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Halftime Report
Trading the Resilient Market 7/11/25
00:44:16
Scott Wapner and the Investment Committee debate the best moves to make in this resilient market despite today’s pullback. Plus, the desk debate their latest portfolio moves. And later, Bitcoin hitting another record high, Tanaya Macheel joins us with the latest news in the crypto sector. Investment Committee Disclosures
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- [00:00]
Edward Jones
A rich life isn't a straight line.
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Jenny Harrington
To a destination on the horizon. Sometimes it takes an unexpected turn with.
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Edward Jones
Detours, new possibilities and even another passenger or three.
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Jenny Harrington
And with 100 years of navigating ups.
- [00:17]
Edward Jones
And downs, you can count on Edward Jones to help guide you through it all. Because life is a winding path made rich by the people you walk it with. Let's find your rich together. Edward Jones Member, SIPC Want to look and feel your best this summer? Don't just think skin deep, think cell deep with Prolon. Prolon is a plant based nutrition program featuring soups, snacks and beverages that nourish the body while keeping it in a fasting state, triggering cellular rejuvenation and renewal. With proper diet and exercise, Prolon helps target fat loss, support lean muscle and reset your metabolism so you look and feel your best all summer long. Prolon is science backed nutrition that can help change your relationship with food in just five days. For a limited time, get 25% off plus a $40 bonus gift when you subscribe@prolonlife.com PandoraPromo these statements have not been evaluated by the FDA. These products are not intended to diagnose, treat, cure or prevent any disease. See site for details.
- [01:18]
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 1212 Eastern. Listen in. Carl, thanks so much. Welcome to the Halftime Report. I'm Scott Wapner, front and center this hour trading stocks at record highs. What are the best moves to make in this market which despite today's pullback, remains as resilient as ever? We will ask the committee. Joining me for the hour today, Josh Brown, Stephanie Link, Jenny Harrington and Jim Leventhal will show you the markets here. We are red across the board. As you probably know by now. We did have though the Russell 22000 posting its ninth day of gains in 10s and P and NASDAQ coming off record highs and stuff. You have the president talking about and threatening more tariffs and UBS really hits the nail on the head today. The remarkable resilience of the US Equity market persists and that's what the story is and that's what the story remains. The question is, can it continue to do that again, tell our viewers why you think so.
- [02:23]
Josh Brown
Yes, the market is resilient despite the noise with regards to tariffs, with regards to the geopolitics, with regards to the Fed and the unknown there. And at the same time we're growing at 2 and a half percent and 2 and a half percent GDP growth equates to a something like mid single digit total revenue growth with a little margin expansion, which is what I expect. I think you're going to see 10% earnings growth. The market expects 5%. I think that's going to be the catalyst going forward. And I want to be overweight industrials, which I am, financial financials, which I am. And now in discretionary we're going to talk about housing in a little bit, but I want to be overweight housing.
- [03:02]
Scott Wapner
Okay. So Josh Michael Hartnett at B of A has a. He always has a good way of putting things, I'll say that. And today he says the title of his note is no Pain. No Pain. He says the options volatility index AKA the VIX of bonds plus the VIX itself equals the best Taco index. Lowest bond and stock volatility since February 19th equals no policy fear equals stocks and crypto liking the Trump policy flip from detox to gorge. See Ark Innovation vs Berkshire Hathaway going all in until the 30 year bond yield jailbreak levels as he calls them. In the UK it's 5.6. In the US it's 5.1%. Japan 3.2. Until all those levels are breached, you do have a jailbreak and you can we can throw the 30 year up to just give our viewers an idea of where it is today relative to the Hartnet level and I'll toss it to you to tell me what you think about what he has to say.
- [04:07]
Jim Leventhal
Right. So the premise is if bond yields, real bond yields far out in the curve break out above those levels, it signifies the big conservative money is truly concerned about the effect on the US economy, which would imply this is where the market will actually start to believe these tariff headlines and the taco thing will come to an end. I think that's what he's saying. I think that's as good as any other possible indicator that we might have. I had a conversation with Brian Dietrich from Carson wealth yesterday about this very subject. One of the things that you look at when the stock market volatility spikes to calm yourself down and to remind yourself that this is all fake and it's mostly for show credit spreads didn't blow out in April. Ryan reminds us that was a really good tell that nobody was taking this that seriously away from the stock market. Another thing that I looked at foreign stocks. I don't even think most people realize what foreign stocks were doing while these ridiculous tariff numbers were first being Floated. They were rallying. The international investor was laughing at the notion that we were going to have 150% tariffs on China. So there are a lot of things you could look at. I don't hate this jailbreak idea, looking at longer dated yields. I think the most important thing that you have to ask yourself in the year 2025, if you want to be invested in the stock market, which is going to have a longer lasting, deeper, more profound impact on the way we live our lives in the year 2030, will it be the AI revolution currently underway, or will it be the things that the President puts on truth social in 20, you know, in. In the year 2025? Like which. Which of those things will be the driving force behind profit margins, earnings, employment, et cetera? So I think most people in the stock market at this point have settled on the idea that AI will be much longer lasting, much more profound than whatever tariff rate Canada has to pay us for the next couple of months. And that's where I stand at this point as well.
- [06:24]
Scott Wapner
Okay, Jenny? I mean, the market's resilient. We know that. And we know that buyers are pretty eager to grab the winners. The flow show at bank of America Tech and Financials Buying Tech, the largest inflow since Liberation Day Financials. The largest inflow in six months. That's interesting in and of itself. So it gives you an idea of what people continue to buy, Right?
- [06:46]
Jenny Harrington
So that's what people are buying. But there is a broadening out and we can't ignore that. It's really interesting. If you look at the S and P equal weighted index, it's up 7%. That's just in line with the S and P itself, I think the way we're thinking of it at Gilman Hill. And I'll just give you exactly what happened yesterday. We have a new client account and they said, look, I want to work with you. Choose whichever one of your strategies you think over the next year is going to make me the most money. So we could choose from the dividend income, international income, or the discipline growth. And if you'd asked us the same question several months ago, it would have been probably the international strategy, maybe some of the dividend stocks, because we thought they were really undervalued. Today we actually said to this client, okay, we're going to do 100% in our discipline growth strategy. But that for us is not the s and P500. So it's stocks like Schwab, Freeport, McMoRan, TripAdvisor, GXL, Logistics, United Rentals, Cisco. And so when I think about the fact that the equal weighted composite is actually up as much as it is, I think, I think there is a lot of money that's also going in to you know, two things other than the Mag 7.
- [07:52]
Scott Wapner
You think that's going to continue?
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Jenny Harrington
I think it should and I think it's should because when we look at relative growth rates and we look at the Magic 7 and how it outperformed the rest of the S and P from an earnings growth perspective, it outgrew the rest of the S and P by 35% the last two years. That growth differential is narrowing. I don't know how much it's going to narrow by JP Morgan put out some great estimates in their guide to the markets where like this year it looks like I think it's a 9% differential. Next year it should be a 2%. Probably it's going to be wider than that but the differential is narrowing. So you have 493 companies that people are saying hey you know what, earnings are pretty good here and valuations are also compelling. They're not more compelling, they're just also compelling. And so when we look out with respect to opportunities for the growth portfolio, there's lots of non mag 7 that are simply compelling.
- [08:45]
Stephanie Link
I'm with Jenny on this. I think there is a lot of room to be be a stock picker here and you may, you know, a lot of people may be looking at the markets and they're saying oh it's 21, 22 times earnings. How could I possibly get in? You got to pick your spots, you can pick sectors and don't everybody jump on me at once. But the health care sector has a lot of attractively priced stocks in it.
- [09:02]
Scott Wapner
Well the point when you look at to your point, I'll give it back to you in a second. But that's why Jenny's talking about those stocks. Yes, that's because the multiple is completely different of the equal weight and stocks like that. Rather than looking at the s and P500 which is so top heavy of tech and some financial stocks and some big industrial stocks too. There's all these others that are waving and saying hey, maybe now is like the right time for a big catch up trade.
- [09:28]
Stephanie Link
Well yes, and maybe Scott, it's maybe even more than a catch up trade. Maybe it's fundamentally based again I was talking about health care stocks, a lot of pharmaceutical stocks that trade at mid teen multiples with 3 to 4% dividend yields. I can pick off stocks I can look at something like a Lockheed Martin in industrials which hasn't performed with the rest of the sector. I mean there are a lot of places you can go. It's not what I'm trying to say and I think Jenny, you were trying to say this. It's not a market where you have to hold your nose to buy stocks.
- [09:54]
Scott Wapner
You have to hold. You're insinuating you have to hold your nose to buy the mega caps and the larger cap stocks. Some of them, if anything, you haven't had to.
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Stephanie Link
Well, from a valuation point of view, which is where a lot of us on the desk, and especially me reside, if I were to say look at a Microsoft, I would have to hold my nose to buy that here at this multiple I wouldn't. However, and again this is to the point of it's a stock pickers market. If I looked at Alphabet, I wouldn't have to hold my nose. Nvidia, I wouldn't have to hold my.
- [10:21]
Scott Wapner
There are a lot of stocks in the area you guys are talking about where people have to cover their eyes like Wal Mart, not because of the valuation but because it's harder. The risks are seemingly higher in those kinds of stocks relative to the Nvidia's and to the JP Morgan's and to the Caterpillars.
- [10:40]
Stephanie Link
Jenny, give me just one shot at this. Okay, I see your point. Take a look at Delta Airlines yesterday. It is hard to own something like Delta Airlines until you get that, that earnings report that says the fundamentals are intact. And that's where Stephanie, Jenny and I reside. And Josh too is looking at the fundamentals. And a stock that hasn't performed well but has the fundamentals intact, you're just waiting for the market to recognize it.
- [11:02]
Jenny Harrington
But on the other side of the Delta trade, like I think you need to hold your, your nose to own a Wal Mart which trades at 30 times earnings, right. Has decent growth ahead. But that is a really rich multiple. And I don't think, I don't think that multiple is justified. I think there's a tier of stocks kind of beneath the Mag seven that have been floated up with the broader market. So there are stocks out there. But it really emphasizes Jim's point is if you can be a stock picker, there are are compelling combinations of valuation and earnings out there. And it's not the whole, I don't think the whole. I don't think the spotlight will shine entirely on the Mag 7.
- [11:38]
Scott Wapner
But like when you know Jeff DeGraff of Renaissance Macro Was on with me on closing bell the other day. You know, the charts are pretty clear in the story they're telling Steph of stay with what has really worked. Well, don't make it harder on yourself than you have to because a lot of the stocks that are not specifically the names that are being mentioned on this desk, but the kind and the size aren't confirming really anything yet. Okay, so maybe they've had a handful of days that look pretty good. Okay, well that doesn't tell me anything as to where the trend is. The trend still looks great for the ones that we're talking about and the ones we talk every day, a concentrated conversation about the most concentrated parts of the market.
- [12:22]
Josh Brown
I think it can do a barbell and that's what actually I have been doing. So on the one hand I can justify Amazon being at 14 times EBITDA and historically it's at 18 times. I can justify Meta, it's at 17 times EBITDA. That's in line with its average. But the growth, both of these companies is so substantial. Right. We haven't even touched on the AI story and all of a sudden what that means. And by the way, Meta is the only one that's really monetizing AI right, with their ads. So I can on the one hand definitely own those stocks. But on the other hand I do think that some of these industrials are a backdoor way of playing AI and data center. I love the financials, especially because the deregulation I think is so unappreciated. And I think that's a multiple driver. And so that's why I like that. The one sector that I'm wondering if it's going to have legs is this whole housing trade. But they're so incredibly cheap and the numbers have been de risked. So I can see both sides. So that's what I'm doing with money.
- [13:25]
Scott Wapner
Let me give you a good example and I'm going to throw it to you on this Qualcomm. You would probably in the list of stocks that you would say, well, you can buy this and you can buy that. You can buy a Qualcomm, for example. Well, okay, the target does get raised to 185 today and it was reiterated by a TD Cowan, but to the point of making it harder than it might otherwise need to be. The stock's up 2 1/2% year to date. I'm looking at a lot of green over really reasonable periods of time. And this one doesn't show that.
- [13:57]
Stephanie Link
I love the Set.
- [13:58]
Scott Wapner
Okay, to my point of like you're going to make it real hard on yourself. Tell me 10 lines about why I should buy it.
- [14:04]
Stephanie Link
Get ready, here it comes. I love this setup. And I love the point you're making about should. Is this harder or not? It depends on what your investment style is. You know, everybody knows I'm a fundamental analyst. I'm looking at this stock at 13 times earnings with about a 3% dividend yield, no debt on the balance sheet. And why is it so darn cheap? Because everybody thinks it's a cell phone manufacturer. No, it is not.
- [14:27]
Scott Wapner
The market smarter than that.
- [14:28]
Stephanie Link
What? No, the market isn't. No, it isn't. No, it is not. Scott. And give me a little Runway on this. Okay, if it were that smart, why would wind have languished so long to pop now? Why? You know, why would Citigroup have languished as long as it did at 60% of tangible book value? I'm not getting snippy with you. I'm getting snippy with the market. That was ridiculous. And now it's approaching tangible book value. The market is not smart.
- [14:53]
Scott Wapner
Josh.
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Jenny Harrington
That's a big statement.
- [14:54]
Scott Wapner
You have it. You have a thought on that? On the idea of. I know you followed the great graph stuff, too. And just on the concept itself. Yes, it may be a stock pickers market, but there's a reason why the stock pickers in this market keep going to the stocks at the top of the list.
- [15:13]
Jim Leventhal
Yeah. No, this isn't. This isn't hard. Every sector capsize dominates the return tables. Every sector. This is what, this is what's driving the market. And not just this year, last year. This is the story of the last 15 years. And every once in a while, there's a relief rally in value. Every once in a while, there's a relief rally in small caps. We get these six to eight week periods. Eight weeks if you're lucky. Where did you know the Russell 2000 is outperforming the S&P 500 by 200 basis points over the last nine days? And people get all excited. But the mean reversion is not the trend. It's always the counter trend. And just go down the list of every. So we're talking about financials. How many conversations have I had with the panel on this show over the last 10 years? People telling me JP Morgan is not the right one to buy because A, it's already the biggest market cap and B, it's already the most expensive. Well, guess what? The stock is annualized at 28% a year over the last five years from a starting point of being the biggest and the most expensive. So that didn't end up mattering at all. It's actually had a better return than Alphabet, than Amazon, than Microsoft, then Tesla, then Meta, and then Apple. Every MAG7 stock JP Morgan has outperformed other than Nvidia. Why? Not because it's big, not because it had a premium valuation. It's the better company the market is. Smart investors know what they're doing. They price assets according to quality and to the momentum and the earnings growth. You're not idiots. I had the same conversation over and over again with the largest, biggest companies that continue to work. If you want to play this like mean reversion thing where like now is going to be the moment where small caps go on a run. Okay, I hope you're good at timing because A, really hard to know when it's going to start and B, you know, it's not forever. It's only a matter of time before it ends.
- [17:15]
Scott Wapner
You have.
- [17:17]
Jim Leventhal
I don't like that game. The game.
- [17:18]
Stephanie Link
All right, that's. But that's cool. I mean I have. Just side note, I've owned JP Morgan for more years than I can count, so I'm with him on that. Where it's not a pushback, it's what is. My, what is. My belief is let's take Citigroup not as an alternate to JP Morgan, but as something that can be owned in addition to JP Morgan. If you look at the five year track record of Citigroup, it pales to compare it against J.P. morgan. On the other hand, if you look at the three year track record, it's right in line with it. I'm not rebutting Josh. What I am saying is that as a stock picker, I see that three year track record of Citigroup that has just now got it back to tangible book value. Let me just finish.
- [17:56]
Scott Wapner
Go ahead.
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Stephanie Link
And I see more years ahead of that gain given the dividend yield, the share buybacks, the earnings power, the turnaround story. So I'm taking nothing away from what Josh is saying. I am saying you can find stocks where in my opinion the market doesn't know what the heck it's doing.
- [18:12]
Scott Wapner
Okay. I find the next part of our conversation a good debate also around sort of where we are and where you are. You guys are expressing your views in some respects on where you think we're going. Jim trimming Oracle. Okay. Stephanie buying more vertive. Stephanie Link leaning into strength. Jim Lebenthal running from it.
- [18:39]
Stephanie Link
Scott, I love you running from it. Okay. I've been in the stock two and a half years, 150%.
- [18:44]
Scott Wapner
Okay.
- [18:45]
Stephanie Link
It's become a very big position. I'm trimming the stock. I have no, I'm gonna sleep like a baby tonight. Trimming the stock. I'm still gonna own shares. However we're entering earnings season. We all know that in earnings season something gets stupidly dislocated.
- [18:58]
Jim Leventhal
Located.
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Stephanie Link
I have been fully invested. I need to have some dry powder. If I want to buy low, I have to sell high. That's the name.
- [19:04]
Scott Wapner
So what's interesting about this in and of itself is that both stocks are up the identical amount from the April low. 87.
- [19:13]
Josh Brown
That is.
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Scott Wapner
No it isn't. It is not. They're based on the moves. I'm not sure I picking anything 150.
- [19:20]
Jenny Harrington
Over a couple years.
- [19:21]
Scott Wapner
So what, so what you're doing, you're fully in the throes of, of a bull market. These are two, hold on. These are two stocks that are at the, the epicenter in many ways of what this whole bull market and record setting run are about. AI, AI infrastructure. Oracle, right in the thick of it. Vertif obviously in the thick of it, leaning into strength and stocks that have worked well.
- [19:45]
Josh Brown
All right, so I'm new to Vertif, right. I have been in Quanta, in Eaton, in Rockwell, well in ge Vernova. I love the theme. I've been pounding a table for two and a half years on this theme. Vertive is the very best in the business and I just got. It got away from me. It was always too expensive. And so this Stock is down 25% from its highs yesterday it was down 12% on the rumors that us was building a cooling system. I'm like, you've got to be kidding me. These guys, Vertif have an end to end solution and services and a huge install base and so down 12% I averaged down. And I'm going to continue on any weakness because I still believe very strongly in this decade long theme. By the way, Dave Cody is a rock star. He's the executive chair. He has a great CEO as well. So I just wanted to find best in class on sale and that's what I did. That's actually my style. I kind of feel like that's the three of us really. Right. We try to find quality and then when it gets hit for whatever reason, if the valuation makes sense and the fundamentals are still strong or getting better, that's what you want to do, that's how you. That's how I Invest.
- [20:53]
Scott Wapner
Only up 9%. Yeah, that's year to date. You can't. You can't necessarily judge things on such a short period of performance and a big burst that you've gotten from it. But I just think it's a really interesting way that you guys are looking at two winners in your books over the last three months. One, Trimming one again, seeing where strength is and riding it.
- [21:19]
Stephanie Link
I'm not gonna damn Oracle and say it's too expensive. I mean, you know, what I think is a good analog here is Broadcom. Steph, and I know you've been in that for a long time. That multiple expansion in Broadcom went from the low teens to the low 30s. Frankly, that's what Oracle has done done. And I do think, geez, am I maybe trimming this a little too soon? Too big?
- [21:38]
Scott Wapner
Are you trimming Broadcom?
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Josh Brown
Not yet, but I'm close at 7%. It's about it. I might come on next week.
- [21:45]
Scott Wapner
7% of the portfolio. It's 7% of your portfolio.
- [21:49]
Stephanie Link
Portfolio. I mean, look, that's what. Oh, did you.
- [21:52]
Scott Wapner
Go ahead, go ahead.
- [21:53]
Stephanie Link
You came in. I rolled. That's what happens.
- [21:55]
Scott Wapner
A mild one.
- [21:56]
Stephanie Link
Wait a second. I bought the Stock February of 2020, 23. First purchase at $86 a share. It's at 235 or whatever it is now. I mean, when that happens.
- [22:05]
Scott Wapner
No, I'm not hating on anybody for taking profits in a stock that. That's up a lot. I just think it does sort of tell a little bit of a story of psychology, of what's happened in this market over the last three months.
- [22:18]
Stephanie Link
In and of itself, I think there's great. Listen, I'm not hating on Oracle. I think there are opportunities right now. I toyed with the idea of buying some Delta today.
- [22:27]
Scott Wapner
You sold one. You sold another name the other day that was up a lot. I don't remember what it was. But you sold it. You did.
- [22:33]
Stephanie Link
Shoot, I can't remember.
- [22:34]
Scott Wapner
Scott, I know you did. I just can't remember the name.
- [22:37]
Stephanie Link
I. I take it as gospel. It's entered in the record.
- [22:39]
Scott Wapner
Hold on. One of our producers. Tell me, what was it?
- [22:43]
Stephanie Link
What did I sell?
- [22:44]
Scott Wapner
Did you sell MP materials?
- [22:45]
Stephanie Link
I did. Oh, man. Yo.
- [22:48]
Scott Wapner
No, I was thinking of something else. There was one last week. I can't remember. You sold some.
- [22:53]
Stephanie Link
Something somebody to something yesterday on MP. Because it went to 45 and I sold it at 33. Listen, folks, and listen closely. It was a $10 stock a year ago. Nobody give me any attitude about selling Stock that's up 200% a year.
- [23:07]
Scott Wapner
All right, so let's talk about one more name that has been a massive winner. We've talked about it at least two times already this week because there's been, well, there've been a couple of calls on it. I think there were downgrades to not to sell or anything like that, but neutral because the stock has run so much. It's Netflix. The price target today goes to 1500. I don't think it's the street high, but the chase has been repetitive. Let's just say stock exceeds expectations. Analysts ups price target and wash, rinse, repeat and there's their stock at 1200. Needham says it's going to 15. Josh Brown, Netflix.
- [23:49]
Jim Leventhal
Yeah. So this name has been on my best stocks in the market list for a long time. I pulled the trigger. I'm up a lot, but I'm not selling. And I'm going to tell you why. You have a name right now just above its 50 day moving average, but in the midst of an 8% pullback from the all time high. This is the largest drawdown that Netflix has been in since April and it's worse than the stock's average drawdown during that entire time. The average pullback for Netflix has been about 5%. So this is a little bit of a larger pullback. Why are people selling the stock? Maybe it's because earnings are coming up and you know, people are a little bit jittery because of how much the stock has already rallied. I really don't know. I don't think it's terribly important. What I do think that is important is this is the type of name where if you don't own it and they for whatever reason put out, here's the expectations. 11 billion in revenue, which would be 16% year over year growth, which is incredible. Earnings of $7.08. That would be a 45% chop year over year. If for whatever reason, let's say they do like 706 and the stock market acting the way the stock market does, chooses to rip 11% out of the share price in Netflix. That's where I would be buying it if I weren't already long. So that's the way I would think about going into this report. Not necessarily chasing it into a news event like that, but just saying like if I get another crack at it, I want to get long. So you had an 8% drop drawdown. Now if you end up in a 15% drawdown from the high in this stock. I think you're, I think you're a buyer, not a seller.
- [25:30]
Scott Wapner
All right, we are going to take a quick break. Coming up, we have a new move from Stephanie Link, a new name she just added to her portfolio. We're also going to discuss a call today on REITs. I don't think Jenny's going to like it. I love it, which is why we're excited about it. Going to do it. Coming up.
- [25:54]
Jenny Harrington
Foreign.
- [25:58]
Carl Quintanilla
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- [27:46]
Stephanie Link
Top States for Business?
- [27:48]
Scott Wapner
Get all the data and complete state by state analysis.
- [27:52]
Stephanie Link
See how your state measures up. America's top states for business now on topstates.cnbc.com.
- [28:14]
Scott Wapner
All right, welcome back ladies and gentlemen. Through thick and thin, Stephanie Link has maintained her love affair with the housing sector. Through high rates, through low stocks, through all of the turmoil. You have kept your heart in the game enough that now you have bought Toll Brothers. Yeah. Why?
- [28:33]
Josh Brown
And I've never owned Toll Brothers, believe it or not. Well, this is the high end consumer and they have size and scale. It's the industry leader. They also have the, they are also the industry leader in gross margins. And Roe. I think they could probably do something like $14 a share this year, $15 next year. I think numbers have been de risked. They obviously think numbers have been de risked because they just announced a buyback program. So they could be buying back 1.6 billion. It trades at 8.7 times earnings. So I don't know when the housing market is going to turn, but I do think it will turn. We do need lower interest rates but we just have had mortgage applications at a three month high this past week. Coincidentally we had the bond market yields at a three month low. So it's, there's pent up demand there. So Dr. Horton is the other one. It's the first time buyer and this one is the high end buyer. And I think both of them are going to win. We get one rate cut, just one rate cut from the Fed. This group is going to fly. And I think the valuations are very cheap and no one really owns these things.
- [29:33]
Scott Wapner
But I mean, let me ask you this.
- [29:34]
Jenny Harrington
Yeah.
- [29:34]
Scott Wapner
Like again, I don't think the market's stupid like Jim does. Obviously the market knows.
- [29:42]
Jenny Harrington
He was so much nicer about it.
- [29:43]
Scott Wapner
The market knows that rate cuts are coming. Right.
- [29:46]
Josh Brown
So I don't know, I think it's still a debate.
- [29:49]
Scott Wapner
You still need to see it to, to believe it. Then in other words, theoretically that would mean it was in the stock already. Like the market know the Fed's going to cut rates within the next six months.
- [30:01]
Josh Brown
Right. But I think that lower rates will lead to pent up demand and that earnings have already been de risked. Every company lowered their numbers this past quarter and the stocks actually didn't go down and they're starting to catch a little bit of a bid. Now I don't know if it's going to last or not, but I believe in a decade long theme about housing because we're 5 million homes short in this country. We have 5 million millennials that want to buy a first time home. Which is why I like the Dr. Horton story. And we talk to all of these companies and I do, and they've under produced for 15 consecutive years. So I like the supply, demand characteristics. I don't know when it's going to turn, but I can't. I mean, 8.7 times earnings for the best in the industry. That's crazy.
- [30:43]
Scott Wapner
All right, let's talk about this call on REITs that I really wanted to get to. Wolf Research. Excuse me. Is negative on the sector today. They said they decided to examine the sector's longer term relative performance. And we almost wish we hadn't. It has been a rough. Has been rough sledding within the sector for some time and unfortunately we don't see any signs of this trend reversing. We wanted to do this because talk about REITs a lot, right? You spend a fair amount of your free time when you could be doing other things at REIT conferences, right?
- [31:15]
Jenny Harrington
It is my favorite race of the year.
- [31:17]
Scott Wapner
You own one, two.
- [31:19]
Jenny Harrington
I don't know why he's so hung up on this.
- [31:20]
Scott Wapner
4, 5, 6, nay REIT.
- [31:22]
Jenny Harrington
He has a vendetta.
- [31:23]
Scott Wapner
I guess you own 10 REITs.
- [31:24]
Jenny Harrington
There we go.
- [31:25]
Scott Wapner
All right, what about this call?
- [31:26]
Jenny Harrington
So what I love about this is it really just brings everything we've been talking about together. When Jim says the market is. When Jim so nicely says the market is not smart, right? When people listen to a broad brush call like this and just say, hey, REITs are terrible. I don't want to own them. Oh, Jenny, what do you think about commercial real estate? Thinking everything is an office property, you know, or a big shopping mall that punishes the whole sector. When the whole sector gets punished, you as a stock picker have incredible opportunity. So let me run through what we own. Crown, sorry, Crown castle. It's up 18% year to date. Postal Realty up 17% year to date. Realty Income up 10%. Sabra Healthcare up 10%. Ventas up 10%. Lamar up 9%.
- [32:11]
Scott Wapner
We just bought Ryan, bought Vici.
- [32:13]
Jenny Harrington
Right. But we just bought Ryman in April. It's up 25% off the low. We just bought Vici last week. And that's, that's flat so far, but it's only been a week, so. And then the only loser in the portfolio for the year to date is easterly government properties. And take all those returns and tack on 4 to 6% dividend yields. And so there this is always been my beef with REITs is that you cannot paint the sector with a broad brush.
- [32:38]
Scott Wapner
You have to be really good, like you obviously are to pick and find the winners. The needles in the haystack, maybe right now the ones that you named obviously are the right places to be in relative to others that have probably underperformed the returns that you've got.
- [32:54]
Jenny Harrington
So I appreciate you giving me credit for saying you need to be really good, but I think one of the nice things about the REIT sector is you don't need to be that smart to get it right either. It's pretty easy to say, I don't want to own a, a REIT that owns crummy mall like B quality malls. Obviously you don't want to own that. It's not that hard to say, hey, there's a lot of boomers who are moving into retirement communities. Let's look at the retirement rates like Ventas and Sabra. It doesn't take a genius to get this spot right. It just takes someone who's willing to not paint the whole sector with a broad brush. And it's fun to suss through because these are hard assets. The individuals who watch our show can actually go and understand. They're not complex. You can look, you can say, oh, Vichy, for example, that we just, that we just bought. They own the Venetian, they own Mandalay Bay, they own boleros. You can understand what they own and you can see who their tenants are. Their tenants are high quality gaming companies that do not change their occupancy even in the worst of the pandemic. So what I love about the sector is it's accessible, it's fun, there's opportunity there. All you need to do is not, not be not smart and say, hey, I'm just going to look at the whole sector and dismiss it.
- [34:02]
Scott Wapner
Fun and accessible. Who would want anything more? Silvana now has the headlines. Hey, Silvana.
- [34:07]
Silvana Henao
Hey Scott. Good afternoon to you. An agreement that would have allowed the accused September 11 mastermind Khalid Sheikh Mohammed to plead guilty has been thrown out. The divided ruling by a federal appeals court today unravels a deal that was negotiated for more than two years, handing down a life sentence in exchange for a guilty plea. Mohammed is accused of developing and directing one of the deadliest attacks ever on US soil. The UN on Friday said it recorded at least 798 deaths over the past six weeks in Gaza near eight hubs run by the Gaza Humanitarian Foundation. The US and Israeli backed foundation told Reuters the UN's figures were false and misleading and denied that there were deadly incidents at its sites and a secular group that advocates the separation of church and state wants to stop an agreement between the IRS and church groups. The Americans United for Separation of Church and State on Thursday requesting to intervene on the settlement in which the IRS would not enforce the Johnson act, which bars certain nonprofit profit groups, including churches, from doing so without jeopardizing their tax exempt status. Scott, I'll send it back to you.
- [35:20]
Scott Wapner
All right, Silvana, thank you very much for that, Silvanaha. Now up next, another high for Bitcoin. We'll find out how the committee is playing the record run. We have a special report coming up as well. And later, the dividend dilemma where you can find the best opportunities for your money as dividend yields head towards record lows. What's going on there? Tell you coming up.
- [35:42]
Edward Jones
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- [36:28]
Stephanie Link
Which are America's Top States for Business?
- [36:31]
Scott Wapner
Get all the data and complete state by state analysis.
- [36:35]
Stephanie Link
See how your state measures up America's Top States for business now on topstates.cnbc.com.
- [36:57]
Scott Wapner
Been a decent year thus far for dividend paying stocks which have largely tracked the performance of the S&P 500 year to date. At the same time, according to Deutsche bank, The S&P 500 dividend yields are nearing their all time lows. Jenny, what gives and what about these stocks? We know, we know we have many, many viewers on this network who own stocks for their dividends, right? So what's the story?
- [37:21]
Jenny Harrington
So it's the dividend yield is low. It's not the absolute number of dividends paid. The absolute dollar value of dividends paid last year was 6 by the S&P 500 companies was $630 billion. That was an all time record. It was 7% higher than it was in 2023 was higher than it was in 2022, so on and so forth. The reason the yield is low is because the market's up so much. So I would actually take that and not say we have a problem, but say, hey, I'd like to look at that low dividend yield as the inverse valuation function of a high multiple. When the market's up, the yields down, does that mean the market has a valuation problem? Maybe. And that might be the better question to ask. There's a little bit of interesting history here too. Prior to the 1990s, when the dot com boom started and we really started a whole tech boom, the s and P500 had a 3% dividend yield. And philosophically, companies approached shareholder return really differently back then. They said, hey, some huge part of our earnings needs to be paid out to the shareholders. Then this concept of every dollar should be invested for growth changed. And so companies don't pay out as much of their earnings now. So what happened? And this is the whole reason I'm in business, what happened was investors used to get a really nice cushy income just by owning the market. Now they don't. Now they get about 1.2, 1.3% on their S&P 500. So if you want income or need income, you have to seek it out. It's literally the reason I'm in business. If the S and P still yielded as much as it did, there wouldn't be a need for a separate strategy that found it. So. So I don't think, I don't think the right question to ask is, should companies be paying out more? Because the companies in The S&P 500 are doing really well and they're reinvesting their earnings for growth. Some companies don't need to do that. It's just a function. And I really think you look at that as a valuation metric, not. Not something that's damning of the US Stocks. And by the way, if you look at international stocks, on average, they have a much higher yield. But those are different companies. They don't have, on average the growth prospects that US Companies.
- [39:18]
Scott Wapner
Is, is it an appropriate, an appropriately worded question to say, would you prefer, if you're a dividend investor, I guess, would you prefer that a company used its excess cash to buy back more of its stock or to raise its dividend?
- [39:37]
Jenny Harrington
Okay, so.
- [39:38]
Scott Wapner
And does that matter for the risks and rewards of the overall market anyway?
- [39:45]
Jenny Harrington
Probably. And I think first you need to define what kind of dividend investor you are. Are you a dividend income investor, which are My clients that are looking for that high 5% or better free cash flow yield. Or are you a dividend growth investor? And if you're a dividend growth investor, all you care about is that the dividend grows a little bit, but really you just want the company to do everything they can to grow earnings. I like seeing the dividend being paid out at the expense of the share buybacks because to me, that's kind of a guaranteed return to clients, whereas the buybacks are more ephemeral. Right. Maybe you get it one year, maybe you don't. So it really comes down to a capital allocation equation for each company with their unique circumstances and based on who their shareholder base is, what. What that shareholder base is looking for depends on what the growth prospects are.
- [40:30]
Stephanie Link
I just want to add this point, Jenny, you wrote the book literally on this, so you know this, but be careful about searching for the highest dividend.
- [40:36]
Jenny Harrington
Absolutely.
- [40:37]
Stephanie Link
We all know this, but it's worth telling our viewers. Take a look at Verizon as an example. The total return on this stock over the last 10 years annualizes 4.1%. The dividend during that time, Jenny, it's been what, 6, 7, 8%? The dividend can be alluring, but you have to have total return in your eyesights is what you're going for.
- [40:56]
Scott Wapner
Okay, we'll take a quick break. We come Back to Naomi McKeel on the case. He's following the record Bitcoin rally, whether it is actually just getting started and what else it might be taking with it. We'll talk about that next. Stock's a bit coin hitting higher highs, traded about 118k for the very first time today. Let's bring in Tenaya McKeel who's been following that story. What can you tell us?
- [41:35]
Tenaya McKeel
Yeah, Scott, quite different from the May 22 high, which was more of a blip at the front of a two month consolidation period, as many investors called it. Despite a 15% gain, the rise started this week after the Fed minutes on Wednesday. That triggered a massive wave of short liquidations that pushed the price up. I think the biggest wave this year, more than $650 million liquidated in the past 24 hours. Meanwhile, Bitcoin ETF seeing their biggest day of inflows this year yesterday at more than $1 billion. Now, investors, of course, expected new records in the second half, given strong institutional demand and regulatory tailwinds. It's hard in my conversations for a lot of investors to identify downside risk. And historically, July is a strong month for Bitcoin and probably take a macro event to hit or suppress price prices. Macro catalysts, of course, are typically fewer in the summer and investors tend to pare back their risk. I'd watch the Fed meeting at the end of the month, knowing how split Fed officials are and how aggressively to cut. And of course, ETH coming back to life. So much so that we have this new crop of treasury stocks for investors to play. ETH outperforming bitcoin the last two months and really roaring this week. ETFs ETH ETF saw their second biggest day of inflows yesterday. Scott.
- [42:48]
Scott Wapner
All right, Tanay, thank you for that good setup today. Mikhail. Josh Brown, what do you think here?
- [42:55]
Jim Leventhal
I'm long bitcoin. I don't really have a target or any idea of where it's going. I've been involved for a really long time, since about 3000, I think, and intend to stay. Recently, I've taken a much bigger interest in Solana. Solana probably gets an ETF at some point between now and the end of the year. This will raise awareness and drive a lot more people to learn about what it is and why it matters. The most important thing the viewers need to understand about Solana is if you believe in the tokenization theme that we're going to start tokenizing everything from farmland to buildings to the stock market, etc. This is the best vehicle because of the amount of throughput. The amount of transit transactions you can do every minute in Solana is higher than any other layer one. So that's the first thing that people need to understand. The second thing is the more activity in Solana, the higher the amount of burning off tokens, which means decreasing supply. So this is the way that I would think about the opportunity going forward in crypto. Still on Bitcoin, Bitcoin. It's hard to believe Bitcoin could 1000x again, whereas some of the smaller tokens have more of a chance to be bigger winners prospectively looking out for you.
- [44:17]
Scott Wapner
Feel like there's enough, I guess, for lack of a better word, bandwidth, investor bandwidth, to focus outside of the pure play Bitcoin itself.
- [44:29]
Jim Leventhal
You know, you can't do what I'm describing describing with Solana, you can't do with Bitcoin so stable. So stablecoins are already a gigantic asset class in and of themselves. They have nothing to do with the things that you can do with Bitcoin. They have their own use case and people are putting money into stablecoins for different reasons. Then they might Put money into another type of crypto. So the number one thing that we need to do now that this is a maturing asset class that's got both government support and institutional sponsorship, we need to stop thinking about these things monolithically, like it's all one trade. That's a very primitive way of thinking about crypto. Now we need to start thinking about use cases that actually have a chance of becoming real. And again, one of the big drivers of bitcoin last year was the introduction of the ETFs. There is no Solana ETF. There's a trust that you can buy off market, but you cannot buy this in a brokerage account yet. I think that'll come given the Trump administration stance toward the asset class.
- [45:35]
Scott Wapner
All right, good stuff. Sent toll is next.
- [45:43]
Jenny Harrington
Yeah.
- [45:43]
Scott Wapner
All right, we're back. Senior markets commentator has pulled up to the desk at post nine. We're giving a little bit back. I mean, what is this? Just. Okay, so what, it's almost a little bit.
- [45:54]
J
In a way, the market continues to ride the line of sort of the best case outcomes in terms of obviously the strength of the comeback, but then also the absorption of the, the news flow. This week they sort of not going to get fooled again by hawkish tariff rhetoric. What's interesting too is the key factor that determined whether you did well in the market in terms of the stocks this week or this month so far is how well you did in the first six months. In other words, the top performing 20% of stocks coming into July has been the worst performing in this month and vice versa. So the mean reversion trade, the dispersion trade has really kept this market near the highs. Now, whether in fact, again, the choreography can stay this elegant going into next week, you're going to hit some more macro headlines and such, we don't know. But for now I think it's probably, probably encouraging. If you're just reading the tape's message.
- [46:46]
Scott Wapner
You'Re getting to the point clearly where a headline in and of itself about tariffs. Yeah. And bluster and threats and this, that and the other. The market has just decided it's going to look through it right until it can't. Until you actually have something show up in some degree of data which says, okay, well now here it comes.
- [47:05]
J
Which is why I think so there's three weeks until this now stated deadline. You're going to have to see CPI number, you're going to have the lead up to the Fed, you're going to have earnings. So in there, I think you can have some slippage and then you're going to lose the seasonal tailwinds at some point there along the way. So I think that's why people maybe are are focused on this prospect for late summer things to get a little bit more turbulent. But right now it's not giving you a lot of signs it's happening.
- [47:28]
Scott Wapner
All right, thanks as always. Mike Santoli will do finals after this quick break. All right, Josh's final trade is Uber.
- [47:38]
Jenny Harrington
Jimmy, Delta Airlines, Zimmer, zbh, Boeing.
- [47:43]
Scott Wapner
All right, the exchange is now. You've been listening to CNBC's Halftime Report, the podcast you can always catch us live weekdays at 12 Eastern only on CNBC.
- [47:57]
Edward Jones
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 and or subsidiaries warrant its completeness or accuracy, and it should not be relied upon as such. To view the full Halftime Report disclaimer, please visit cnbc.comhalftimereportdisclaimer.
- [48:36]
Stephanie Link
Which are America's Top States for Business?
- [48:39]
Scott Wapner
Get all the data and complete state by state analysis.
- [48:43]
Stephanie Link
See how your state measures up America's Top States for business now on topstates.cnbc.com.