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Halftime Report
Trading Trump’s Tariffs 3/4/25
00:47:27
Scott Wapner and the Investment Committee debate Trump’s tariffs as Canada, Mexico and China announces retaliatory tariffs pushing stocks sharply lower. Plus, the desk share their latest portfolio moves. And later, travel and leisure stocks getting hammered today, the Committee discuss their strategy in that sector. Investment Committee Disclosures
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- [00:00]
Scott Wapner
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- [00:31]
Josh Brown
Are you still quoting 30 year old movies?
- [00:33]
Scott Wapner
Have you said cool beans in the past 90 days?
- [00:37]
Josh Brown
Do you think Discover isn't widely accepted? If this sounds like you, you're stuck in the past. Discover is accepted at 99% of places that take credit cards nationwide. And every time you make a purchase with your card, you automatically earn cash back. Welcome to the now it pays to Discover. Learn more@discover.com creditcard based on the February 2024 NEL. I'm Scott Wapner and you're listening to CNBC's Halftime Report, the podcast the most profitable hour of the trading day. We record this live weekdays at 12 Eastern. Listen in. All right, Carl, thanks so much. Welcome to the Halftime Report. I'm Scott Wapner. Front and center this hour trading the Trump tariffs with stocks down sharply again. As you know, so many names on the move today. We'll debate them with the investment committee. Joining me for the hour, Josh Brown, Stephanie Link, Carrie Firestone and Brian Belsky. We told you stocks are lower today. The NASDAQ is officially in correction. That means it's down more than 10% from its high. The Russell is down 17%. So the small caps have been getting hammered as you do get the first shots, if you will, in this new trade war. China's already retaliated. Mexico says theirs coming Sunday. Canada put an export tax on electricity to the U.S. the Vix is way up. And Stephanie Link, JP Morgan's trading desk today makes a tactical call. They says, they say US GDP to crater. Changing their view to tactically bearish. You changing yours to tactically bearish. That means a shorter term view of this market.
- [02:12]
Scott Wapner
No, because we've been talking about the growth slowdown for a couple of weeks now. I mean, just a couple of weeks ago you were at 3.9% in the Atlanta Fed Tracker. Now you have negative, no.
- [02:21]
Josh Brown
1 was negative 2.8.
- [02:23]
Scott Wapner
No one was talking about a 600 basis point decline in GDP. And I just don't see it. Sure, tariffs are a Concern, sure. The part parts of the consumer being more choosy. But on the other side of things, guess what we have. Gasoline prices are down 10% year over year. You have much lower interest rates. Only about a month ago we were flirting with 5% on the 10 year. Now you're in the low four. So that's good. And I do think that the job market is the most important for the consumer. And it's still fine. It's slowing, but it's steady. Wages are up 5% and saving Scott 5 and a half percent. So maybe consumer takes a pause for a little while. Wouldn't be surprised. But they have savings. Right. Delinquency rates are not going sky high. They're higher but they're still historically low. So there are a lot of things puts and takes. What I think is the most interesting. Up until today we've had it being a tech sell off for the most part. Right. And the Magic 7 down 11% with the S and P only down to today. Now you have a broadening out. You had the leaders actually correcting and that's okay too. I think that's where your opportunity is in financials, in energy, especially in industrials because I'm not, I'm not backing away from manufacturing and the renaissance that we are going to see here. And the manufacturing industry will actually benefit from tariffs if they bring the facilities here, which is what they're going to do over the long term. So I think there are opportunities. You know, I have been very active in the last two weeks. I have 9% cash. I've been nibbling. We're going to talk about it all day long and I see a lot of things to be excited about for the longer term.
- [04:01]
Josh Brown
Yes. This has been for Stephanie Link and we will get into more detail a shopping list moment, if you will. And she's been a buyer with that list and I'll tell you some of the moves that she has made. What about it, Josh Brown? As JP Morgan also says, the guardrail of risk markets looks to have come off Barclays today talking about the euphoria in the US is on the retreat and there is still room to wane even further. You've had three and a half trillion dollars of value wiped out of the S and P since election day. This is not what a lot of people thought was going to take place in the first 30 to 40 days of this administration.
- [04:40]
Stephanie Link
I guess it's weird because this is exactly what they promised us would take place. They said on day one, this is what they Told us. So I don't really understand like, oh wait, they're really doing this. They did this in 2020 moves.
- [04:53]
Josh Brown
I know what happens in the market. You're right. You're right about obviously about the policy moves, obviously. But I'm not necessarily sure.
- [05:03]
Stephanie Link
Let me give you my.
- [05:04]
Josh Brown
That on election day. If you would have told people that, okay, the NASDAQ is going to be down 6% by, you know, the second week of the first week of March. You said that doesn't sound right.
- [05:21]
Stephanie Link
Yeah, no, no, no, I, that part I agree with you 100%. And actually here is something very unexpected. In the last 50 days, Tesla fell into a 45% drawdown, the second fastest 45% drawdown ever in the history of Tesla. The CEO basically lives in the White House, slash Mar a lago. And yet Tesla has now fallen out of the magnificent seven stocks by market cap. Broadcom is bigger. Berkshire Hathaway has a bigger market cap, so does Eli Lilly. So that was unexpected. There's a lot of unexpected things happening. I think the big picture here, the wall, when you've lost the Wall Street Journal op ed page, basically you've lost the business community and there's just a lot of blunt language now. There's a lot of chaos. I don't think it'll stay this chaotic. I don't think the Vix goes to 50 as a result of this. I think this, this volatility will be with us for a little while. But I don't think it's a great time to panic necessarily. There's risk off behavior everywhere in the market already really fast. 8% of the S&P 500 now has an RSI above 70, which means there are very few stocks in a bull market. You are basically seeing a peaking in 52 week lows. 8% of the s and P are now making new year lows. That's fairly high given what's gone on the last two years. 40% of the S&P components are making four week lows. So if you think you're going to be the first person to sell and react to this, you already missed it. So I think the way that you want to think about this is what are the stocks that are holding up the best right now, not what's getting trashed the most. And so my focus is on what are the best stocks in the market, where are investors not selling and riding this thing out? Because in my opinion those are the names where you'll continue to get all time highs once this volatility subsides. I know there are people with different strategies. They want to buy pain, they want to run into Tesla down 45%. I'm not saying that won't work. I'm telling you what I would be doing and not what everyone else should be doing.
- [07:34]
Josh Brown
Brian, is it time? And by the way, I mean, heck of a time to have you here, right? You do work for bmo. Last I checked, it's a Canadian based bank.
- [07:42]
Brian Belsky
It is, right? Yeah. So let me share a little bit about how my morning has gone, please, if that's all right. So we have the very good fortune of running private wealth portfolios for both Canada and the United States. And so we own some, some portfolios that are a mixture of US and Canada. I can't tell you how many calls I've taken, Scott, that want to blow out these portfolios, like literally blow these portfolios out and go 100% Canadian. Which I think this is exactly the wrong time to do that. That's number one. Number two, working now.
- [08:13]
Josh Brown
You mean out of anger, Working out.
- [08:15]
Brian Belsky
Of emotion, out of anger, out of just pure fear. Okay. Now where I was going to go next is being in Canada for 13 years working for Canadian bank, but marketing up there as a strategist for a lot longer. I'm not going to tell you how many years that the Canadian market is actually excessively contrarian. Whatever they're doing go the opposite way. They're typically led by fear and they're massively macro. Now what do we know about Canada versus the United States? Many of the economic projections for Canada just in the last 24 hours have cut GDP down to negative GDP for the year, 2 full percentage points. And the bank of Canada, in terms of our own estimates from our great economic team at BMO is saying that they're going to be excessively aggressive in terms of cutting rates. So what does that mean for Canada in terms of the lending facility? We know that banks are tremendous managers of capital, but banks that are centered more toward on the US I think are still the place to be. The Canadian consumer is still very prudent in technology. So we think actually this is an a longer term buying opportunity for Canada. But I think it's not time to leave the US if you're a Canadian client.
- [09:24]
Josh Brown
But do you think, do you agree with sort of JP Morgan suggesting that this is a time to be tactically bearish U.S. stocks?
- [09:34]
Brian Belsky
No, I don't. Because number one, no one can time the market. Number two, we're investors, not market timers. And not traders. And so many people said, belski, you didn't make any changes in your portfolio this month. Well, guess what? The names that I own in my portfolio are the names that I want to own in any kind of pullback anyway. I'm not going to try to outsmart myself. So guess what? I think that the names coming out of this, and it's really interesting, is that the market has performed the way that it should. Take your generals out first, then take the lieutenants out, which are generals, were tech lieutenants were financials. Now we're going after the other commissioned officers. So I believe from a near term perspective, we're closer to the end than we were.
- [10:15]
Josh Brown
How are you viewing the market in all your years of experience watching these markets, what does this tell you? It's not your first rodeo. It's not the investor class's first rodeo of a trade war and tariffs from this president. So what do you think?
- [10:31]
Kerry Firestone
Well, I'll tell you the thought that went through my head when I saw the market really fall when Trudeau was speaking. I thought, you know, the market could end up positive at the end of the day. Now, I'm not saying it's going to, but it's interesting that Nvidia right now is positive. What I think we're seeing is just this sort of reaction toward the mean. We had three months, more or less, of financial stocks leading the market higher because euphoria about there aren't going to be any regulations. They do everything they want. I, I'm not even sure that that would be a positive. But the market got so enthusiastic, it became unrealistic and we sort of led higher and higher. And now there's, oh, gosh, you know, maybe, maybe there's a problem with your, maybe there's some inflation, but manufacturing is still looking good. The manufacturing numbers, I think are decent. The consumer numbers aren't great, but they're not terrible. If you heard what Target had to say, and there are pockets of concern such as, you know, let's not get too exuberant here and there. But that doesn't mean that this is the end that we have to say, oh, my God, you know, it's, you know, watch out below. We have to get extremely bearish. I think that we should always.
- [11:45]
Josh Brown
No one said you have to get extremely bearish. But there are times to be tactically bearish. Stocks that were down a ton yesterday, you're down a bunch today. And the market's been unsettled as it is. We may be in a prolonged environment that feels more unstable and unsettled because you're not sure how long the tariffs in this trade war are going to last. Among other things. You're not, you're not sure about to what degree earnings power is going to deteriorate if you're dealing with a growth slowdown and trade war.
- [12:20]
Scott Wapner
But just you're coming off of 16% earnings growth in the fourth quarter.
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Josh Brown
No. And expectations are falling fast after that. This is not a.
- [12:27]
Scott Wapner
Numbers haven't been coming down at all. Not yet. Now maybe they will and maybe the tariffs will clip earnings and the picture for earnings by 5 to 7% which is what I've been saying for a while. But you have such momentum with regards to the earnings power at these companies. And so even if earnings were to fall, that's not great for stocks. It's probably why we're seeing a sell off. However, that being said, you're still looking at something like 7 to 10% earnings growth this year if you grow one and a half, 2% in the economy. Which is what I am continuing to.
- [12:55]
Josh Brown
Believe you kind of, I mean I get the feeling that you think overall this is a not much to see here moment. Would you sure Sound like. Because I can tell you, you know, consumer confidence has been falling. Right. Sentiment among consumers is not great. Hardly ever. Any of the retail based companies have been talking up a great game but.
- [13:15]
Scott Wapner
Hardly any haven't had a goods growth economy in four years since COVID Right. No one's buying goods at all. And so it's actually quite impressive to see what Wal Mart put up in terms of same store sales. What what Target did what TJX did. I mean there are winners staples in lower end retail. Well no, I mean not really. I mean 60% of Target's revenue is discretionary and they're Target. Right. That that's what they sell and they actually did quite well. But my point being is Covid happened, we bought goods, then we got out of COVID we did services. We're somewhere in the middle here on services. I think we are slowing down definitely. But I don't think it's a disaster. And at the same time I think goods are overdone to the downside. Just look at what Wal Mart had to say in terms of where they saw strength. When has the last time we've seen discretionary goods goods actually surprised to the upside. Both Wal Mart and Target said it today. So Walmart said last week Target said it today. So my point being is you can't just look at retail and Say the consumer is dead. The consumer is not dead. No one said it may be slowing dead. But I mean they have jobs and they have wages and they have savings and that's the most important thing in my consumer.
- [14:25]
Josh Brown
Holding up as strongly as it has pretty remarkable collectively has been remarkable. The resiliency is one of the reasons why we've been able to put in new highs in the market this whole period of time. The death, so to speak, of the consumer has been greatly exaggerated numerous times obviously through the whole rate hiking cycle. And what if, what if you get.
- [14:46]
Scott Wapner
Mortgage rates to come down? What if you actually have housing that then starts to actually improve? Mortgage rates have peaked at 7.3% two weeks ago. It's at 688. We're nowhere close for it to see momentum in terms of housing. But you get that into the low sixes. That is important because there's a multiplier effect to housing. You buy a house, you have to buy stuff for the house outside the house and a car to get around from the house to wherever you're going. So that's what I'm watching.
- [15:09]
Josh Brown
So Josh Kerry mentioned in video being higher today. You know, that's been a pain point within the market. Bernstein Stacey Rascon says valuations are looking increasingly attractive. They suggest that that stock has done historically well if you buy it at 25 times or lower. It's obviously had a huge pullback. We've suggested we're not really going to get a better feeling market until the likes of Nvidia looks a little better in its own right.
- [15:39]
Stephanie Link
I mean there, yeah, there are, there are so many green stocks right now that we should be talking to like eBay, Alphabet, McDonald's, like these are pretty big market caps. But Scott, you're right to that point. Nothing is big enough to offset Nvidia. There's no 10 stocks that are big enough to offset Nvidia. So I do think it's important for maybe not necessarily overall volatility but just for the indices to kind of find some support. You kind of have to have a name like Nvidia bottom and go green, look 26 times forward earnings with a 50% growth rate, a buyback and arguably some of the best news flow of the year out of any stock still ahead, including a huge developers conference in March. Why wouldn't this stock be a buy here? So I agree with that, that sentiment and you know, if I'm out looking for things to do and I haven't done this yet, I would have it.
- [16:40]
Josh Brown
On the list Apple is so interesting too. I think we would all agree, given its reliance on semiconductors in general for its products and given its reliance on China for a huge chunk of its revenue, 1720 percent, it's the best performing mega cap stock over the past one month. Even though you could make the case that it has the most to lose from a trade war with China. The knock has been its trading at a premium valuation for less than premium fundamentals. It's at 31.6 times forward earnings. Steve Kovac joins us now, our reporter, of course, who covers that stock. It's a great disconnect for people who say, wow, how is this stock still green and doing better than others when it would theoretically be so exposed to a trade war with Canada? Yeah, that's with China. Excuse me. Yeah, that's right, Scott. And by the way, yesterday, once we got that confirmation from the president that.
- [17:36]
Scott Wapner
These tariffs were happening, we saw the stock drop at percentage percent and a half.
- [17:39]
Josh Brown
It's up about half a percent now. And let's get some perspective here what.
- [17:43]
Scott Wapner
They think analysts think the impact of these tariffs are going to be.
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Josh Brown
They haven't gone through the second round.
- [17:47]
Scott Wapner
And done that analysis yet, but the first round they said it's going to be low to single digit percentage hit to earnings. We'll see what they say for this round.
- [17:55]
Josh Brown
But you know, they have to make this calculation out.
- [17:58]
Scott Wapner
Do they increase prices or do they absorb those costs? Either way it could hurt them. So we do have some guesses here.
- [18:06]
Josh Brown
Of what could be happening with the.
- [18:07]
Scott Wapner
Iphone 16e for example.
- [18:09]
Josh Brown
That was a new phone they announced.
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Scott Wapner
A couple of weeks ago that was $170 price increase over the last model. And just this morning though we had the opposite example. There's a new iPad Air model that came out today that was announced today starting at $599. That's the exact same price that last year's version cost. And we're also expecting one more product.
- [18:29]
Josh Brown
To come out this week that's a.
- [18:30]
Scott Wapner
New version of the MacBook Air. Apple's been pretty silent though, to be honest, about what's going on with these tariff impacts, how they're thinking about pricing.
- [18:39]
Josh Brown
IPhone pricing is going to be the.
- [18:40]
Scott Wapner
Most can probably absorb things from the Mac and the iPad and those lesser products. But iPhone is where all the money is and they're not going to be.
- [18:48]
Josh Brown
Able to shift enough those supplies of those iPhones they make in India bring it over to the United States. They're still reliant on China.
- [18:55]
Scott Wapner
And I want to point to what.
- [18:56]
Josh Brown
The Best Buy CEO said today.
- [18:58]
Scott Wapner
His vendors are expected to raise their prices.
- [19:01]
Josh Brown
Apple is one of those vendors and.
- [19:03]
Scott Wapner
It hits all those other PC makers we talk about.
- [19:05]
Josh Brown
That means Dell, that means hp and.
- [19:07]
Scott Wapner
It also impacts Microsoft.
- [19:09]
Josh Brown
Microsoft has already warned Windows revenue could take a hit as well. Scott yeah, it's good stuff, Steve. Thank you. Steve Kovac. Brian I mean, maybe investors just simply think that, you know, Tim Cook's trying to make Trump is BFF and they're going to get some kind of exemption from a lot of these tariffs or that there's not going to be a protectionist play on China's part related to American products like the iPhone relative to competitors over in China. But Apple's already like, we've already seen market share issues over there. What do you make of the fact that the stock has traded, I think reasonably well, pretty darn well when it would be front and center here.
- [19:48]
Scott Wapner
Yeah.
- [19:49]
Brian Belsky
This program in particular has done a really wonderful job talking about Apple the last couple of months or so, especially given the fact of, of where we've seen multiples that have been inflated, where we've seen all of this performance the last couple years in the Magnificent seven. But our comments remain resolute. We think that Apple of the seven should be the one that you overweight.
- [20:10]
Scott Wapner
Why?
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Brian Belsky
Because of cash flow. But we also think too, is that a lot of, a lot of times on the show we talk about quality, quality, quality. If you screen The S&P 500 for quality, it's going to reign supreme with respect to a lot of tech stocks. So that's number one. Number two, when people get worried about the market, Scott, you go back to historically you go back to liquidity, liquidity, liquidity, liquidity. So what are the largest stocks in the market? The big tech stocks. So Apple checks a lot of boxes there. That's why we've continued to own it for all of these years and that's why we're going to continue to overweight it in our tech.
- [20:44]
Scott Wapner
Sure.
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Josh Brown
But you do admit that you need to be more selective within tech, even if you like it. Mag style sevens are all significantly off of their record highs. Apple is only 8% off its record high compared to an Alphabet, for example, which is 19. We mentioned Tesla. Josh did the price target gets cut today. Wolf Talking about Microsoft is the one who needs to make a stand here. So we will watch all of those. Stephanie Link is making a move in this space as well to a stock that's 18% off of its record high, that being Amazon Well, I started trimming.
- [21:18]
Scott Wapner
A couple of weeks ago. I went from really very much overweight to market weight. Now I'm slightly underweight. It's still about a 3 1/2% position for me. But you have 95% of the sell side that have buys on this thing. Just about everybody owns it on the buy side too. I think that it's had a nice run. It's up 23% from its August lows and I just thought I could take that cash and put it elsewhere into names that are getting have just gotten hammered and we'll talk about some of them.
- [21:45]
Josh Brown
Like Broadcom.
- [21:46]
Scott Wapner
Yeah, like I've been adding to that for the last three weeks and it keeps going down and down and down. They report on Thursday so we've got to be careful. But I do believe in the long term story very much. It's rate went from 34 times forward estimates which got rich, to now 28 times now I was buying it a couple of years ago at 14 times and we've talked about the multiple expansion but it deserves to have a higher multiple because they are going to see something like 60, 60 to 90 billion total addressable market in their business. With two new ASIC customers coming in the next couple of years, I think that's going to be very positive software. I love the VMware acquisition, what it's doing for their recurring revenue and margins and their non AI business that has actually been horrible and I expect it to be down 15% in the quarter. But I do think you're in the process of troughing. So I like the valuation, the pullback in the stock and I just thought it as an opportunity. I just don't have that much cash. I have a little more cash than I have, but I didn't have that much.
- [22:37]
Josh Brown
You found some at the bottom of your handbag.
- [22:38]
Scott Wapner
Well, I found a little bit to.
- [22:39]
Josh Brown
Get Palo Alto too.
- [22:40]
Scott Wapner
Oh, I did, yes.
- [22:41]
Josh Brown
I did get some chains rolling around down there.
- [22:43]
Scott Wapner
I do. Well, I'm trying because I'm trying to look for ones that have lagged that I haven't been able to own. CrowdStrike was one I didn't own ever and I bought it when it fell 41% in the summertime. I've been trimming that because it's up 95%. It's held up remarkably well. I like cyber security very much. I think it's bigger than AI in terms of the total addressable market and Palo Alto is lagged and I like their platform strategy. I think they've Done a really good job there. Free cash flow is expanding. So this one too is, it's kind of lagged. It's hung around here in this downdraft, but it's not been a good stock over the last year or so. So I think it's a laggard that will win.
- [23:18]
Josh Brown
Yeah. From chips to software, that's Brian, how a lot of people are talking these days where the trend is going to continue. Money is going to come out of chips. Even though some of their there's some nice winners today. Even in the face of the red on the screen. Okta is yours. Speaking of software, they gave strong guide.
- [23:32]
Brian Belsky
They have and that's a name that has consistently grown and it's another one of these names from a margin and revenue perspective that has beat, beat, beat, beat, beat. And I think in the SMID category, it's one of those growth areas in tech that offers some consistency, especially relative to a technology sector in SMID land that is much more, more volatile. Speaking of chips, I think we're learning firsthand, especially the last six months. If you look at the semiconductor space in the market, traditionally it is the most volatile industry in the market in terms of earnings growth and especially performance. And we're seeing that come to come.
- [24:06]
Josh Brown
To light watching a lot of momentum names as you know, Afflovin, Robinhood, Palantir, they're all lower today. So is Reddit, Josh, which has been weak lately. It's down last I saw was about 6% today. We could pull up a real time look, but it's down 18% since the beginning of that momentum sell. Down.
- [24:27]
Stephanie Link
Yeah, I just think that's the basket of stocks that it's in the same people that are in that are in other momentum stocks. And when people hit these ETF baskets, these are the stocks that get sold off. There's nothing specific happening with Reddit and if you've been following the stock for a while, it could be down 6% in the morning and up 6% in the afternoon with absolutely no news whatsoever. So I wouldn't make too much of it. Just understand that's the basket that it lives in and that's how volatile these stocks can be sometimes.
- [24:58]
Josh Brown
Banks have been brutal today, this week, most of them selling off pretty significantly. We'll run through some of the names, which include private equity stocks, which last I checked, Morning care, we're getting hammered. You got Blackstone, but Apollo, Ares, kkr, Josh says Carlyle. But what's going on here?
- [25:17]
Kerry Firestone
Well, I think that it's risk off and there's going to be a fear about doing deals.
- [25:22]
Josh Brown
Deals off.
- [25:23]
Kerry Firestone
Yeah, deals are off. So no one is feeling comfortable that. However, if we have lower interest rates, you know, we're talking about leverage. These are businesses that require a lot of leverage. Lower interest rates are good for them. So that's a positive. They've had a big run along with the financials. So we're talking about stocks that are up, you know, if you go year over year, maybe 100%. I don't have a problem with them trading down somewhat because of the big gains. And we've got, you know, enormous embedded gains. We've cut this stock back, Blackstone over the last year a couple of times and it's still higher.
- [25:56]
Scott Wapner
So we've already seen $800 billion in M& A and it's only marked.
- [26:00]
Kerry Firestone
Yeah.
- [26:01]
Scott Wapner
So I think that we are going to see deals. Absolutely. Does it slow a little bit down maybe?
- [26:06]
Josh Brown
We had the slowest start. We had the slowest start. We had the slowest January. Let's just. We had the slowest January in a very long time. I don't have the number on the top of my head, but we have the slowest start to the year in a number of years.
- [26:21]
Scott Wapner
I'm talking about M and A. I'm.
- [26:22]
Josh Brown
Talking about M and A. M and.
- [26:23]
Scott Wapner
A is at 8.
- [26:24]
Josh Brown
I'm talking about M and A and.
- [26:25]
Scott Wapner
I think it's going to be more than 3.3 trillion which was last last year. I absolutely think that is to be the case. Does it. Is it slower than what I initially expected for the year? Possibly. But deregulation is going to help and we are going to get deregulation. And we're not only going to get deregulation for deals and capex and visibility, but we're going to get Basel 3 endgame rules that are going to be much less in terms of the capital that these companies are going to have to hold and they'll be able to buy back stock. And at 1 1.4 times book value, some of these stocks are certainly still attractive.
- [26:56]
Josh Brown
Josh, go ahead.
- [26:58]
Stephanie Link
I would. I was just going to point out cross border tensions and countries throwing out entire US industries is not great for the M and A picture. It slows everything down, it gives people pause, it makes them think twice about saying yes to transactions. So I would say, and I'm long Carlyle, which requires there to be M and A. It also messes with the capital markets, slows down the machinery for IPOs. And that was one of the big things that we had expected to come back this year. Now that you're in like year three of a bull market, you should see more investor appetite for new companies coming public which also helps the private equity companies as they get exit liquidity. If you're not getting cross border M and A, you're not getting exit liquidity and you got a 20 to 30 Vix regime. These stocks are going to be in the penalty box, not breaking out, not looking good. And you got to decide what your time, what's your time horizon. If you want to buy them down, now's your chance. If you're trading them, you're probably not interested.
- [28:07]
Josh Brown
I think for many it's a deal's not off but delayed, that's fine but.
- [28:12]
Scott Wapner
But there's also positives from net interest income that we haven't seen that you're going to see from the spread. So there's a lot of puts and takes to the banks and loan growth is not going to fall to negative. They're just not. Especially again if the capital levels are relaxed. So to me there are many ways you can figure this out in terms of analyzing. You want to own the banks, you want to own private markets, companies go for it. But I just think that the valuations are still very compelling and I do still expect activity to happen.
- [28:37]
Josh Brown
Okay, so we'll take a quick break. We will come back. I've got a new move, a new stock that Josh Brown has added to his portfolio. It is in the insurance space. I will tell you what it is. We've already touched on some of these consumer concerns. We do have Stephanie Link making a number of new moves around this market that we still need to get to. Also Josh Brown's hot take on this year's best performing sector. We got a lot to get to. We're back in two.
- [29:07]
Scott Wapner
For 140 years MultiCare has been in Washington prioritizing long term solutions, partnering with local communities and expanding access to care. Together we're building a healthier future. Learn more@mycare.org Are you still quoting 30 year old movies? Have you said cool beans in the past 90 days?
- [29:29]
Josh Brown
Do you think Discover isn't widely accepted? If this sounds like you, you're stuck in the fast. 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 at Capella University.
- [29:53]
Kerry Firestone
Learning the right skills could make a difference. That's why our business programs teach you relevant skills you can take from the courseroom to the workplace. A different future is closer than you think with Capella University. Learn more at capella. Edu.
- [30:09]
Josh Brown
Okay, welcome back. Let's get to some of these moves I mentioned. Josh Brown has a new buy. It's an insurance stock. It's a small cap name and the ticker is knsl and that's Kinsale Capital Group. Tell me more.
- [30:23]
Stephanie Link
You and I judge were on the floor the day this company came public on the New York Stock Exchange. I'm pretty sure it was 2016. I haven't looked at it since. Up until the last couple of months I started following it again. This is one of the best performing stocks in the market so far. But it's early in the company's story. Since it's come public in 2016, the stock is up about 2800% or versus the S&P up about 200%. So it's, it's more than 10x in the market. And the reason why is because it's got this incredible niche in the insurance business all to itself. Excess and supply ensurance. Basically any company that is non traditional and falls out of what a large carrier would very easily want to bid for falls to this company. And they only have 1% market share. It's $120 billion opportunity and they're at like 1.6% of that. So it's a 10 billion market cap. It's not in my best stocks in the market list. This is something entirely different. I think it's a really great long term investment and I'll be in this for a while. Just started establishing a position over the past week or two.
- [31:38]
Josh Brown
Okay, good stuff. We'll follow that obviously. All right, Stephanie Link has another move. You sold Amex. Now I'm thinking like, pay more attention to what you're doing. I mean, come on, you trimmed more Amazon and you sold Amex. But you're making the big case about the consumer being great.
- [32:00]
Scott Wapner
But I'm buying other things. Last week I bought Dr. Horton and Las Vegas Sands and today I'm buying.
- [32:06]
Josh Brown
Well, we'll get to the casinos later. Just give us a chance.
- [32:09]
Scott Wapner
But the point being is I'm not knowing. It is not a negative call on the consumer. It's. I'm up 30% in the past year. I'm up 65% in the past two years with Amex. It trades at 19 times. I was buying it at 13 times. It's had multiple expansion. Yeah, they're seeing a little bit of a slowdown. I do not, I do not think it's horrible by any means. I would absolutely buy it back if it fell, but I just want to take the gains and have cash to buy the things that are actually down and out. Trying to. I'm trying to buy low and sell high, Scott. That's what I'm trying to do.
- [32:40]
Josh Brown
All right, for instance, for instance, Target, you're buying low because you bought more. You bought more today. Okay, so they beat. They did talk about consumer uncertainty. They did warn that February sales were soft. They talked about prices on produce potentially going up in a matter of days. And to follow that, the CFO said at the company's investor day following the report, quote, the company expects to see meaningful year over year profit pressure in its first quarter relative to the remainder of quarter of the year. So why buy more today?
- [33:12]
Scott Wapner
Well, that's why I think it's down. Obviously his commentary, because the quarter itself was actually good. Something that I have been arguing for the last couple of years at Target even in the really bad times is the traffic. They have traffic, they just haven't been able to convert it. But this, this quarter they actually did. 1 1/2% cop may not seem great, but it's against a 4 negative 4,4 last year. They're making progress. Operating margins actually beat. So they get the gist like conservatively guide beat. Operating margins are the most important in my mind along with traffic and comps. And those metrics were good. The full year guidance actually was better than the whisper number in my opinion. And they will say operating margin, small operating margin expansion. I think the CFO is being very conservative. Yeah, I didn't like the comments that they made about February, but that's nothing. That's not Target specific. Wal Mart said the exact same thing. And if I look at the multiple at 12 times forward estimates where I don't think estimates are coming down materially after this quarter, in fact they might go higher. It's a very cheap stock with a 4% dividend yield and I still think they are one of the haves versus the have nots. Right. We talk about Costco and Amazon and Target and tjx. Those are the haves.
- [34:18]
Josh Brown
Is gap a have not because you own that and it's down 7%.
- [34:21]
Scott Wapner
Gap is a very volatile stock for sure. And it's down because tariffs, they do have a exposure to Canada in terms of their sourcing. So I think people are a little nervous. But I don't really own it. So much for the quarter. It's really the turnaround from the fairly new CEO. He's been there for about a year and a half. He was at Mattel. He turned around Barbie. He has revamped the product. Have an entirely new management team at Old Navy Athletic. They're taking market share. Inventories are down and all the Stock trades about 11 times earnings as well. So it's volatile. But I do like the turnaround story. I like the management team the most.
- [34:55]
Josh Brown
Okay, we'll take another break. We will get to Josh Brown's hot take on a hot performing sector. But first, though, let's get the headlines with Silvana. And now. Hi, Silvana.
- [35:05]
Scott Wapner
Hey, Scott. Good afternoon. Ukrainian President Volodymyr Zelensky today called his clash with President Trump Friday, quote, regrettable. In a post on X, Zelinsky said it was, quote, time to make things right and that he was ready to work under the president's leadership to achieve lasting peace. His statement comes as the Trump administration paused military aid to Ukraine overnight. The Trump administration says it is reviewing Columbia University's federal contracts and grants over allegations of anti Semitism, which it says the Ivy League university has failed to tackle. Columbia was the epicenter of pro Palestine protests on college campuses that took place last spring. The government says $51 million in contracts are at stake. And thousands of people are filling the streets of New Orleans today for Mardi Gras. But the weather may dampen the celebrations. The National Weather Service says thunderstorms with winds up to 60 miles per hour are expected today. The two main parades have already moved up their start times, shortened their routes and decided to go without marching bands in a bid to avoid severe weather. Halftime report.
- [36:13]
Kerry Firestone
We'll be right back.
- [36:16]
Stephanie Link
CNBC News Update is sponsored by Morgan.
- [36:19]
Josh Brown
Stanley, where old school hard work means bold new thinking. Are you still quoting 30 year old movies?
- [36:30]
Scott Wapner
Have you said cool beans in the past 90 days?
- [36:34]
Josh Brown
Do you think Discover isn't widely accepted? If this sounds like you, you're stuck in the past. Discover is accepted at 99% of places that take credit cards nationwide. And every time you make a purchase with your card, you automatically earn cash back. Welcome to the Now It Pays to Discover. Learn more at discover.com creditcard based on the February 2024 Nelson Report.
- [36:56]
Kerry Firestone
@ Capella University, learning the right skills could make a difference. That's why our business programs teach you relevant skills you can take from the courseroom to the workplace. A different future is closer than you think with Capella University. Learn More at capella. Edu.
- [37:13]
Josh Brown
All right, we are back. The best performing sector of the year thus far is health care. Yesterday, Goldman Sachs's David Costin recommended that space. I'm told that Josh Brown has a hot take on this area of the market. Do tell us more.
- [37:31]
Stephanie Link
David Costin is absolutely right. But from my perspective, for a reason that he's probably not paying attention to, he's looking at the valuations in these names and the fact that they're acting well when the S and P is negative and they should, they are defensive. I'm looking at the technicals. I have 12 of these names on my list of best stocks in the market. And if I'm not mistaken, I think healthcare now has the most amount of names on that list of all the sectors. AbbVie, Avid, Bristol Myers, Cardinal Health, Gilead, JJ etc. I want to focus on three charts in particular. We'll do these quickly. Sencora Cor. Many of you know this stock but you remember when its ticker was ABC and we used to call it Amerisourcebergen. Very 20th century name. Sinkora is much sexier, much more modern but basically it's a pharmaceutical distribution company. I know Steph knows this name. RSI of 63 not yet overbought. It's within 3% of a 52 week high. Stock looks outstanding. Up 2% during the volatility of this week. 15 times forward PE expecting 12% earnings growth. That's a great setup for something contrarian. Striker Syk look at the way that this stock has bounced off its 200 day moving average. Look at how badly she wants to break above that $400 resistance level. Striker is 4% below the 52 week high. RSI only 54. 3% above its 50 day. 8% above the 200. I would use the 200 as a trailing stop loss. Check it every Friday. Do weekly Friday closes if she closes above. Stay long. Last one trade update on Gilead. I gave you this name at 104 when it first hit my list. I admitted I don't know much about the fundamentals. I love the technicals. This stock has exploded. It's up 22% from January 28th when I introduced it to you. RSIC 74 slightly overbought. I would let it cool off a little bit if you still want to play it. But I think it'll set up and go higher. This is one of the best stocks in the market, hence why it's on my list. The best stocks in the market.
- [39:53]
Josh Brown
All right. Thanks for that good stuff. We do have a market flash I want to tell you about. Hugh sun is going to do that for us. Hi, Hugh.
- [39:58]
Brian Belsky
Hey, Scott. So I am just reporting on CNBC.com that the CFPB, the consumer financial Protection Bureau, has just dismissed its lawsuit that it filed in December against Early Warning Services, which is the operator of the Zelle network, as well as the three major banks running on it, running on it, which is JP Morgan, Chase, bank of America and Wells Fargo. SCOTT so they were alleged to have allowed $780 million worth of fraud since.
- [40:23]
Josh Brown
Its inception in 2017.
- [40:24]
Brian Belsky
And as you know, under the new direction direction of the cfpb, they're essentially reversing everything that the former has done with this. And this is the latest example of this.
- [40:33]
Josh Brown
SCOTT Hugh, thanks for that. Appreciate that. Update from Hugh Sun. We will watch those stocks we said already red on the day. Mike Santoli is next with his midday word. Senior markets commentator Mike Santol is here for his midday word at post nine. What are you thinking about today?
- [41:11]
Stephanie Link
You know, I during squawk box I mentioned one of the things to look for is whether the MAG7, the NASDAQ 100 type names start to act as defense. Again. That would be one sign that we were maybe getting to a different phase. That obviously happened, but it happened not for the considered fundamental reasons. Everybody's been talking about here about Apple's insulated from this or that. The NASDAQ 100 bounced right above its 20,000 mark. It was 9.8% off the high and everyone is seeing all these things line up to say, okay, does this look like at least viable for a trade? Some people think the first mouse gets the cheese and they're going to try to grab it. We were barely above the 200 day average in the S&P 500. So tactically it makes sense that we're kind of letting up on this, selling a little bit led by those defensive stocks that have actually they were like first in on the on the correction.
- [41:55]
Josh Brown
Right.
- [41:56]
Stephanie Link
So they're kind of first out. Banks buckling. Good sign means no place to hide beyond that. You know, obviously I think there's a high burden of proof as to whether this matters. We were straight down for eight trading.
- [42:06]
Josh Brown
Days in the S and P except.
- [42:07]
Stephanie Link
For that phantom one hour rally at the end of the day Friday. So I think that it's enough for now is the way it seems. Although it was not a true comprehensive purge, a lot of people were looking for that.
- [42:18]
Josh Brown
We're still going to be headline Driven. Yeah, obviously. I'll see on closing bell. Just got to keep it short. Speaking of headlines, we have new ones from the White House. Megan Casella is there for us. Meghan.
- [42:29]
Scott Wapner
Hey, Scott. We're just hearing from President Trump responding for the first time to Canadian Prime Minister Justin Trudeau, who came out with very strong words earlier this morning vowing to retaliate against the tariffs that are now in place against Canada. Trump posting on true social saying, please explain to Governor Trudeau of Canada that when he puts on a retaliatory tariff on the US Our reciprocal tariff will immediately increase by a like amount. So he's saying here that this trade war is only going to escalate. Canada, of course, this morning put 25% tariffs on about $25 billion worth of U.S. goods. They say about 75, $80 billion more will be targeted in three weeks time. TRUMP now saying he will respond in kind. All of that is going to be added on top of what's already in place. Scott, I would also add I was just inside talking with White House officials about what comes next here. What we're waiting for. There are potentially some calls being scheduled, not scheduled yet. But I also asked whether the steel and aluminum tariffs that we expect next week on March 12th and the reciprocal tariffs that we expect on April 2nd, whether that will be added to today's tariffs on Canada and Mexico and China. And I was told yes. So that just means gear up. We're only getting started here. The tit for tat is likely just beginning.
- [43:40]
Josh Brown
Yeah, I'm looking at stocks like, you know, Cleveland Cliffs is off near 7%. So we appreciate that update, Megan, thank you. You'll keep that news coming as you get it. That's Megan to sell at the White House. We'll take a break. We do have travel stocks getting hit hard today. Really anything related to the consumer is under pressure. We do have ownership. Got a lot of volatility there. We'll trade it back. We're back. Do have another move to get to. We've had so many today. Carrie, you are out completely now of Booz Allen. Really at the center of these defense cuts. You had been selling it down and now you're out, correct?
- [44:22]
Kerry Firestone
Well, this is a company whose primary in terms of ball sales customer is the US Government. So need I say more? And the government is cutting back. The government is certainly going to cut some of their contracts. It's possible that the government might shut down. If the government might decide that it wants to defer paying bills, no reason to own Booz Allen in this kind of environment, even though we believe over the long term it's a great company and we believe they'll continue to outsource business from the government to Booz Allen.
- [44:52]
Josh Brown
Okay, I want to talk more about sort of travel experience stocks, if you will, because they're getting hammered today too. JetBlue got a downgrade by Deutsche. They're talking about the economic soft patch hitting travel demand. It plays into United, Delta, American. We can show you these names. They're all down today. You have United and Delta. Brian.
- [45:11]
Brian Belsky
We do. And if you think about interest rates going down and you think about fuel costs going down, people forget too that Delta has its own refiner. And so I think this is a pure overreaction. Anybody been on an airplane lately, you know that you're paying top dollar? And oh, by the way, we're coming into the summer travel season. I think this is a layup to be adding to these stocks here.
- [45:29]
Josh Brown
Expedia, Trip booking down. You own booking.
- [45:32]
Kerry Firestone
Yeah, I mean, booking has come. It's a name again, we've trimmed because it's been so strong. But this is also a company that does a lot of business within Europe with Europeans, and that's close to 50% of its business. So we think that it's still an attractive stock here despite this, you know, rumbles of fear.
- [45:50]
Josh Brown
Casinos lower across the board. Caesars on pace for 11 straight down days. Lvs is on a three month losing streak. That's yours, that's mine.
- [46:01]
Scott Wapner
And I've been adding to it because it's going down every day. Just like Broadcom. No, look, the stock is down 12% year. This is a Macao story. This is a China recovery story. And China is actually recovering. So they get 60% of their revenues from this region. But they also had renovations over the last two years that really hurt their market share. So I think the renovations come to a close. They have an analyst day in the spring and I think they're poised to do quite well in the second half of this year.
- [46:24]
Josh Brown
Marriott's price target got bumped up today to 298 from 289 at Morgan Stanley. They're overweight. You own the name.
- [46:30]
Brian Belsky
Yeah, we love it. Especially given the fact that is the gold standard now for these bigger hotels. And they've done a wonderful job integrating all these new properties and they've got more growth coming. And I think that's just a name that you absolutely have to own in the consumer discretionary space, which differentiates itself.
- [46:46]
Josh Brown
What about Disney price target today to 130 from 125@ loop. They think guidance was conservative. Yeah.
- [46:53]
Brian Belsky
So it follows through with respect to how to position the communication services sector in general. You want to neutralize Google, Meta and Netflix and you want to own more Disney and Spotify and @&t. So I think that's a great move to be adding more to.
- [47:08]
Josh Brown
You don't think about it in, in a consumer discretionary type travel way. I mean after the company itself had come out and suggested that it was concerned about the rising prices of parks.
- [47:21]
Brian Belsky
I think the park side of things and how from an operational perspective and how they've managed that is getting better. I think for Disney we're you want to own Disney is because of the cash content and consolidation in terms of the streaming side again. And it's one of the only streamers that make money, Scott. So that's why we like it.
- [47:34]
Josh Brown
Okay. We should note Live Nation is also within the group that is down today. We have final trades coming up next. Are you following the Halftime Report podcast?
- [47:48]
Scott Wapner
What are you waiting for?
- [47:50]
Stephanie Link
Look for us in your favorite podcasting app. Follow the Halftime podcast now.
- [48:05]
Josh Brown
We will obviously have a very busy and active closing bell today with Liz Ann Saunders of Schwab. Alex Lazry is going to join me as well. He was just named CEO of the New York, New Jersey World cup host Committee, a World cup that will be jointly hosted by the U.S. canada and Mexico. Interesting day to talk to him, wouldn't you think? Let's do final trades. Josh Brown, what do you got?
- [48:30]
Stephanie Link
McDonald's refused to sell off stocks. Been green all day. RSI 58. This thing is set up to break out.
- [48:39]
Josh Brown
Ryan Belsky, BMO's own.
- [48:42]
Brian Belsky
BMO's own. Thank you so much. On shoes. Oh, and Owen, discretionary stock that's actually working.
- [48:49]
Kerry Firestone
Kerry Charter Communications. It's U.S. based. It's utility defensive. Lower interest rates are good and it's breaking out technically, the Linkster, Wells Fargo.
- [49:00]
Scott Wapner
I think the banks in general are a buy. And this one has a cost cutting story, an asset cap lift story and strong reserves, 14 times earnings as well.
- [49:09]
Josh Brown
All righty. We will track this very interesting, interesting market into the close. See what happens throughout the afternoon. We'll be on headline watch as well. And I will see you on the bell at 3:00. You've been listening to CNBC's Halftime Report, the podcast. You can always catch us live weekdays at 12 Eastern only on CNBC.
- [49:31]
Scott Wapner
All opinions expressed by the Halftime Report.
- [49:33]
Kerry Firestone
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- [49:40]
Scott Wapner
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- [49:42]
Kerry Firestone
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- [49:44]
Scott Wapner
You should not treat any opinion expressed on this podcast as a specific inducement to make a particular investment or follow.
- [49:51]
Kerry Firestone
A particular strategy, but only as an.
- [49:53]
Scott Wapner
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.
- [50:01]
Kerry Firestone
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- [50:03]
Scott Wapner
Should not be relied upon as such. To view the full Halftime Report disclaimer, please visit cnbc.comhalftimereportdisclaimer.
- [50:11]
Kerry Firestone
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 you need to know in the business world. We'll teach professional skills to help you 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.