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Trading the Trade War 4/23/25
00:44:09
Scott Wapner and the Investment Committee debate the new trade war headlines driving stocks sharply higher. Plus, the Committee share some of their latest portfolio moves. And later, we give you the setup on some key names reporting earnings this week.
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- [00:00]
Edward Jones
A rich life isn't a straight line.
- [00:03]
Scott Wapner
To a destination on the horizon.
- [00:05]
Edward Jones
Sometimes it takes an unexpected turn with detours, new possibilities and even another passenger or three. And with 100 years of navigating ups 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 Are you still.
- [00:32]
Joe Terranova
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.
- [00:48]
Jenny Harrington
With your card, you automatically earn cash back. Welcome to the now it pays to Discover.
- [00:53]
Joe Terranova
Learn more@discover.com CreditCard Based on the February 2024 Nelson Report. 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, the new trade war. Headlines driving stocks all over the place today, mostly higher, as you know, not as high as we were. However, we will debate the markets, we'll debate the headlines, we'll debate what to do with all of this with the investment committee. Joining me for the hour, Joe Terranova, Jenny Harrington, Steve Weiss, Surat set. I'll take you the market. I'll show you exactly what I'm talking about. Yes, we're green and we're nicely green. And the NASDAQ is still a near 500 point gainer today. That's near 3%. Dow is up better than 1,000 points and it's pulled back off of that. So that's how the market looks at straight up 12 noon here in the East. Joe, I guess I'll begin with you on what we're playing with. Last night Trump no intention of firing Powell. Last night Trump tariff rate on China won't remain at 145%, won't be anywhere near that high. It'll come down substantially. It won't be 0940 or so. This morning the treasury secretary, Wall Street Journal, excuse me, the Wall Street Journal moving a story says quote, White House considers slashing China tariffs could be by half to de escalate the trade war. Trump hasn't made a final decision. Treasury Secretary within the last unilateral offer from Trump to cut China tariffs. Full China trade deal may take two to three years. What do I do with all that?
- [02:44]
Jenny Harrington
This is exactly why we said on Monday it's very difficult based on where the market was to think that you could play the market from the short side and expect downside because you get the treat the tweet rather. So you have a very clear softening of the rhetoric of the last 24 hours that is obvious to all of.
- [03:03]
Joe Terranova
Us, including our Eamon Jabbers at the White House today who described it as a quote, tonal change.
- [03:08]
Jenny Harrington
Clearly tonal change without question. With that being said, it still remains a highly volatile environment that dictates if you are active, you are trading. And I know a lot of people that watch the show. That's uncomfortable for them. I know for some people in our universe that's uncomfortable for them. But that's what it is. It is a trading environment. Yesterday when Treasury Secretary Bessens comments came out regarding what he said in a private closed door meeting. You saw the rally in the S and P. Okay, I was able to buy some S P futures. I wrote the S P futures along the way in extreme volatility. And then guess what happens? The market literally slams into the ceiling this morning. And we have a chart to show this. So while you have all this crazy volatility or treacherous environment, mercurial nature of markets, you actually have some technicals that you can rely on. So let's show this chart. If you look at the month of March, what you will see that in the low for March, 5488 is your number for the S&P 500. That actually which was the floor now becomes the ceiling on April 9th. Time to buy, right? Time to buy. The high that day, the Intraday High is 54.81. Today we get up to 54.69. And Foolish Me, I didn't sell my S and P futures there. I'm still sitting with them. I have a stop down below, can't lose money on them. But certainly I should have been a seller up there.
- [04:32]
Joe Terranova
It does appear to me based on this tonal change from the President himself. And I think we can agree if you listen to his comments and you read between the lines and you listen to Ammon's reporting, which I advise you do because his on the ground boots on the ground stuff at the White House yesterday moved the market. Describing this Weiss is a quote, tonal change that it appears to me that the markets have gotten the President's Attention maybe a little bit later than people thought and expected. But there seems to be less tolerance for some level of volatility, especially as it relates to what's been happening in the bond market and the currency markets because of the commentary about the Fed chair. So the President softened his tone regarding Jay Powell, undoubtedly did that. I'm trying to figure out what you guys are supposed to be doing in this market because on Monday when you were on I asked you when you were really describing how negative you were, unquestionably, are you 100% in cash? I asked. You said, I'm almost completely hedged. I have very, very little exposure. This morning you told our producers I've kept most of my exposure except for sales in Amazon, Google due to concerns about cloud and consumer spending. Just can you square that for our viewers?
- [06:01]
Steve Weiss
So when I hedge, I'm hedging with, with the indices with the Q's or voo. And the reason why I do that instead of selling my positions is because I know, as I've said before, this is going to be a headline driven market. So I'm able to take those off quickly and I'll incur my gains on the taxes from short term trading in those. I did have gains in those. So keep in mind when I initiated my bearish outlook and went to 75% cash is almost on the day when he was inaugurated. So none of this surprise. So that's how I'll continue to play it. I'm not selling matter. I'm not selling even though frankly I've considered because his legal problems, you know, continue to materialize. I do have concerns. I've not sold Microsoft even though I sell. I harbor cloud concerns there as well. But I can't have no exposure. I like those for a very long term play versus the ones that you mentioned purely for the cloud and for consumer spending on both Amazon and Google. So look, the way I look at my view hasn't changed. You know, one day of, of him negotiating against himself as we've seen should not be applauded by the market. You know, this is more. This market is trading like it's watching Hulu where there's a new episode dropping every week and that in a compressed time versus like Netflix, which is what the market wants to see where all the Information drops at 1. And you know what? The story is so good analogy.
- [07:32]
Joe Terranova
I get behind that.
- [07:33]
Steve Weiss
Yeah.
- [07:33]
Joe Terranova
So rare. A rare good analogy. But nonetheless, we'll run with it.
- [07:37]
Steve Weiss
I remain so I remain bearish and concerned about the economy. Okay, okay. The economy. CEOs are not going to change. What they've already stated is we're pulling back on investing because they don't know where the road is. That's going to drive the economy into recession.
- [07:54]
Joe Terranova
I feel like any time people of Ken Griffin's stature speak publicly that it's worth bringing the headlines to all of you. Obviously, the head of Citadel is speaking at the Semaphore World Economy Summit, in which he has said within, I'm past this within the last 20 or so minutes, that the trade war has devolved into a, quote, nonsensical place and that the United States is eroding its brand. That's what Ken Griffin has had to say. I think everybody has been watching. And I bring you this, too, because Ken Griffin, the stature that he has, obviously, the position in which he sits, the company which he runs, and he's been a supporter of the Republican Party, a donor, he's not naive to the issues that have surprised a lot of people who have been on that side of the support space. This trade policy, which caught a lot of people off guard, and it surprised a lot of people in terms of what they thought and what is markets and how to invest in that environment. What do you make of what Ken Griffin has said in the greater context of what we're supposed to do? When you have the president, the treasury secretary making the comments that they did and the market's just reacting to everything, right?
- [09:24]
Scott Wapner
Well, I think it's a little silly that the market's reacting to everything because we kind of knew. I think at least if you looked at Trump 1.0, you kind of knew that you were going to get this. I mean, I think this is on steroids. But when I think about that specific Ken Griffin comment and how it relates to the market today, that's actually not a new comment today. Right. That kind of thought about the trade war is chaotic and it's eroding our brand that's been out there for, frankly, before Liberation Day, people have been talking about that, and it's real. So he's right. But he's also not telling us something that we haven't known and haven't digested. When we were talking before about the tonal change, how long is that gonna last? Like 10 minutes. I've been thinking about how whenever you go to visit a friend in Florida, the joke in Florida is, you know, for the people who live there, like, oh, you don't like the weather? Wait five minutes, it'll change. Like, oh, you don't like the tone, wait five minutes, it'll change.
- [10:12]
Joe Terranova
Yeah, but you wouldn't. So are you, Are you, Are you sitting on your hands because you're afraid the tone's gonna change? Five minutes.
- [10:18]
Scott Wapner
I'm never sitting on my hands. And I also want to make a point here. When I get bearish and I think the market's going down, it doesn't mean I'm selling out the portfolios or the stocks. I believe that you do not trade in and out to get around bear markets. I believe that you stick it out through them or stick it out through. Correct.
- [10:33]
Joe Terranova
You think this is a bear market, like a bona fide bear market. I mean, two thirds of the S and P is down more than 20%. I mean, David Rosenberg, you know who I think Bearish said of the current market setup, says, quote, an endless string of volatility in both directions, which is a tougher environment that only happens in fundamental bear markets. Now, I bring that up because I almost feel like using historical reference in your thought process about this particular market is dangerous.
- [11:07]
Scott Wapner
I agree.
- [11:07]
Joe Terranova
Why? Because this was a president induced bear market. But that means it can also be a president induced quick turnaround, right? Can it?
- [11:18]
Scott Wapner
I think it could, but I also think there's a lot of asynchrony here. So when you say, do you think it's a bear market? Like the definition of bear market is down 20% in general, people argue with that. But so you could say, okay, there's a bear market here, there's not a bear market there. As you know. When you say, what do you do? You know, do you sit on your hands? No. What you do as a proper investor is you take advantage of it. And I think I'm actually always kind of excited and happy in these environments because there's something to do. So as you all know, I bought two great positions, I bought Ryman Hospitality Properties, and I bought the microchip. Microchip convertible preferred. I never could have done that had there not been bear markets in those stocks. Right. In the microchip, it was down 60%. Ryman was down 30%. Different. What's the semiconductor index? Down like 20 or 30%. There's a bear market in the semiconductor index. There's not one, technically speaking, in the S and P yet. So we're all over the place. And I think what we need to remember is there's opportunity. Everything's going to be treated differently. There's async asymmetry, asynchrony, if that's a real word. But there's a lot to do. And again, unlike a trader, because I am a long term investor, I just get through it so. Well, I'll tell you, I have no idea, no idea when the tone is going to change. I have no idea what's going to happen with tariffs, I don't know.
- [12:34]
Joe Terranova
But the market, the market though, the market though Surat is proving to everybody who's watching that it doesn't take much and it's not going to take much to get the market into a much better place. You know, you go up a thousand points like you were earlier today. All right, so best in comments. Maybe throw a little cold water on, on the extreme optimistic level of today, but nonetheless you're still looking at a 500 point gain on the Dow and near 500 points on the NASDAQ. That just tells you a lot.
- [13:06]
Surat Sethi
It tells you directionally the tone is changing. Right. And I think what's happening in the White House is they're testing to see when they say things, what is the market going to react. So the whole Powell commentary was to say what is the market going to react? And they got the reaction and it was pretty bad. So what do they do? They turned it around. The same thing happened two weeks ago when you know, the yields were going through the roof. So I think they're watching the parameters of this. And to Jenny's point, you've got to stay invested and upgrade your portfolio. It's just very hard to time this stuff because we don't know where it's going to go. And now we're in that phase where, what, 20% of the s and P earnings are coming? What is that going to be? So now you've got more data coming at us and we're going to hear more from CEOs. So I think you have to really understand what you own in your portfolio.
- [13:55]
Scott Wapner
Yeah.
- [13:56]
Jenny Harrington
I just want to ask a question. So if, if you're, which I agree with, you stay invested. If you're a long term investor, you stay invested. But what are you trying to time then? Because you're just staying in it. So what do you like, you're not, you're not timing anything.
- [14:08]
Scott Wapner
No.
- [14:08]
Jenny Harrington
You don't care.
- [14:09]
Scott Wapner
Or you can say I'm timing the long run. Right.
- [14:12]
Jenny Harrington
And what does that mean?
- [14:13]
Scott Wapner
Okay, what it means is that. What, it doesn't mean anything.
- [14:16]
Steve Weiss
I didn't say anything. Jenny, relax. Take it easy, take it easy.
- [14:20]
Scott Wapner
Far enough tonight. No, but like, like if you're timing the long run, here's what you know. You know that over the very long run, the market delivers on average an 8 to 10% return. Actually looked at it recently, it's more like 11%.
- [14:31]
Jenny Harrington
But so I know that.
- [14:32]
Scott Wapner
Yeah, just ask what you're timing and you're saying I'm not going to try to be cute. You know, I'm not going to, I'm not going to try and be smart. I'm not going to beat it. I'm just sticking with compounding. I'm just sticking with.
- [14:42]
Joe Terranova
No, but Joe's being tactical. Joe, Joe bought more. Wait, hold on. Yeah, Joe, Joe bought more of the tlt. It was a trade that he was in.
- [14:49]
Steve Weiss
I bought more Netflix.
- [14:50]
Joe Terranova
But that's a bet that the TLT is a bet that yields are going to go down. Obviously the yields had been getting away from that trade. But now you, you must have the belief that we're going to get back into some level of normal. Normalcy and quotes as to the way that the bond market generally reacts at times of uncertainty. People buy bonds if the bar, if the market is sensing out, sensing a more difficult economic outcome, yields go down. Not absolutely.
- [15:22]
Jenny Harrington
And I also think what's important is that what we're hearing is the messaging from the Treasury Secretary. We're not hearing from Howard Lutnick, we're not hearing from Peter Navarro this week. We're hearing from the treasury secretary. And what have we continue to hear from the Treasury Secretary. We want yields lower. And I think that has purpose. I think that has meaning. If there is flexibility on what the rate of tariffs ultimately is going to be, then the argument that tariffs are ultimately inflationary and they're going to lead to some permanent inflationary spike, I think that completely falls apart. I think the reality is we've got a dramatic shock to confidence. I think it's going to impact CapEx. I think it's going to impact consumer spending. I think it's going to impact guidance, which really you have to give two sets of guidance right now. Why even give guidance at this point? So I think ultimately it means you get the economic contraction. Just one last point. And I do think, look, I understand when we talk about trading, people get uncomfortable.
- [16:18]
Joe Terranova
Right.
- [16:18]
Jenny Harrington
I'm sitting here, I'm long futures, I'm probably going to lose money on them. I understand that. But the Ken Griffin of the world, the Jane Streets of the world, the virtue financials of the world, they're making money right now. They are. It's an elevated volatility.
- [16:33]
Joe Terranova
Those firms make money in any environment.
- [16:37]
Jenny Harrington
That's a pretty good profit.
- [16:38]
Steve Weiss
How Ridiculous. It is saying that you got to be long term invest all the time. Ken Griffin, who you quoted David Tepper, Steve Cohn, Renaissance. Right. The founders of those companies, of all those asset management firms are worth between 25 and 50 billion. Naming one. I'm going to be in all time. My dial. Hold on. I let you talk. My narrative is not going to change regardless of what market conditions are. If you have the capability and the mandate. Now, a lot of people here don't have the mandate because they're not the asset alligators. They have to be in equities now, number one. Number two, to think that to give them the, the administration credit that they're throwing out all these sound bites to test the market acceptance is just ridiculous. I don't think you know it. Okay. You're not going to play with the markets trading down a thousand points or up 1,000 points a day.
- [17:31]
Joe Terranova
I think administrations for as long as time has existed.
- [17:34]
Steve Weiss
Exactly.
- [17:35]
Joe Terranova
Have always done that.
- [17:36]
Steve Weiss
I'm not disagreeing.
- [17:37]
Joe Terranova
There's always a trial balloon thrown out by any administration to see how the market might be.
- [17:41]
Steve Weiss
I'm not disagreeing. But none of them are trial balloons of 184% tariffs. They're within the realm of what's reasonable.
- [17:50]
Joe Terranova
Well, that's why Ken Griffin said it's evolved into a quote, nonsensical place.
- [17:53]
Steve Weiss
It is nonsensical. I and think of what the market rallied on. Market rallied on Scott Besson saying, oh, tariffs are going to come down with China. No shit. You mean they're going to stay at 200%? Come on, everybody knew that. For Trump to say I'm not going to fire power, really, he has no bad word. He has no ability to fire power. So that just shows the market is, to your point, very nervous and at the headlines drive, but ultimately the direction is the direction because the smart people in industry are not going to deploy billions of dollars in cap ex on headlines. They're going to wait to see what sells. Now, if he fires Lucknick, which he should, if he gets rid of Navarro, which he should and brings in people there, then it could be a different story. But tone's not changing. While it's all stick of things there.
- [18:40]
Joe Terranova
Okay, we're going to spin this now about the tone changing just maybe towards Tesla. See how I did that? Take a look at the stock because the company obviously had an earnings report last night. Sales down 20%, net income down 71%. Musk saying the time he spends at Doge is going to drop quote significantly next month. He had barely taken put the phone down. And Dan Ives put out a note raising his price target to 350. Tesla gets back Musk was the headline there while acknowledging does Ives that the brand damage caused, and I'm quoting straight from the note, the brand damage caused by Musk in the White House doge over the past few months will not go away just by this move. And some of the damage will be sustained, sustained forever in Europe and the US But Musk recommitting as CEO and basically leaving his DOGE role over the next month is the biggest and best possible news Tesla investors could have heard last night. So again, he raised his price target to 350 from 315. You, you still have the stock?
- [19:49]
Jenny Harrington
Yes, the stock is still in the ETF. April 30, we rebalance. Everyone can guess what's ultimately going to happen. Let's talk about the earnings. Let's talk about.
- [19:57]
Joe Terranova
Well, let me ask you. But no, I don't know if everybody can guess. Okay, well when do you have to make the decision?
- [20:02]
Jenny Harrington
April 30th.
- [20:03]
Joe Terranova
Okay, so what happens is today's only the 23rd. You're telling me that if this doesn't initiate a return of momentum to the upside in the stock that you wouldn't necessarily keep it. You leading on people to believe that it's bounced come April 30th with your comments now.
- [20:22]
Jenny Harrington
So there would have to be. How do I couch this properly in a compliant way?
- [20:26]
Joe Terranova
There would have to be dramatic.
- [20:29]
Jenny Harrington
There would have to be a dramatic, dramatic bounce to restore positive momentum in this stock. In addition to that, remember something that we do is we prioritize in the definition of quality revenue growth. Their revenue growth is flatlining. Okay. You're seeing in the totality of the MAG7amoderation in revenue growth. I think that's why the street is repricing a lot of the Magic seven. So I think this is a company that is fundamentally challenged. I also think in terms of the softening of the rhetoric, wouldn't be surprised if the next thing that we hear is exemptions being handed out that ultimately could positively affect a lot of these Mag 7 companies. Because clearly the need to import graphite from China, which is the world's largest exporter, of that Tesla is reliant on that. The tariff is challenging right now. It's margin compression.
- [21:22]
Joe Terranova
Let me ask you, this has the tone. Let's keep this theme going of tone changes. Okay. Tone change around trade war. Tone change around Musk and Tesla, perhaps tone change around Data center. We had some concerns recently about hyperscalers scaling back, maybe not spending as much on new data center investments, keeping the current ones in place but maybe dialing things back. GE Vernova today big power orders. The CEO of that company's on mad money tonight. Don't miss it. GE Vernova is a big winner. 4% Vertiv strong outlook for data centers. Vistra, Eaton, Constellation, all higher. We can cycle through all those and you can see what I'm talking about. Oracle, Dell Technologies also higher tone change around data center.
- [22:14]
Surat Sethi
Yeah, I think it was becoming so negative because people were picking on while Microsoft going to slow expenditures in Amazon. There is still demand for this and we just don't have enough supply. The question is going to be pricing and I think these things were just being sold so fast. We own Equinix in the data center which also has colocation and that stock's also been sold off.
- [22:32]
Jenny Harrington
So we have Vertif. But the only question I would have is do we really have a proper reflection of the demand after. What was it? April 2nd was Liberation Day, quote unquote.
- [22:43]
Scott Wapner
That's the problem.
- [22:44]
Jenny Harrington
You know you're, you're talking about earnings that really don't affect, reflect rather this new environment. So I don't know, I'm so skeptical there.
- [22:52]
Scott Wapner
That's the total crux of the problem and that's the crux of all of earnings season. Right. Is what we're hearing does not reflect what's going forward and there's no way to extract and they have now with.
- [23:00]
Steve Weiss
The 90 day moratorium. They have a 90 day moratorium and having to offer real negative guidance.
- [23:07]
Scott Wapner
Yeah.
- [23:07]
Steve Weiss
Hoping that things will change six positive. So there's no percentage for them to come out and talk about to Jenny's point, the reality.
- [23:14]
Joe Terranova
What about tone change around Bitcoin? Right. Which had a pretty big drop down from its high and has been on the move big time again.
- [23:23]
Steve Weiss
Yeah.
- [23:23]
Joe Terranova
You're pushing up against 100k. You know it's, it's decoupled in many respects from the nasdaq. The NASDAQ as the dollar has had its issues. Bitcoin's gotten a bid.
- [23:36]
Steve Weiss
I think you'd see through 100. I mean you will see legislation come out. We know that's going to happen. You've got a pro crypto chair of the sec. You've got, you've got a president who has significant family interest in it being approved. So that alone is going to get it through.
- [23:54]
Scott Wapner
But the other problem with crypto is you could also see it move down.
- [23:58]
Joe Terranova
Absolutely.
- [23:59]
Scott Wapner
And that's the problem with it because there's no, there's no future stream of cash flows that you can look towards.
- [24:03]
Steve Weiss
To still no business case.
- [24:05]
Scott Wapner
Right. And there's also still a huge component of the market that's, that's wrapped up in excessive risk and excessive risk taking and concentration. And if, if things go south, they get squeezed. They mean may need to sell those hold. Yeah.
- [24:16]
Jenny Harrington
But for now the, the momentum is in place. Clearly the resiliency is something that I think people are applauding.
- [24:23]
Scott Wapner
Kind of it just throws around.
- [24:25]
Jenny Harrington
Well, that's, that's what it. Listen, Jenny, you want to make an omelet, you got to crack some eggs. I mean, you got to step forward and take a little bit of risk.
- [24:32]
Steve Weiss
There are very few, there are very few owners of bitcoin. You're going to scare out because of volatility.
- [24:38]
Joe Terranova
Well, right.
- [24:39]
Scott Wapner
I want calculator.
- [24:40]
Joe Terranova
All right, let's do this. Let's take a quick break. We come back, we have more committee moves. Seurat has a new buy, a new sell to tell you about. We'll do that when we come back.
- [24:50]
Edward Jones
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- [26:51]
Joe Terranova
All right, we're back above 40k. Back down below, excuse me on the Dow. So we're well off the best levels of the day. Surat new move. You bought Zoetis?
- [27:00]
Surat Sethi
I did. Leader in animal health care. They don't have the payer regulatory issues that you know, some of the other big pharma do. And upgrading from Elanco. So my theme for the last few weeks is upgrade your quality of your stocks. Lanco is a good company before times levered so Edis has a strong balance sheet and global presence.
- [27:17]
Joe Terranova
Ever owned it before?
- [27:18]
Surat Sethi
Have not. No.
- [27:19]
Joe Terranova
No. All right, thank you very much for that. Stocks on the move. We need to get to Bristol Myers, their schizophrenia drug. Falling short of the main goal. Phase three. Jenny, you own the stock. Bristol Myers reports earnings tomorrow before the bell. We can take a look at what the stock is doing after it did fall short. Phase three.
- [27:37]
Scott Wapner
Right. So I think a lot of the information will actually come from the call tomorrow. So it's hard to say too much right now. But when I bought this drug about, I don't know, nine months ago when I bought this company, sorry, it was trading at a five and a half percent yield. It was trading right about here at 48. And it was not purchased for that schizophrenia drug. What it was purchased for was the fact that it was minting about $10 billion a year of free cash flow. And we thought that they would ultimately be able to buy their way back to growth. So then maybe six months ago they announced this coping five drug stock popped up 10%. Now they're getting less. Great news on it. Stock drops a little bit. I didn't buy it for this. I think they'll still figure out a way to buy their way to growth. But I am curious what they have to say on the call. So I'm kind of like fine, great, get to buy it where I originally bought it.
- [28:19]
Joe Terranova
What about Thermo Fisher? Let's look at that stock today. Their earnings did beat.
- [28:23]
Scott Wapner
Yeah.
- [28:24]
Joe Terranova
See what it's doing. What do you think?
- [28:26]
Scott Wapner
I think this is a really interesting example of how government policy is really impacting businesses. And to your point about not needing to say anything positive. So they beat but they lowered full year guidance. They lowered it from 2330 to 2230. And they said by the way and Q2, it's like 10% below. So they highlighted things like macroeconomic uncertainty and muted U.S. purchases. They're taking proactive mitigation actions to navigate near term headwinds. Core business is resilient still. So when you hear people say that, when you hear the CEOs say that they're. They're taking the exact hall pass that you said they would. They don't want to, you know, they don't want to be too.
- [29:03]
Surat Sethi
The other thing about Thermal.
- [29:04]
Joe Terranova
You own it too.
- [29:04]
Surat Sethi
You own it too is they're also an acquisition machine. So they're going to look for things on the cheap. And it's a great management team that's been there for many years. So it's one of our core holdings. And when things like this happen, this is when you add to a stock.
- [29:18]
Scott Wapner
It was super rich for a long time. So now you've got.
- [29:20]
Surat Sethi
It had a Covid bump to it because all their products were used in Covid. Then it came off and now I think it's a great time.
- [29:26]
Edward Jones
Yeah.
- [29:26]
Scott Wapner
So now you're trading back at 18 times earnings. 5% free cash flow yield. That's getting more reasonable.
- [29:31]
Joe Terranova
Joe Capital One, they beat. They missed on revs.
- [29:34]
Steve Weiss
They did.
- [29:35]
Joe Terranova
Bank of America reiterates it a buy today and they call it a consumer staple. What do you think?
- [29:40]
Jenny Harrington
Largest credit card holder in the country. Now with the integration of Discover stock gapped open higher here financials, the entire sector is really trading with a strong degree of resiliency. Just pull up Berkshire Hathaway. But in the case of what you're.
- [29:59]
Joe Terranova
Leaning on the insurance side of the financial universe you're leading say that clearly.
- [30:05]
Jenny Harrington
Travelers Chubb, which reported also strong quarter. You could group that all collectively together progressive put in that basket. But I do think financials as a sector is has less exposure to the tariff volatility. I do think there's been a degree of surprising consumer resiliency. And to Jenny's point, I don't think we see the real effect of that just yet. But it appears as though whether it's Visa, MasterCard, Capital One or even to a certain extent American Express, these stocks are stocks that are finding support within the market. You've got buyers that are stepping in and wanting to own.
- [30:43]
Joe Terranova
What about CME Group? CMG reported as well.
- [30:47]
Jenny Harrington
Yeah, down slightly. I think they needed a little bit of a, a stronger beat than ultimately they got. There's a lot of enthusiasm surrounding the exchanges on the expectation that volatility remains high. Net interest income is good for trade. Good for trade, a great environment for trading. So I need, I think they need a little bit of a stronger beat. But down tape. I wouldn't, I wouldn't sell it here.
- [31:08]
Joe Terranova
Okay, what do you downtape for that stock?
- [31:11]
Jenny Harrington
Yeah.
- [31:11]
Joe Terranova
Okay. Let's get the headlines now with Silvana Hanau. Hi, Silvana.
- [31:14]
Edward Jones
Hey, Scott. Good afternoon. Senator Dick Durbin of Illinois just moments ago announcing he will retire after 44 years in Congress. Durbin, who has been the number two Senate Democrat for 20 years, said, quote, it's time to pass the torch. Several Illinois Democrats have signaled their interest in running for the seat, including Representative Lauren Underwood and Lieutenant Governor Julia Stratton. The families of the Uvalde school shooting victims have reached a settlement with with the city. City Council members on Tuesday voted unanimously to approve the settlement, the details which have not been released. And the mayor of Vivaldi said the city will also work with the families to create permanent memorial. An attorney for the families could not immediately be reached for comment. And In New Jersey, 3,000 residents have been forced to evacuate as a massive wildfire continues to burn after igniting yesterday afternoon, fueled by strong gusts of wind and dry conditions. The New Jersey Forest Fire Service said the Jones Road fire has burned 11,500 acres and is now 30% contained. Scott?
- [32:22]
Joe Terranova
All right, Silvana. Thank you, Silvana. Now, coming up, betting like Buffett, there's a new etf, believe it or not, that lets you do just that. Bar Pizzani explaining all of it in today's etf, Edge.
- [32:42]
Edward Jones
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- [33:39]
Joe Terranova
Ryan Reynolds here from Mint Mobile. I don't know if you knew this, but anyone can get the same Premium Wireless for $15 a month plan that I've been enjoying. It's not just for celebrities. So do like I did and have one of your assistant's assistants switch you to Mint Mobile today. I'm told it's super easy to do.
- [33:56]
Edward Jones
@Mintmobile.Com Switch upfront payment of $45 for 3 month plan Equ to $15 per month required intro rate first 3 months only then full price plan options available, taxes and fees, extra fee, full terms@mint mobile.com.
- [34:12]
Joe Terranova
Back we'll go to Bob Zani now with today's ETF badge. Hey Bob.
- [34:15]
G
Hello Scott. Good to see you. The Berkshire Hathaway annual meeting is 10 days away and anticipation is already building around what Warren Buffett might say. There's now an ETF for that. Last month, Vista shares launched The Vista shares target 15 Berkshire selection income ETF. I know it's a mouthful, but it holds direct exposure to Berkshire as Well as the 20 largest holdings of Berkshire. Layered on top of that is an option strategy that targets annual income of 15%. This is very interesting. Let's talk to the man in charge of that fund, Vista Shares CEO Adam Patty. Adam, good to see you. You say you can now invest like Buffett and you can get income. So what's in this? How does it stack up against a simple 500s and P500 index fund?
- [34:55]
H
Yeah, I mean look, we've been running the market's been momentum driven for many years. The switches flipped. We're looking at quality and a value tilts right now in terms of factor exposures. And Berkshire Hathaway has certainly performed incredibly well this year, handily outperforming the S&P 500. It's a really well diversified portfolio chosen of course by the best investor the world has ever seen. When Warren Buffett, you've got everything from Apple and Amazon to Coke and financials such as bank of America and Citigroup. So really well diversified is performing really well in this market. So I think the time is right.
- [35:32]
G
Yeah. And Kroger, I see here all sorts of stuff here and this is why you're diversified Buffett doesn't just hold magnificent seven stuff. He is a well known diversified investor. He's known for a value tip tilt and that has paid a lot of dividends this year. So I guess the message here is diversification and Berkshire's attitude towards investing pays off this year.
- [35:55]
Joe Terranova
It is yeah.
- [35:56]
H
Stable, stable companies that are hopefully undervalued with that value. Tilt, as you mentioned, I think is important. And your prior guests, one of them mentioned, you know, the financial exposure that Berkshire has and perhaps financial companies have a little less exposure to tariff, the tariff issues that are, you know, kind of going through the, through the economy. So, you know, we've got a lot of that in there which is, which is really well positioned.
- [36:20]
G
Now, Berkshire does not pay a dividend, but you've added an option overlay to this that does pay a sort of synthetic dividend. Now how does this work and why did you add that into this, into this mix here?
- [36:32]
H
Well, who doesn't want to invest like Buffett but with income, right? So to your point, BRKB does not pay one. Warren likes to keep his, his cash on hand for you know, we repositioning the portfolio. So we did a lot of research and we found that investors in brkb, you know, would like to get that dividend exposure. So if you own brkb, you buy a little of om to, to add to that, to add to your portfolio, get that synthetic dividend exposure. We use a, an options overlay. You know, we're selling calls and call spreads and we're, you know, it's a 15% target income come annually, which we pay out monthly at 1.25% which is the goal.
- [37:12]
G
And you rebalance quarterly quickly, right.
- [37:15]
H
How often you balance on the equities and of course the options are run daily. It's an active process.
- [37:23]
G
Adam, thank you very much. Interesting product. Of course, we'll keep an eye on Buffett next week. Remember, you can see all of our shows, etf ed shows on our website. That's etf edge, that's cnbc.com Scott, back to you.
- [37:34]
Joe Terranova
All right, Bob, thank you. Bob Pizzani, we have a special programming note, of course, next Saturday, May 3rd, Bob mentioned we'll be bringing you the entire Berkshire Hathaway annual shareholders meeting live on CNBC streaming on CNBC.com and CNBC. Plus we will hear directly, of course, from Warren Buffett himself as he takes the stage to answer questions for over four hours. Our Becky Quick and Mike Santoli as always, always will be live in Omaha beginning 8:30am Eastern Time. Up next, a big sell call today on one of the committee's energy names. We will debate it in our calls of the day and we'll do that next.
- [38:27]
Edward Jones
Foreign.
- [38:34]
Joe Terranova
Welcome back. Want to call your attention once again to CNBC's newest subscription streaming product called CNBC Plus. You can stream Halftime Report all of your favorite CNBC shows anytime, anywhere and also on demand, that's what the data feed looks like on your screen. Headlines and stock movers, of course. Speaking of, let's get to our call calls of the day today. We do begin with Chevron downgraded to a sell surrot. It is your core holding in energy. Redburn today says get rid of it. What do you think?
- [39:05]
Surat Sethi
I mean you get a 5% yield, the stock's down 6% for the year. And by the way, as oil stays where it is, it goes lower. And Exxon and Chevron are in the perfect spot to do acquisitions. So you know, the big boys are going to get bigger. And I want to hold this because at some point when oil turns around these, you know, the Chevrons, you think.
- [39:23]
Joe Terranova
They'Re going to be allowed to get bigger?
- [39:25]
Surat Sethi
I do.
- [39:25]
Joe Terranova
I think there's questions about, you know, what was thought would be the case to what maybe is the case. Well, because you're, you're, you're putting that ahead of the slide in oil prices which they, according to this firm, the most oil levered of the super majors. That seems to be trumping, pardon the pun, what you're suggesting.
- [39:48]
Surat Sethi
I think it's a very different time than it was in the last downturn because the balance sheets of the Chevrons of the world are very strong. And to your point of acquisitions, they're going to go after pockets of shale, pockets of the small companies that can't survive. So I don't think you're going to see a multibillion dollar acquisition, but you're going to see private and smaller acquisitions that will just bolt up their assets.
- [40:08]
Joe Terranova
So it doesn't matter if oil stays in this, in this range.
- [40:11]
Surat Sethi
I don't think to me oil in the 50 to 60, they're fine. If it goes below, I think they're all in trouble. But then the economy is in trouble. So there's a bigger thing. But you're also getting paid 5% to.
- [40:21]
Joe Terranova
Sit on the stock, paid to wait. Northrop price target cut today to 550 from 575. RBC still likes it. They outperform, reiterate it. What do you think? They trim their outlook, obviously.
- [40:32]
Scott Wapner
What do you think so they announced earnings yesterday and the stock was down almost 3, 13% and all they did was they guided EPS down 10% below consensus. And the reason they did.
- [40:41]
Jenny Harrington
That's all.
- [40:41]
Joe Terranova
What do you mean that's all they did? That's all they guiding 10% below and.
- [40:44]
Scott Wapner
The stock 13% for like so big whoop. Yeah, and I'll tell you why it's a big one. Because the cost increases are not expected to be recurring. It was due to production increases. And, and by the way, they do also have a complex supply chain. But here's why it's not a big whoop. Because they have a record backlog. They have $92.8 billion dollars in backlog. Their international sales are up 11%. And it's not a big whoop when you think about, when you think about investing for the long term. We've owned this stock since 2013. It's up 400% since then. It's got an annualized return of 14%. And when you look through that like, okay, here's a one off, down 10% revision because of momentary cost cost increases. You look through that and when you look through that you're a tax efficient because you haven't had to pay capital gains along the way. And you stick with this company. It's by the way, trading now at 17 and a half, 17 times earnings, 5% free cash flow yield to your point all the time. You always talk about permanent compounders. This is a permanent compounding poster child. I want to own that. This does not rattle me, Joe.
- [41:42]
Joe Terranova
CrowdStrike initially initiated, excuse me, buy at Roth today. We believe that CrowdStrike is one of the best positioned companies in security. I mean that's already known.
- [41:51]
Jenny Harrington
Yeah, look, I think everyone knows that collectively we all believe that the investment thesis surrounding cybersecurity is one of the strongest investment thesis that you can maintain in the market. Whether it's Crowdstrike, Fortinet or Palo Alto. These are, these are the vehicles to get you there. I will note you have Checkpoint, which is down today after earnings and that's really because there was exuberance in the stock. Very long positioning didn't really deliver the blowout quarter that was expected. That said, I take the other side of the down market in Checkpoint.
- [42:26]
Joe Terranova
All right, quick break. We come back, Santoli, he's on the other side with his midday work. We welcome in our senior markets commentator Mike Santoli for his midday word now. I mean, what a session already.
- [42:57]
I
Yeah, for sure. I mean it made maybe some sense the Pre markets were up 2% on some less bad or incremental moderation in the trade. And you know, the sort of hostility toward Powell, we extended on more, you know, kind of maybe insubstantial headlines about what time China tariffs might look like. This environment, I think most of what you have to understand is we're under a tremendous amount of stress. The market did get very oversold as an initial condition. How much we can make use of that in terms of running to the upper end of this range is the question in the short term as people get chopped up trying to chase the headlines and you have this whole kind of squeeze dynamic that gets in place as well. So I get it that the market and the short short term is very tactical and it's going to essentially try to say is the latest headline less bad than what was priced in 5 minutes ago? Bigger picture, you obviously need broader resolution. You obviously don't really want a market that's popping around 2 and 3% a day in whatever direction. It's just very agitated. And it's not usually, you know, a market where you can build fundamental conviction.
- [44:00]
Joe Terranova
No, but this idea of needing broader resolution, I'm not sure how much of a resolution you necessarily need. I'm not suggesting you need, you know, the finish line, which the Treasury Secretary himself says could be two to three years. You need a meaningful reduction in the tariff rate on China. And then don't you have a feeling that this market would probably take off on that definitive news about that outcome? I think it would.
- [44:28]
I
It would certainly make that a attempt. It depends on when. It depends on whether the window is still open for the real economy to kind of weather this reasonably well. Look, the 90 day pause on the extreme version of tariffs sliced off that left super negative tail. Can we slice off another piece of the probability spectrum by saying here's the range of, of potential tariffs or negotiations that are underway, whatever it might be. That's probably the next thing to look for for. The other thing I keep, I can't lose sight of is when you see these clusterings of really broad daily rallies around a market low usually means good things for a multi month forward. Look, I don't know if you want to really rely on that, but it's hard to ignore. The way the market has acted is sometimes building towards something that says maybe we have a decent low in play.
- [45:18]
Joe Terranova
Yeah. All right, good stuff. I'll see you. Closing bell. That's Mike Santol. We'll do the setup next. All right, let's do the setup. We're going to start with Chipotle. They report today after the bell you own that stock. And really interesting to hear from them now.
- [45:37]
Jenny Harrington
They do the pressure somewhat on Scott Boatwright to reverse some of the negative momentum. It looks like Q1 traffic is a little bit on the decline. Analyst community has come out. They've downgraded the expectations here for eps. Same store sales for the year that might have to be cut.
- [45:54]
Joe Terranova
Okay. United Rentals, that's today as well. Jenny, you own that stock.
- [45:59]
Scott Wapner
So yesterday one of their competitors Herc reported and they had a rotten quarter but they reaffirmed their full year guidance. United Rentals is a much better operator so we're looking for good numbers from them.
- [46:08]
Joe Terranova
Alrighty. Merck.
- [46:10]
Surat Sethi
Tomorrow morning, Surat, another disappointment here down 20%. It's going to be about the pipeline and see what they have to say, what's coming down and what they're going to get to otherwise, you know, this is one that's on my watch list.
- [46:21]
Joe Terranova
What about Pepsi? That's tomorrow morning too.
- [46:23]
Surat Sethi
Yeah. So Pepsi is an interesting. Right. So Coke's been doing really well. Pepsi's got their food side that they need to show. You know, two things. One is revenue growth and also expansion in terms of costs. So we'll see what they have to say for that.
- [46:35]
Joe Terranova
All right, we'll do finals next. I will talk to Dan Greenhouse, Lori Calvin, the Jeff Richards today on closing Bell. I hope you'll join me. We'll see what this market does and anybody's guess at this point. But I'll see you at 3:00 Eastern Time for that. Surat, what's your final trade?
- [46:51]
Surat Sethi
Salesforce. I love that stock and I think productivity is going to be there.
- [46:55]
Joe Terranova
Stephen Weiss who's left an indelible mark on everybody today.
- [47:01]
Steve Weiss
Yep. Steve, what do you have? United Help Health Care. I think the stock's bottomed. It's gotten the beat out of it now.
- [47:08]
Joe Terranova
I think it's positioned to someone shows gratuitous. The first time was perfect. Another time we just, you know, like I said, not too serious.
- [47:18]
Scott Wapner
All right. Try not to get too excited about this. In Western Union they report after the close. I think the stock is overly sold off on irrational tears. 9 and change percent yield.
- [47:25]
Jenny Harrington
Great looking chart how that aerospace HWM.
- [47:28]
Joe Terranova
Okay. So holding on to a nice game nonetheless. I'll see you for the final stretch. The exchange begins 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.
- [47:48]
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.
- [48:27]
Joe Terranova
Introducing CNBC plus the new streaming platform from the number one source in business news.
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Jenny Harrington
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Joe Terranova
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Jenny Harrington
Go to cnbc.com stream now.