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Halftime Report
Your 2025 Playbook 1/2/25
00:44:19
Courtney Reagan and the Investment Committee discuss the first trading day of 2025 and what’s to come for stocks and your money. Plus, Josh Brown says this Joe Terranova name is shaping up to be one of the best stocks in the market. And later, the desk discusses the travel trade in 2025. Investment Committee Disclosures
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- [00:01]
Courtney Reagan
What does it mean to be rich? Is it having more stories to share or time to give? Is it being able to keep your loved ones close or travel somewhere far away? At Edward Jones, we believe the key to being rich is knowing what counts. Your dedicated financial advisor will take a comprehensive approach to your financial strategy to help support what truly matters to you. Edwardjones.com findyourrich Edward Jones Member, SIPC Is.
- [00:32]
Capella University
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 at Capella.
- [01:00]
Scott Wapner
Eduardo 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.
- [01:19]
Courtney Reagan
Thank you, David and Sara. Welcome to the Halftime Report. I am Courtney Reagan and today for Scott Wapner, front center on this first trading day of 2025, the strategy for stocks falling back to back years of 20% returns on the S&P 500. We'll discuss the setup, opportun opportunities and of course, the risks. So joining me for the hour, Josh Brown, Joe Terranova, Liz Young Thomas and Jim Labenthal. Let's get you a quick check on the markets and where we are at about the midpoint of the trading day, higher across the board, that NASDAQ composite leading the way, half a percent higher for the NASDAQ. Dow Jones Industrials just marginally higher and S&P 500 higher by about a third of a percent. I mean what a year obviously that we just closed out Major averages also posting their fifth positive year in six. But the last month obviously not as great as somebody expected that Santa Claus Rally gym did not show up. So as we are looking at the month of January, there was an article on CNBC Probe this morning talking about sort of these three potential landmines or maybe they're positive catalysts. You've got the jobs report, you've got Fed meeting and of course you've got the earnings getting started. So as we're looking sort of broad market, big picture, let's start there on January 2nd. Jim, what are you thinking?
- [02:24]
Jim Labenthal
Well, the things that you listed, I think we feel fairly comfortable that they're in a good position, namely, the economy here in the US Is strong. Profit picture looks good. I mean, we can debate it, but you know, it really hasn't gone down over the last couple of months in terms of estimates for this coming year. Where I think there is uncertainty, and I'm actually happy with some uncertainty, is what presidential policies will come out after January 20th and what their impact will be. And I say that's healthy because a little bit of uncertainty, which probably is the manifestation or the reason for the manifestation of some down markets in the last couple of weeks of December, actually resets the bar that we can go higher from here. Now, let me be clear. I don't think that uncertainty is over. I do see a good year ahead on the back of the economy and the profit picture that I mentioned, but I think you could see a little bit lower before you go higher. And again, that uncertainty and a little bit of a resetting of prices is good in the long run. You just have to kind of buckle your seatbelt and get through whatever volatility the first quarter may bring.
- [03:22]
Courtney Reagan
Liz got some mixed messages today from some of the banks. B of A says, look, we're one step closer to euphoria. Sentiment can stay elevated. We can be in this bull market for a little bit longer. But then HSBC says, well, don't buy the dip just yet. The next few weeks will remain choppy. Where are we? Where are we going?
- [03:38]
Liz Young
So, I mean, first of all, we have to take stock of where we've been, right? We just finished out a positive 23% year after a positive 24%.
- [03:46]
Courtney Reagan
Incredible.
- [03:47]
Liz Young
Typically, right? Typically when the market is up over 50% in two years, you still see positivity in the following 12 months, but not to the magnitude that we've seen. So manage your expectations about what might happen in 2025. So then the big question here after a rough finish to 2024 is, is this tradable, Is this viable or is this the beginning of something deeper in the downtrend? And I think that some of this is tradable and viable. But I would expect that between now and, let's say, inauguration or the end of January, we do see more bumps. We've got earnings season that'll start. We have, as Jim mentioned, a lot of policy uncertainty that starts still here. But I think this is a healthier place to be. We're only up about 1.7% now since the election, which is less extended than we were. The original rally was up 5.3%. We went really fast really quickly. So I think this is a healthier place to be and you can buy some of these dips. But I would expect there to be more bumps along the way, especially with yields at these levels.
- [04:47]
Courtney Reagan
Joe, of course they brought up inauguration. How could I forget that from a possible catalyst or a landmine? I mean, how can you sort of play that card when we just don't know what policy will be, even though the President Elect has laid out some things he wants to do on the very first day of office that could impact the markets?
- [05:03]
Scott Wapner
Well, first of all, as it relates to the incoming administration, I just think there's a lack of clarity on what the reality of their policies ultimately are going to be. So I don't think you waste your time trying to how figure out how do I allocate my portfolio according to what fiscal policy will be implemented or not implemented. I think the, the biggest potential landmine that's in front of us here in the next 30 days is earning the potential for there to be disappointment surrounding earnings growth. And I think you treat the first several weeks of January looking at the market and understanding that the market is trying to develop its personality. We go back prior years. That's what the early weeks of January are all about. What's the personality of the market going to be for the year? Where can the market find leadership? And I think if you study the composition of what we have today, first of all, it's surprising to me that we're actually higher. Let's remember, we came into 2025 kind of skidding on our heels a little bit and with a lot of sentiment reversing itself, expecting that there would be some trepidation and corrective behavior early in the month. You also today have a lot of mean reversion within the market. So the Russell is the best performer of the three major indexes. You've got energy, which is strong. You have some material names which are strong. You have the gold stocks that are strong. And then you have some of the momentum names like Applovin, like Coinbase, like Vertiv, which ended the year in a downslope. Those are recovering. So mean reversion really is a story early on. And I think the first couple of weeks you have to be judicious. You just kind of have to study, okay, what is the leadership form going to take?
- [06:46]
Courtney Reagan
Do you think that what you're seeing in materials particularly is that more that mean reversion than anything else? Because obviously a big laggard for the year, but not sustainable.
- [06:54]
Scott Wapner
I think everything about Today is, is really mean reversion more than anything else. And I think you have to allow time to pass before you could have the confidence to say to yourself, okay, we've got an evolving trend.
- [07:07]
Courtney Reagan
As Joe was talking, Josh, I'm thinking, I was thinking of the word trepidation, which is what you said. But Josh, UBS thinks that many investor concerns are overblown. They're looking at history saying you don't need to worry so much.
- [07:18]
Josh Brown
Okay? I think that's probably when you want to start worrying.
- [07:21]
Courtney Reagan
Okay?
- [07:22]
Josh Brown
The majority of Wall street was way underweight equities going into 2024. They told us we were going to have to pay for the complacency of 2023. The yield curve inverted and the SAHM rule was triggered and blah, blah, blah. I tend not to pay people that are watching. I'm on this show for like 13 years now. People already know what I'm going to say before I say it, but I'm going to say it anyway. Courtney, this is not how you invest, okay? If you want to listen to people's tactical ideas about the first quarter, the first month of the year, you're welcome to do that. And maybe you act on it, maybe you don't. Maybe it's just good food for thought. Maybe it tempers you extra expectations. I'm fine with all that stuff. I think what you really need to focus on here is flows. Very simply put, January should be a great month for flows. Look at the amount of money that poured into ETFs last year. Even though we didn't get a great December in terms of upside for stocks, we had tons of money coming into the ETF market. It's now $10 trillion. Look at 401ks record balances. That's not going to change. The flows will continue to come in, the shocks will come along. We don't know what will cause them. Maybe it's Trump related, maybe it isn't. Maybe it's trade related, maybe something else. Bigger picture, people are investing, margins are growing in Corporate America. From 2001 to 2023, you had the average profit margin growth something like 2%. And then last year was 8%. And now you've got the AI kicker. You've got the Fortune 500 companies that are implementing these tools into their workflows. You think margins all of a sudden going to mean revert negative? I don't think so. You're going to get continued earnings surprises and you've got these gigantic, incredible best companies we've ever had in this country all still investable. Even though some of the valuations, they were elevated, some of them are not. So I think the setup is good and I think you want to tune out a lot of the noise. Don't worry about, you know, oh, today is it, is it rebalancing, tomorrow, is it something else? Just focus on what you personally want to accomplish as an investor and what you need to do early in the year to get that process started.
- [09:38]
Scott Wapner
I'm not saying this is going to occur, but how do you treat the month of January? If the flows were to disappoint, if.
- [09:45]
Josh Brown
We have less flows, who would, I guess, here's a question, who would they disappoint?
- [09:51]
Scott Wapner
Well, you're making that, you're making the observation that generally in the month of January you get strong flows and that should give you confidence about the remainder of the year. If you're observing the flows and you say to yourself, you know what, the flows so far in this month are somewhat disappointing. I'm not saying that's what's going to occur, but let's play the other side of that. If the flows disappoint and you don't see that type of confidence, is there a message there that you extrapolate for the remainder of the year?
- [10:14]
Josh Brown
No, I think it's a great outcome. I don't see why. I don't see why the 73 million millennials who are 30 years plus from retirement want to buy stocks from their parents at all time record highs. So if flows should disappoint in January, we don't get the quote unquote January effect. If the year doesn't get off to a great start, that's probably an even better outcome for most of the people who are investing currently. They're buying lower prices. Look, I'm. This is a message that I refuse to back off from. If you're an investor who is a forced saver and forced buyer in a 401k or otherwise, if you've got money at my firm, at Liz's firm, Sofi, if you've got money with Jimmy Leventhal with one of the funds at Joe's firm, you don't want to buy all time highs if you don't have to. If you're 85, you're not going to like what I'm saying. If you any age under that, you should be happy to hear what I'm telling you. You want the pullback especially early in the year. That kind of front end loaded buying opportunity always works out great.
- [11:19]
Jim Labenthal
That's why I was saying earlier that I, I think a correction would be healthy at this point. Yeah, by the way, by the way, by the way. And all four of us are going to agree on this. Calling a correction is not going to call it a fool's errand, but it's almost licking your finger and sticking it in the wind. We, we might be in the beginning of one right now. We're only off 3%.
- [11:36]
Josh Brown
Whatever it is, the way to do that correctly, call the correction is to always call the correction.
- [11:42]
Jim Labenthal
Well, okay, so that's a great point because something I want to be strategic.
- [11:45]
Josh Brown
About it, not tactical all the time.
- [11:47]
Jim Labenthal
So let me make this point and I agree with what you said, but let me temper one thing that you said about buying at all time highs. You know, a lot of times people call me up and say, well, why are we buying stocks here? They're at an all time high. You know, almost definitionally, stocks are at all time high all the time. Right? I mean, the stock market goes up, granted, 2022, granted, 2015, whichever year you want to pick. But generally stocks are going up. And what I'm saying, not to take anything away from what you're saying, is that if stocks generally go up, you shouldn't get, you shouldn't get flustered by whether we just set an all time high or we're in a correction. You should, and this is exactly what you're saying, Josh, buy when you have the money. Be a long term investor.
- [12:29]
Courtney Reagan
So what do you want to buy then, Liz? I mean, Raymond James is talking about reversion of the mean, but also trying to make a case for momentum changing. Are the Magnificent Seven going to be where we need to concentrate our money or should we think about what Raymond James is saying and let's broaden it out a little bit?
- [12:44]
Liz Young
Well, so first of all, all of this nervousness about yields going back up, I think we can look at it as another gift from the market. So if we don't want to buy at all time highs, you can now still earn good money in cash. Let it sit there, wait for a better entry point and wait for it in certain stocks. It might not all happen at the same time. I think what we've learned in this cycle is that we've had these different points of maybe tech is down, other points where cyclicals are down. I think you'll get opportunities that will roll throughout the year. So to your question, what do you want to buy? The other thing that we have to remember about what's happened, the Last two years is that early in the year for the first quarter you see inflation come in above expectations. And now we know at the end of 2024 market participants started to focus more on inflation again. It had moved over to jobs. Now we're back to inflation and we're worried about it because of a possible Fed hawkishness cycle. So if inflation starts to surprise to the upside again, let's say January, February, March, I think the market gets a little nervous. But there are some sectors that can benefit from that. Materials probably benefits from that. Energy probably benefits from that. So you want to find opportunities in some of those spots that have not been the winners certainly were not. The winners in 2024 are not trading at all time highs. They have had some internal dislocation, but maybe the flush is over. So if we're going into a period where inflation is expected to come in a little bit hotter than we want and we've still got cyclicality at our backs because of possible policy that's going to be stimulative to that, then those could be good buys.
- [14:19]
Josh Brown
What about specifics? Specifics? Pharma stocks did nothing last year. Even some of the GLP1 names actually went down. These stocks are now 8, 9, 10 times earnings with 5 and 6% dividend yields. I have sympathy for people that look at the market and say I don't want to buy Apple at 41. Good news. You don't have to. You may not get as good of a company as Apple, but that's reflected in the valuation. Have added housing stocks. None of them are at all time highs. They've gotten absolutely demolished. Do we really think that there's going to be seven more years of a frozen housing market? Unlikely. This is an area where you say, you know, there's any endless amounts of demand. It's just waiting for a little bit of relief in rates. Even if you don't get that in the first half, you get that in the second half. These stocks can work. They're cheap enough and they've come in blue chip stocks that have had a horrible stretch. Everybody thinks these are broken brands and nothing can go right. Starbucks on Tuesday. This has never happened before. Starbucks came public in 1992. It has never had three consecutive negative uses. Years never happened. Not even once. Just happened. I understand all the problems with Starbucks. I get it. Everybody gets it. The whole world gets it. That's where opportunities get created. Same thing with Nike. Has never had since 1980. 80, okay, almost 50 years. Has never had three consecutive negative years. Just Happen as of Tuesday. Are there issues with some of these companies? Of course. That's why they've been going down for three years. Start looking at these names and ask yourself what could possibly go right if you don't want to pay all time highs for stocks? There's a lot on the menu that's not at an all time high.
- [16:02]
Scott Wapner
I think it begins with understanding that 2025 is probably about how do I generate alpha? The last two years have been a beta chase and you had the ability, and for some people it works. You have the ability to just go buy the S and P and buy an ETF that VO or wherever it is that correlates to the S and P. And you find. Because you're in the beta chase, I think now you look at, you say to yourself, okay, how exactly can I generate alpha? Some of the things that I did towards the end of the year, to Josh's point, is where do you see the reawakening both in terms of earnings growth and price performance, correlating to a particular investment theme? We're beginning to see that artificial intelligence, the thesis surrounding artificial intelligence, now it's going beyond just the semiconductors. It's going into areas of the software names and some of the emerging software names that have been dormant in the last several years kind of reawakened at the end of the year and had relative strength versus the rest of the market even in December when we saw that little bit of a modest correction. So four names. Twilio, Datadog, DocuSign, Zoom. These are four names within the fourth quarter that I entered new positions in. I'm happy with all of them and would be most likely adding to each of those as they move higher because I think they're finally reaching their moment where we will see that alpha generation.
- [17:24]
Courtney Reagan
Hang on to that thought because I like what you were talking about with, with AI. And we had Professor Jeremy Siebel on this morning talking about AI monetization, if we can. I want to roll the sound bite and we can talk about AI and the mega cap tech on the backside.
- [17:36]
Josh Brown
Those people buying the AI, getting those profit and margin expansions, not just investing in it, but saying I'm making enough money to play to pay for the Blackwell chip, that it's worth my while to do that. Now we've seen step one. I'm not sure how much we're seeing step two. That needs to verify all the excitement on AI.
- [18:05]
Courtney Reagan
I mean, Liz, when you're looking at tech, obviously it's this big, big area of opportunity. We've seen it the two years. I was really the key phrase last year. He's talking about sort of give me the step two here. How should you be playing that if you're not really ready to go after individual stocks? How else can you play this AI trait in a smart way? That's not overdone software. Okay.
- [18:27]
Liz Young
And I'll be more specific about that. So first of all, he's not the only person saying that. He's not the only person waiting for the next phase and saying, okay, we've seen all this spending on AI, we've gotten all these promises now where show me the money, right? Show me the tangible impact. And a lot of investors have started to scrutinize companies that are spending a ton on AI, which is what we saw in the second half of 2024. So into 2025 and I put this in the 2025 Outlook software, I think has a lot of potential to be that next step in this AI trade. So a lot of it has been theoretical how things will actually impact profit. Software is the conduit where companies can actually put that to work. Not to mention software has obviously trailed the AI adjacent and AI specific names.
- [19:12]
Josh Brown
We just say to ourselves though, like we're not talking about LLMs this year, we're talking about agentic AI. And Jeremy Siegel's point is, I think very widespread. And I would just point out though, a lot of people are now thinking about just this idea that it's a whole new paradigm. This technology is moving so fast. We're not worried about necessarily LLM AI, whether or not people are going to be using that. We already know they're using that. OpenAI has more than half the amount of monthly users that Instagram has. It's billions of people on these platforms. The question is, where's the roi? The ROI is probably going to happen not with Copilot per se, but with agentic AI, where companies and workers are now managing chat bots and all sorts of agents on the web doing menial tasks for them. I think you're going to start hearing that in the earnings report of the S&P493. Maybe not by Q1, but certainly by Q3, Q4. They're going to have a lot of stories to tell.
- [20:18]
Jim Labenthal
What you're saying is backed up by the epitome of the LM LLM. And you already mentioned copilot, which is Microsoft. So if Microsoft were going to be the beneficiary this year or in the coming years of AI More than it's actually, actually already had a pretty good run. But bear in mind that earnings estimates have gone nothing but down for this year and next year over the last several months. So clearly the analyst community is saying what you're saying, Josh, which is that this is not where the money is going to be made. I happen to to agree. I happen to agree. It's going to be the normal economy that finds way to apply this. Maybe it's airlines giving better customer service representation when, when a flight is canceled. I mean, we can make up anything you want about this, but I do think you need to look astray from the Mag 7, which have been the darling so far.
- [21:03]
Josh Brown
Yeah, you want Microsoft's the worst performer of the Mag 7 last year only went up 12%. That's less than half the performance of the S and P and about a third of the performance of the cues. Microsoft is a spender in the a high trade. So we think that Copilot will ultimately be a great product for them. But it's very expensive. And to Professor Siegel's point, who can buy the Blackwell chip? Well, that's who's paying for it. It's Microsoft, it's OpenAI, it's Alphabet, it's those names. The end user doesn't pay for the Blackwell chip. They pay service fees to those cloud providers in order to utilize the compute. So when you hear the CEO of Domino's Pizza say we spend $50 million in AI, you think they're not going to find a way to turn that 50 million spend into 100 million of incremental profit? Of course they are. They're really good at it. Most of corporate America is really good at turning tech spend into excess profit. And I don't think that 8% growth in profit margin last year was like a random fluky thing. We're pricing equities higher, 21 times earnings for the S&P 500 because we recognize that at its core, the onset of the era is about companies finding efficiencies and wringing efficiencies out of their existing workflows using the technology. It's not just the about giving more money to Jensen Huang.
- [22:30]
Scott Wapner
And all of this means we're going to have tremendous data center demand. And that means that 2024 was not a, to use Josh's word, a fluke surrounding the outperformance of the utility sector. The utility sector is entering a period where it is going to have secular growth. It's entering the period where you're going to see partnerships with These mega cap companies and various utilities. Utilities, because there's this insatiable demand for power generation. We saw it with Constellation Energy. It's a name that we own in the etf. I think it's going to expand beyond Constellation Energy to other utilities. And as a derivative of that, the power generation source is going to rely more and more on natural gas. We'll talk a little bit about that later in the show.
- [23:17]
Courtney Reagan
It's all interconnected. I want to stay with Big Tech for a second Alpha about getting a rare downgrade to market perform from outperform at jmp. Jim, you own this one. What do you make of this call?
- [23:28]
Jim Labenthal
Look, this, this is a stock that has done well, but not as well as some others in the Mag 7. I'm a very strong believer in it. It is my largest tech position. So, you know, there my money is where my mouth is. I think it's a combination of valuation and technology. And notwithstanding the fact that they've got to spend on AI as well, they have a lot of applications that make money. They also do far more than just search. You know, if you think about YouTube as an example, or if you think about Waymo, which has now established itself as the leader, not amongst the leader, but the leader in autonomous driving in robo taxis, I think there's a lot of shots on goal for Alphabet. I think it's a very forgiving valuation, you know, Other shots on goal include the quantum computing breakthroughs that they're making that will take some time to monetize, make no mistake, steak about it. But it's a combination of R and D and profits right now that make me like Alphabet.
- [24:18]
Courtney Reagan
Josh, you removed Alphabet, though, from your list of the best stocks in the market.
- [24:22]
Josh Brown
One of the names it's fallen off. I own Alphabet. I've been a seller. I've sold it twice in the last six months. I still, I'm still in the name. I just, I, I, I love it. I'm not in love with it. Is that right?
- [24:35]
Jim Labenthal
I get it. You own it, you trimmed it. We're not going to, like, we could argue about that, but we're not going to. We're both in the name.
- [24:40]
Josh Brown
Just think about this name as like a headline risk name for the first half of this year.
- [24:44]
Jim Labenthal
What, regulatory, Judiciary?
- [24:46]
Josh Brown
Well, no, so I already think that's in the price because it's 20, it's, it's like 20 times earnings. It's significantly undervalued versus the rest of the NASDAQ giants. I think that regulatory overhang is already in the price that I'm less worried about, especially with Trump coming in.
- [25:03]
Scott Wapner
Sundar VIP passed tomorrow.
- [25:05]
Mike Santoli
Mar A Lago.
- [25:07]
Josh Brown
If they don't have it yet, they can afford to buy it. I think the bigger issue here is more and more you're going to hear about search moving to other LLM platforms. You're going to hear about meta search, you're going to hear about OpenAI search. Sam Altman spoke with Andy Ross Sorkin toward the end of the year. He said OpenAI's ChatGPT search search is maybe the best product they've ever launched. You should take him at his word. He's not a stock promoter. He doesn't even own any shares of OpenAI. I believe Sam when he says that it's not that Google is like, screwed. It's just that they've never had a competitor before. Now they have six. Perplexity is not going to stop what they're doing. So I find my own search queries increasingly happening away from Google. Google's doing its best to shove Gemini down our throats at the top of the results. Hopefully that works and they can monetize that at the same rate. They've been able to monetize the blue links, but again, they've never had to fight from a defensive position. Since they've come public, they've been the dominant search engine. So I like Google. I think we can make money here, Jim. It's cheap enough that I think some of these risks are in there. I just feel like this year is Amazon, so year I just.
- [26:21]
Jim Labenthal
It's not your favorite. I got it.
- [26:22]
Josh Brown
Yeah, not my favorite, but I'm still there. I don't want to abandon it completely.
- [26:27]
Courtney Reagan
All right, we got a great discussion going, but we got to take a quick break. So coming up, new year, new calls will debate the analyst activity on Uber and more on our calls of the day. That's coming up next. Stick with us. Halftime is back in just two minutes.
- [26:43]
Capella University
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 at Capella. Edu.
- [27:14]
Mike Santoli
Get a head start on 2025 with CNBC's Big January, the hottest tech event CES from Las Vegas, the the jobs report and meet the future of biotech and Pharma at JPM Healthcare. Check out the AMEX golf tournament from California, Inauguration Day and the meeting of world leaders in Davos. Plus the first Fed decision of the year. The investing edge you need to start the year ahead of the game. Cnbc.
- [27:58]
Courtney Reagan
We are back. Let's get to a move from Joe. Joe, I almost got to this in the last block, but then our conversation went elsewhere. You bought the biotech etf, the xbi.
- [28:07]
Scott Wapner
Yes. So the genesis of this is there was a financial stock, new holdings. I had purchased that stock a couple of months ago. Horrible trade. Apologize to the viewers, got stopped out of it, Wanted to do something, something with the capital. I've traded in and out of the XPI and multiple times in 2024. Yes, I've been tactical, Josh. I apologize for that. And I think with the xpi, you have to be tactical. The XPI ran up to 105 back in November, pulled back below 90 more recently in December. We have the JPMorgan Health Care Conference coming up in San Francisco next week. I think that's a potential catalyst. I also think in this environment, with the beginning of the year, we're going to get this mean reversion sentiment affecting flows. I think that could benefit for the SBI. So, yeah, the SBI somewhere around 92. I'm willing to take the risk here with a very tight stop below 88.
- [28:55]
Courtney Reagan
Okay, well, let's hit our call of the day. Uber added to Goldman Sachs conviction buy list as it comes off its worst month since May 2022. Josh, you own this one.
- [29:05]
Josh Brown
This is the most mispriced stock in all of large cap tech. I know it's not a tech stock by taxonomy. I know. It's. It's considered a transportation. I cannot believe the, the ridiculous, the ridiculous idea that this company's cash flows are going to be affected by robo taxis that are not on the road from Tesla. But that's kind of what happened. I think everyone understands that autonomous is the future. If you're sitting at Uber right now, all you're doing is rubbing your hands together. I can't wait. The single biggest problem for Uber is capacity. They don't have enough rides in order to do this the way that they really want to do this. So if there are autonomous vehicles in cities all over America, those can be aggregated into the Uber app. Uber is currently working on a pilot with Waymo in the cities of Austin and Atlanta where the Waymo cars will be included as an option into the Uber app. Uber is going to be the demand aggregator for the autonomous age. People selling the stock because they think it's like roadkill because of the cyber taxi or whatever. They completely missed the story. It's one of the fastest growing companies right now. They're going to have enormous cash flows this year, trading under 30 times earnings. And they haven't even announced their buyback plans yet, which is something that we expect at some point during the month of January or February. So I love the stock. I added to it on the recent slide. I've been in the name for a very long time and I still think it's a triple digit name at some point. Once we get past this complete misunderstanding of what the actual story is going to be.
- [30:48]
Courtney Reagan
I love the passion. I hear it. Let's get over to the headlines with Pippa Stevens.
- [30:53]
Pippa Stevens
Hey, Courtney. The FBI says that the U.S. army veteran who drove a truck into a crowd in New Orleans on New year's Day killing 15 people acted alone. In a news conference updating the investigation, the agency added there was no connection at this time between the attack in New Orleans and the explosion of a Tesla cybertruck outside the Trump Hotel in Las Vegas. Police in South Korea have raided the headquarters of Jeju Air and the operator of the airport airport where a 737 crash landed on Sunday, killing 179 people. Investigators said they planned to seize documents and materials related to the aircraft's operation and maintenance. And Israeli Prime Minister Benjamin Netanyahu was released from the hospital in Jerusalem today after prostate surgery. In an announcement on social media, the prime minister's office said Netanyahu was in good condition following a, quote, successful end to his surgery. Courtney, back to you.
- [31:49]
Courtney Reagan
Thank you very much, Pippa. Well, straight ahead, trade update, Josh Brown's best stocks in the market. There are only two names on the list today. We will bring you one of those stocks after the break. You'll have to stick around to hear it. Halftime. We'll be right back.
- [32:06]
Capella University
At 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 course room to the workplace. A different future is closer than you think with Capella University. Learn more@capella.edu.
- [32:22]
Mike Santoli
Get a head start on 2025 with CNBC's Big January, the hottest tech event, CES from Las Vegas, the data, the jobs report and meet the future of biotech and pharma at JPM Healthcare. Check out the AMEX golf tournament from California, Inauguration Day and the meeting of world leaders in Davos. Plus the first Fed decision of the year. The investing edge you need to start the year ahead of the game. Cnbc.
- [32:54]
Courtney Reagan
Welcome back. Well, Josh, you've got a new name that just made your best stocks in the market list.
- [32:59]
Josh Brown
Yeah, it's eqt, which, which is. I know, it's. He's saying that you like the kid in classic. Oh, me.
- [33:07]
Scott Wapner
Keep going.
- [33:08]
Josh Brown
Joe owns EQT Very, very low relative to where it's trading today. All right, you cool now? Okay. EQT is about to break out. Every technician is talking about it because it's bumping up against this 48. Resistance level hasn't quite punched through yet. It's one of the only names right now Amongst large cap US stocks that is within spitting distance of a new 52 week high because of this flush that we've had in December. It's in a sector that really hasn't done anything in a long time. It's one of the better fundamental stories in that sector which is how it hits my list. And if in fact it does break out above 48, Joe is going to be happy and a lot of technicians who are anticipating this breakout are going to be happy as well.
- [33:52]
Courtney Reagan
Then I guess I get to be the teacher. So Joe, it's now your turn. Give us your thoughts on equity.
- [33:56]
Scott Wapner
I mean Josh could keep going here. The stock, the stock broke out. It was, it was in a little bit of a sideways pattern in the second quarter. It broke out above the low 40s range. But prior to that, what this company fundamentally really benefits from is its location, its location, its proximity to the data center demand that I mentioned before because natural gas is becoming a more important source of power generation. In particular when we spent the last four years prioritizing decarbonization. So used to be at a point where utility, if the price of natural gas got to, let's say $4.25, the utility automatically would switch to coal. Now because of decarbonization, they no longer have that ability to switch the coal. EQT sitting where, where it does in the Appalachian really benefits geographically it's a quality company. It's a little bit rich on valuation, but you're paying a premium for I think what strong fundamentals. And to Josh's point, are any other.
- [34:55]
Josh Brown
NAT Gas names worth looking at that that haven't gone up as much for the same reasons or is this very.
- [35:00]
Scott Wapner
Unique, not where you find a strong balance sheet like you get with equity? The Problem with a lot of the natural gas names is they're written with a lot of debt.
- [35:09]
Courtney Reagan
And natural gas, of course, up 38% in the last two months is a name there that I know. Jim, you, you don't have, but you have thoughts on Cheniere?
- [35:17]
Jim Labenthal
Yeah, well, you know, if we think about why natural gas is up and you quoted a short term price, it's basically more than doubled over the last year. Was well below $2 during the middle of 2024. And why is that? A lot of it has to do with what's going on. Russia, Ukraine, and over the weekend there was the termination of the deal by which Russia has been shipping natural gas through pipelines through Ukraine to Europe. So what that means is there's going to be more liquid natural gas, that market's going to expand. There's going to be more exports from the US which is what Cheniere does. It's a pipeline company, but it has these export terminals along the Gulf Coast. There's going to be growth in LNG cargoes going to Europe and elsewhere. That is why natural gas is up. And I want to just go back to a year ago. Why did natural gas go down so much? It was because there was a moratorium placed on building new export terminals. Insiders will say, hey, we had enough export terminals. The point that I'm driving at though is export terminals and the ability to export, export LNG is what's causing the price to rise. That doesn't look like it's going to stop anytime soon. You know, maybe some people say, hey, cold snap, polar vortex in January. Okay, maybe that's why natural gas is at 378 instead of 350 or 340. But I think we should expect, expect that under this administration, the idea of below $2 or even $2.50 Natural gas is unlikely.
- [36:37]
Courtney Reagan
I was just going to bring up that polar vortex. It's flipping freezing outside. Liz, when we talk about, we could broaden out and talk about the energy space. Actually, the leader here today, up about 1%, obviously hasn't been super strong over the past year. What do you make of expectations for the sector, say 2025 or. I don't know, pick your time range.
- [36:54]
Liz Young
Yeah, I mean, I mentioned this a little before. So if we have a resource resurgence in inflation, energy could be one of the beneficiaries of that. Energy, if you look at earnings, is expected to turn positive earnings growth in 2025, which is very different from what happened in 2024, but still kind of lackluster. Results. Although we've got oil prices that have been sort of in a range for a while, I do think energy is an opportunity in 2025, but I wouldn't call for it to be a double digit positive opportunity. Opportunity.
- [37:23]
Courtney Reagan
Fair enough. It is leading the way here today, at least in the very short term. Well, coming up next, Mike Santoli joins us for his midday Word. We're back right after this. We're back on halftime. Senior markets commentator Mike Santoli joins us with his midday word as he does every day. Mike, what do you make of the action today? Obviously very beginning of the brand new year. Got a lot of things to, to watch for in January. What are investors doing with their money right now to kick us off?
- [37:54]
Jeremy Siegel
Yeah, Court, it's pretty unsettled actually. The index action so far today has been pretty squirrely. There's been several attempts to actually have some of those new year flows come in and stabilize the tape to mix results. There's still more stocks up than down, but it was very strong, aggressively upside breadth at the open. The dollar ripping higher, treasury yields going from declines to, to further rise over the course of the morning has definitely placed the cyclical parts of this market in check. On paper, we have the makings for a pretty good relief trade. Majority of stocks were down pretty significantly last month. The median S and P Stock was down 6 and a half percent in December. It feels as if we're oversold enough to bounce. But those things standing in the way now, I would say for the S and P itself, Tesla, Apple, those are sort of individual stories that are affecting that. That's the most of the pressure on the headline level. So I think we got to let the first day flows kind of wash through this market and see what we're left with at the close.
- [38:51]
Courtney Reagan
You went exactly where I wanted to ask. If you're looking at the charts, it sort of looks like we saw the sharp decline here in the last couple of minutes. And so when you're talking about the S and P, you're focusing on Apple and Tesla for the reason that's, that's.
- [39:00]
Jeremy Siegel
Definitely in terms of the sort of percentage of, of downside action. That's where it's coming from. But again, you've sort of lost a lot of momentum underneath it too. You had, you know, the, the average, the equal weighted S and P was up nicely earlier. Now it's around, it's around flat. So not to make too much of it, we've been kind of turning around these levels for a few weeks here. But you know the market, you got to keep it on a shorter leash, I think, unless it can prove that, that, you know, the new year flows are going to, going to benefit it.
- [39:27]
Courtney Reagan
Sure. Tesla down 7%. That is a big one to watch. Obviously a big valuation on that. Mike, thank you very much. Well, coming up, the committee's take on one of the hottest trades over the last year and how they're going to play it in 2025 halftime. We'll be right back. Welcome back. The travel trade has been red hot over the last year with stocks like United Airlines one of the best performers in the S&P 500 last year up about 130%. Joe, you own it in the Terra Nova ETF. What is the setup for this year?
- [40:15]
Scott Wapner
Look, candidly, the ownership that we have in the airlines relates specifically to momentum and it relates to the factor of momentum finally emerging for airline names like Delta, like United Airlines Lines. We've known what the balance sheet has looked like, the quality side when you're looking at a multi factor approach to investing in the airlines themselves. But you finally, in the middle of the year, sought the upward momentum and that's the reason it was technical in its nature, why we own these. I think you're entering a period as you look ahead here in the first quarter and into the second quarter where you always hear about the effect of weather, what weather is going to mean to you at as an investor, whether you hold these names or you don't. I'll leave that to you guys to do the research. But I think you're going to hear about that headwind. And I do think traditional to what we've had in prior years, the airlines are going to be affected by weather issues.
- [41:08]
Courtney Reagan
And speaking of weather, you've got a hot take on a cold trade. Jim.
- [41:11]
Jim Labenthal
I'm a little, I'm a little angry, Courtney, and I want to be careful here because I've never used my position on this show as a bully pulpit. I'm just going to factually now you got our attention.
- [41:22]
Courtney Reagan
Okay, what do we got?
- [41:23]
Jim Labenthal
All right, you want to talk weather? I was out in Park City, Utah for the last week. We got two feet of new snow. That's every skier's dream. Like, let's go skiing, guys. Sounds good. Except the problem is Vail Mountain, which owns Park City, didn't let any of us know that there was a ski patrol strike going on. So less than 20% of the mountain was open at the peak holiday time. All right. That meant I got a great time looking at the Snow from the ski lines, which stretched on for an hour. Here's my point. Yeah, I'm a little, little angry at Vail Mountain. All right? And it's down 6% today. And you know why? And you can see why the stock's been lousy for quite some years. If you want to be in a travel stock, if you want to run a travel and a leisure company, you darn well better give the experience that you're advertising because if you don't, you will get negative PR and you will get non repeating customers exactly what you don't want.
- [42:10]
Josh Brown
I love this as like a new segment. Segment for halftime.
- [42:13]
Jim Labenthal
Things that things that things.
- [42:14]
Josh Brown
Patty, this is like, you know what really grinds my gears with James Lebenthal.
- [42:21]
Jim Labenthal
Yeah.
- [42:21]
Josh Brown
I mean, can we do this?
- [42:23]
Courtney Reagan
Yeah, let's, let's do it.
- [42:24]
Josh Brown
What else? No, I'm just kidding.
- [42:26]
Courtney Reagan
We're gonna have to leave it, get.
- [42:27]
Jim Labenthal
Fired, get fired up for a love Delta Airlines. Great experience there.
- [42:30]
Liz Young
Okay.
- [42:31]
Jim Labenthal
Great experience.
- [42:31]
Mike Santoli
Wow.
- [42:32]
Courtney Reagan
You don't always hear people say that about airlines in general when it comes to personal experience. Well, coming up, another standout sector in the last year debate on financials. The five names that Joe is watching in that space after we write back. We are back. We want to hit the financials, of course, earnings coming up here pretty soon. And Joe, you are very overweight when it comes to the financials in your etf.
- [42:58]
Scott Wapner
When it comes to financials, I'm very.
- [43:00]
Courtney Reagan
Yes, that's what I mean. Compared to the S&P 500 weightings, 28%.
- [43:04]
Scott Wapner
Exposure we have in the ETF. And when you see the type of performance that the financials had at the end of the year, you begin to observe and study what exactly is your ownership doing in that type of an environment. And what you're looking for is where can you find the names that you own that are actually acting in a very resilient way relative to the overall sector itself. So if you look at the financials and what we own at 28%, there were five names that stood out. They stand out and I think they stand out for 2025 and their ability to generate Alpha Square, PayPal, Trade Web, MasterCard, which we all know about. And then lastly, American Express. I would focus on Square, PayPal and Trade Web because these are three names that have kind of been dormant over the last several years in terms of their performance. They've reawakened. And I think the reawakening that they're experiencing has some sustainability as we move through 2025. And I like the resiliency that they displayed at the end of the year relative to the rest of the sector.
- [44:09]
Courtney Reagan
Josh, you're in block of those five names.
- [44:11]
Josh Brown
Yeah, I'm going to co sign Joe on block. This name actually got written up last week as one of bank of America's top names for 2025. And it's not hard to understand why. They've got this dominant square payment processing network that is throwing off a lot of cash. And then they've got the cash app itself which is going to increasingly become part of the way people pay for things, not just peer to peer. Then you've got this kind of call option. On the bitcoin treasury idea, I think they've got like a $8 billion worth of Bitcoin on the balance sheet. Maybe it's higher by now. So there's a lot of things to like about the setup here. And compared to a lot of other publicly traded fintechs, it's not an insane valuation and it's probably under owned relative to it's a $50 billion market cap. So it's not quite, it's not quite a giant financial company, which means it's probably under owned.
- [45:09]
Courtney Reagan
Liz, if we zoom out a little bit, we look at financials as a sector up 28% over the last year. I mean, not a bad performer. We think we know what the Fed is going to do here at the end of the month and ahead of earnings. What would you be focusing on for the financial sector?
- [45:22]
Liz Young
Well, we know financials always set the tone for earnings season And I think 2025 is expected to be a friendly environment for financials and even the traditional financials. So I would stick with them. But I think that there's probably some volatility in the rate market that's going to continue to put pressure on them in the first quarter.
- [45:38]
Courtney Reagan
Got it. All right, well stick with us. Final trades the first one of the new year coming up on halftime. We'll be right back. We're back with final trades. First one of the new year. Jim.
- [45:53]
Jim Labenthal
It may be mean reversion, but I'm going with it. Applied materials.
- [45:56]
Liz Young
Liz, materials. I think they're oversold, due for a bounce.
- [46:00]
Scott Wapner
Joe, Jimmy Shoes said short. Mtn Bell, he said his piece.
- [46:05]
Courtney Reagan
He grind his gears.
- [46:05]
Scott Wapner
He did coupang.
- [46:07]
Josh Brown
Okay, Josh, Starbucks Turnaround happens in 2025.
- [46:11]
Courtney Reagan
I want to get it kick started right now. I need another cup. That does it for halftime. The exchange starts here with Kelly Evans.
- [46:19]
Scott Wapner
You've been listening to CNBC's Halftime Report. The podcast, you can always catch us live weekdays at 12 Eastern only on CNBC.
- [46:30]
David
All opinions expressed by the Halftime Report participants are solely their opinions and do not reflect the opinions of CNBC, NBCUniversal, their parent company or affiliates, and may have been previously disseminated by them on television, radio, Internet or another medium. You should not treat any opinion expressed on this podcast as a specific inducement to make a particular investment or follow a particular strategy, but only as an expression of an opinion. Such opinions are based upon information the Halftime Report participants consider reliable, but neither CNBC nor its affiliates and or subsidiaries warrant its completeness or accuracy, and it should not be relied upon as such. To view the full Halftime Report disclaimer, please visit cnbc.com halftime reportdisclaimer is it.
- [47:10]
Capella University
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 at Capella Eduardo.