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Halftime Report
Trading the Tariff Whiplash 4/14/25
00:43:59
Scott Wapner and the Investment Committee discuss tariff whiplash with the markets looking to build on last week’s gains. Plus, the Committee share their latest portfolio moves. And later, the desk discusses Roth’s new note about stocks that are “Diamonds in the Rough.” Investment Committee Disclosures
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- [00:02]
Scott Wapner
As America's leading business lender, bank of America is on your corner and in your corner. With $215 billion in business loans and over 3,700 business specialists across the nation, we help businesses thrive so communities prosper. What would you like the power to do? Learn more@bankofamerica.com LOCALBUSINESS bank of America Official bank of FIFA Club World Cup 2025 Copyright 2025 bank of America Corporation. All rights reserved.
- [00:32]
Laura Castleton
Hello, I'm Laura Castleton with Janus Henderson Investors. Is a brighter future possible?
- [00:37]
Scott Wapner
At Janice Henderson, we think it is. We work to help our clients achieve superior financial outcomes and fulfill our purpose of investing in a brighter future together. We never forget that this means our thinking and our investments are helping to shape millions of futures. At Janice Henderson, we are committed to helping you invest in a brighter future.
- [00:55]
Laura Castleton
To learn more, go to Janashenderson.com.
- [01:03]
Scott Wapner
I'm Scott Wapner and you're listening to CNBC's Halftime Report, the podcast the most profitable hour of the trading day. We record this live weekdays at 12 Eastern. Listen in. All right, Carl, thank you very much. Welcome to the Halftime Report. I'm Scott Wapner. Front and center this hour trading the tariff whiplash the market's looking to build, at least trying to build on last week's gains. We'll debate the road ahead with the investment committee. Joining me for the hour today, Joe Terranova, Steve Weiss and Rob Secchin will take you to the markets. We are green, but we are off of the best levels. No question about that as investors still try and make sense of everything that's been happening. Joe, you know, Morgan Stanley today addresses the consistently inconsistent, I think you could call it policymaking. Quote, investors should prepare to be fooled many more times. One well known investor told me last night, quote, I'm forced to trade tweets rather than invest in companies. And Goldman's Tony Pascarello says over the weekend, quote, preservation of capital is still job number one. There are times to go for the break, there are times to go for the gas and I don't think it's the latter. What do you think?
- [02:16]
Joe Terranova
I think I agree with all of that. I think nothing has changed. I think we've had a confidence shock as a result of whatever we're calling April 2nd. I think that we are going to see that behaviors as it relates to consumers and corporation is going to continue to contract because of that confidence shock. And I think you have to turn to the market. I think you have to turn to the market and Let the market guide you as to where ultimately it's going to be going. Last week the, the North Star was the bond market. Without question, you were following the bond market. I would tell everyone today you have to be watching the MAG7 technology and.
- [02:53]
Scott Wapner
Semiconductor and still the bond market as we, I mean, yields are down today.
- [02:57]
Joe Terranova
You have yields at 440. Look, the last couple of days, Steve and I talked about this before the show. Most of the activity that I have had has been in the futures market. I'm trying. You're having such extreme difficulty analyzing individual underlying equity names. That's, that's not where right now, because of the confusion, you could find opportunity. So it's really the macro, it's derivatives, it's the futures market. And looking at all of that collectively today, bond futures not as active as they've been in the last couple of days. The real activity last night and again today in the Nasdaq, follow the MAG7. You now have only Alphabet and Apple higher as we speak. So we've lost basically the entire the Mag 7 and you have the SMH lower. That is not encouraging. For those who thought we were going to take out last Wednesday's intraday high at 5481. We failed below there earlier today at 5459.
- [03:51]
Scott Wapner
Rob, is your firm approaching this right now as Tony Pescarello suggests our investing audience should? Preservation of capital is still job number one.
- [04:01]
Steve Weiss
That's always job number one when you do what we do. But there are days to be a buyer, as we've seen in the last several weeks. And there's days to be ease up on, on the accelerator as well. We've seen such massive moves, I think that we thought coming into the year that volatility was going to be here. It looks right now like volatility is here to stay. As long as there's uncertainty around this and there's challenges to growth, there's challenges to earnings, but that does not change the fact that you are rewarded in big down days. We were down in the 4,000 last week. We took advantage of that to be a buyer and you know, in the short run were really, really rewarded. So I think you have to look at clients and say, what days are you going to be active? What days are you not? We have not been, Scott, knocked into a different atmosphere. Equities have been able to deal with COVID Equities have been able to deal with the shock of 2018, the growth shock, the pivot in 2013. Yes, there are short term scares. But once there's certainty, they're always able to deal with it because companies are incredibly adroit in dealing with what's happen in front of them if they know it.
- [05:15]
Scott Wapner
Right. And now they don't know anything because we're far from certain that that's the problem. We've done a lot of damage. Even if this rectifies itself from a volatility calm down, the residual effects are going to last for a while. The notion that the bond market was the biggest game in town, literally it is, but figuratively too, now, and that, that's where you need to watch. And Barclays today says it's the biggest problem. It's the, it's the bigger problem for sure. They don't think that risk assets can stabilize until the bond market does. And okay, you get yields down today, but as long as that remains as unsettled in its own right, you're still going to have a level of volatility that's going to make you a little nauseous.
- [06:00]
Rob Sechkin
Right. And I agree. You always got to watch bonds, you always got to watch rates. I grew, Joe. That's the most important thing that's going to drive the market because it affects what your cost of capital is ultimately. That affects your investment and then impacts your return. In every DCF model you're modeling, okay, what's, you know, what's my cost of capital? So you have to, you have to watch it.
- [06:23]
Steve Weiss
Look, it affects market order, most importantly. Right, sure.
- [06:27]
Rob Sechkin
Which affects everything I just said.
- [06:29]
Scott Wapner
Well, every, everything you've said is a derivative of the disorder that was happening within the bond market. It affects confidence, it affects almost everything. It affects stability in some respects of the equity market. When you're seeing what's happened in the bond market with that, that's why we've been gyrating through this process.
- [06:48]
Rob Sechkin
The moves are definitely not giving you comfort, even on big down days, because they're so big. And you know, I've said this for Robin, I'm surprised you haven't written it down to write down everything I say.
- [07:00]
Steve Weiss
But in terms of Nostradamus here, let's.
- [07:04]
Rob Sechkin
In terms of the world, in terms of 2008, those were certain events, and sure, you were scared as they were happening, but ultimately one event changed them and that was the addition of massive liquidity. The Fed's hands are tied right now. They can't inject massive liquidity because they know where inflation is. So, you know, so given back on the, on the tariffs going back and forth, that's destabilizing. And CEOs are not going to invest if you talk to them offline rather than what they say publicly out of fear of retribution. If you talk to them offline, they don't know where to go.
- [07:37]
Scott Wapner
No, but that's why you've got people surround.
- [07:40]
Rob Sechkin
So cautious.
- [07:40]
Scott Wapner
Right? Well, that's why you got people. You have moves too, which we'll get to in a minute because your, your moves look like you're trying to take advantage of some of the volatility that we've had and the pullback. But this whole conversation is the reason why Krinski at BTIG says we're going to be rangebound, we're not going to have a V shaped recovery. Morgan Stanley, the worst may be over, but the coast is not clear. Valuation levels are seen right now at the start of a downturn rather than at the end. And trivariance. Adam Parker, just to round out the kind of tone you're reading today out of the notes, less optimistic about equities now than we were just last week. And Citi today downgrading the S and P target and equities in general to neutral.
- [08:21]
Surat Sethi
Look, I mean we've all touched on this. I think the bond market, the credit market is driving the market today in the last few days. And I think as a long term investor, I agree with Rob. You pick up good companies, you can upgrade what your portfolio is. But in the short term, we're going into earnings season, we have a huge uncertainty as to where the bond market's going to be. It could, it could move on a tweet, it could move on anything, you know, foreign countries selling our bonds and then valuation. To Steve's point, when you plug in valuation and you look at credit spreads widening, you look at other things, there's uncertainty. So I think the opportunity here is on down days or when you have cash. But I wouldn't come out of the market. I just think it's hard to be.
- [09:03]
Scott Wapner
Really aggressive because you just don't really know whether there's a legit and longer lasting flight from US Assets sense. It's a key point that Tony Pescarello, who I mentioned earlier with the preservation of Capital comment, goes on in a thoughtful note, as he always puts out, I'll quote from it. So you have the idea of what he's thinking about. And it says judging only from price action, like most of us have been seeing the price action in the market and it's been up, down, up, down, up, down, we're suddenly witnessing A comprehensive turn away from U.S. assets. This is the single most important theme to monitor over coming weeks. I think this is important too to discuss guys because it affects almost everybody watching a related point in the Context of traditional 6040 strategies, recent weeks have demonstrated a lack of insurance afforded by the bond market. This is a sea change from the correlation regime that dominated most of the past two decades. In other words, where are you hiding? Where's your hedge? Where do you feel better if the stock market goes down, you can lean on that from your appreciation of bonds. You're not getting that.
- [10:14]
Joe Terranova
You are not getting that in any regard. You are not getting that in basically the totality of the US capital market structure. You know, you could talk about, you could find opportunities. You could say well TJX is making a 52 week high today or maybe it's Wal Mart or some Staples or utilities. But you're talking about sectors that are just not big enough. They don't have enough liquidity to provide the type of hedge exposure that we're talking about. So that ultimately leads to a continued deleveraging process and it leads to a process that doesn't really allow the evolution of a real strong bullish trend off the bottom. That's where you get that sideways activity and that's what we're getting right now. You know last night it was interesting to me. Many people have said and over, over the last several weeks I keep saying where's the leadership? Where's the leadership? Because if you're going to get the sustainable bull rally off the bottom, that 4835 low last week, you need some form of leadership and you don't really see any leadership stepping forward. You thought maybe you were going to get it from technology. You didn't get that.
- [11:18]
Scott Wapner
I've heard Saturday morning. Okay, Saturday morning you thought today was going to be a potentially 3 to 5% update for the Nasdaq. Yeah. And that's you're going to get your leadership out of the above abyss. But then Sunday morning, by mid morning you're like well okay, we may get a lift but that's out the window.
- [11:35]
Joe Terranova
Because of the communication confusion. But I'm talking about what's the market actually messaging and was interesting. Again Steve and I spoke about this before the show I was watching last night and yeah, the Nasdaq was strong but, but it wasn't like you had universal strength in all of the major indexes. The Russell last night was underwhelming, underwhelming at best. And it's been Bleeding all day and it's now it's lower. And I think you need to have that universal strength if you're going to be able to say, okay, we are getting a message from the market that last week's low is a viable low.
- [12:08]
Surat Sethi
The problem is you can't get it. Like you said, what sector is going to give you that strength? Because financials, you can't get it because we don't really know what capital markets activity is going to happen. Technology, we don't know what's going to happen to semiconductors or chips. So health care, we already have an overhang because we have somebody in the administration who does not, you know, like vaccines. So right now we're kind of in this no man's land and we're going to go into earnings season where nobody's going to commit to anything.
- [12:32]
Rob Sechkin
Right.
- [12:32]
Scott Wapner
Well, you guys are, you're committing to things.
- [12:34]
Surat Sethi
Yeah, no, no, I mean, sorry, I mean companies are not going to commit.
- [12:37]
Scott Wapner
No, I understand, but, but in the same breath and by the way, we're negative in everything but the S and P, but that's like a half point positive. So we're on the precipice of being negative there too. As you are, as Joe said, getting just a peel off in everything it seems but Apple and Alphabet in terms of the mags, you bought more workday, you bought more salesforce. So you're buying software.
- [13:00]
Surat Sethi
I have, I love cash flow companies and I think with a valuation of these companies that have come down from 22 to 23 times to 15 to 17 times on companies that are embedded in corporations globally. And then I bought our products also which is the leading industrial gas company that has long term contracts that the stocks now are 20 times earnings was always trading 24 to 27. They're focused really on looking at their business getting of hydrogen. So I'm upgrading the portfolio and I'm saying, hey, where do I want to be? I know I'm not going to be right short term, but longer term, this is where I want to be.
- [13:33]
Steve Weiss
You listen to all this commentary and certainly we're expecting volatility. We think markets could retest lows. But when you look at the Deutsche bank institutional investor positioning, certain surveys, they're in the second percentile of owning equities. We came into the year in the 95th percentile. If you don't think everybody's moved to the same side of the boat, you are gravely mistaken.
- [14:00]
Scott Wapner
Sometimes the crowd is right.
- [14:02]
Steve Weiss
Rarely, rarely, rarely for long. And what, what I think surat's saying. And what we're saying is in those environments, you should certainly be looking for the things that you want to own coming out of this, because it is a change in a headline, a change in policy, those type of things that you'll be scratching your head. Why wasn't I taking action in environments like this? Which is why he's making changes. But everybody now is cautious, us included. Okay. You know, and being in the consensus is wildly comfortable.
- [14:38]
Scott Wapner
I understand. But I haven't talked to a single person who is anything but cautious because you just don't know what you're supposed to do and what information you're supposed to do it on. Right to the point that this person was like, as I mentioned at the top, I'm trading on tweets rather than investing in companies normally you invest in.
- [14:57]
Steve Weiss
So invested in companies.
- [15:00]
Rob Sechkin
Some investors you're talking to, and I know some of them, they have the freedom of choice. They are not the asset allocators. They can allocate to any asset class. Most that come on the show and there's nothing wrong with it, they are the allocation to equities. So for them, I've got to put my money into equities, generally 90%, some of the ability to say 20% cash. But you never see that. We heard that from Kevin on Friday. So I agree. If you find something that's dirt cheap and you're willing to withstand the volatility, that's fine.
- [15:31]
Scott Wapner
Is that what you're willing to do with the moves you made? As negative and cautious as you are, you bought more Goldman, Meta Netflix, Taiwan Semi, Nvidia and Leidos. That's right. Those are all. These have been hit too hard names.
- [15:44]
Rob Sechkin
Right. So let's go through them. So Goldman, I bought, as I mentioned on Friday. I bought some on Friday. I bought some day before and I think I've been paid for that. And cash is with inflation, you can't hide in cash because it's appreciating asset. You can hide in Treasuries, you'll see some depreciation. Basically the yields are okay there and you get tax treatment. In terms of Taiwan Semi, look at 14 times you got to buy that stock. And we heard Trump, you know, dial back on semis. The biggest issue there actually is not the US for all the bluster, because you got to let semis come in. It's really China. So China me is in a much more strengthened position. The risk there again is China because of rare earths. So they basically embargoed all rare earth exports. Guess what? They're the only ones who have rare earth. We'll start a mine here at the end of the year, but otherwise it's 100% market share in China because the Vietnam mine is shut down under dispute. Rare earth goes into the chemicals, the byproducts, refining goes into everything. It goes into airplanes, it goes into cars, it goes into chips. So that's disastrous potentially. And she had warned Trump about this in his prior administration, but didn't mean anything. So that's. That's the risk. Taiwan, semi. Nonetheless, as one of the world's most important companies, as we hear Jensen Wong say all the time, I think it'll come through. In terms of Leidos, things seem to have calmed down. And what I the reason why I added there is because in the budget reconciliation bill, they talked about increasing spending to the dod.
- [17:20]
Scott Wapner
I hear you on the Netflix thing. That seems obvious to me, but Metta and Nvidia, right? I mean, just given what's happening trades.
- [17:27]
Rob Sechkin
I have a core position meta that I've not cut back. It was a trade. And I could tell you right now, stock where it is, I'm probably stopped out of it. In video, I'm not stopped out yet. But it's a trade because I still believe that this is not in the environment where the market should be priced at 20 times.
- [17:44]
Scott Wapner
I know, but you didn't. You did. I mean, look, I'm guessing when you tell me, it just seems obvious to me you did not buy more of Metta and Nvidia today or whenever it was.
- [17:54]
Rob Sechkin
No, not today.
- [17:55]
Scott Wapner
Thinking that you were going to have a rollover in some of those names now. No, halfway into this, halfway into the trading day today, as tactically as you are, that would scream to me like, wow, I'm kind of surprised by the role in those names so quickly today.
- [18:11]
Rob Sechkin
But before show, I did say to you and Joe that I'm sure at the cues. So I've been 75% cash since inauguration day, pretty much. And guess what? Every sale has been a good sale, actually a great sale. But I'm suffering because I've got such beta in the names that I own that that hurts me more than the market going down 5%. I could be down 10% and those names, but I'm good with them for the long term. But return is defined by point of entry first. So I think, given my view, which marks your trade to historic multiple 16 times. I see 4000, 4500 on the S.
- [18:48]
Scott Wapner
And P. Well, because. And by the way as, as Patty Martell on our production team just just sent to me, Yan Hatzi has just put out a new note quote. In part because of these uncertainties and in part because it is unclear how the US economy will cope with the dramatic increase in uncertainty. We still peg the probability of a full blown recession over the next 12 months at 45%. Remember he had raised the probability of recession and then there was the pivot by the administration and he pulled it.
- [19:17]
Rob Sechkin
He point just to follow up, just conclude. So we talked last week that as you see, you know, Trump surrender a number of points and try to get back to rationalization which is still a long way to go, that those headlines would drive the market higher because the worst case is embedded in the market which is what you guys are saying basically. I don't agree. However, I think given today we're reaching the point of exertion of, of exhaustion on those headlines. So go ahead.
- [19:45]
Joe Terranova
No, I think picking up on what Rob was saying, I'm looking at everything from how do you think about the market that you have in front of you? And I do think, I do think Steve that potentially there's enough to where you say to yourself okay, maybe the damage we saw on the downside we've absorbed the war worse than. One of the reasons you could say that is, you know, this is now an administration that's going to react to the market. They are, they've indicated in the past that they will react with what they see as it relates to the bond market. So I think what that presents for all of us is an environment that is completely different than what's holding. 2017 was first year of President Trump's first administration. That was the lowest volatility environment that we've seen in the last 25 years for an incoming president. Now you have an environment where I truly believe you're going to see one of the highest volatility environments and it goes back to your Goldman Sach trade. Anything related to trading in 2025 is going to have dramatic tailwinds behind it. So think about the exchanges, CME ICE Interactive Brokers. Think about everyone who's front facing with all the trading revenue. I don't think it's a one off what we're seeing here in this upcoming no all the institutions throughout the year.
- [20:58]
Scott Wapner
The, the institutions that have been forced in out in out in out who are able to be more tactical than any other normal investors like the rest of us. Why do you think the trading volumes are spiking at the banks Like Goldman.
- [21:14]
Surat Sethi
Sachs and you saw it at Morgan Stanley, JP Morgan, right, Their earnings. Normally you don't get credit for trading revenue and everybody was focused on that. And you see Goldman. So I think your point's right on.
- [21:24]
Steve Weiss
The consumer banks are really struggling.
- [21:26]
Surat Sethi
Well, I think consumer and I think also regionals are going and they're not going to have that. And when bank of America comes out, we're going to look at credit, we're going to look at the consumer, we're going to get real estate. Those are going to be other things that to your point, trading is going to be driving a lot of.
- [21:39]
Rob Sechkin
Speaking of trading values will slow down ultimately.
- [21:42]
Scott Wapner
Well, if the volatility, Goldman has great.
- [21:44]
Rob Sechkin
Levers to pull across.
- [21:45]
Scott Wapner
Speaking of Goldman and the consumer, they downgrade hotels today. Marriott, Hilton, Hyatt all cut. Hyatt goes to sell. You don't need to be, you know, a rocket scientist to figure out why. They say it's a result of the recent macro volatility and consumer pressures. We know obviously what the sentiment data has been. Let's get back to Apple for a minute because it was back over $3 trillion in market cap and as it's come off the highs, quite frankly, I don't know if it still is. Steve Kovac follows it for us it was up more than 4%. It's up still less than 3. So it's right around that 3 trillion line clearly. But what exactly does the exception if it is that exemption, whatever word you want to pick because it could change in five minutes too. What does it mean?
- [22:34]
Steve Kovac
Yeah, what it means is Scott, we've stopped having that conversation about building iPhones here in the US and these enormous costs of iPhones that that would result in. And now we're talking again about what we were before these tariffs went into effect and how Apple can mitigate those tariffs using the tools in its tool chest. So look, with China still has this 20%, the so called fentanyl tariffs on them and that is still going to impact the bulk of iPhone production, especially those the pro models that are coming over the US but now we get to talk about India again. Now we get to talk about Vietnam again. Bloomberg had this very great headline over the weekend talking about this. One in five iPhones are now being manufactured in India and that's only going to increase. This wasn't because the new tariffs were coming. They started doing this back in the COVID times when those shutdowns in China forced them to look outside of China. And now we're talking about what tools in those tool chests that Apple has. So that includes raising prices a little bit more modestly. That includes playing around with some of the memory inside of the base models of iPhones so they can do these kind of quiet price increases. And then it also helps the margin conversation here too and how what those margins looked like on the iPhone. So I think KeyBank put it best, this was like the best case scenario Apple could have hoped for that surprise relief that they got. They're not out of the woods yet. We heard the president and Secretary of Commerce Howard Lutnick talking over the weekend that no one is going to be safe from these tariffs. But we've heard that story before and the market at least early this morning was acting like, hey, this is this exemption is here to stay. And and the thing that we thought coming into this Trump administration is going to stick for now. Apple gets these surgical tariffs. They get exemptions where they really count. But still got to navigate what's going on in China. There's 20% tariffs are still in line. And then you guys were talking about the macro. Scott, a lot of the chatter on the street this morning was talk about the macro environment as well and how if we are heading to a recession, just like John Hatia's note that you read off was predicting that could still be some headwinds for Apple as well because sure the tariffs might come off but then we're facing some macro uncertainty.
- [24:43]
Scott Wapner
Scott all right, Steve, thank you for that. A number of calls. Obviously there's still a lot of negativity around Apple. Citi, they like the stock, they cut the price target to 245. You do have the price target at JP Morgan cut to 245. You have the target raised to 259 at Goldman. But there's just so much uncertain around this name even with this news. And by the way, you know, decent return on investment so far anyway for Tim Cook in that million dollars that they gave to the inauguration because the market cap that they added on Friday and then again today, pretty good ROI so far. What do you think about the stock here?
- [25:26]
Steve Weiss
So we've been neutral on the name. We trimmed it coming into the year after that very strong fourth quarter that Apple had to maintain that neutral weighting. I mean it's obvious why it struggled. 90% of their production is parts are manufactured and assembled in China and dropping from 125 to 20 likely takes the worst case scenario off the table. So it's proper to rewrite here a little bit.
- [25:55]
Joe Terranova
I was Mesmerized on Friday. I never like to say this on air, but I watched the stock all day and I literally said to myself, Apple is trading as if it's getting the exemption that it got.
- [26:05]
Scott Wapner
Last stock was up a lot.
- [26:06]
Joe Terranova
You could just see on Friday you could see the way that the offers were being lifted in the short dated options market, that something was, was going to unfold. I think Apple's okay. Look, we sold out of Apple in the ETF in October somewhere around 220ish. But I think Apple is going to be fine. I think Apple was smart enough probably to build inventory ahead of the tariffs. I'm sure they've got enough iPhones out there. The real damage will unfold. If in fact there is further economic contraction in China, you don't get the recovery there. And domestically here you do see the onset of an economic recession where consumers say, okay, we're not going to buy.
- [26:44]
Rob Sechkin
I don't think Apple is. Personally, I don't think it's viable here. There are too many variables that could happen. Such as the Chinese government, you know, said that anybody in government can't use an iPhone. If you got Huawei making great strides there, we got other domestic phones, of course they're going to favor those. And particularly with Cook saying we're moving the supply chain, there's nothing to keep Apple there. And then Rare Earth, you can't produce the phones once Rare Earth gets exported to India.
- [27:11]
Scott Wapner
All right, let's take a quick break. When we come back, we have calls of the day. And later we're talking about some diamonds in the rough because one firm is out today with a list of stocks. What they say some real upside opportunities in all of this volatility. We're back right after this. This episode is brought to you by freshworks AI powered service software that makes work easier and processes less complex. Are you working harder than your software? Uncomplicate your business with fresh service for it and fresh desk for customer support. Stop wrestling with clunky tools and start focusing on what matters. Delivering exceptional employee and customer experiences that drive robot ROI in weeks versus years, all with no hidden fees. Start working smarter, not harder, with Freshworks uncomplicated service software. Learn more@freshworks.com With HubSpot's built in AI, you can get more done than ever before. Breeze agents help you do things in seconds that used to take hours. And Copilot keeps you two steps ahead, giving you the right insights at the right time. Get started today@HubSpot.com AI as a salesperson, the search for the right buyer or buying groups can feel like you're endlessly sifting through leads and hoping they're ready to buy. Thankfully, LinkedIn Sales Navigator is more than just a tool. It's your strategic sales partner. LinkedIn Sales Navigator is a sales intelligence platform that helps professionals effectively prospect and engage high value customers, drive higher revenue and increase sales performance. Sales Navigator helps you target the right buyers, surface key signals such as job changes or which accounts you should prioritize, and shows you hidden allies so you can find those buyers that are most likely to convert. Whether you're looking for new clients or strengthening relationships of current accounts, LinkedIn Sales Navigator has new AI features designed to help sellers find the right people and get right to the right conversations, all at scale. Fueled by LinkedIn's 1 billion-member platform, Sales Navigator gives you the most up to date first party data, enabling you to unlock conversations with the people that matter. Ready to get right to the right conversations?
- [29:07]
Laura Castleton
Try LinkedIn Sales Navigator now with a.
- [29:09]
Scott Wapner
60 day free trial at LinkedIn.com HalftimeReport. That's LinkedIn.com HalftimeReport for a 60 day free trial. Terms and conditions apply. All right, we're back. Let's do some calls. It's got to be really hard, by the way, to not only make calls on stocks in this kind of environment, but to heed whatever call is out there just because, you know, what do you know ADP and Paychex JP Morgan is looking at? Okay, what are some of the least exposed names to discretionary spending? Well, they found these two quote our battle plan for payments in fintech stocks as it relates to trade war, uncertainty. They like these names because of volatile environments like this. You own them?
- [30:09]
Joe Terranova
I do. So ADP and Paychex, by the way, they're both in the industrial sector is somewhat surprising. Both have strong revenue growth. I think when I look at the two and I look at the market share potential, I actually like Paychex a little bit better than ADP. ADP has got about 7% overall market share of HCM and payroll. So I think revenue growth is strong. Free cash flow margin is strong. Better position to capture more market share as we move forward.
- [30:35]
Rob Sechkin
Forward.
- [30:35]
Scott Wapner
I think that's Paycheck Industrials because these companies are so levered to the employment.
- [30:40]
Joe Terranova
Picture and moving, migrating quickly to the cloud based environment and who could get there the fastest is probably going to be the leader. Workday had appeared to be doing that. But the valuation for me on Workday is a little bit rich.
- [30:53]
Scott Wapner
All right, Let me, I'll get back to this in just a second. Let me get to a news alert from our White House correspondent Megan Casella. Hi, Megan.
- [31:00]
Laura Castleton
Hey, Scott. So some auto company stocks are jumping right now. All some comments from the president just a couple of minutes ago. The president is inside the Oval Office right now with the president of El Salvador and in this long Q and A session with reporters, he's been asked about tariffs. He was just asked that after this weekend when he mentioned some short lived product exemptions, he was asked which specific products would he be considering and he responded, quote, I'm looking at something to help some of the car companies Remember. There are 25% tariffs on nearly all imports of autos and auto parts. There are some exemptions in place for Canada and Mexico as long as they abide by the trade agreement that's in place. But Trump saying now that the car companies, quote, need a little bit of time to move some of their production back to North America. He says they're going to make them here, but they need a little bit of time. So he is thinking about that relief. He was also asked whether he might be considering any further exemptions for Apple. Remember Apple of course, got a big win this weekend with the exemptions that were issued so far. The White House is though saying that smartphones and iPhones in particular could be subject to additional tariffs in the future. He was asked whether Apple might get any additional exemptions and he said, look, I'm a very flexible person. I don't change my mind, but I'm flexible. He also emphasized that he is in regular touch with Apple CEO Tim Cook and saying that he doesn't want to hurt anybody, but the end result is he's trying to boost the US Economic standing. One final point, he was also talking a little bit about the European Union and as there are negotiations ongoing during this 90 day pause to see if they can avoid further tariffs. The president saying now the European Union has got to come to the table and they're trying to but that they're taking terrible advantage of the U.S. i flagged that comment as the EU Trade Commissioner Scott is in Washington right now to continue these sorts of trade negotiations between potentially more news to come out of that meeting later today. Scott.
- [32:50]
Scott Wapner
Okay, we appreciate very much the update there. Megan casella, the White House for us. So we showed you Apple Intraday. It's pretty much at the lows of the session though still up by 2%. The obvious bumps that you would get in Ford and General Motors, Surat you no longer own gm? No. You know, Jim Leventhal sold it on the very first whisper of tariffs few months ago. Remind us when you got out and was it in anticipation of tariffs?
- [33:18]
Surat Sethi
No, I got out about six months ago and it was in the low 50s. And really at that point it had done everything we wanted to do. And then we were looking at this year to say, hey, you've got a new administration. What's going to happen? You're kind of at peak auto sales and peak competition. So it was just kind of one of those things. We said, hey, we can move the money elsewhere.
- [33:36]
Scott Wapner
Okay. We'll obviously watch all of those stocks that are moving on. What Megan Casella was reporting from the North Lawn of the White House. We will get the headlines now though, from Silvana Hanow. Hi, Silvana.
- [33:45]
Silvana Hanow
Hey, Scott.
- [33:45]
Laura Castleton
Good afternoon. A congressional watchdog will look into changes made at the sec, including any led by the White House or Elon Musk's Department of Government Efficiency, Reuters reporting. In a letter sent to Senators Elizabeth Warren and Mark Warner, the Government Accountability Office, which is the nonprofit partisan research arm of Congress, wrote that in the next three months it will look into the agency's recent efforts to cut staff and leases and reorganize its workforce. Saudi Arabia is reportedly planning to pay off Syria's debts to the World Bank. Now that's according to Reuters, which says the plant could open up grants for Syria's reconstruction, but US Sanctions that remain imposed on Syria may complicate its financial recovery. And in Turkey, a new phase of restorations is underway for the nearly 1500 year old Hagia Sophia to protect it from earthquakes due to its close proximity to fault lines, the project will focus on reinforcing the mosque's historic domes, the most significant work on the monument in over 150 years. Scott?
- [34:54]
Scott Wapner
Silvana, thank you. So Silvana, now coming up, the tariff turbulence is driving investors into one part of the ETF market to manage this volatility. Bob Ozani knows where it is. He'll tell you next. In ETF Edge.
- [35:08]
Steve Weiss
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Scott Wapner
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- [35:27]
Steve Weiss
Ahead, giving you the right insights at.
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Scott Wapner
The right time to close more deals than ever. HubSpot impossible growth made impossibly easy. Get started today@HubSpot.com AI are you still quoting 30 year old movies? Have you said cool beans in the past 90 days? Do you think Discover isn't widely accepted? If this sounds like you, you're stuck in the past. Discover is accepted at 99% of places that take credit cards nationwide. And every time you make a purchase with your card, you automatically earn cash back. Welcome to the now it pays to Discover. Learn more@discover.com CreditCard Based on the February 2024 Nelson Report, we're back. Bob Pisani has today's ETF Edge. Where are people looking to hide out within the ETF spectrum? Bob?
- [36:15]
Bob Pisani
Well, I have somebody who knows the answer to that, Scott. The wild markets are placing new emphasis on ETFs that are tactical in nature, I.e. those that are not tied to indexes and can quickly allocate and reallocate resources. Let's talk to one of those managers, Katie Stockton, old friend of ours, founder and manager, partner of Fairlead Strategy, also manages the fairly tactical etf. And before I ask you about your etf, you're a longtime active manager. What are you doing now and what are you advising your clients?
- [36:41]
Silvana Hanow
We believe that the loss of momentum behind The S&P 500 will stay with it for most of this year, if not even into next year. And there and we've been recommending our clients manage risk and that means different things for different people. But it can be more defensive leaning in your sector positioning for one, you know, more asset classes that have a lower correlation to the S&P 500. We are seeing this as a cyclical down move within a secular bull trend. So we'll be excited to come out the other side of it.
- [37:09]
Bob Pisani
Now I want to talk about your etf, your tactical ETF tactics just past the three year mark. That's important for managers. Congratulations. So you rotate on this between the 11s and P500 sectors. We all know that, but you rotate between that and gold long and short term treasuries rebalances every month. Here's a summary. Where are you invested now?
- [37:28]
Joe Terranova
Where?
- [37:28]
Bob Pisani
What are you doing with this right now?
- [37:30]
Silvana Hanow
Well, we have eight equal weighted buckets that we try to fit fill with the best sectors. So we're eliminating the bottom three based on our technical metrics. And these are long term indicators that we're using to eliminate noise only identifying long term shifts. So we want to be in those sectors that have the best long term momentum, the best relative performance. And if eight sectors aren't qualifying, we will give that bucket to other asset classes and that's where we stand. Currently we have seven sectors that are qualifying. We recently eliminated the technology sector, which is very significant, of course. And we have small pieces in short term Treasuries, long term treasuries and gold.
- [38:07]
Bob Pisani
So this is fairly defensive. So consumer staples, utilities, no holdings in tech at all. You don't own the tech sector. You've got a small weight in gold, you've got small weight. And long and long term bonds, it's still almost 90% what, 88% stocks though.
- [38:22]
Scott Wapner
Right.
- [38:22]
Bob Pisani
And here's a little list here. Is that going to change at all? Do you do this every month?
- [38:26]
Scott Wapner
Right.
- [38:27]
Silvana Hanow
It will continue to change its model driven, so 100% systematic. Based on our technical models. We held technology from 2023-20 all the way through until last month really. So we did ride that technology outperformance, but with an equal weight position. We also morphed into these other sectors that had the opportunity to emerge as they have done this year, as outperformers. So that heavy defensive sector exposure is something we expect to stick with here for a while. Whereas we expect the higher beta sectors of the market to gradually be removed from the tack ETF and be replaced with those alternative asset classes.
- [39:03]
Bob Pisani
So this strategy you're using run here would underperform if tech was dominant, which is what's been happening until a couple of months ago, and would outperform if the market was dropping and bonds were rallying. That's been partly true recently. I guess this is a long term way of saying it's been tough being a tactical manager, hasn't it, in the last few years?
- [39:23]
Silvana Hanow
So the benchmark for the tech ETF is actually the Russell 1000 equal weight index and the secondary benchmark is something close to a 6040 comparison. So tax design is to be a holistic portfolio. And you're right. If the tech sector is the primary or sole source of upside leadership to 2023 was a great example. It will underperform the s and P500, but it can outperform its benchmarks. We recommend holding tack as a holding that hopefully won't let you down. Shouldn't, you know, let should let you sleep at night and then supplementing that with technology stocks, we've got to let you go.
- [39:58]
Bob Pisani
But bonds underperforming your bonds down is a major problem for this portfolio and for a lot of people that are out there, is that a little bit.
- [40:05]
Scott Wapner
Of a surprise to you?
- [40:06]
Silvana Hanow
For the tech portfolio which has also that piece in gold and the short term Treasuries which is close to our cash equivalent. It does actually fairly well with that diversification on the risk off front.
- [40:18]
Bob Pisani
Okay, going to have to leave you. Always a pleasure to see you. We're going to have a lot more on tactical trading of stocks, bonds and gold. That's coming up on ETF Edge 1:10pm Eastern Time. Katie is going to be joined by Troy Donahue. He's the head of America's portfolio trading at BTIG is ETF edge.cnbc.com Scott, back to you.
- [40:34]
Scott Wapner
All right Bob, thanks so much. We'll do the setup next. We'll do the setup for you ASML Wednesday before the bell. Rob, you own the stock. I mean we already know about the difficulty in trying to give outlooks. What about in a stock like in a company like this, especially when China.
- [41:14]
Steve Weiss
Accounts for 30% of your sales. Right. And the risk reward is definitely more attractive though than it's been in a long time. Boy for a name like this. But I think you're to see a lot of these companies, a lot of these semi companies, you know, guide down a little bit because I think the macro environment is just so uncertain.
- [41:35]
Scott Wapner
Travelers, Joe is also Wednesday, you own that name.
- [41:38]
Joe Terranova
EPS is going to struggle in this upcoming quarter for all of the homeowner insurers and that's obviously attributable to the L A wildfires. In the case of Travelers, they've already guided to about 1.7 billion in catastrophic losses. Let's see if they could keep that number anchored there or if it exceeds 2 billion. The offset to that is potentially stronger margin lifts. Overall though, I like the auto insurers above all else in the insurance industry which has strong pricing power, will closely.
- [42:04]
Scott Wapner
Watch Amex Surat for obvious reasons on Thursday.
- [42:07]
Surat Sethi
Absolutely. I mean I think Amex is going to be very interesting. It's going to give the high end consumer where are they spending? Are they where where are they not spending? And also the experience experiential part. Right. That was what we came out of COVID So where are we seeing that? And then in travel we're going to see what they say as well.
- [42:23]
Scott Wapner
Well we've already heard from others. Right. You can sort of glean what they're going to say whether it's bastion at Delta. I mentioned the hotel downgrades today. There's a lot of negativity around the travel space.
- [42:36]
Surat Sethi
Yeah. And I wouldn't be surprised for them to say hey listen, we don't know where this is going. Just like everybody, everybody else But I think the indication is going to be what's stronger and what's not.
- [42:47]
Scott Wapner
Speaking of what's stronger, Netflix, Netflix year to date is up 4%. Steve Weiss, you own the stock. It reports Thursday. You heard people suggest it's like recession proof. The last thing people are going to do is touch their Netflix subscription.
- [43:01]
Rob Sechkin
Yeah, I think recession resistant rather than recession proof is perhaps both. Look, every quarter's big in like crapshoot because you don't know if they all increase their spending. Subscribers may go down, they may go up. This is typical long term play that you have to own because ultimately they're a unique company and they are the winner in the space.
- [43:22]
Scott Wapner
Okay, so we're going to do this. We'll take a break. We come back. I mentioned that one firm today has a list of what they think are diamonds in the rough. We do have ownership. You probably own some of these stocks too. We'll tell you what they are and we'll debate them after this break. All right, guys, so Roth is out today with the diamonds in the rough Note trying to look at names that might be able to get through some of this volatility. Applied Materials, Jyoti on the list. They say it's oversold. They think it has support and they just come off the best week since November of 22. Breaking a six week losing streak.
- [44:00]
Joe Terranova
Yeah, doing the opposite of what I like to do actually. Stock is down 11% year to date. Down 30% over the last 52 weeks. You always look at Applied Material relative to its peers. Who are they? Lam Research, KLA Corp. KLA Corp. Is a company we have owned since November of 2020. That's up 5% year to date. That's only down 1% over the last year. Unlike KLA Corp. Better here, better position than Applied Materials. And I would actually think Lam Research is better positioned than Applied Materials.
- [44:31]
Scott Wapner
What about you? You like it?
- [44:33]
Steve Weiss
Listen, it was way oversold. We hit 199 on this name earlier this year and a couple of weeks ago we hit 126. No surprise to see a bounce off the bottom and an oversold name. We own it long term. I think you can certainly buy it here relative to where it's.
- [44:49]
Scott Wapner
What about Cintas stories? Strong rally off support. They think it has legs higher. You own that?
- [44:53]
Joe Terranova
Uniform Services. The benefit here is the company reported March 26. So you'll hear from this company again at the end of June. You're owning this company for the management, the management of the balance sheet, the 50% gross margin the ability to deliver mid teens EPS growth for the last 10 years. That's remarkably consistent.
- [45:16]
Scott Wapner
And TJX, so you referenced the name earlier. It had been getting a boost even though when the consumer sentiment names just have been consistently going lower. TJX held up pretty well. It's on this list.
- [45:30]
Joe Terranova
TJX off price is doing remarkably well. I believe TJX made a 52 week.
- [45:36]
Scott Wapner
This is a record. This a record intraday high today.
- [45:38]
Joe Terranova
Okay. Wal Mart, Costco, also in that category because of the market share. Let's introduce another name which I think today it made a new all time high. Do you know Casey's General. Casey General Store. C A, S y, reasonable valuation, $16 billion market cap. If we could show the chart of that. That's moving higher today. That's a focus on convenience stores.
- [46:03]
Scott Wapner
Yeah. Jim Leventhal. Name? Jim.
- [46:05]
Rob Sechkin
Okay.
- [46:06]
Scott Wapner
Yeah, yeah. Give him a little. Give Jimmy some props.
- [46:10]
Joe Terranova
Good, Steve. Give Jimmy some props.
- [46:13]
Scott Wapner
All right, we'll do finals next. Likely to be another eventful last hour of trade. And I hope you'll join me on closing bell. Dan Greenhouse, Matthew Boss, Stacey Raskon, Stephanie Gill, Brian Levin. Levitt. Excuse me. Loaded table. And I hope you'll be there with us. Final trade. What do you got?
- [46:39]
Steve Weiss
J.P. morgan, Morgan Stanley.
- [46:41]
Surat Sethi
Speaking of trading.
- [46:42]
Scott Wapner
All right.
- [46:42]
Rob Sechkin
FTA, new buy last week.
- [46:45]
Scott Wapner
All right. You keep buying. More of that.
- [46:46]
Joe Terranova
Progressive.
- [46:47]
Scott Wapner
Yeah, Progressive. Progressive. Still going. Insurance.
- [46:50]
Joe Terranova
Yes.
- [46:51]
Scott Wapner
All right, so we're still hanging green on the S and P and the Nasdaq and the Dow, the Russell still red. I'll see you at 3:00. You've been listening to CNBC's Halftime Report, the podcast. You can always catch us live five weekdays at 12 Eastern only on CNBC.
- [47:10]
Steve Weiss
All opinions expressed by the Halftime Report.
- [47:12]
Scott Wapner
Participants are solely their opinions and do.
- [47:14]
Steve Weiss
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.
- [47:37]
Scott Wapner
But neither CNBC nor its affiliates and.
- [47:39]
Steve Weiss
Or subsidiaries warrant its completeness or accuracy, and it should not be relied upon as such. To view the full Halftime Report disclaimer, please visit cnbc.com halftime reportdisclaimer Growing a business can feel impossible.
- [47:52]
Scott Wapner
But with HubSpot's built in AI, you can get more done than ever before, which means anything's possible. Breeze agents help you do things in seconds that used to take hours, providing the customer support of 5 us generating the content of 10 use and Breeze Copilot keeps you two steps ahead, giving you the right insights at the right time to close more deals than ever. HubSpot Impossible growth made impossibly easy get started today@HubSpot.com AI.