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Halftime Report
Trading Trump’s Tariff Wars 3/27/25
00:44:03
Scott Wapner and the Investment Committee debate the latest tariff news and what it means to the market and your money. Plus, the desk discusses financials as Jefferies falls after releasing negative guidance. And later, Josh Brown says Zscaler is on the verge of a breakout, it’s one of the stocks he has on his “Best Stocks in the Market” list. Investment Committee Disclosures
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- [00:00]
Multicare Representative
Our state has changed a lot in the last 140 years. We know because Multicare has been here guided by a single making our communities healthier. That comes from making courageous decisions, partnering with local communities to grow programs and services, and expanding healthcare access to those who need it most. Together, we're building a healthier future. Learn more@mycare.org with the Venmo Debit card, you can turn the spa day that your friends paid you back for into concert tickets that you can earn up to 5% cash back on, where a spa day with the girls becomes concert tickets. Visit Venmo Me Debit to learn more. The Venmo MasterCard is issued by the Bancorp Bank N.A. pursuant to license by MasterCard International, Inc. Term Supply Dosh Cashback Term Supply.
- [01:01]
Scott Wapner
I'm Scott Wapner and you're listening to CNBC's Halftime Report, the podcast the most profitable hour of the trading day. We record this live weekdays at 12 Eastern. Listen in. Carl, thanks so much. Welcome to the Halftime Report of Scott Wapner. Front and center this hour, the markets once again assessing the latest tariff news. We will trade it with the investment committee. We'll talk about that highly anticipated IPO as well. Joining me for the hour, Josh Brown, Shannon coach Jim Bleventhal. We're all post nine where we are still, Josh, digesting those new auto tariffs. The president says they're going to be permanent, Dan. I've says it's like a hurricane. A hurricane like headwind, you know, Ford, GM, obviously they're down April 2nd, still looming. What to do with the markets? Well, Barclays isn't waiting around and I want your reaction to this. They say the markets are under pricing trade risks. They say switch preference to fixed income over equities. Boy, that's a far cry from how we felt just January 20th.
- [02:02]
Josh Brown
Yeah. So I think a lot of people have already started to price in this trade war a really long time ago. Nobody woke up this morning and said, wait, what? There are tariffs. So I don't know what that is. I don't know. Maybe they're talking to like ultra tactical hedge funds or something like. But that doesn't sound like it's an investment commentary. I want to start my commentary today, though, by giving some credit to Jim because Jim did something that's really hard to do in the investment business. He's long gm. He held it for a really long time. And then before this tariff stuff went from fantasy to reality, he came on the show and said, I'm at a GM and the other version of that would be somebody doubling down, tripling down, coming up with reasons for why everyone's wrong and they're right. It was really impressive to watch him do that in real time. I think we were here the day he did it.
- [02:54]
Scott Wapner
We were and we, you know, we, we pressed him on it, that it was just a mere headline at that.
- [03:00]
Josh Brown
Point, but it was, he did the.
- [03:01]
Scott Wapner
Right thing and it was enough.
- [03:03]
Josh Brown
And here's the thing, risk is so asymmetric or something like this because he also has another risk which is he blows out of gm. The tariff things turns out to be no big deal. And then his clients are like, why do we sell GM five sticks in the hole? Like, well what were we doing? We could have just held it. It pays a dividend. Mary Barr is still wearing leather jackets. It's like, it's all right, fine, so he did it, he made the right trade. And now here's the aftermath for the people who didn't, quote, unquote make the right trade. There are 14 publicly traded companies in the auto manufacturer industry classification group. Between the New York Stock Exchange and the nasdaq, it is Texas Chainsaw Massacre. Median year to date return for these stocks is negative 7, which doesn't sound terrible, but over the past week it's negative four. They are all selling off. Even the best name in the group, which is Ferrari, ticker symbol is race, is 17% below its 52 week highs. Stellantis is 60% below 52 week highs. I don't think you understand how much damage that is to one of the bigger automakers. There are five companies in this category that are significantly below every moving average and that list is growing. Revision Tesla lucid for GM and now understand the fundamentals because usually when you have stock sell off like this, you can lean back on the fundamentals and you could say, you know what, I'm a buyer, I think this is overdone. You can't say that here. Out of those 14 auto manufacturer names Judge five of them are not even profitable on a net income basis. And the most profitable again, Ferrari and Toyota TM are not down enough to be able to say this is wildly overdone. So I think the pain continues and I know that there's this predilection to buy dips, look for V shaped recoveries. Yes, we've had a history of that over the last five years. I don't think that's going to be the result here. I'm sorry. If you get an opportunity because Trump speaks out of the other side of his mouth. And these stocks catch a plus six plus seven percent relief rally. I would use it.
- [05:11]
Scott Wapner
What do you think about all of that?
- [05:14]
Jim Cramer
Well, first off, thank you, Josh. I do appreciate that. And I think, look, I'm looking at General Motors every darn day. All three of you and everybody who watches know I really like the company. I like the products. I think the management, Mary Barra, Paul Jacobson, the CFO are fantastic. They can't get out of the way of this. I can't conjure up, you know, I can't come up with the reasons. Josh, as you know, that was a phrase you used. I can't come up with the reasons to be positive here. You know, maybe Trump reverses this, but maybe he doesn't. There's a lot of other stocks that are down as well having nothing to do with General Motors where I can come up with positive reasons. And we'll talk about that if we.
- [05:49]
Scott Wapner
Take that a step forward and say if you can't be positive on any of these or the related names as a result of, of not just the tariffs towards the autos, but the overall environment and the, you know, the back and others have termed to be the chaos around all of this, how can you have a positive bias towards the market right now? Which goes back to my first question.
- [06:15]
Jim Cramer
Yeah.
- [06:16]
Scott Wapner
About the note that says, you know, what equities us. Nah, not right now.
- [06:21]
Jim Cramer
Hey, hey, Scott. I mean, you're making the right point or asking the right question. I can't sit here with great confidence and say that my position right now, which is to be fully invested, is going to work out. It depends on this chaos. I'll use your word. It's fine. This policy.
- [06:39]
Scott Wapner
I mean, it's not my word. It's the word that is in many notes.
- [06:43]
Jim Cramer
Yeah, I'll use it. All right. It is policy chaos. I mean, one day, literally this week, we're saying, okay, we're going to be flexible on tariffs, we're going to be lenient. The next day we're saying we're going to do across the board. I mean, it changes that fast. What my hope is, and everybody in investing hates using the word hope, okay? But that's where we are. My Hope is that April 2nd gives some degree of finality. I'm not so stupid and naive as to think it will be total finality. But if we get some finality on tariffs and then we get into earnings season and companies can say, we think we have an idea of what the picture is and we think we know how to move forward on it. Look, I'm staying invested because I do see valuations being attractive. I do as a 56 year old man believe that optimism works over time, that Americans and corporations move forward. But we need some finality, some degree of finality on tariffs.
- [07:37]
Scott Wapner
Where is the.
- [07:38]
Josh Brown
Well, he said permanent.
- [07:40]
Scott Wapner
Where is the.
- [07:42]
Jim Cramer
He said that yesterday.
- [07:43]
Josh Brown
Yeah.
- [07:43]
Scott Wapner
Where's the uncertainty, the reflection of what the sentiment change is most. I don't know. Gold, new record, high throw. You could throw gold. I mean it's still hot. You know, it's been going up past 3,000 which is an all time record. Yields are up too. And that is a story to keep an eye on. It's been almost a stealth backup in yields as the Treasury Secretary has repeatedly talked about. Almost their number one, number one initiative, keep the 10 year yield down 440 almost. We don't want to be having that conversation again about a backup in yield. Shan Citi says that the 10% increase in tariff for April 2 equals a 5 to 6% hit to earnings. And that at the end of the day is the decider of what you're willing to pay for a stock.
- [08:36]
Shannon Saccocia
Yeah, and I think, I think all of the points that have been made thus far are good points. But you know, Scott, I think our view is predicated on two things. Number one, we do not believe that we're going to get the top end of that tariff range which would result in the type of EPS deterioration that you just cited. Number two, our view is that in the second half of this year, focus of the Trump administration is going to switch to Congress and taxes and those things are likely to create a more steadying force. Our view on tariffs is that we will have increased tariffs, but they are going to be more specific, more prescriptive and more clear in terms of the concessions that the Trump administration is looking for as we move into May and June. So if that is your view and you had, you know, Mike Mayo was on with you a couple of days ago, he made a great point about deregulation because we've stopped talking about that. Right. Expectations for deregulation were really strong going into this year. We thought we were going to get this, this immediate transmission of all of this pro business sentiment. That is where we are in that in this short term we feel very uncertain about the path. But our view is that this will be softer and that we will go back in the second half of this year to really focusing on China, which, Scott, I believe that companies have mitigated that over the. Over the course of last eight years.
- [09:59]
Scott Wapner
Josh, earnings expectations estimates are already coming down. January 1st, you're looking for 12.2% earnings growth. Today you are below 8.7.7. As you see on your screen, S and P Global Ratings says there is now a 25% chance of recession within the next 12 months. Remember Gundlach telling me 50 to 60% was his number? Soc Gen done today. We could already be in a new bear market. They say that the recent rally from the March 13th, 5500 low to just back above the 200 day may prove to be only a technical rally just from oversold levels.
- [10:35]
Josh Brown
I call this a bear market. Two weeks ago, possibly prematurely, but I was talking with the median stock in the s and P500 being in a 19% drawdown. I'm not one of these people that sits at the magnifying glass and needs it to be exactly negative 20 to, like, make it official and wear the sash. That's not what I do. I would just tell you this is a bear market. If you look at your portfolio and you look at your individual stock holdings and even a lot of your ETFs, that's what we're in right now. And I don't think it's over. And I think it's okay for it not to be over. I would point out the last bout that we had with the global trade war in 2018, we were negative 18% through the end of February. And that felt really bad. Probably felt as bad as this does. Then we had another one that culminated with the Fed changing its mind on Christmas Eve at the end of December. But from September into December, that same year, 2018, we did this all over again. We recovered from the tariff concerns, and then they came roaring right back. And the Fed was scaring us. It's a little bit of a different backdrop this time, but I want to address that. That mini backup in yields that you cited, Scott, because that's tied in with the tariff stuff and the trade war stuff. I'll give you an example. The Wall Street Journal wrote up, wrote this up over the weekend. You take a BMW 3 Series, okay, making these in Mexico. BMW spent a billion dollars on a plant in Mexico that they opened in 2019. So it's really hard to just say, all right, forget it. Close the plant. Okay? So they make the three series there. To bring that back into the country. They used to pay a 2.5% tariff. No big deal. Nobody noticed. It's a BMW now, 25% what they're saying whatever the number is, 27%. Okay, so now you're talking about 25 on top of the 2.5. That takes a sticker price on a base model BMW 3 Series from 47,000 to closer to $60,000. And people say, well, you're in Spartanburg, South Carolina. Just move the production there. MAGA no, they're making the SUVs there. They don't have the capacity to do that. That's one story of one auto manufacturer, one specific line. But it's a microcosm of what now has to get priced into the stock market and not only into the stock market but into consumer expectation. BMW said we'll eat it. We're not going to raise the cost on our dealers will eat it until May 1st. Tell me what happens on May 2nd. They're going to keep eating it. They're going to lose another billion dollars on this for two months. So this is the chaos that you reference and this is why you're getting that back up in rates because this is the inflation story writ large. If that's the repricing that has to happen on a lot of things we buy here.
- [13:18]
Scott Wapner
So if it is the nascent stages or whatever, however you want to characterize it, of a nascent new bear market, the kind of which Josh and Socjin are talking about, what gets us out of that? One of the reasons it's been hard to do anything is because there are serious questions about tech, right? Does tech hold the key? Does tech hold the key to the whole thing, the whole story?
- [13:42]
Josh Brown
Consumers hold the key. For me, 70% of the economy is consumer. Sure, but tech does not hold the key.
- [13:48]
Scott Wapner
But, but for the market, right. The consumer is not necessarily necessarily the most tied thing to the stock market. If you say the performance of large cap tech, that probably is in terms of the near term direction of stocks, you have to get these stocks working again, as long as you have all these questions out there, don't you?
- [14:07]
Shannon Saccocia
Well, I think that why you've needed them to work over the last couple of years is the concentration that's been built up because of an absence of growth in other parts of the economy. And if you don't get, you need to have the broadening out of this market is necessary in order for us to create an environment of success for the stock market in the second half of the year. Scott, I'm not, I'm not arguing with you that tech is important from a concentration perspective. But we, I don't think, we don't think that you can have another year where tech is the arbiter or the barometer of stock market progress because it's, you know, it's tired. You know, you need to see cap x industrial impulse hiring out of other parts of the economy in order to create an opportunity for the stock market to succeed in the second half of this year. It can't be these seven stocks. Again, not.
- [14:57]
Jim Cramer
Let me take what you're saying and Josh, what you said, just let me take the other side of why we might be positive here. I mean look at energy stocks, look at financials. I mean these are stocks that are tied to economic growth and they're doing very well.
- [15:08]
Scott Wapner
Energy is not doing well based on economic growth. It's not.
- [15:13]
Jim Cramer
That's actually not my point. My point is that if we're in a bear market and if we're worried about a recession, which generally goes hand in glove with a bear market, you don't see energy stocks outperform.
- [15:24]
Josh Brown
You just don't see copper making new highs, which it is exactly that. I don't think you have to have a recession to have a bear market. I just. In 2018, we do not have a recession. 22, 2022, no recession. I think we're in a bear market right now. Based on the. It's just, just on math, not feelings. Not just purely on math. The median stock is in its own individual bear market. We're very fortunate that we still have these tent pole tech companies, ex Tesla and Nvidia that are hanging in there. They look much better than that. We're also very fortunate that health care stocks have caught a bit this year. Well, but the thing is they're not big enough enough to do it on their own. Consumer discretionary actually looks worse than tech.
- [16:07]
Jim Cramer
The biggest, that's Tesla.
- [16:09]
Josh Brown
But I'm just making the point. You look at, look at these names and listen to the commentary.
- [16:13]
Scott Wapner
It's not.
- [16:13]
Josh Brown
Just listen to the commentary coming from the CEO's last time. You think it's going to get better in April?
- [16:18]
Jim Cramer
Listen to what they told us on that. I agree. And that's why I really would like to see some finality on April 2, if not before.
- [16:26]
Josh Brown
I don't know why you think you're going to get that.
- [16:28]
Jim Cramer
I hear you, Josh. I mean, I'm saying what I'd like. I'd also like a pony.
- [16:31]
Scott Wapner
Josh's point. Sorry. Tesla's 43% off of its high. Nvidia's 25%, Alphabet's 19 Meta 17, Microsoft 16. Amazon out of the discretionary. So Amazon's hurt. A lot of the retailers have hurt. Some of the, you know, more travel related names have hurt. Apple's been down 14%. New questions about that, that has hurt. Part of my point here is you cannot have the AI trade fall apart and you're probably going to get a pretty darn good sentiment barometer related to the Core Weave ipo, which comes tomorrow. We get more details tonight after the bell, pricing, size, but there are already some speculative, you know, reports out there about what might happen. Leslie Picker is following the money for us here and it feels like the money might be changing, the dynamic might be changing even as we have this conversation here. Less.
- [17:26]
Multicare Representative
Oh, it's changing very rapidly. Scott. I've been speaking with sources close to this one all morning. It sounds like final, final decisions around the deal have not yet been made. Basically we haven't seen this refiling of an S1 that indicates a downsized offering. But there have been conversations with investors about a potentially smaller deal here, the $40 per share number that's out there as it pertains to Nvidia's willingness to anchor the offering with a 250, $250 million order at that price. That's according to a person familiar with the matter who I spoke with earlier this morning. Nvidia already owns 6% of Core Weave, which would have been diluted down to 5% after this offering. There's also a call scheduled after the market closed to determine the official, official price tag. But at $40, Core Weave would be pricing 15% below the marketed range. The company and some of its selling shareholders are Planning to offer 49 million shares according to the S1, although that number could be reduced, of course, if there isn't enough demand. Core Weave provides software and cloud services to manage AI infrastructure. IBM met a Microsoft, Nvidia and OpenAI use core weaves technology. And while its revenue has skyrocketed from just $16 million to $2 billion from 2022 over the past two or three years, its losses have widened. Some analysts have suggested that creative accounting has led the company to to showcase higher gross margins than they actually enjoy. And of course we've got just this whole backdrop of market volatility, concerns around the supply chain, concerns around data data centers. As we saw from Josiah earlier in the week, none of that is good news for a company that's marketing itself in this world while it's on the road. Scott?
- [19:09]
Josh Brown
Hey Leslie, I just, you know, when you think about red flag flags in a large, this is Going to be the biggest IPO of the year. Unless I guess Space X or Stripe come out of nowhere and decide its time. So when you look at the largest IPO of the year and, and the first thing you're hearing the day they're going to price is downsize. Yeah, the size of it. So Red Flag 1, Red Flag 2, their number two customers in video and Nvidia gets a ton of their revenue by selling GPUs to them. So it's a related party transaction on steroids. And now we're hearing that we need in video to take down even more equity size in the deal. Again, not great. $10 billion in debt, negative. $6 billion in free cash flow, negative $900 million in net income. Microsoft articles on Bloomberg pretty much every day now walking away from this, walking away from that lesser spend that like these are, this is not the cloud through which you want to cut through and price a deal. So I want to ask you, like, are these the things that you're hearing as you report on the story? Like is everyone kind of starting to realize that these are what the red flags are?
- [20:18]
Multicare Representative
I mean especially in this current market environment, you have a very sizable deal. It requires a lot of demand to get the, to get the deal done. And then when you add on top of that what's going on in the market, that's a risk in and of itself. All the uncertainty that's out there, I think going into this deal and why it ultimately decided to come out when it did. Because that also begs the question, why even go public in this market at all? I think at least people close to this deal believed that the AI trend and the AI story was strong here. But when you kind of dig beneath the surface, there are some issues as it pertains to know defaults that have been reported or at least you know, in the FT about some of the covenants that they had as it pertains to their debt.
- [21:05]
Josh Brown
Now three founders sold 500 million worth of stock. We just found out from the S1 too. That's also not like the best sign ever that when the three founders, the largest shareholders who have all the votes right, have sold half a billion dollars worth of their own stock within the months leading up to the ipo. Like that's not, that's not, that's not a great story either.
- [21:25]
Multicare Representative
All of those things are concerning especially for an investor that's looking to take on an untested a new issue into the market. It's a business model that they don't really have much in the way of comparing currently to pure plays right now. All of that is concerning and sometimes you have to offer a discount in order to get people on board. Whether $40 will do the trick, whether downsizing the amount of shares that they're offering does the trick. I mean, this is a company that has a lot of debt. So they do want to maximize that primary issuance to get more money, to get more cash to pay down some of their debt loads. That would be beneficial for them being public would be beneficial for them regardless of the price. Whether that is ultimately, you know, achievable here is, you know, the question.
- [22:09]
Scott Wapner
Yeah, Leslie, you let us know the very latest as you get it. Appreciate your reporting on that and following this for us, a very closely watched IPO for so many different reasons, guys, as it relates to the current state of, of the AI trade. You look at the deep seat day was kind of the earthquake that got everybody. Oh, what was that? Shaking up this trade. Joe Size comments the other day got everybody really thinking about the data center side of it. Some of the stocks most directly related to that, the data center stocks, the power providers to the data centers, they've been, they've traded terribly. And now you wonder is the IPO and the lack of a truly successful offering, certainly to the degree that it was once thought to be. Is that the straw that breaks something? It ain't good in the story.
- [23:07]
Josh Brown
It reminds me of the Snowflake of Snowflake IPO from that which.
- [23:12]
Jim Cramer
Okay. Which was not fatal, was.
- [23:15]
Josh Brown
No, it's great company Snowflake. Just the timing, it came right at the end of 21.
- [23:19]
Jim Cramer
We talk about the timing for a second, just for a second before we answer your question. Scott, you know, remember Monday, we were talking, and I'm not being facetious here, we were talking about the potential for a Face Ripper rally. Not all of us believed it, but I think, you know, well, we had it.
- [23:32]
Scott Wapner
We had it right. We're up 5% from the bottom.
- [23:35]
Jim Cramer
Yeah. I mean, but we were talking a short period talking about it on Monday, potentially continuing. I didn't think it would, but if it had, I don't think we'd be talking four days later about downsizing this very important ipo. And I do think it's very important. We know there's been an IPO bust here that we haven't had enough of them. And I'm very long financials and I'm looking forward to that happening. But I'm not, I'm not quite ready to give in to the overall pessimism that I feel kind of brewing about the AI trade, about IPOs. I don't think this IPO doesn't sound like it's going to do well.
- [24:07]
Scott Wapner
You're looking to buy more Nvidia, right? You are. But that can't get out. Can't get out of its own way.
- [24:13]
Jim Cramer
But at the same time, all the.
- [24:14]
Scott Wapner
Reasons that we just discussed.
- [24:15]
Jim Cramer
I got it. And those are, to me, more technical reasons. When I look at the fundamental reasons, and of course, I'm looking at you, Josh, you know, I see a stock that's trading at 24 times forward earnings, and I really don't question that much the 50, 50% earnings per share growth that we're looking at this year.
- [24:30]
Scott Wapner
You think that in video has been trading lower for technical reasons? It's been all about fundamentals, and it's been one thing after another.
- [24:38]
Jim Cramer
Okay, when I was saying technicals, I meant the technicals of this week just being up, down tariffs and who, who knows what's coming out of Washington. Regarding the fundamentals, I actually think the fundamentals are very much stronger. I don't think Deep Sea Seek is some death knell here. It moves them from large language learning, model training to inference where they probably.
- [24:57]
Josh Brown
Here's the way it's going. Here's the way it's going to be. And I'm a. I'm.
- [25:00]
Scott Wapner
This is like the Godfather of Nvidia.
- [25:02]
Josh Brown
Okay, I'm long, I'm long. I'm not. I'm. I'm like, I'm not negative on Nvidia long term. I'm telling you what I think the risk is right now. This is the part people don't understand. Last summer, a press release went out from Blackstone gloriously announcing this massive infrastructure investment that they were making. And this is where the money comes from when. When you hear the Breathless reports that CoreWeave has acquired 300,000 GPUs. Where the hell do you think they got the money to do that? They're getting the money from these huge pots of wealth management capital that's going into AI infrastructure funds. And Blackstone's not alone. Everybody has one. It's the hottest product for people in my seat to be selling to their clients. It's billions and billions of dollars in debt financing so that CoreWeve can buy all this Nvidia product. That's great. Here's the. Here's the rub. If, for whatever reason, the demand doesn't materialize fast enough to please the investors, then all of a sudden there's less money for the next infrastructure fund and the next one and the next one. And all of a sudden Core Weave doesn't have the capital to buy more GPUs, which is where in video really at the end of the caboose of that long train I've described. That's where they finally come out and say turns out we may not have much more demand for the next version after Blackwell as we thought we did. Everything's still great, but it's a little bit of a dial down. How do you think Wall Street's going to take that? Calmly?
- [26:34]
Jim Cramer
Disastrous.
- [26:35]
Josh Brown
Well, and here's the thing, Nvidia is going to be right with their vision of where is going in the same way that all the companies laying broadband and fiber were right 25 years ago. The timing, all that fiber was worthless until YouTube came along in 2005. It took a long time to find a use for all that dark fiber. That's the worry here.
- [26:56]
Scott Wapner
All right, so here's what we'll do. We'll take a quick break. This Coral Weaves story impacts financials too. And some are moving today on the whole IPO conversation. We're going to discuss that and what one firm's commentary maybe means for the whole space. Plus drill baby, drill. I know you've heard that the thought that this is going to be a boon for energy related stocks. Well, not so fast. We got some interesting stuff on that as well. We'll do it all. We come back.
- [27:28]
Multicare Representative
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- [27:47]
Shannon Saccocia
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Shannon Saccocia
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Multicare Representative
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Josh Brown
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- [28:28]
Josh Brown
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- [28:43]
Scott Wapner
All right, welcome back. We did talk about the Coral Weave ipo. As you know, aside from the obvious story about about AI. It certainly is a good test for the capital markets and the current state of which maybe should be defined by the great reset in expectations if nothing else. Jefferies on that note today, that stock was lower before we came on the air said policy uncertainty in Washington's hurting business. Last year's quote, momentum has been slowed by the uncertainty that has arisen as a result of the policy statements and actions of the government and geopolitical geopolitical events. There's the stock down some 10%. You can put Goldman and Morgan Stanley on the screen and it will show you red as well. Financials are still one of the top sectors of the year. Shannon I'm wondering how we should think about all of this in what has been a less than exciting capital markets environment since the beginning of the year. Far from what people thought this might look like.
- [29:41]
Shannon Saccocia
The challenge is, is that and Josh mentioned consumer confidence earlier, consumers generally I don't want to put words in his mouth, but the difference between consumer confidence and business confidence is that business confidence is a much better leading indicator of activity. And what you're seeing right now is that you're seeing businesses not necessarily pull back on Capex, but they're not announcing at the same pace that was anticipated. Capex hiring and a move towards potential M and A that was expected when we came into this year. However, if you look at sentiment around business, business confidence uncertainty is high in the short term. Optimism remains high in the longer term. And I think the problem is, is that there was a move into financials coming into the end of the year 24, positioning for, positioning for what was going to be this like overnight exposure explosion.
- [30:32]
Josh Brown
Yeah.
- [30:32]
Scott Wapner
Trump November. Right. You pile into the stocks in December and January ahead of the inauguration, private equity, these other financial stocks. And then here we are having a different conversation that we anticipated.
- [30:45]
Shannon Saccocia
See, CEOs just went through the last couple of years of not really doing much in terms of capital, capital expenditure, which is by the way, why hyperscalers have benefited because they're investing in future growth. So if I'm a CEO though, though especially of a small business, Scott, why am I going to jump into the fray right now in terms of transactions when I could just wait 6, 8, 10, 12, 3 months and see if there's more certainty. And so but I don't think it detracts from the longer term second half of the year, 2026 story about this inflection higher and this market just doesn't.
- [31:16]
Scott Wapner
Have the ability right now to look that far ahead. It just Doesn't. There's too much flying in its face on, on this road that has hurdles now. And you know you've thrown like one of those strips across the highway that you thought you're going to be cruising by with nails in it. That's a deal with all that.
- [31:32]
Jim Cramer
That's a great description. And eventually we will get through this. I don't see disaster afoot. Even though I don't like this core weave IPO timing and what you just said is accurate. But Scott, I do think there will come a time. I don't think we're measuring it in months. I think we're measuring it in weeks or days where we do start to focus on what comes. You talked about the economy earlier in the second half. When we look forward into the second half and get through however long this tariff stuff talks takes, you're going to look at lower capital requirements. Michele Bowman, as the Fed chairman for supervision of banks absolutely wants lower capital requirements, whether you like it or not. Scott Besant, the Treasury Secretary is gutting the Consumer Finance Protection Bureau. Leave aside.
- [32:12]
Scott Wapner
Would you buy, would you, would you buy bank stocks today?
- [32:15]
Jim Cramer
100. If I have new money coming into an account, I am filling up on them. Okay. And it's because the cost of doing business is going down. That's where I was going with the Consumer Finance Protection Bureau. We've all heard Jamie Dimon over the years and years talk about lament how his expenses that don't lead to revenue compliance have gone up and up and up. Guess what? They're now going to go down.
- [32:36]
Josh Brown
One of the themes that I've been talking about all year is you can be in the financials but not be, not necessarily, necessarily have to bet on the M and a trend or whatever that's not happening yet or deregulation at the banks. So in recent weeks, through my best stocks framework, we talked about the Intercontinental Exchange. It's making a record high right now. So congratulations if you're in that. We talked about CME for the same reason. These are companies that make money on high trading volumes and volatility. They're not waiting for an M and A boom that may not come. We also talked about insurance. Berkshire Hathaway is a trillion dollar market cap, the only non fang in that group. And by the way, new record high right this minute as I'm speaking. So you're making money in insurance, you're making money in exchanges. These are in the xlf guys. You don't have to just pick the same four stocks and wait for them to go up.
- [33:28]
Scott Wapner
All right, let's get the headlines with Bertha Coombs. Hi, Bertha.
- [33:31]
Multicare Representative
Hey, Scott.
- [33:32]
Shannon Saccocia
A New York state court just blocked Texas filing from filing legal action against a New York doctor who prescribed and sent abortion pills to a Texas woman. Ruling sets up a high stakes battle between states on either side of the abortion issue. The case is widely expected to end up before the Supreme Court. Meantime, a federal appeals court in California refused to halt a district judge's order requiring the Trump administration to rehire thousands of federal workers in a 2 to 1 decision. The order requires reinstatements for some 16,000 employees terminated in mid February from the Departments of Veteran Affairs, Agriculture, Defense, Energy, the Interior and Treasury. The administration has also appealed to the Supreme Court.
- [34:19]
Scott Wapner
And Sam Bankman Fried is on the move.
- [34:23]
Shannon Saccocia
The disgraced crypto exchange founder is now at a transit facility in Oklahoma, which often houses inmates being moved across the country. Until yesterday, he had been in a prison at a detention center in Brooklyn. Bankman Fried's legal team has asked that he served the rest of his 25 year sentence in California to be closer to his parents. Scott, back over to you.
- [34:47]
Scott Wapner
All right, Bertha. Thank you. Bertha Coombs. Coming up, Josh highlighting one of the best stocks in the market, a name he says is on the verge of a big breakout. We'll tell you what it is. Now.
- [34:58]
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- [35:30]
Scott Wapner
Welcome, ladies and gentlemen, to Mario's Bistro.
- [35:34]
Shannon Saccocia
The special tonight is the beef carpaccio.
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Multicare Representative
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- [36:14]
Scott Wapner
Talk about a cyber name. It's not CrowdStrike. It is that one, though. It's Zscaler. Yeah, you want to hit on this?
- [36:19]
Josh Brown
So this is a cybersecurity stock and I'm not in it and I don't have any trade on right now, but I wanted to highlight it because it's on the best stocks in the market list and it's really on the verge of a decision point. It's been challenging this same level of overhead resistance for the better part of let's say 14, 15 months. And I think it really looks like it wants to punch through. This is an RSI of 55, so not overbought. It's 4% below its 52 week highs while most other software stocks are way lower. 10% above its 200 day moving average. It's bounced off of that 200 day moving average four times this year already. The buyers are coming in where they should be coming in. You've got this range between 180 and 220 going back to the election and I think if it can hold this line level and you get a little bit of cooperation from the Nasdaq, a little bit of a better tone for tech, this will be one of the first names to break out. So I'm not in it currently, but I wanted to put it on people's radar because I think there might be a trading opportunity.
- [37:20]
Scott Wapner
All right, we, we'll keep our eye on that. Can we get an intraday guys of that too instead of sitting on that other one for a moment just to, just to check it out on, on a more tick by tick. Look at that stock. Well, that's not it but anyway, let's talk about that energy because it is the best sector year to date. Interesting development though. There was a Dallas Fed survey which shows US shale executives alarmed at tariffs and Trump's rhetoric on oil prices threatening drilling plans. Here's a quote from a story in the ft. Drill baby drill is nothing short of a myth and populist rallying cry. One shale producer wrote in a submission to the Dallas Fed in the survey that I mentioned, quote, tariff policy is impossible for us to predict and doesn't have a clear goal. We want more stability. The thing is, if you drive oil prices lower and lower, it is actually a negative for production, especially shale because it drives up the cost for producers and is a very heavy capital intensive area. It's somewhat counterintuitive to think about because the President has talked so supportively of drillers. I'm wondering for those of you who have exposure, Jim, into nat Gas drillers oil, what do you think?
- [38:33]
Jim Cramer
Well, first off, state what I think. We all know the first Trump administration was a horrible time to be invested in oil companies and the idea of drill baby drill means that profits go down for These companies, most of the management of the exploration and production companies know that and are not likely to simply go along with what the administration wants. They have shareholders. They want to drive profits. But where you were talking about tariffs, Scott, and that actually is a very big problem for the industry because and some people know this, some people don't. Yes, we are energy independent, but we vitally rely on Canadian oil, this heavy sludgy stuff that comes from the tar sands to be run through the Northwestern and Northeastern refinery system that is set up for exactly that. It's not set up for the light, sweet West Texas intermediate oil that we ship overseas to other refineries. This may sound esoteric. It's not. Tariffs really matter. Yes, we are energy independent, but the idea that we can just do everything within the borders of the United States is a fallacy.
- [39:33]
Scott Wapner
Are you worried about any of these names that you have as a result of this?
- [39:37]
Jim Cramer
I worry about them. If we're going to have a recession, I think, you know, I don't think think we're going to have a recession, but the risks are there.
- [39:44]
Josh Brown
Besson, very specifically, in multiple interviews and in an hour long podcast with Chamath and the all in guys laid out the fact that lower oil prices is like a cornerstone of what they're trying to accomplish. I don't think they it's not drill, baby, drill. Yeah, let's buy oil stocks because we're going to get crude at 80. It's the opposite. I think nothing can make them happier than seeing a trading range for crude West Texas, 50 to 65. They'll call that a victory. That might not be stocks. The stocks that, that's part of the point of this.
- [40:18]
Scott Wapner
That's part of the point of this Dallas Fed survey.
- [40:20]
Josh Brown
Yeah.
- [40:21]
Scott Wapner
Which just makes you think about it potentially a little bit, a little bit differently. All right. Straight ahead. We'll take a break. We'll come back. Robinhood moving beyond its core focus. It is, it's all grown up, so to speak. Kate Rooney's follow following that money for us. We'll discuss next. Welcome back. Robinhood gearing up for a more mature investing base with a new low cost wealth management tool in private banking. Our Kate Rooney following that money for us and joins us with more. Kate.
- [40:50]
Shannon Saccocia
Hi, Scott.
- [40:51]
Scott Wapner
Yes.
- [40:51]
Shannon Saccocia
Robinhood is rolling out a robo advisor private banking and wealth management. It is the latest signal this company is growing up with their client base. When Robinhood went public, if you remember, it did have the reputation for being sort of for the meme stock trader crowd. Now it's looking to court more high net worth sophisticated investors. They are undercutting on fees here. So the Robo Advisor charges 0.25% annually. That is capped at 250 bucks a year. But it's only for gold subscribers. They're also offering certain transfer incentives. The subscription is a key way that the CEO says they are going to break even. But there's some skills skepticism. I caught up with him here in San Francisco. He admitted subscriptions haven't worked that well historically. And Financial Services says they're using Amazon prime and Costco for inspiration. Robinhood's got about $200 billion in customer assets. That pales in comparison to competitors. Think of Schwab, Vanguard, Fidelity. It's also now going up against some of the banks on private wealth 10 of telling me they are trying to position for that massive wealth transfer from the baby boomers. He's also looking to differentiate with an AI research assistant. They just rolled out. The bar he says is high still for using AI around investment advice. It is known still for hallucinations. Still not generating investment ideas though. Stock is off the lows. It's up more than 120% though if you look at the past year.
- [42:12]
Scott Wapner
All right, thanks very much for that setup. You in your most recent blog. This is no surprise to you in any way because you suggest wealth is is on fire as you've been talking about and you watch really closely.
- [42:24]
Josh Brown
Yes.
- [42:25]
Scott Wapner
Whole, this whole industry, we're the, we're.
- [42:27]
Josh Brown
The best business on Wall Street. We're the most reliable, most profitable. Every CEO is referring to their wealth business as quote, a crown jewel on their quarterly conference calls. Robinhood is incredible at bringing on new users to their platform. Maybe the best I've ever seen. And they've got really great user interface, really great tech and it's smart like you have now you have all these users. Why would you let them grow up and graduate and go elsewhere? So I understand the impulse. It's a horrible business though. $250 for quote unquote wealth management. That's like gas station sushi. I think what's more interesting that they're doing is the acquisition of the RIA custody business. That one I actually think is going to work and we might even kick the tires there. So I wouldn't get too excited about $200 wealth management but get excited about Robinhood turning its technology on some of the thornier problems that advisors face when trying to service their clients.
- [43:24]
Scott Wapner
Retail is also getting more ways, for lack of a better word of Just being invested. Etoro, for example, we talked about the other day.
- [43:34]
Josh Brown
They're just more platform too many, too many ways. Maybe.
- [43:37]
Scott Wapner
Maybe. Yeah. But it just shows you the interest and opportunity that some of these companies think exists.
- [43:43]
Josh Brown
That's right.
- [43:44]
Scott Wapner
All right, Santol is next. We're back. Senior markets commentator Mike Santoli. As you see here, Post nine, we talk a lot today about coreweave. Yeah. What it means for the IPO trade. Obviously, there's capital market ramifications, too, but it really is a barometer at the current time when many are questioning where we are in the life cycle of this whole phenomenon.
- [44:09]
Jim Cramer
I think it's sort of concentrating all the attention on this, maybe creating a little bit of a crescendo of anxiety.
- [44:16]
Scott Wapner
Around this whole idea of overbuild and.
- [44:18]
Jim Cramer
And whether we're going to get a return on the investment. This first. When the window opens up for iPodOS, the first ones to come are the ones that need to be sold that the sellers need to get out the door.
- [44:29]
Scott Wapner
That's always the way it is.
- [44:30]
Jim Cramer
That's why they've been pretty lousy so far. I'm not saying this is in that category, but they're sold and not bought at this phase. And so I think you have to reflect on that with, with all the specifics of whether in fact this deal works. If there's too much hair on the finances and all that stuff. I do think that it could get us clear of this concentrated moment of do we really need all these GPO's kind of question, because you've seen it already in video shares.
- [44:56]
Scott Wapner
I'm not saying it's going to be.
- [44:57]
Jim Cramer
Up and away from here. And I don't think that that trade is going to be kept on a.
- [45:00]
Scott Wapner
Long leash like it was last year.
- [45:02]
Jim Cramer
But at least we're sort of reckoning with it as opposed to everyone assuming.
- [45:07]
Scott Wapner
It'S nothing but good things. Yeah, we'll see. Final size, price and all that. We start to get, by the way.
- [45:12]
Jim Cramer
The investment bank stocks weak today, but mostly because of Jefferies.
- [45:14]
Scott Wapner
Yeah. Yes, exactly. Exactly. That was sort of the second derivative look that we took on the Core Weave IPO. I'll see you three. That's Mike Santoli. Finals are next. See at three today, closing bell with those two gentlemen. Among my guests today, Rick Reeder of BlackRock and Monumental Sports and Entertainment founder and chairman and CEO Ted Leon says Wizards, Capitals, all sorts of lineup. Oswat, the motor and Dean of Valuation, Lauren Goodwin. So I hope you'll join me for that last hour. Of trade farmer Jim Long trade long.
- [45:48]
Jim Cramer
Term, bullish short term. Just a little nervous playing a little defense with a great pharmaceutical vertex.
- [45:53]
Scott Wapner
Thank you very much.
- [45:55]
Shannon Saccocia
Josh talked about this earlier, but there's a lot of places to play in financials offense and so a little bit of defense.
- [46:00]
Josh Brown
Okay, there's only two subscriptions the American people will not cut, almost regardless of how bad the tariff thing gets. Netflix, Costco and Netflix. I'm picking Netflix. Look at the strength of this stock. Look how close it is to its 52 week.
- [46:14]
Scott Wapner
Good stuff. Thanks everybody. I'll see you on the 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.
- [46:28]
Multicare Representative
All opinions expressed by the Halftime Report participants are solely their opinions and do not reflect the opinions of cnbc, NBC Universal, 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 halftimereportdisclaimer Is it time to reimagine your future? The right business skills may make a difference in your career. At Capella University, we offer a relevant education that's designed to focus on what.
- [47:19]
Josh Brown
You need to know in the business world. We'll teach professional skills to help you.
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Multicare Representative
Pursue your goals like business management, strategic planning and effective communication, and you can apply these skills right away. A different future is closer than you think with Capella University. Learn more@capella.edu.