 50, 50% overall is iPhones for Apple. So 20% of that 50% in China. So that is a big deal.

B (18:57)

Jim, you own this one, you're an Apple shareholder. Are you going to upgrade your phone? I mean are you believing this upgrade cycle? Do you think it's a real thing going into the holiday season? You got to keep in mind they released it ahead of the holiday season. So is this something's going to be in your stocking stuff or somebody else's?

D (19:11)

It's Jimmy's got to give questions.

B (19:15)

Mark.

D (19:15)

Simpler. But you know, at first I was going to respond like I'm not the right barometer but maybe I actually am because it's been so long and I mean my touchscreen is actually malfunctioning at this point in time and maybe I actually am representative of the pent up demand. We know that. I mean for two years now it feels like we've been talking about a super cycle of upgrades that never materialize. Joe, I hear you talking about China, but maybe actually domestically and internationally outside of China there is pent up demand that's to going, going to come through. Now with regards whether that's true or not, with regards to the stock. I mean, as a shareholder, I'm happy that it's up and I do think that you've got to respect the momentum and Joe, I'm sure you do as a momentum investor in the name. That said, from a valuation point of view, as a fundamental investor, I find it hard to put new money to work at this price.

B (20:01)

So it's really the price. But what about the outlook of the idea of iPhone picking up? Maybe they do a breakthrough when it comes to, I mean, don't you want to invest now with the idea that there could be some type of innovation?

D (20:11)

Sounds great coming from your lips, Frank, but I mean, I think that's, that's why we're at 270 and not to 20 where we were not that long ago. I mean, heck, a year ago. I think we're at 16 a year and a half ago.

E (20:21)

Yeah.

B (20:21)

Important to know with the rest of tech down right now, Apple's up about 3/4 of 1%. Want to switch gears now to our Mackenzie Sagalos with what to watch when Amazon reports after the Bell Mac.

C (20:30)

So, Frank, this print is all about Amazon trying to calm investor concerns over its cloud business, which is the company's revenue engine. It's lost big ideals to rivals. Its backlog still trails Microsoft and Oracle. And then last week's 15 hour outage has raised questions about its legacy infrastructure. But bank of America says AI capacity should ramp in early 2026 and Amazon could be in a better spot to showcase its custom in house AI chips and cloud edge as more compute comes online. And then on retail, Amazon's core business is expected to show solid upside, especially with accelerating online spend in Q3.

B (21:08)

Frank McKenzie Sagalo is live out in the bay with the very latest on Amazon, also reporting after the Bell Mac. I know you're standing by for those numbers as well. I want to turn to you guys. One of the things that's been talked about a lot, Joe, you can kick this off, is that Amazon, the leader when it comes to cloud infrastructure and hyperscalers, is losing market share when it comes to AI workloads to some of its competitors. Do you think that's real? Is that something that investors should be worried about? Because this is a stock? Despite the retail business, the ad business, it does trade on the cloud business.

A (21:35)

So it is the weak link in the Max 7. It is the disappointment of 2025. Myself and others have come on the network and said that they felt Amazon would take the lead in the Mag 7 and it hasn't. I've been wrong in that regard. I think when you try in mind for the reasoning behind it, it's very clear to me two things stand out. Number one, I said this the other day and someone actually reached out to me and said well what about Anthropic? Yes, they have a relationship with Anthropic but there is no relationship as it relates to AI that I know of would open AI. And the street seems to really value that and pay the premium for that relationship. In addition to that, what is going on with cloud? Because cloud is trailing its peers and it's trailing its peers to the degree that is becoming somewhat troubling in particular after we saw last evening both Microsoft and Alphabet deliver on cloud. Amazon has to come around with that cloud and deliver in the same mannerism.

B (22:35)

Link. Are you equally worried any concerns about also the retail business? The end of de minimis exemption for small items? A lot of those items were sold on that marketplace. If we are seeing a slowdown in consumer spending that could hit the ad business. So a number of areas that could potentially be impacted by the current environment.

C (22:50)

No, I mean I think the consumer business is very strong and the margin improvement will continue. That's important. Their ad business is absolutely booming in terms of us. They have a 30% market share. Azure has a 20%. So I get that Azure and Google Cloud are both growing faster, but these guys still dominate the industry. What needs to happen tonight? They need to print an 18 and a half or 19% growth number. If they do not stock goes down much. A lot, A lot down from here. I don't think that's going to be the case. But that's what all eyes will be.

B (23:22)

On if it falls. Are you a buyer similar to what you did with met at Microsoft?

C (23:25)

Yeah, yeah. Because I like that. I think there's a lot of ways to win and the things that I just talked about, I think they're continuing to take market share in consumer and retail International has a lot of opportunity. They've done a really great job in terms of cost discipline. So expect the margins and the profitability of the company to actually see improvement. And I think we're just a little over obsessed, myself included on us. And I get why it's one of the last couple of quarters. Yeah. But you know what? It's still growing with that kind of market share to grow 17% last quarter. That's still very healthy.

B (23:56)

Is it the growth or is the fact that they're not leading when it comes to AI workloads? Which one of that is more important.

C (24:01)

I don't know if they're not leading an AI workload.

B (24:03)

I mean that's every report, every analyst note out there.

C (24:05)

I don't know if that's the case. I think, I mean I think that we haven't even seen the anthropic revenue yet and the details there. So I mean I think there's a lot of ways you win with Amazon. And oh by the way, it's trading at 13 times EBITDA. Historically it's traded at 18 times. So I'm not saying gets back there because obviously the growth is a little bit slower. But you know, I think that they can get maybe 15, 16 times if they can show improvement in us. And I think they're, by the way, they're consistent. Consumer business should help from prime day as well. So we should see good numbers.

B (24:32)

There are the ever patient Jim Leventhal. I'll give you last word on Amazon.

D (24:35)

Yeah, well you guys just hit the fundamentals and I agree with it totally. I would also just look at the chart. Maybe in the control room we could get a 10 year chart because what you're going to see is that over long periods of time the stock rises and then consolidates. I think we've just had a little rise after that mid-2020s consolidation. Maybe we consolidate a little bit further. But basically this is a stock that overlays long periods of time. Look at that chart. Like that's a stock that goes higher over long periods of time. And unless you see some fatal flaw, which none of us do in the Amazon web services or the consumer or the logistics or you name it, Amazon prime the video. I mean it's hard to, it's hard to shoot against this company doing over the next 10 years. Look at that chart over the last 25 years. It's hard to see it stopping its growth rate.

B (25:20)

Look at you calling for a 10 year chart. You don't hear that very.

D (25:22)

I know. And then they went, then they went.

B (25:25)

Have you ever called for, for a 10 year chart?

D (25:26)

Look at that chart.

C (25:27)

It looks very pretty.

E (25:28)

Look at that chart.

D (25:29)

If you don't want to go down.

A (25:31)

The 10 year chart road with Jimmy.

B (25:33)

And I, I can see by the way Amazon up over 600% over the last 10 years. Coming up next on halftime, our chart of the day. A huge drop for one consumer stock. And Stephanie Link is making a move on this name as well. She's gonna reveal the trade straight ahead. Halftime's back in just two minutes.

F (25:51)

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B (26:22)

This episode is brought to you by Progressive Commercial Insurance Business owners meet Progressive Insurance. They make it easy to get discounts on commercial auto insurance and find coverages to grow with your business. Quote in as little as 8 minutes@progressivecommercial.com Progressive Casualty Insurance Company coverage provided and serviced by affiliated and third party insurers. Discounts and coverage selections not available in all states or situations Are you looking for health insurance? Georgia's got you covered. Georgia Access is our state's marketplace where you can compare, apply and enroll for health insurance plans that offer the best value for your needs. Open enrollment is happening now. Visit georgiaaccess.gov today and choose the plan that is right for you. I'm Insurance Commissioner John King and I'm proud to bring you Health Insurance for Georgia by Georgia. And welcome back to halftime. Let's get to our chart of the day. Look at this one. Chipotle shares taking a real big hit after lowering its sales outlook as consumers. They cut back on dining as they're feeling the pressure from inflation. Shares down more than 14% Steph link, you sold out of this one. You got out. You don't like burritos.

C (27:47)

Mea culpa. This has been a problem for a while. I've been fighting it. I have. I was looking for anything to be positive last night. Anything at all. There was not anything to be positive. They missed on the revenue number. They guided down same store sales for the third consecutive quarter. The operating margins missed. The restaurant margins missed. They've lost their way. I'm not sure this leadership team is the right leadership team and I do not want to be emotional about it, but I truly believe it. Because since Boat Ride Right has been there, they've done nothing but miss. So I sold out of it. That's one. And then I just don't feel good about. I apologize to anyone who followed me into it. I actually am quite tempted in Starbucks, to be honest with you. I don't own Starbucks at this moment, but the turn certainly seems to be starting very early on. But the first positive comp in two years with a very good leader. That's on my radar, radar screen.

B (28:44)

Are you more Brian? Sorry, Joe. Are you more pro Brian Nickel or Starbucks?

C (28:48)

Both.

B (28:49)

Okay, that's a good answer.

A (28:50)

So I think the question that you have to ask is, is this idiosyncratic with Chipotle or is this the economy, the real economy, beginning to contract? Because some of the names that we hold that have done remarkably well, Royal Caribbean, Ulta Garmin, they have all been punished this week. And Garmin, in their quarterly earnings call, they talked about the weakening that they're seeing from the consumer. Royal Caribbean, the same case could be made.

C (29:24)

I think it's low and medium area of consumer at the high end.

A (29:27)

Wouldn't that affect Starbucks then?

C (29:30)

It could, it could, but I, but I think you get bailed out on Starbucks because you've got a seat CEO that's going to restructure, which is different.

A (29:37)

Than what you have with Scott Boatwright and Chipotle. Look, Chipotle, I think it's a combination of both. I do think low end is feeling the economic pressure and they're losing that, they're losing that traffic at Chipotle. But I also can tell you, and this is boots on the ground. My kids and my kids friends, they'll tell you the experience is different. They'll tell you maybe the food isn't, doesn't taste as good. They'll tell you, tell you that the environment.

B (30:02)

Right.

A (30:02)

They'll tell you that the environment in the restaurants is, is not as what it used to be. Maybe the stores aren't as clean, but there's something that's different which.

B (30:10)

Are you hitting on something? Jim, I know you want to say something, but on the call they talked about people 25 to 34, 25 to 35. That's where they're seeing a lot of weakness. Is this also. Maybe you're talking about the real economy where AI is impacting some of their sales because these are younger people, maybe they're displaced out the job market. These are the people that will go to Chipotle. If you're 25 to 35, this is an overgeneralization. But you're not packing your lunch. You go out to lunch.

A (30:33)

Yeah, I think you could, you could make that argument, but I think there's something more. Look, I think it's about the experience.

B (30:39)

Okay? Right, the experience.

C (30:41)

Something. Jimmy Brinker. You look at McDonald's, you look at Starbucks, I mean, there's, there are signs that there, that there are okay, things in the environment. So I do think this is a big Chipotle.

D (30:52)

I think there's. Okay, there probably is an idiosyncratic issue, although my son like eats there almost every day. Besides that, I think there's an obvious problem here that we're kind of not touching on, which is the government shutdown. This is what I believe, okay, that all these people who are furloughed or working without pay and the knock on effect of all the contractors who are not getting paid and you know, look, this, there is going to be an effect from the shutdown. The good news of every, everything I'm saying thought about this when you were talking about the cruise lines just a second ago. The good news out of this is at some point the shutdown is going to get resolved. So this should be temporary. Side note, let's get the shutdown resolved. Guys.

B (31:30)

Link another side. I want to give you credit for owning that one. I mean you said listen, anybody that followed you, you apologize, you own this one. I want to go to two other names that are consumer facing that you're also selling. It's Deckers and Gap.

C (31:41)

Yeah, and I did this, I did this last week. I haven't been on so Gap. I was up double digits. I love the story. I love the management team. I like what they're doing with their brands and the creativity. Nothing wrong with the Gap. I just wanted to take the double digit gains and call it a day. Daggers, they actually had a very good quarter. They actually had a double beat with Hoka, with Ugg. Hoka, they actually gained 2 percentage points of market share. They had margins that expanded earnings that grew 14% total revenues, 9% gross margins expanded as well. So why did I sell it? I just don't think they lowered guidance to be conservative. I just don't think between now and the end of the year this stock has a catalyst to move higher. That said, I might look at it in January with a fresh set of eyes because I do like the brands very much and I like this management team as well.

B (32:28)

All right, declare shares pulling back just about 1% right now. Coming up on Halftime, more committee stocks on the move after earnings. We're going to run you through all the, all the names. Halftime is back right after this.

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G (33:36)

We'Re back. I'm Kate Rogers with your CNBC news update. Israel says it's received the bodies of two hostages today from the Red Cross. A day after the fragile Gaza cease fire face its toughest test yet from a series of Israeli strikes. Israeli forces will now transport the remains for identification and burial. Israel has criticized Hamas as being too slow to hand over the remaining disease. Cease hostages in Gaza, but Hamas says it will take time to locate and retrieve all of the remains because of the widespread destruction in Gaza. Officials in Brazil say the death toll from a massive police raid in Rio de Janeiro has risen to at least 121, including four police officers. The operation began Tuesday as authorities targeted a massive drug trafficking gang. The raid sparked intense gun battles. Human rights organizations have called, called for investigations into the deaths. And New York governor declared a state of emergency today to issue $65 million to food banks and pantries. It comes as federal funding for the national food stamp program is set to lapse on Saturday. Oregon and Virginia have issued similar declarations. Frank, back over to you.

B (34:43)

Kate, thank you very much. Great to see you as always. Alright. We're going to turn to some, some committee stocks that are on the move right now. First off, we're talking Cleveland Cliff Cliffs tumbling after announcing a share offering. Jim, you own this one. Pretty big share sale, just about $1 billion here. Before we talked about Metta issuing debt because they want to issue shares, they're issuing shares. What do you think about this one?

D (35:05)

Well, I mean, same thing from a corporate finance point of view. Anybody looking at the balance sheet at Cleveland Cliffs is simply going to say, hey, there's a lot of debt there. So you know what, they're raising some equity. I think it makes sense. I actually think think nobody should be surprised by this. All right. If you've been following the balance sheet for the last several quarters, it's been pretty apparent that it would be a good idea to take out some equity to knock down the debt. The stock is still up 33% year to date. Now look, full honesty here. It's had a bad year, it's had a bad three year run here. But I do think that this should take out the concerns of any that anybody has about the balance sheet. Let the company start growing from here here. I think the things to focus on going forward are number one, does Canada, do Canada do anything with tariffs? And there's two things that Canada should be thinking about. One is making a deal with the US but the other is putting tariffs on Chinese steel that continues to come into the market there. And then the second thing regarding Cleveland Cliffs is what looks like a pickup in domestic auto production. That should very much help Cleveland Cliffs business overall. That's what we should be focusing on going forward. As far as it being down 11 12% today, that's what happens when you do an equity offering. The key thing is to see how it responds in the weeks to come. Which based on what I was just saying, I think it will resume the uptrend.

B (36:20)

All right. Shares of Cleveland Cliffs as you mentioned down about 11 and a half percent right now want to go to service now. It raises full year guidance on strong demand. Those shares up just about four and a quarter percent. Joe, you own this one in the Joe tf.

A (36:33)

You get a little bit more comforted when you own this position. I don't think you get overwhelmingly excited. Application software, this application software name in particular has been struggling. It's a name that has not performed so far year to date. There is some good execution here on the quarter. Nice job by Bill McDermott for that. We're seeing that there is a little bit of a turn so you hope it's an inflection point. Let's see the stock prove itself out over the coming quarter and and then deliver again. Next earnings report with something we saw similar to today.

B (37:03)

I want to get to one more of your holdings. KLA pulling back after hitting a record after earnings. You also own this one. Shares down about 2%.

A (37:10)

Look, the semi equipment names in my opinion are in the sweet spot right now. I think the decline we're seeing in KLA A Corp is more indicative of a market environment that's punishing technology today than it is anything about kids. LA Corp. You could make an argument that the guidance wasn't as strong as the street anticipated. But look, Lam has already told us their their story in their earnings report. Now you get it from KLA Corp. Both of them are solid. You're going to hear from Applied Material and I keep talking about Teradyne, which I think Steph, you bought recently. I think that's the fourth semi equipment name that you really want to focus on for ownership.

C (37:47)

It was up 20% yesterday. Great quarter.

B (37:50)

Also got to keep it in perspective. I mean, stocks up about 90% year to date. So very small pullback compared to the year to date performance. All right, coming up next, Mike Santoli joins us with his MIDDAY word. We're back right after this. And we were back on halftime. Senior markets commentator Mike Santoli joining us with his midday word. Mike, thanks for being here. At post nine, Steph hit on it earlier. Financials are leading text the laggard. What does that say?

H (38:28)

It tells you the market is trying to kind of get out of this pressure from a few of the max seven names through rotation. And I think it's encouraging that financials have had a bid because yesterday they had a very adverse reaction to the Fed press conference along with consumer cyclicals. So on a rethink, financials are okay at the moment. It shows you the tape's a little bit hard to rattle even when you do have, you know, Microsoft matter Nvidia leading to the downside. Everybody, including me has been saying semis are mega overbought. Just tactically they have to come in a little bit, only down half a percent. And you're trying to get a quality rotation and that's what's happening. So if you just look at the leader in terms of upside contributors to the S and P today it is Visa, JP Morgan, Berkshire Hathaway, Eli Lilly. It's non tech quality. So we'll see if that works. I mean, I think the rally narrowed out a lot. There was a big low quality surge going into the recent highs market trying to kind of correct some of those imbalances.

B (39:27)

You're talking quantum computing, uranium stocks, things like that. Yeah, I want to go back to the Fed because you mentioned it, Jay Powell. Powell saying it's not a foregone conclusion. To me that's kind of echoes what he always says. He always says this data dependent. Why does this seem so different to so many people?

H (39:40)

He always will at least suggest that it could go either way or there's some room for various outcomes. I think basically he was explicitly trying to prevent a situation where the market was priced at a 95% certainty of a cut in six weeks when you don't quite know what the next one.

A (39:59)

Weeks, six weeks hold.

H (40:00)

Plus he's dealing with voices on his committee that are more hawkish and don't think they need to do anything. So the market's not really taking it to heart. The market's still leaning in the direction of more likely than not we get one more cut. But it has changed the pricing of ultimately how far this goes. So you know, we're not necessarily seeing, you know, another percent and a half of downside in short term rates priced into the to the curve which I mean the market seems okay with it right now. But I do think it does ratchet up the anxiety just slightly on some of the vulnerable areas of consumer market wondering if it's going to, you know, kind of be a mistake not to not to ease again in December.

B (40:38)

All right. Mike Santiago with his midday word. Mike, thank you again. Coming up next, we debate our top calls the day. Halftime's back right after this quick break. Welcome back to the HALFTIME report. Let's get to our cause today. We're going to start with Boeing downgraded from a buy to a hold at Deutsche. Also price Target lowered from 255 down to 240. Link, you own this one?

C (41:12)

Yeah. And it's down 11% in the last few days. I know they missed on earnings which was a disappointment. They took a charge for the 777X that was expected. It was a little bit higher than expected expected, but it was expected in general to take to see a charge. Meanwhile, the aviation piece they beat on revenues. They had 160 deliveries. They had 5,900 planes in their backlog. Even the defense business actually beat expectations. And most importantly, free cash flow was positive versus being negative in the quarter. I still think this is a really powerful story for free cash flow that doesn't this charge does not change change my mind. I still think they can get to 10 billion in free cash flow by 2028.

B (41:54)

All right. Another name we actually talked about a little bit earlier, Teradyne double upgraded at B of a new price target to OH5.

C (42:00)

Yeah. I mean like they positively preannounced. I haven't had a positive preannounce in a long time. But they had better than expected semi test business where it was up 23% sequentially and we have to owe it to AI. So numbers are going higher. The stock is still quite cheap relative to the group.

A (42:18)

Well, that's a name. That's a name that Steph, okay. Should feel very good about. If we could pull up a six month chart of this name.

C (42:27)

Okay.

A (42:27)

That's going to give you comfort because I know where you got into that. There you go. That's a six month chart. Nice Job.

C (42:33)

Thank you.

A (42:34)

Some bad, some good. That's what we do in this business.

C (42:36)

Humbling business.

B (42:37)

I like this. I suppose it wasn't a 10 year chart. Maybe the company hasn't been around for 10 years.

C (42:41)

No.

A (42:41)

I know when she bought it.

E (42:41)

Yeah.

B (42:42)

All right, there we go. I want to focus on energy very quickly. Energy sector up about a half a percent. Phillips 66 getting its price target raised from 155 up to 159 by BTIG. Joe, you own this one?

A (42:53)

I do. I own the refiners. Valero, I had owned Marathon for a while and I own Phillips 60 sticks. I stayed with Phillips 66. That had been the underperformer. I know it's on Josh Brown's best stocks in the market list as well. But after earnings, they delivered on what the street wanted to hear. Refining, refinery utilization remarkably strong. Highest level in the last seven years. And they're working on reducing debt. Chemicals business also strong. Refiners are right now really the one component of the energy trade that has the most momentum.

B (43:27)

And right now, shares up 1 and 3/4 of 1%. Coming up next on Halftime, the earnings set up for a few committee names beyond Big Tech. Halftime's back right after this. And welcome back to Halftime. Let's get this set up on some key names beyond Big Tech. We're going to start with Coinbase reporting after the best. Steph, you on this one?

C (43:59)

Yeah. High expectations. The Stock is up 35% headed into the print. I don't really own this for the quarter. It's a very small position. I wanted to have crypto exposure. I wanted to have exchange exposure because I have no idea what the price of Bitcoin is. But I know if I get a buyer and a seller, Coinbase makes money. It's as simple as that. In my mind, it's a very small position. If it's weak, I'm a buyer.

B (44:18)

All right, next up we got Striker. That's in the Jyoti. It's reporting after the bell today.

A (44:22)

Yeah, it's been somewhat of a sideways year. It's up 3% year to date. Look, health care right now, it is not in the sweet spot. It's not in investors eye. They're not paying the premium for it. One area of health care that I've talked about a lot that continues to work and will continue to work XPI up again today. I remain long.

B (44:41)

All right, Striker up about a half a percent right now. We also want to hit another part of the health care sector. It's Abbie Reporting after the bell today. Jim, you own this one.

D (44:47)

It's been a solid pharmaceutical company. Very attractive dividend yield, very attractive multiple. It's got many different therapeutic areas that it performs in. Does great M and A activity. I expect. Just a solid middle of the fairway quarter here.

B (45:02)

All right, one more CBO reporting tomorrow morning. Joe, you own this one personally.

A (45:05)

Shares are up 20% year to date. This company should report a very strong quarter. If you listen to a lot of the conference calls from the big financial companies, have heard about their trading revenue, I can't see how the utilization of options, which we know continues to grow, is not going to be reflected in a robust earnings.

B (45:24)

All right, shares up more than 1%. Stay with us. Final trades are coming up on Halftime. You don't want to miss it.

A (45:31)

Are you following the Halftime Report podcast? What are you waiting for? Look for us in your favorite podcasting app. Follow the Halftime podcast now.

B (45:44)

And we are back on Halftime with final Trades. Jim, you're up first.

D (45:47)

Cisco Systems, many fundamental things going right at the company, but the shares, they just have great momentum.

C (45:54)

That's it.

B (45:55)

Steph, you're up.

C (45:56)

Quantus Services had a very good earnings report. They grew revenue 17 and a half percent, organic growth of 10%, and electric backlog is up 15%. Sequence sequentially. So electrification theme is still alive and well.

B (46:10)

All right, Joe T, you got the last word.

A (46:12)

Steph, you know the industrial train technology.

C (46:15)

I certainly do.

A (46:16)

Okay. Boy, that was quite a quarter. Take a look at the chart. This is an inflection point. Positive momentum building.

B (46:21)

Yeah. Big H Vac player.

A (46:23)

Yes, sir.

B (46:23)

You go. All right, that's going to do it for halftime. The exchange starts right now. You've been listening to CNBC's Halftime Report, the pilot podcast. You can always catch us live weekdays.

A (46:35)

At 12 Eastern only on CNBC.

F (46:40)

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