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Halftime Report
Trading the Turbulence 4/8/25
00:47:21
Scott Wapner and the Investment Committee debate the volatility in the markets as the indices started the day strong but start to give back gains during the hour. Plus, the desk making more moves in their portfolios as the market whipsaws, they share the details. And later, Jenny Harrington out with a new book on dividend investing, she explains how her strategy can work in a volatile market. Investment Committee Disclosures
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Edward Jones
What does it mean to be rich? Maybe it's about measuring life and laugh lines and time. Not by how much you have, but by how often it stands still. At Edward Jones, we believe the key to being rich is knowing what counts. Our dedicated financial advisors provide one on one support, meeting you where you are through all of life's changes. Because what matters most is living a life you love. Let's find your rich together. EDWARD Jones, Member, SIPC.
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Scott Wapner
As America's leading business lender, bank of America is on.
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Josh Brown
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Scott Wapner
With $215 billion in business loans and over 3,700 business specialists across the nation, we help businesses thrive so communities prosper.
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Carrie Firestone
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Scott Wapner
All rights reserved. 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, Sarah, thanks so much. Welcome to the Halftime Report. I'm Scott Wobdor. Front and center this hour, the rebound in stocks, S and P looking for its first positive day in four. We'll discuss and debate these markets with the Invest Investment Committee today. And joining me for the hour, Josh Brown, Jenny Harrington, Carrie Firestone and Jason Snipe. We will show you the markets here. Yep, we have a good day going. We are off the best levels. Yields are up again today. Something to keep an eye on. We had the worst sell off in Treasuries in some two years yesterday. Josh, let's just sort of set kind of the mood of where we are. Obviously, we're looking better. We're still really uncertain on where things are. We know that a lot of damage has already been done by the administration's handling of all this, the way it was all done to the markets, to portfolios, to the economy. Larry Fink says yesterday CEOs are telling him they think we're already in a recession. Goldman Sachs today says we're in a event driven bear market triggered by the tariffs. A point you made before all of this mess in the market happened, that we were already in a bear market because if you looked at all these stocks, you had hundreds of stocks that were down more than 20%. And you know, it still doesn't feel like this market is on any level of solid ground by any stretch.
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Josh Brown
Yeah. And what actually the end of that Goldman quote was that we're in an event driven bear market that could tip into a cyclical bear market, meaning something that's driven more by the economy than just the shock of what we're seeing on the tape. And that's what I'm worried about. So if I were talking to my friend Caleb Silver who runs Investopedia, I would say Caleb put today's bounce into the entry of classic bear market bounce because that's a exactly what you have today. 29 of 30 Dow Jones stocks are advancing, 88% of the S&P, 594% of the FTSE 10 is up, 86% of the stocks and 98% of the Nikkei. So it's around the world. You've got this bear market bounce phenomenon started overseas, continuing here. When you look at the level of technical damage done though, I think you have to conclude, hey, this was warranted. We need to exhale, need to take a little bit of a breath. Not every day should we be down 15, 1700 points in the Dow. But what happens after today? Does anything change? Because if we think we're going into a recession and if Larry Fink is saying the average CEO thinks there's a recession, well, here's what's to come. Number one, earnings season starts at the end of the week. And you know what you're going to hear, maybe not from the banks but everywhere else pulling guidance. That's never good. I've never seen it be the bottom when they pull guidance. So that's the first thing. The second thing, and this is more important, everybody understands this. If it's a recession, earnings typically fall 20 to 30%. That's not in anyone's estimates. Even, even with all of the fear of the last couple of days, that's not where estimates have come down to yet. Plus multiples are 18, multiple on the market still 18, not 17, not 16, not 15. So I worry you're gonna get the earnings guidance yanked, followed by weak earnings next quarter. Not catastrophic, but weak. Plus you have multiple contraction and none of this is over. It's continuing. It's gonna be every single day. I had a beautiful call with this one. This, this one's not doing their job and not helping us. And it's just going to be this constant in the headlines. So that's where I think we are. And if you were hurting last week, if you hadn't done anything defensive or you looked at your portfolio and you were way too aggressive going into this, this is the type of day that Offers you an opportunity to make the necessary changes and you don't have to sell down 7% in the hole on whatever's killing you. So I think that that's the way rational investors should think about this and not anything more.
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Scott Wapner
Kerry, you know, Mike sent only made the point last hour at the very end there that the burden of proof is still high on this market, that, you know, some are going to use this opportunity to Josh's point to, to sell right into it because you still have this level of uncertainty. You have this escalated now. War between trade. War between the US And China. China says it's going to fight to the end. The treasury secretary was on Squawk this morning talking about their escalation being a big mistake. I thought Eunice Yoon made a great point earlier on this network that the lever between the two countries cuts both ways. And look, the fact of the matter is that wrecking your own market and your own economy is an interesting negotiating strategy if somehow you think you're going to get leverage out of that. Josh has talked about that, too.
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Josh Brown
That's just the art of the deal.
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Scott Wapner
Judge, in terms of social media. So what do we do with all this? The burden of proof is still on this market. We have a low bar for upside surprise at this point because we've done so much damage. BlackRock today tactically downgrades US stocks to neutral from overweight. Tactically, not way out long term, but in the near term because they're not naive to what the environment now looks like.
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Jason Snipe
Right. So they're worried. And let's be honest, strategists at Wall street firms generally are late or wrong. But I would say the following. A market is not homogenous, and we can talk about how this market has not hit a low. And I'm sure that's true. But we have thousands of stocks and some of those stocks have gone down 50%. They may have gone down more than 50%. I have a list. I won't hold it up. It's a big list of stocks that are down 30% that we've been watching.
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Scott Wapner
On your shopping list?
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Jason Snipe
Yeah, on the shopping list.
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Scott Wapner
And you don't feel confident enough, like right now to. To that?
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Jason Snipe
No, for some we do. And I know we'll talk about that. And I think it depends. It's not as if we're saying, oh, gosh, the market was down 20%, bear territory, but now we're going to buy. I mean, that's naive to think that this is the end. We don't have Any ideas, Josh, that what is going to happen later today, never mind tomorrow, so let's be careful. But if there have been names that you've been watching and you feel this is a compelling company, this is the job that we do as professionals, this is something that we want to own. We're starting to buy some of those names.
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Scott Wapner
Let's do, let's do it right now. I was going to hold off for a minute, but because you're making this point so strongly, you bought more Amazon, for example. Yeah. Mega caps have gotten obviously crushed even more. So in all of this, Amazon's 28% off of its high.
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Jenny Harrington
Right.
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Scott Wapner
You do have some target cuts today, by the way, for Amazon and some of these other names. But tell me more about this.
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Jason Snipe
Yeah, well, so if tariffs are the big issue, and we understand that if you're selling multiple items, every single one of them is going to face a tariff. But for Amazon, they make their money by the dollar amount that they sell, and that dollar amount may not change, it can continue to go up. It's a different mathematical strategy on how they earn their, their profits. And so 28% down. And we think that they will make the numbers, they will continue to gain market share. And yes, tariffs will hurt. Some of these are unsustainable or they will move the source of production. But this to us was an opportunity and the price at which we felt it was an attractive buy.
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Scott Wapner
Josh, what do you think of that real quick?
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Josh Brown
I like it. I bought some Amazon on Friday. I called in and told you guys, anytime that name is in a 30% drawdown and there's no real fundamental problem with what the company is doing. And it's more of a macro issue. That's where I think you say to yourself, look, I don't need for this to be the absolute lowest price. I just need to feel confident that this is a good price. And regardless of how long it takes, I will be justified in having added to. It's a core position. What I'm not doing is saying, this is it, I'm buying it. Market's going to rally. What is it up today? 900 points on Monday and I'm going to get out. That's not what I'm doing there.
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Scott Wapner
Target did get cut to 220 from 270. Overweight still, though, Jay, at, at JPM, stocks have come down a lot. And you know, you got to believe that at some point people are going to think enough is enough, at least tactically.
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Jenny Harrington
100% and 30% off the 52 week high I think is a, is a significant number. To Josh's point, nothing's really wrong with the business. And you know, the other thing I always focus on is AWS is the largest Kyle player in the business and they have been accelerating growth over the last couple quarters. So I continue to like that. And also operational margins have continued to grow over the last few quarters. So I think the business is really in a solid place.
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Scott Wapner
Jenny, let me ask you this. Do we think that the growing number of influential people within the investing world speaking out is going to have now a real and changing impact? Because, you know, we talked about so many of the people yesterday. You can add Ken Langone to the list as well. He called the number in terms of the percentage of import duties put on Vietnam, bs. I don't understand the formula. He said, I believe the president's been poorly advised by his advisers with this situation and the formula they're applying. Ray Dalio today at cnbc, I agree with the problem. I'm concerned about the solution. And now Ken Griffin speaking out as well. He pointed to the fact that you're going to see prices go up for all sorts of products, bad for the middle class. Even if, quote, now even if the dream of jobs coming back to America plays out. That's a 20 year dream. It's not 20 weeks. It's not two years. It is decades. And we'll get to the whole Musk Navarro battle in a minute. But the idea that if you believe that these influential voices are actually having influence on the president and his team here, what that might mean for the market being more durable in terms of a comeback.
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Kerry Firestone
So I think the interesting thing here is influential for the President, Magnaphone for what everyone's saying and thinking, right? They're not, they're not influencing how investors think. They're not influencing how the American public thinks. They're speaking up on their behalf and everyone's mad. And so the administration, and my guess is all the Republicans in Congress are listening to this and you know what's going to happen a year from now? We're going to be really getting close to midterms. And if we're in this same position in midterms, the Republicans will be hearing this and it'll be amplified even further. And they're going to say, hey, we are at risk of losing the House and the Senate and they need to maintain that. So I think they need to get this ugly market, these horrible feelings that a lot of people are having. And I need to say, like not everyone's having horrible feelings. I sent out a note to clients on Friday about what was going on with the tariffs. And I've always told you I have a very mixed client base from a political perspective. And a lot of people are like, yeah, this is horrible. And a lot of people are like, hey, I'm great with this, you know, short term pain for long term gain. So there is a mixed perspective out there. But if the market's still down 20%, if we're in a bear market, a cyclical bear market, a regular, a tactical bear market, whatever it is, you don't win re election as an incumbent when you're in a cyclical and when you're in a bear market. So sometime between now and this time next year, if the Republicans want to keep control of the House and Senate, the administration is going to need to clean this up and get the market to a lot higher.
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Jason Snipe
I think, I think sooner.
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Kerry Firestone
I think sooner because this is a really important point. Every day that passes, more and more damage is done.
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Scott Wapner
Well, more and more damage is done to, you know, retirement portfolios. More and more damage is done to stocks. And CEOs like Elon Musk get tired of looking at his stock get destroyed in the market because now you have this brawl, if you will, at least verbally, obviously, between Mr. Musk and Peter Navarro. The Washington Post, by the way, says that Musk made direct appeals to Trump over the weekend to reverse the sweeping tariffs. Obviously it's getting spicy. You probably have heard about it to this point, but let's remind you with some actual video and sound watch.
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Kerry Firestone
We all understand in the White House and the American people understand that Elon's a car manufacturer, but he's not a car manufacturer.
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Scott Wapner
He's a car assembler that was on this network. And you know the response by Musk, he didn't take too kindly to that comment because he took to his social media platform, the one he owns called X, and he responded, I think we have these made up for you. Where Musk says Navarro, you can read it for yourself. Navarro, truly a moron. What he says here is demonstrably false. He went on to say that Navarro, Navarro is dumber than a sack of bricks. Just quoting from the posts and social media from Musk about Navarro.
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Josh Brown
Look, I'm not known to come on here and constantly praise Elon Musk, but this is a man who has built a global business, a multinational business. A lot of people have had issues with how he did it, but suffice it to say he made Himself the wealthiest man in the world. And he didn't inherit it, he built it. And to have somebody who effectively was plucked from obscurity because Jared Kushner did an Amazon search to find a China Hawk economist and say that this guy doesn't assemble cars or this guy doesn't know what he's talking about. I mean, it's almost obvious which side most business people would fall on if they had to agree with one side and be against the other. I think there's room to say that the longer the market turmoil goes on, the more of a rift there's going to be between actual business people and theorists. And the actual business people will ultimately win out because it's their actions, the way they run their business, the way they pull back Capex, the way they are forced to lay off employees, like, that's the side that will eventually get the attention of Congress, to Jenny's point, and hopefully get the attention of the White House. It just might be a while. Like, these things don't operate necessarily as quickly as we would like them to.
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Scott Wapner
You know, you, you're forcing companies obviously to make critical decisions that just can't be made in a minute.
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Josh Brown
You know, what ends up happening is paralysis. That's the. So we're not. When I talk about, I'm worried about the earnings picture and I'm telling you what I think is about to happen in this earnings. Earnings season is pulled guidance. Of course they should pull guidance. How could you possibly, with a straight face, talk to 45 sell side analysts on a call and give them any idea of what's going to happen? Now you can do worst case, middle of the road case, best case, maybe that's a helpful exercise. But in the end, like, there is no possible way that you can have any kind of confidence in what the rest of this year is going to look like in, let's call it 9 out of 11s and P sectors. So I think that that's going to be the theme of this earnings season. And I do think this will ultimately get the attention of politicians because it's their constituents who are working at these companies or who own small businesses that cater to these companies. And it's not theoretical, it's not a Twitter debate. This is literally affecting people's real lives. And it's going to get worse, not better, the longer that the rhetoric continues this way.
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Scott Wapner
You've got, you know, CEOs scrambling to figure out what to do in the months ahead when it comes to supply chains and the like. Apple, according to The Wall Street Journal planning to source more iPhones from India as a tariff fix. You know Jason, Apple's lost nearly $640 billion in market cap. Now this was before today, 640 billion in market cap over the past three days alone. That loss in and of itself is bigger than the market caps of 489s and P. 500 companies, yeah, 489 of 500s and P companies, yeah.
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Jenny Harrington
No, it's been a bloodbath obviously with Apple. 90% of their assembly is done in China. Right. So they're, they're widely exposed to the tariff conversation and what's happening at 30% off the 52 week high, just like Amazon, 26 down 26% year to date. And then you hear the news today is obviously they're starting to move some of those iPhones here to the US 200,000 plus phones. You know that's a microcosm of the type of business that they do. So for me I start to look at, you know, not necessarily the Trump put, but if he is able to wave a victory flag on any level, these are the companies that benefit tremendously and there's not a huge hurdle for them to jump over if there is some, some victory flag wave. So that's why I continue to say market weight here and I'm opportunistic on this stock.
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Scott Wapner
Yeah, it reiterated underweight Apple was today at KeyBank. Goldman still has a buy on it though they do cut the price target. Now you've got a stock Josh, trading at 184 thereabouts. You know, now you got price targets around 240 bucks. The ones that are even positive like Goldman which says buy it but we're cutting the price target by $50. You still got a long way up to 240.
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Josh Brown
Now they're going to, this stock is going to get used. So in prior bear markets that aren't caused by trade tensions like this thing acts really defensively and it tends to act really well. And unfortunately I don't think it's can in this particular environment. And I'm telling you this as a long as a shareholder and somebody who doesn't plan to abandon his position anytime soon. But I have to be very honest, I think they're going to use this stock in the public markets as kind of like a, kind of like a call option on the degree to which the trade war is going poorly that day or well it's a, it's a, it's a gambit between, you know, like, like between China and the United States. So like every time there's negative rhetoric coming from China, this is going to be one of the epicenter stocks. And it kind of reminds me of the casino names the last time we had like a tariff war with China, the way that Wynne used to trade and MGM and all these companies that had so much susceptibility to Chinese authorities. I think that's probably overstated in the case of Apple. But this is where they make their phones. This is where this is their second biggest market to sell into. And a really big difference now versus last time is the Chinese phone manufacturers that Apple compete with were nowhere near as powerful as they are today. So it's a really tough situation. I went into this year saying I don't think this is going to be one of the best performing names. And I'm sticking with that call. This is just not where I want to be in this moment. Is just too much headline risk.
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Scott Wapner
Pretty big moves today. Carry in the semis, got Micron up. We mentioned the nice 4% bounce in, in video. You know, the semis, there is belief in some quarters that you're first in, so maybe you're coming first out. Remember, they, they were getting pretty beat up, whereas software was doing okay. Now I wonder if you're having a little bit of a reversal where semis are coming out. I lead you right into another move that you made. Applied Materials. Is that new or an addition?
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Jason Snipe
That's new.
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Scott Wapner
Okay, why this one?
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Jason Snipe
That's new. So we've been watching that for years. This is a name that many years ago we owned in my life at Fidelity, own lots of AMAT and all of the other semicap equipment companies. 47% up, 50% down roughly. And it's selling for 15 times earnings. It was selling for 25 times earnings. And there's also a short squeeze going on with all of the semis and these cap equipment companies because they have been pounded and pounded for months now. So they are primed to have a big reversal. But that's not why we bought it. We bought it because it hit our target. And not only are there semis in everything now which need equipment and aim at it has basically a monopoly and a lot of the products that they sell. But if you think about data centers and how AI needs more chips and needs more production of chips, that also is a big positive.
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Josh Brown
President, the president and CEO of Applied Materials just stepped in and bought almost $7 billion worth of stock. It's his first insider purchase in 10 years.
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Jason Snipe
Yes.
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Kerry Firestone
Can I Say something on this, too. So I think it's so interesting the way Kerry laid it out, because we used to own a map a while ago, too. We sold it when it was at a stretched valuation. As you know better than anyone, this thing's traded at 14, 15 times forever. Like, that's the multiple. And when Kerry said before, the market's not homogenous. This is where you have to have that price target of where you'd buy well in advance. You can't in the moment say, oh, I need to start looking at a mat. If you have that price target and you say, okay, the market's down 20% from its high aim at down. I don't know, what was it, 50% or something. Then if you're, if you're poised and ready to go when this crazy thing gets down back to its historic multiple, you're actually ready to buy it and you can pounce with confidence versus freezing in your tracks.
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Scott Wapner
I think the. I just want to point out to the.
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Kerry Firestone
We might buy it, too, by the way.
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Scott Wapner
You know, the market move Today, you know, 21 and a half minutes into our show, is interesting there. It just goes to the lack of power behind this move. As strong as it looks on your screen. Remember, why don't you guys show an intraday of the either the S and P or the Dow, which will probably give a similar sort of look at how the session has played out. Looks to me like we're almost at the lows of the session.
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Josh Brown
I think it's the earnings thing, Judge.
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Scott Wapner
It's the earnings. And you know what, the Fed is in a really, really tough spot here. Austan Goolsbee from Chicago, the Fed president there, is speaking on public radio in which he has said that tariffs are a negative supply shock. The response is unclear, that the tariffs are way bigger than anticipated. Really echoing what I think everybody, at least outside of the White House, was.
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Josh Brown
Expecting to see, by the way, the timing. Like, all right, so let's say, let's say you want to go against consensus, right? The reciprocal tariffs go on at midnight tonight. So we wake up tomorrow in a new world, effectively. You want to go against consensus. You don't think they'll actually do it? Think they'll pull back at the last minute. You want to play chicken with Donald Trump?
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Kerry Firestone
You know what? I kind of would play chicken.
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Josh Brown
So you should do it.
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Kerry Firestone
I grew up my apple.
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Josh Brown
That's.
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Kerry Firestone
Yeah. No, I mean, I did okay. I'll tell you what I did on Monday. I put a ton of work money to Work for portfolios where they'd come in, they were new and they were sitting on cash and it is a little bit of good time.
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Josh Brown
Good idea.
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Carrie Firestone
Yeah.
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Scott Wapner
What did you do?
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Kerry Firestone
I just put the portfolio to work, Right. So whenever clients come in, I tell them, look, it's going to take me three to six months, months to get invested. If the market's terrible, it'll be faster because I'll pounce on the prices when they're low. If the market's great, it'll be longer. But I grew up in a household where I was threatened constantly. Like I breathed wrong and I was threatened. I would say that explains so much.
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Jason Snipe
I know, I know.
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Kerry Firestone
Listen, if you want to get into my family, three brothers, wild and crazy dad, it explains a lot. But constant threats, of those threats, I'm going to bet you less than 2% were ever made. Good on.
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Scott Wapner
I go back.
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Josh Brown
Sweet. You think there's a high probability that these tariffs, the reciprocal tariffs specifically, do not go on at midnight?
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Kerry Firestone
I think there's a high probability that it's not quite as bad some way or another than we're all expecting.
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Scott Wapner
I go back though, to where I started 23 and a half minutes ago, that to many people the damage has already been done.
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Kerry Firestone
Yes. And to the small businesses, not just portfolios, but the underlying businesses, what was it?
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Scott Wapner
Well, I mean, we're talking like $10 trillion worth of value wiped out of this market.
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Josh Brown
Even though reverberations. We don't even fully understand American brands selling anything overseas. We don't even fully understand, like, it. Like, remember what Kid Rock was able to do to Bud Light last summer that wasn't that long. Like, we don't even know. So that's number one. Think of Disney, think of Apple, think of Nike. We have no idea. That's. Maybe it go, maybe it goes away. That would be great. I'm certainly not rooting for what I'm describing. We also don't understand what the shock waves mean to the US treasury market beyond 24 hours. Saw some huge selling yesterday.
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Scott Wapner
I said the, what did I say? The largest in a number of years, the dollar.
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Josh Brown
We have no idea what this is like. It's almost like the, the bomb went off and then like, all right, we have no idea now what the second order, the third order effects. And maybe they're not as bad as some of the worst case scenarios. That's certainly what I would hope for, but how can we know?
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Jason Snipe
I think they're pretty bad.
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Scott Wapner
So we got to keep a close eye on things as you know, obviously, the markets remain volatile. Nothing like what we witnessed yesterday with the massive swing, almost unprecedented move midday that we had there. Let's get to one more stock just because it's, it's owned on the desk and it is in the news and it is on the move. It is UnitedHealth. You have the Medicare payment rates exceeding expectations. So that stock with the others in that space have been up. Jason, you take it first. You have a full position. Carrie, you have a big position there too. But what do you guys think? Jace first.
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Jenny Harrington
Yeah, no, I think it's, I think it's huge because I'm thinking about the reimbursement rates. We're expected to be 2% and we've got 5% reimbursement rates. So that's, that's significant. Their earnings have been solid here. Obviously, it's, it's positive on the year, you know, and I think this has been, I almost liken it to what happened with Social Security through Covid. You know, inflationary calls for medical costs are going up and they're trying to right size what the reimbursement rate should be. And I think this is a signal to the market that the administration is supporting managed care businesses.
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Jason Snipe
Yeah, well, I would say that UNH went through its own ultra bear market last year. I mean, you haven't seen a stock collapse that's a defensive stock the way this did. Unless it's a real catastrophe and it's been climbing back for the last few months. It's a stock that sells for 14 times next year's earnings. The earnings are coming through now. You got an additional positive. So I think it's, it's just perfect storm on the upside for you and today.
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Scott Wapner
All right, let's do this. Let's, let's squeeze in a break if we could. We do have more committee moves to get to as well. We do have more trades on the banks as well. Earnings are coming up fast. We have a move in the financial space too, to tell you about. Back in two. How will you shape the future of banking with confidence? Industry consolidation, crypto, the rise of fintechs, all create a complex landscape for banks to innovate and grow. EY provides domain LED insights to navigate today's fragmented banking sector. So whether you're tackling regulatory complexities, integrating digital assets, or seizing M and A opportunities, EY sees your business from every angle, working together to deliver outcomes that create strategic value. EY shape the future with confidence.
- [28:35]
Josh Brown
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Scott Wapner
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Josh Brown
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- [28:50]
Carrie Firestone
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- [30:07]
Scott Wapner
All right, we're back. Let's get another move from Kerry. You bought American Express.
- [30:11]
Jason Snipe
Yeah, exactly. So American Express is this topic on for a long time and it's had a great run and then its weekend and once the Stock was down 20% we started to think about where we would buy it again. It back to 13 and a half times next year's earnings, 15 times this year's earnings. Of course the business gets hurt if people stop spending, but they have high end customers. That part of the market is not as susceptible to the type of regressive type price increases we're going to see with tariffs. And we think that people are going to continue to travel perhaps less. But still at this price we discount a lot of negative news and decided to add to the position.
- [30:51]
Scott Wapner
I mean you do have, you know, the market getting crushed isn't exactly good for anybody at any level of wealth.
- [30:57]
Jason Snipe
Of course.
- [30:58]
Scott Wapner
Right. I mean, you know, you're not factoring. That's part of the issue as well with you know, cratering the economy and the stock market. Yeah, theoretically. Get to a place you think you can get to.
- [31:12]
Jason Snipe
I understand, but think about it, Covid. Right. The low, the low of COVID when the market was down, 32% was essentially before anybody had died yet. I mean, not to be morbid, but the market began to go up when the world started to fall apart and.
- [31:29]
Scott Wapner
Shut down because it probably sensed that the Fed bazooka and three bazooka's worth of fiscal stimulus was coming from the government. Neither are coming to the rescue this time.
- [31:41]
Jason Snipe
I understand that. But again, you look at stock by stock and there are opportunities that we felt at these prices. It's not as if we added 4%.
- [31:50]
Scott Wapner
Oh sure. No, I hear you, I hear you and I know how you invest. You're not looking for some dramatic outcome next week. I got you.
- [32:00]
Kerry Firestone
Can I just throw an interesting stat on that? So I heard last night from JP Morgan, they said for the low end consumer, 98% of their disposable income is spent. For the high end consumer, 13% is spent. So even if there's massive destruction in their portfolios, that 13% is so little they could just go to like 13 or 14 or 15% of discretionary income, continue to spend at the same levels. And that's why there's such an enormous difference between a Discover and an American Express. I think American Express has an enormous level of insulation from a worst.
- [32:31]
Josh Brown
So, so it's also why the outcome of this, however long it lasts, is going to be the wealthiest 10% end up with even more wealth.
- [32:39]
Kerry Firestone
Right.
- [32:39]
Josh Brown
Which, because they will be adding to their portfolios of assets, whether it's real estate or, or equities or bonds, which will, when they do recover.
- [32:49]
Eamon Javers
Right.
- [32:49]
Josh Brown
You'll, you'll see even more disproportionate. No offense to anyone who doesn't believe this, but this is only the way it's always happened after every recession in history. Let me, so let me, this won't be no different.
- [32:59]
Scott Wapner
What about, you know, Josh, the, the outlook for bank earnings which are starting as we said this week, for your, you know, stock you've owned a long time, J.P. morgan. Let me just remind people to the alternative asset managers, their stocks haven't traded well at all. The Apollo CEO Mark Robert Cohen is going to be on squawk tomorrow morning at 8:30am and I don't want you to miss that because again, this, this was somebody who was said to be in the mix for a potential cabinet role as well. So I can bet you that he's going to have some interesting things to say tomorrow morning regarding the current situation and what he thinks needs to happen. But you'll have to watch for yourself. And find that out, please. Back to you. My, my bad.
- [33:37]
Josh Brown
Yeah. Financials are having one of the biggest bounces today of all the sectors right up there with technology, which I think makes sense. These companies, thank God, are going into, you know, whatever's to come with this economy, they're going into it in better shape than they've ever gone into economic turbulence before. From a balance sheet perspective, from an earnings perspective, and I think from a risk management perspective, I just don't see the publicly traded bank stocks as being at the epicenter of what's causing this situation. It's a very different bank sector than we've had going into prior recessions, and they're also washed out. The average RSI within the S&P financials is 33. So these stocks are almost 201, extraordinarily oversold. But here's what you're going to hear later this week and early next week when the majors report. I think they're going to have to raise their reserves nerves. And what that, what that does is it comes directly out of the profits that would otherwise be dropped to the bottom line. And this is just the way it goes. And I think it's a wise decision if that's what they end up doing. Jamie Dimon was notably fairly muted in his shareholder letter, which came out two days ago, was actually kind of yesterday. He was actually kind of surprised that he didn't have more to say on the subject of tariffs. But maybe that's what, what comes out during the conference call, we'll see. But in the end, I think what the banks have to be thinking now is, okay, do we have enough reserves? We're looking at spreads blowing out a little bit. We're hearing about stresses all over the economy. What do we need to do here? And that's not great for shareholders, quite frankly. It's just not. Never has been.
- [35:16]
Scott Wapner
Let's. We'll take a break and Jenny, you get ready, okay?
- [35:19]
Kerry Firestone
Okay.
- [35:20]
Scott Wapner
Because Jenny has another new buy and Jenny has a new book, and it's about dividend investing. What else? Something near and dear to many of you. We'll talk about both next.
- [35:42]
Josh Brown
Let's say your small business has a problem. Like maybe one of your doggie daycare customers had an accident. You might say something like, doggone it.
- [35:53]
Kerry Firestone
Hey, Chihuahua.
- [35:55]
Scott Wapner
Holy schnauzers.
- [35:56]
Josh Brown
But if you need someone who can actually help, just say, like a good.
- [36:00]
Scott Wapner
Neighbor State Farm is there and get.
- [36:02]
Josh Brown
Help filing a claim from your local State Farm agent for your small business insurance needs. Like a good neighbor State Farm is there.
- [36:11]
Scott Wapner
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 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 credit card based on the February 2024 Nelson report. Welcome back. Okay, let's talk about Jenny's new buy. RHP is Ryman Hospitality Partners. Tell me more. You bought it.
- [36:53]
Kerry Firestone
Okay. So oddly, this is exactly like your aim at buy. We used to own this. We sold it a long time ago. I looked at it again about maybe six months ago. Fantastic company. And I said, by the way, six months ago, I said if this happens to reach 92, just buy it. Right? Everything's there. No matter what, what the market's doing. The only way it would reach 92 would not be on its own merits. It would be on a market dislocation. So here's what they are. They own.
- [37:16]
Josh Brown
It's the Grand Ole Opry.
- [37:17]
Kerry Firestone
Yes.
- [37:17]
Josh Brown
Oh, I love it.
- [37:18]
Scott Wapner
Thank you.
- [37:18]
Kerry Firestone
And the Ryman Auditorium. It's Fantastic. They own 5 of the 10 largest non gaming conference centers. So they own the national in D.C. the palms in Florida, Opryland in Nashville. And they've gotten beaten up because they're mushed in with Hotel REITs. And they're very different. They have, like I said, non gaming conference centers. So huge companies book out their corporate, with their corporate conferences. They book them out two to five years in advance. If you cancel, you're in trouble. Trading right now with a 5 1/2% yield, really consistent earnings growth ahead of it. And you can look at a company like this, you don't want to look at the pandemic that was too weird. But you can go back to the great financial crisis and say, all right, when there was a deep and sustained recession, a global depression, how they fare? And they fared okay. And you can stress tested and say would they still be able to pay the dividend if we went through a scenario like that again? And the answer is yes. So sometimes you get to buy something really great in these markets, even though I think we all agree the market probably hasn't bottomed. This stock I think is really compelling right here. And you know what, it's already down 30, 35% from its high. It's down another 5 or 6 or 10%. And I'm wrong and I didn't nail the bottom. I'm okay with that. This is a company I want to be investing in. It'll produce the income my clients expect me to. You want to go?
- [38:36]
Josh Brown
Well, I wanted to ask you, have you ever seen Jason Isbell live from the Ryman?
- [38:40]
Kerry Firestone
No.
- [38:40]
Josh Brown
That's the move for due diligence purposes alone, when I should give you free tickets, book your flight.
- [38:48]
Kerry Firestone
Okay, good idea.
- [38:49]
Scott Wapner
So let's talk about this book.
- [38:51]
Carrie Firestone
Yeah.
- [38:51]
Scott Wapner
Dividend Investing Dependable Income to navigate all market Environments. Well, sure need it now. Some are thinking, tell me more. What am I going to learn from reading this book?
- [39:03]
Kerry Firestone
So I tried to write a book that was going to be actually very useful for people where they could read it and whether you're a dividend investor or not, you could learn about investment behavior. You could learn how to construct a portfolio, how to research stocks. The whole second section is actually a research process. The whole third section is toggles between stories of investments that I've made that have worked and investments that I've made that haven't worked. And they talk between that also with client stories and say, here, this is how this client set up their portfolio. This is how another client came to it. Here's a story on real estate investing that worked and didn't work and then why they decided to switch to equity investing. So I think it's useful. It'll give you something to think solidly about how to create a portfolio in.
- [39:47]
Josh Brown
Who's going to play you in the movie? Can I say Jessica Chastain?
- [39:52]
Kerry Firestone
That's very sweet of you. You're very, very generous.
- [39:55]
Josh Brown
Kevin, can you make some calls?
- [39:57]
Kerry Firestone
Yeah, I don't think. I don't think anyone's going to make a move.
- [39:59]
Josh Brown
I have a copy of this. I have a copy of this book. I already started going through it. You and I are going to talk about it later this week. I'm super excited for you. Congratulations.
- [40:06]
Kerry Firestone
Thank you.
- [40:07]
Scott Wapner
So your top three dividend income picks, Kinder Morgan is Kinder Morgan, Verizon and Bristol Myers. Yeah, just quickly about those. We sure.
- [40:15]
Kerry Firestone
Kinder Morgan, four and a half percent yield. Bristol, four and a half. Also. Sorry, what was the third one that I gave you because I. Verizon. Verizon. Sorry, I thought I gave you ConAgra. Verizon, six and a half percent yield. What's interesting on these is you can look at where the revenues are coming from. And in the case of Verizon and kinder, you have 100% revenues coming from the U.S. so you're out of the tariff fiasco. Bristol, you have 71%. But on Bristol, we know health care is being excluded. You can look at kinder and Verizon and say where? Like where are their cost of goods coming from? On kinder, maybe some steel, right. Verizon, maybe some iPhone costs. But there's enormous economic sense insensitivity here and there's relative to the broader market, tariff insensitivity. And that's why I thought they'd make really good kind of top picks for right now. So they've paid their dividends for Verizon 40 years, kinder 14 years. Years. Bristol 92 years. They've paid their dividend. Bristol's earnings look terrible, but they produce 10 billion plus of free cash flow for the next three years. So they can essentially buy their way to growth. It's nice because this goes a lot to the book. When you're buying dividend income stocks in an uncertain period like now, some portion of your return is certain. When you're buying a growth stock, which works great too, but different strategies, 100% of your return is uncertain, you might get a bigger return. But on dividend stocks, some portion is.
- [41:35]
Scott Wapner
Certain and all, all profits to the Council for Economic Education where I'm on the board.
- [41:42]
Kerry Firestone
Very proud of it.
- [41:43]
Scott Wapner
Congratulations on the book. Thank you for educating us and our viewers on dividend investing. We will take a quick break. Mike Santelli will be on the other side. First though, the headlines from Pippa Stevens. Hi, Pippa.
- [41:53]
Pippa Stevens
Hey, Scott. The Supreme Court just moments ago pausing the reinstatement of thousands, thousands of fired federal employees. The top court put on hold a lower court ruling requiring six federal agencies to reinstate the probationary workers who were fired as part of President Trump's effort to reduce the federal workforce. The stay is in place while litigation continues. Elon Musk's Doge team is reportedly using AI to monitor communications among federal workers that are hostile towards President Trump or his agenda. Reuters reporting the team is, quote, heavily using Musk's ChatGPT rival Grok AI to monitor communication tools, including Microsoft Teams, and communicating with each other through the Signal app, which could violate federal record keeping rules. The White House and Doge team did not respond for comment. And in a London courtroom today, lawyers for Prince Harry said he was treated unfairly when he was stripped of his British security detail in 2020 after stepping down as a working member of the royal family. He's appealing that decision, saying the government didn't follow its own rules when cutting the protection. Halftime report. Will be back right after this.
- [43:04]
Scott Wapner
CNBC News Update is sponsored by Morgan Stanley, where old school hard work means bold new thinking. Welcome back. Market picture certainly not as strong as it was at the outset today. Perhaps Eamon Javers has some news for us from the White House to help us understand what's exactly happening.
- [43:43]
Eamon Javers
EAMON yes, Scott, that's right. There's an inaccurate report that appears to be floating around the market. The inaccurate report suggests that Caroline Levitt, the White House press secretary, had said that the China tariffs go into effect or went into effect today at noon. That is inaccurate. I just spoke to Caroline Levitt in her office just a couple seconds ago. She says that all of the China tariffs are scheduled to go into effect tonight at midnight and any reporting that that happened at noon is not correct. She is working to clear that up inside the building and I'm here to bring it to you. So wherever that report was coming from, not accurate tariffs go into place, as was the schedule tonight at midnight.
- [44:24]
Scott Wapner
SCOTT yeah, as was scheduled. Those are the really important words, as was scheduled, Right, right. Yeah. So no changes, some development between now and then.
- [44:32]
Eamon Javers
Obviously, I mean, anything can happen, right? SCOTT but no indication of any change here from the White House. Caroline Levitt says she may have been misquoted or this might have been misreported and attributed to her, but she has not said that. And she said to me directly that these tariffs are still going into effect tonight at midnight. She's going to be briefing here at the White House at 1pm so we might hear more from her on camera on that.
- [44:55]
Scott Wapner
Thanks for clearing it up. Very much so, Eamonna but yet again, you see how jittery the market is for headlines that, you know, either up or down, guys, there's no denying the fact that the market is still around the lows of the day. Apple is red. Tesla was red. As that as Eamonn was talking about, erroneous report was going through the market for a moment. Tesla's back green. But some of the chip names, names amd, which was green, is now red. Some of the chip names were a little volatile in those moments too, but just welcome to the world that we're.
- [45:35]
Josh Brown
All we put up Ford and Ford and GM red all day. This is one of the biggest bounces we've seen since this whole nightmare started.
- [45:42]
Scott Wapner
Those guys are red.
- [45:43]
Josh Brown
Stocks cannot attract buyers. It's incredible.
- [45:46]
Scott Wapner
Nike, Las Vegas, Sands. We're talking about stocks with maybe the most acute kind of exposure. I'm thinking Starbucks. Your Starbucks. Where's that on the list we can throw that I got so many stocks in front of me I can't even find it right, right in this moment. But nonetheless you get the point. It's still green. Anything with like, you know, big time exposure in that part of the world on this kind of a headline which our Eamon Javers in his own reporting has shot down and suggested that what he was told or said what he was told directly from the press secretary at the White House is that the tariffs on China 104% now because remember they were raised go into effect as scheduled at midnight tonight. Barring something that that happens. We'll be right back. Well, welcome to another day of swings. That's the current market picture here again after a really strong start, an erroneous headline clarification and just on the ground reporting from our own amen jabbers. And here's what you have at the current moment. The Russell's now negative by a couple of points. It's a marginal move to say the least. But you're pretty much at the lows of the day off of where we started which was such a strong bounce back right out of the gates today. So we'll keep watching that. I want to bring some more stocks to your attention too, if I could. Netflix named the new top pick at Morgan Stanley replaces Disney the target 1150 bucks. Jason, you own Netflix?
- [47:29]
Jenny Harrington
Yeah, I mean Netflix has been a great stock. Immense into all the carnage obviously that we've seen. You know when I look at the last quarter which they added a double on EPS on 16% revenue growth, they continue to focus on profitability which has been very positive for the stock. And then when I think about just potentially the, the break in the consumer there is optionality now with ad supported tier. Their foray into live sports I think has been uniquely positive. So I continue to really like this stock in this environment.
- [48:01]
Scott Wapner
You have a thought here?
- [48:01]
Josh Brown
Yeah, I totally agree with what Jason is saying and this name is in the communications sector. But the truth is it's consumer staple. I defy you to find somebody in the middle class or above who would ever cancel their Netflix. Almost no matter how bad things get. Netflix you would hold even through unemployment. Honestly, like I think it's, it's super defensive. Yeah, super profitable now relative to the way streaming used to be making money around the world. You've got geographic diversification there as well. No tariffs whatsoever on film production. Until I hear otherwise, I would assume that that won't happen. I should have said it out loud. I don't want to give anyone any ideas, Peter. Forget I said that. But I think this is the type of name that investors who have to be fully invested portfolio managers, they will gravitate toward this because of the defensive character characteristics.
- [48:54]
Scott Wapner
Otis worldwide and 3M mentioned as core defensives to own today at Wells Fargo.
- [49:00]
Josh Brown
Happen to own them both.
- [49:01]
Scott Wapner
You own both and Otis is the one of your most recent buys.
- [49:04]
Josh Brown
Yeah, I think the analyst heard me on TV last week talking about Otis because it can't be a coincidence, right? No. Nobody ever talks about this company's tiny market cap.
- [49:12]
Scott Wapner
You just get in the elevator, you go up, you go down, you don't think twice.
- [49:15]
Josh Brown
Yeah, you just get in the elevator. We cancel the elevator. So this is the thing about Otis that people don't understand. They look at it and they say, oh, no, this company must be so reliant on steel or they must be so reliant on selling elevators. It's a services business. The maintenance contracts which cannot be canceled, 87% of the company's net income. That's why I think this is defensive.
- [49:37]
Scott Wapner
All right, we'll take a quickie. We'll come back with finals. All right, we'll see a closing bell, 3:00 Eastern Time today. Aswat the motor is going to be on. He's going to talk about out the valuation now, this market. Ellen Zentner will be with me, Alicia Levine as well, and Goldman Sachs is Sun Cho. So I hope you'll join me. Let's do finals. What you got?
- [49:58]
Jenny Harrington
Palo Alto. Stay long.
- [49:59]
Scott Wapner
Thank you, Carrie.
- [50:01]
Jason Snipe
Microsoft new safe haven like Apple was for years.
- [50:04]
Scott Wapner
Jenny with the book.
- [50:06]
Kerry Firestone
Dominion 5.3% yield. Regional utility, 100% earnings coming from us.
- [50:11]
Scott Wapner
All right, Josh, I think.
- [50:12]
Josh Brown
I think Netflix will work. You can hide there.
- [50:15]
Scott Wapner
All right, I'll see you for the last stretch of trading on the closing bell. You've been listening to CNBC's Halftime Report, the podcast. You can always catch us live weekdays at 12 Eastern only on CNBC.
- [50:30]
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.com halftime reportdisclaimer the last.
- [51:10]
Scott Wapner
Thing you want to hear when you need your auto insurance most is a.
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Josh Brown
Robot with countless irrelevant menu options.
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Scott Wapner
Which is why with USAA Auto Insurance, you'll get great service that is easy.
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Josh Brown
And reliable, all at the touch of a button.
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Scott Wapner
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