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Halftime Report
Your September Strategy 8/29/25
00:44:14
Scott Wapner and the Investment Committee debate whether a September stumble is coming. Plus, we discuss whether the tide is turning for software stocks. And later, the Committee share their latest portfolio moves. Investment Committee Disclosures
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- [00:00]
Stephanie Link
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Scott Wapner
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Eamon Javers
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Jim Lebenthal
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Scott Wapner
Year@Lifelock.Com specialoffer terms apply. I'm Scott Wapner, and you're listening to CNBC's Halftime Report, the podcast the most profitable hour of the trading day. We record this live weekdays at 12 Eastern. Listen in, Carl, thank you very much. Welcome to the Halftime Report. I'm Scott Wobner. Front and center this hour, all that lies ahead for stocks is a historically tough month is about to begin. We'll discuss the road ahead for the markets, the AI trade and much more with the investment committee. Joining me for the hour, Stephanie Link, Jim Laventhal, Amy Raskin, Jason Snipe. Let's go to the market, show you the picture today. We do have some red across the board. You know what happened by now with the PCE report, which we're going to get to. But we do wrap up this week, I think, with new questions about the state of the AI trade. Following the Wall Street Journal reporting today, Alibaba has a new chip to fill the Nvidia void in China. You had obviously Nvidia not trading well since its earning chips are down today. Broadcom reports next week, Micron's down, AMD is down. The SMH is having its worst day since April. Stephanie Link, where does that leave us?
- [02:11]
Stephanie Link
I mean, these stocks have had such a nice run. I'm looking at Broadcom in the past year of 84% and that's a huge, huge number. It's rerated. The whole group has rerated. Are there question marks about maybe the growth isn't as fast as we have been seeing over the last several years, of course, but there's a couple of stats we Got from Nvidia and I don't own Nvidia, but I obviously we all pay attention to it. Long term, they see 3 to 4 trillion dollars in CapEx and data center spend between now and 2030. And they did not, they did not change that, that they reiterated last yesterday. That means the CAGR long term is 40 to 45%. That's still very, very healthy growth. Short term, the data center numbers still growing 17% sequentially from the past quarter that they just reported to next quarter. That's over $7 billion.
- [03:04]
Scott Wapner
I know. Let me stop you one second. No, no, no, stop you one second. Let me stop you just one second.
- [03:07]
Stephanie Link
I'm just telling you the.
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Scott Wapner
I know, I got you, I got you. You asked a question. Is growth not what it was? Of course. So then why wouldn't you say of course to the question of, well then why do the stocks deserve to trade to what they're trading at? Why does the stock appreciation justify itself if the growth rates are going to slow in critical areas like they are with Data Center? I know the numbers are still extraordinary.
- [03:38]
Stephanie Link
They are, they are.
- [03:39]
Scott Wapner
However, if you're telling me that the growth is not what it was, well, it was. Why should everything else be like it is?
- [03:47]
Stephanie Link
Well, you're, you're talking about Nvidia trading at 25 times forward estimates. And they, they just told us that the industry is going to have a CAGR of 40 to 45% and they're the number one player in the industry. Same deal, by the way, with broadcom. They've got three ASIC custom ASIC customers that are going to grow 60% year over year. The growth numbers are still very, very worried.
- [04:08]
Scott Wapner
Now about Broadcom for next week. The stock's down 5, almost 5% today. Why, why is Broadcom going to have a better reaction following its earnings than Nvidia has?
- [04:18]
Stephanie Link
Okay, because the reason why I own Broadcom over Nvidia and that is because of the diversified total revenue mix. So 31% comes from data center AI, 41% comes from software and that's VMware and that's recurring revenue and that's higher margin business. And then the rest is kind of the cyclical troughing business, like the enterprise networking stuff that Marvell by way told us yesterday is bottoming. So I like the diversification, I like the inference in terms of expectations. If you have inference and you have large language models and that's increasing and you need inference for that, that actually means you need more custom ASIC chips.
- [04:55]
Scott Wapner
Isn't Marvell down a bunch today.
- [04:57]
Stephanie Link
That's because they lowered guidance. I don't think that Broadcom is going to lower guidance by any stretch. And they also, by the way, have the industry leading gross margins, operating margins and free cash flow. So my point being is you're asking about the broader smh. I think you have winners and you have lo losers. But if I had any lack of conviction or less conviction in the spending environment, yeah, that's when I would have a problem. I'm not concerned about the absolute growth numbers. I'm concerned more about if that spend slows. And you don't think 3 to 4 trillion dollars by 2030. That's crazy. That's way more than anybody was expecting. I mean, I was thinking a trillion. That's a lot too.
- [05:35]
Scott Wapner
Okay.
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Stephanie Link
But three to four is big.
- [05:36]
Scott Wapner
Amy Raskin, how do you see it? After the week in which we had Nvidia numbers stock ran up a ton into the pr stock hasn't traded well out of the print. They maybe with their earnings report raised more questions than they have before datacenter growth, what's the real business in China going to look like, etc.
- [05:54]
Amy Raskin
It's sort of interesting because we do own Nvidia and we've owned it for over 10 years now and it's literally like a 30,000% increase. But I'm going to take sort of the opposite side of Stephanie. I think that 3 to 4 trillion number is crazy. I don't think you're ever that we're going to get there. I don't think you can get there and earn a return on those numbers. And at some point that's going to matter. So we own it. We're, we're underweight. We have huge gains in it that we've trimmed. We keep trimming, we keep trimming, it keeps coming back up. But I do think it's not going to happen anytime soon as long as there are shortages. Ironically, that sort of makes people buy more because they're trying to keep the chips out of other people's hands and get as much as they can. So I do think you're having a big pull forward. I think that's going to continue, which is why we haven't sold it outright. We're still in the stock. So I think you still have a while there. But I do think at some point these inflated expectations are going to come home to roost and you're going to see another big pullback in the stock.
- [06:51]
Scott Wapner
I mean, you do have a highly concentrated customer base. We know that CNBC yesterday, Nvidia's top two mystery customers made up 39% of Q2 revenue. Customer A made up 23. Customer B, 16. That's higher than the same quarter a year ago when Nvidia's top two customers made up 14 and 11% of sales respectively, according to their own filing. We asked Altimeter's Brad Gerstner this very question yesterday when he joined us. He said not a big deal. Listen, it's kind of like saying the United States exports are dependent upon Europe, India and Southeast Asia. Right? The fact of the matter is these companies are as big as countries. They are the biggest buyers in the world. They're the only ones with the balance.
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Jim Lebenthal
Sheet and the free cash flow that.
- [07:40]
Scott Wapner
Can scale up, compute at this level, at this scale, it's a huge national advantage. I don't view that as a, as a problem. In fact, I view that as an asset. What do you say to that kind of response to a little bit of what you're saying?
- [07:55]
Amy Raskin
Well, that's not my issue isn't the customer concentration. My issue is whether those customers are going to be able to charge for their AI and get returns on it. And I just think, I think expectations for I have gotten ahead of themselves. You saw the MIT report that said 95% of customers using. I don't see a return on it. I think it will come, but I think it will come over a longer period of time between now and 2030.
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Stephanie Link
But one sec. That's why I own Broadcom, because it's not just AI and data center like we just talked about.
- [08:24]
Scott Wapner
I know, but it's. Don't you think it's being valued on AI and data center more than anything else? I think, I mean, come on.
- [08:30]
Stephanie Link
I think certainly it is rerated, no question. But I think the margins are sustainable because of the software business. That's when it started to re rate when they expectations aren't quite as high, they're not nearly as high. Again, maybe they don't get to 3 to 4, 20, 30, but even if they got to a trillion, that is enormous. And you want to own the best two companies and that is Broadcom and that is Nvidia.
- [08:54]
Scott Wapner
Let's look at three months. You don't think that expectations have gone higher.
- [08:59]
Amy Raskin
You just know expectations certainly come higher, but it's not, it's not the bellwether name. I do think the diversification helps. It's a trillion dollar market cap versus a $4 trillion market cap. So I think that sort of tells.
- [09:12]
Scott Wapner
You a little bit about Mr. Snipe.
- [09:14]
Jim Lebenthal
What do we do?
- [09:15]
Jason Snipes
Yeah, listen, I, you know, I hear both of the points and I can appreciate both of them. I think for me, as it relates, whether the capex number is $1 trillion or 3 or 4, it doesn't matter. What I could say is the guidance is very strong and obviously the AI theme is not moving anywhere. Right. So as I look at the guidance based on expectations.
- [09:38]
Scott Wapner
Yes, right.
- [09:39]
Jason Snipes
Absolutely.
- [09:39]
Scott Wapner
No, I know, but not all expectations. I have expectations my football team is going to do great this year. Yeah. Well, what if they don't? That's not a guarantee. No, it sure looks good on paper.
- [09:50]
Jason Snipes
It's not. But what I will say is even when we think about the concentrated return, we're talking about the greatest companies in the world that are spending money with Nvidia right now. If we go back a few months ago when all the announcements about the Middle east and the investment there and in the EU and sovereign and enterprise, there is opportunities elsewhere outside of the hyperscalers. So I don't think this theme is slowing down anytime soon. Yes, there has been some digestion. A lot of these companies have run a lot into these prints and through.
- [10:22]
Scott Wapner
Through this whole year. But I don't, not lately. I mean, lately stocks haven't done well. Nvidia, Amazon, Metam, Microsoft month to date as we're about to wrap are all negative.
- [10:33]
Jason Snipes
And for me, I think it's just, it's just a season of digestion. We come, we talk about this all the time. The stocks run a lot into the print. Then there's a little bit of digestion post print and then they really accelerate when we see something else. So I think that's where we are right now.
- [10:47]
Scott Wapner
Pharmacist, you're on your. Everybody, I've given you the opportunity to speak. My gavel's ready, but go ahead.
- [10:55]
Stephanie Link
All right.
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Jim Lebenthal
Well, I'm going to take it maybe slightly different direction. I don't have a strong opinion on whether you're right, Amy, or whether you're right, Stephanie, on the growth rate. What I would say is that a forward multiple on video of high mid twenties gives a margin of safety. If you want. As far as, as far as the peg ratio goes. To me, anyway, let me, let me make the bigger point that I want to make here is what we do is both science and art. The science is the PEG ratio. The art is looking at the markets, looking at sentiment, looking at what you just said, Scott, about where some of these stocks have traded, which is to say down and doing what I've been doing this month, the last few weeks, which is trimming and raising cash. Now I'm not very comfortable doing it. And this is the science of what is the market saying in terms of sentiment as we enter September, a notoriously tricky month. As I look at my portfolio, I see a lot of stocks that have been trading above, above where I think fair valuation is. I've been trimming them. And what you've been noticing, Scott, and everybody watching is I haven't put money to work, haven't put it back to work for several weeks. I think September. This is the art.
- [11:53]
Jason Snipes
This is the art.
- [11:54]
Jim Lebenthal
Scared to death. Nothing scares me. I'm a former nuclear submariner. There you go, your honor. Steely eyed killer of the deep. That's no point. What I see, what I see is opportunity. It's coming what you just said and I loved it. The 95%, the MIT study of these companies that have not yet reached a gain from AI, that is opportunity. I see that ready to grow and I see the sentiment starting to roll over in the stock market and that's going to be opportunity to put money back to work in the next couple of weeks.
- [12:21]
Scott Wapner
Speaking of the not euphoria, it's not, I don't think reach that level. But like Jensen Huang talks about selling Blackwell to China, the market gets all excited about it. It's like, oh, we think it could happen, we think it could happen. I don't know. Not so fast. What makes you think that all of a sudden they're going to be able to sell their best chip, their highest performing chip in China and China without letting it happen? Well, not both sides, right. That the China will take it. Now you have the Alibaba news today, which sort of is why Nvidia is down the way it is, but also that it's not going to come at a cost. Well, what if they'll have to pay to the government? Are they going to want that? They're going to want these older generation chips or they're going to be able to make their own from the Alibaba's of the world. I asked Stacey Raskin, he's like the top chip analyst in the space about that issue. Are they going to be able to sell it in China? Here's what he said where I keep.
- [13:21]
Jim Lebenthal
Coming back to this. I'm very confident that there was demand for these parts in China, whether they're Hopper or whether they're Blackwell. I just don't think there is enough local capacity of locally sourced Parts to support the local demand for AI. I think the customers want Nvidia's parts. We'll see if Nvidia is allowed to sell them or not. But I think the demand is there.
- [13:41]
Scott Wapner
Nobody knows. That's the bottom line from somebody who thinks about it more than anybody, arguably Guy trying to model out what potential sales could look like in China if they're able to do it, minus whatever sort of payment they would have to make for a, you know, a license, a licensing through the government to do it.
- [14:00]
Stephanie Link
So the guidance is what it is without China. And there's expectations that maybe if they have China, it's two billion, two and a half billion. I don't know. The bigger question to me is is it a Hopper chip or Blackwell chip? Because that actually has implications for margins and so it's not a demand problem. It's going to be what does the government, both governments allow to be to happen? And then what are the implications in terms of what they can actually sell? Which one of these chips can they sell? I would highly doubt it's Blackwell, to be honest with you. But if it's Hopper, that's okay too because they're still going to get the revenue side of it and they'll make up the margin side on the Blackwell around the rest of the world, in my mind.
- [14:41]
Scott Wapner
What about all the hype around the power players, if you will, because they haven't had a great month. Vertiv's down 12, Constellation down almost that same amount. Bistra is down 10%. These are all percentages. Eaton's down nine and a half and GE Vernova is down seven and a half. You want to talk about where there's been a lot of hype, look here, almost over everything else, don't you think?
- [15:05]
Stephanie Link
I don't think it's hype at all. I mean you don't have the infrastructure. And part of video CEO commentary about the total addressable market of CAPEX and AI and datacenter spend of 3 to 4 trillion has to do with also these guys, the infrastructure players, which I still believe are absolutely a buy. You buy them on weakness. I've been buying them all year on any weakness. But they do trade. Scott, to your point on the data center AI trade, if you will.
- [15:33]
Amy Raskin
Right.
- [15:34]
Stephanie Link
So today is a bad day.
- [15:35]
Scott Wapner
Hasn't there pushed, hasn't that fact pushed their valuations higher than what they historically trade for as like utility or power companies?
- [15:44]
Stephanie Link
Yeah, because you have utility and power companies double, triple the size of what they're spending. And we don't have enough data centers guys. I'm sorry, we just don't. So we have 11,400 data centers in the world. It's estimated you have to get that to 30,000. You need a grid. We talk about the grid all the time. This is right up Quanta Services alley. They have 75% of their customers are utility companies are tripling the spend so there are always kinds of ways to play it. And oh by the way we are still very short power and we're still going to need it. Even if you don't believe my numbers at 30,000 over the next 5, 10 years even if you get to half of that, you still don't have enough power even today.
- [16:23]
Scott Wapner
These stocks overhyped or what?
- [16:25]
Jason Snipes
So I think, let me say this, I think that we recently bought ET Eden, right You know in the last couple weeks and we've been watching yes and we've been watching it for a while and it's been running significantly. It's up around 17% in the last year but only up around 5% year to date. So we took advantage of some of the price price pullback over the last few weeks. Now what I will say about their business. Aerospace backlog up 16% Electrical backlog up 15% yes, it is a data center play. The report was Good. EPS was up 8% Revenue was up 11 11% But I think going forward to your point staff on where the CAPEX is and what the the power that is necessary and needed to power these data centers and all that goes into the grid. I I think that you cannot avoid these names and I think they're kind of being played into all that's going on with this trade right now in terms of some of the digestion and pullback that I mentioned earlier and I.
- [17:26]
Stephanie Link
Think that's part of the price has said they have. There is $2.4 trillion of mega project. You know this. Yes, $2.4 trillion of mega projects in the pipeline. Only 17% have been started. So again haircut that number in half or by a third or whatever you want to do is still the bottom line is the visibility is still very strong in the near term.
- [17:47]
Scott Wapner
Do we learn better things about software since we talked about chips? Do we learn better things about that trade this week? I mean if you look at Mongo so you're like yeah, I feel pretty good if I own that stock. Best week ever. They beat they had upbeat guidance as well. Stocks given a little bit back but there's your week chart says kind of Everything. Snowflakes, best week since November. They beat guidance was good. Amy, how about that? Your Target today goes to 275 from 250 on snow. It's a buy reiterated at Citi today. Feel better about these trades coming out of the week than we did going in?
- [18:22]
Amy Raskin
Definitely, yeah. Snowflake had a great quarter. We own it. You saw that reacceleration in growth. You know, look, it's still a very expensive Stock but at $66 billion market cap versus some of the other options that we have in the space. I'll take it. And I do think for AI to even happen you need, you need the data organization which is Snowflake.
- [18:43]
Scott Wapner
Jace, you own it too. Yeah, yeah.
- [18:45]
Jason Snipes
And I think it's all about data warehousing. The big one for me is operating margins were up 11%. The street was looking at 8%. That is a big win there for them in terms of monitoring down their expenses and growing the revenue. These are the types of stocks you want to buy in the cycle.
- [19:00]
Scott Wapner
Well, you have been buying more of this one, right?
- [19:03]
Stephanie Link
Yeah. Total product revenue growth of 32% accelerated 4 points. And to Jason's point, I mean their margins up 610 basis points year over year. Most people were thinking about 400 or so. I mean 400 would have been fun to have. Right now you've got 6, 600. And what do we get? What did I say? 610 basis points. So they have the products. That's the whole thing. This new CEO who's not even new anymore, he's been there a year but he actually has focused on new products and that is absolutely doing very well and that's why they're gaining share.
- [19:32]
Scott Wapner
Okay, so that we know that the software trade has been questioned and for good reason really. If you look at the one month performance of some of the names like right in the, in the part of the space. C3AI. AI trade down 30% in a month. Fortnet 25. Oracle's down 10. Datadog down eight and a half. ServiceNow is down eight. Jim's Adobe is down four. Target today gets cut to 400 from 430. I'll ask the question on the, on the desk. Raise your hand if you used to own Salesforce. Raise your hand. How many hands go up?
- [20:06]
Jim Lebenthal
I mean three years ago.
- [20:07]
Scott Wapner
No, no, keep the hands up. Don't be all shy. We're not playing that.
- [20:13]
Jim Lebenthal
Hands high there was, you got a long time ago. Warner Wolfe. Let's go to the video.
- [20:19]
Scott Wapner
It reports, it reports next week the worst year since 22. Why don't you own it anymore?
- [20:24]
Jim Lebenthal
Well, I sold it on valuation about three years ago, but why don't we extend this? Because it's in the same category as Adobe, which I know.
- [20:31]
Scott Wapner
I don't want to talk about Adobe. I want you to tell me straight up why you don't own this stock anymore.
- [20:37]
Jim Lebenthal
Because I own Adobe instead. I've made a choice within the software space. That's a great choice within the software space. I don't know. There's 5,000 stocks in the stock exchange, Scott. I don't own them all. I want about 25. I own Adobe. I don't have a neutral on Salesforce. But the question for Salesforce is the same one as Adobe, which is these stocks are guilty until proven innocent. Bottom line.
- [20:58]
Scott Wapner
Now, Snowflake, you sound like, you sound like a Cowboys fan today trying to be happy with a couple of first round picks rather than defensive player. Snowflake, we got a couple of picks.
- [21:09]
Jim Lebenthal
In back that can go well because it reported earnings, same as with MongoDB. Reported earnings. The question is answered. We need the question answered for Salesforce next week with earnings, same with Adobe and I think it's the week after next. Not quite sure they've announced. But these stocks are guilty until proven innocent and the proof comes in the.
- [21:26]
Amy Raskin
Form of earnings reports that we're looking at. As long with ServiceNow, we're looking at it. We haven't, we haven't finished the work but it just, it's come down enough that it's worth looking at.
- [21:37]
Scott Wapner
We asked Brad Gerstner too about the idea of the software trade being dead. I want you to listen to what he told us yesterday because it's right in the heart of the argument. Is software dead? That's what everybody was saying. And so all these companies were pretty bombed out. I think what this quarter, when we look back at it, it will mark the turning point of the AI winners in software. Okay, the turning point of the AI winners may be the underscoring of the AI losers in some respects too. That's, that's kind of the conversation we're having. There's a bifurcation going on here.
- [22:10]
Amy Raskin
Yeah.
- [22:11]
Scott Wapner
And it's winners versus losers. And you know, some are trying to hang on to the perceived as a perceived losers and think that they're going to have their day. I'm not going to mention any names of those. Some. Jim.
- [22:25]
Jim Lebenthal
Hey, look, I'm. If it, if it does not perform well after earning earnings, it being Adobe, I'm done this is not going to be a battleground stock for me. I'm glad it's fun. We've made it a battleground stock the last two weeks. But I'm not, this is not going to be something that I'm going home at night worrying about. It doesn't perform after the last earnings, I'm done with it.
- [22:45]
Stephanie Link
I've always had a hard time owning any, any stock where they're seeing revenues decelerate and the valuation staying where they are. Like a sales, like a salesforce is the perfect example. 24 times for single digit revenue growth like that to me is not exciting. But that's one of the reasons why Snowflake had its struggles a year ago, year and a half ago, because they couldn't deliver. Revenues were decelerating. That's why new product introductions are so incredibly important. And the power of that in addition to margins. And when you have that combination, you get massive operating leverage, which we saw this week. I just don't see, I just don't think some of these older traditional software companies are going to see that you might be right operating.
- [23:21]
Jim Lebenthal
And here's my point, you may be right. And if you're right, I'll come on with you and say I'm selling the stock.
- [23:26]
Stephanie Link
I hope I'm.
- [23:26]
Jim Lebenthal
No, no, no, it's okay. Look, what I'm looking at is a software stock that I still believe is relative relevant. I may be wrong. I see mid teens earnings growth projected. I see a stock that's trading at a mid teens multiple, that is the PEG ratio. You know, where I live, Amy is one. And finally, stock buys back shares or the company buys back shares at such a meaningful pace for a software company that they're shrinking the share.
- [23:50]
Scott Wapner
So lastly, we're going to embark on this new month of a Fed meeting, obviously where the market has big expectations of rate cuts coming. I know there's a debate that core PCE obviously showed that it rose in July. Waller says let's get on with it. Cutting rates don't wait. You risk more by waiting than you do with cutting. Morgan Stanley says a Fed that cuts earlier may have to cut less. We know who wants the Fed to cut. That's the president. Which brings us to the Lisa Cook story. There is a court hearing going on right now over President Trump's attempted firing of Fed Governor Cook. It just ended. Eamon Javers is live outside the courthouse in Washington with the very latest. What do we need to know, Eamon?
- [24:33]
Eamon Javers
Scott, what you need to know here is that that hearing is now over, and it's ended with no decision from the judge here on whether or not to issue preliminary injunction. The judge says she wants to see more filings from both sides here on Tuesday. So we go into the Labor Day weekend with no decision from the judge on the status of Lisa Cook and the status of this lawsuit. And what we heard in the second half of this hearing, Scott, was a lengthy back and forth between the judge and between the Department of Justice's attorney who's arguing the case here, Yaakov Roth, Roth arguing on behalf of the President here. And the central issue was this issue of what does forecause mean? What authority does the President have to fire somebody from the Fed board or not? And what is the definition of that term? Roth gave a definition in court about that term. He said, cause is more than a policy disagreement that bears on the official's ability to do the job. And then he added, and you could add, it's an issue of whether the question was known at the time. So that is, was there an issue that came up that was adjudicated by the Senate when the official was confirmed? If that's the case, Roth suggests, well, then that's not sufficient for cause for the President now to go back in time and say, well, they didn't adjudicate it enough or what have you. What was interesting about that argument is that Abby Lowell, who is the attorney for Lisa Cook, jumped on that at the end of the hearing and said, well, wait a second. If the government is arguing that if it had to not have been known at the time in order to be acceptable for cause, we can go back and pull Lisa Cook's filings, her mortgage documents, banking records. All of those would have been sent to the Senate committee that confirmed her at the time. And therefore, you could say it was known at the time. And so therefore this point is moot. That was an interesting back and forth between the two sides, and that may have some bearing on where we go here. Another interesting question here was whether or not Cook got appropriate notice. And the judge says here, I had a strong reaction to the idea that there was notice provided because of the President's tweet. She says to the Department of Justice, you're not saying that what happened here satisfies due process, are you? And the DOJ says, yes, notice was given. The judge responds by that social media post. And the Department of Justice says, yes. So what the Department of Justice is arguing here is that the President's social media posts are sufficient notice to terminate Lisa Cook. From the Fed. So the judge is going to have to consider all that. She said it's a novel case. She's going to go do some thinking about it and we don't know now whether there's going to be a preliminary injunction in this case or not.
- [27:20]
Scott Wapner
Wow. It's a lot to grasp. Eamon, thank you very much. Outside the courthouse, you'll keep us up to date. Eamon Jabbers in Washington. Up next, some new committee moves to document Stephanie Link with a new buy. It's in the retail space. Plus Jim Lebenthal. Wow. Man, he loves this name. He keeps telling you why, then why? Why is he selling some of it? He'll tell you next.
- [27:49]
Amy Raskin
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- [28:50]
Scott Wapner
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- [29:20]
Jim Lebenthal
Football season is back. Sports business expert Mike Ozanian breaks down the latest numbers. The biggest and most profitable sports league in the world. Exclusive NFL team valuations. September 4th, CNBC.
- [29:48]
Stephanie Link
Okay.
- [29:48]
Scott Wapner
We had a big week in retail stock land. We got a lot of reports. We heard from a lot of the discount retailers. You have a new buy on a stock that's having its best month since November. It's up 12% month to date and it is Deckers.
- [30:04]
Stephanie Link
I've never owned it before actually.
- [30:06]
Scott Wapner
Scott, why now?
- [30:07]
Stephanie Link
Well, why now? Because they have very strong brands. I'm a big believer in HOKA myself personally, but the numbers speak for themselves. It's growing Hoka about 20% and they're guiding double digit growth for the rest of the year. For Hoka, Ugg actually saw a massive snapback of 19% growth last quarter versus 3% the prior quarter. So they're seeing brand momentum. That's what I like to see in retail. They have great global opportunities to gain market share. International last quarter grew 50%. I think they're just at the tip of the iceberg in terms of international momentum. Dtc, they have opportunities as well. Well, and we are hearing, we've been talking about the China consumer. We are hearing that China is seeing a little bit of improvement. 8% of Hoka's revenues have come from China. And they also talked about how the July and early August trends were off to a good start, beating expectations. So stocks trades at 17 times forward estimates still down 41% on the year, down 25% in the past year. I think there's a catch up trade to be had here.
- [31:02]
Scott Wapner
Well, UBS agrees with you because UBS today is bullish as well. And they say this stock is a significantly underappreciated growth stock and that they see a quote, very good opportunity to buy shares in a growth company currently significantly undervalued by the market. Certainly tariffs could drive a macro slowdown which disrupts the second half of next year. However, we view these as minor risks which don't dull our enthusiasm for the big picture story. Any other takers? Deckers chart though? Crickets?
- [31:37]
Amy Raskin
No. That's quite a chart though. It looks like it is bottoming and.
- [31:40]
Stephanie Link
Turning and There are only 14 buys out there from the sell side and 15 holds and sells and you know that's right up my alley.
- [31:47]
Scott Wapner
Nine percent this week.
- [31:48]
Stephanie Link
Yeah.
- [31:48]
Scott Wapner
What's up with Gap? How about the price action? Can we look at at Gap after they miss their comps? Tariffs are going to hurt profit profits. They maintain their full year growth guide. Maybe that's why this chart that we're going to show you looks the way it does so goes down, then comes back and now it's up two and a half percent. You own the stock. What's up with the price action? What does that, what does that tell you?
- [32:13]
Stephanie Link
Because the headline comp miss is disappointing, but it was all athletic. It was down 9% and that was actually pretty much known. They have a new manager actually at Athleta Intra quarter. So they need need to fix that. Athleisure overall is really struggling. It's not just athletic, but in the meantime, 70% of their revenues come from Old Navy and Gap, the brands. And they're seeing nice comps, 2% at Old Navy, 4% at Gap, 4% at Banana. That was a big surprise. Now the disappointment is tariffs and what it means to margins. I was thinking you can see operating margins by the end of this year at 10%. That's off the table because of tariffs. But six and a half, 7% spent is still an improvement and I think we will get through tariffs. The big deal in my mind is they have the products that they want. Richard Dixon is doing an amazing job with his new management team and the stock is still trading at about 10 times forward estimates. So I think you have to be patient, though, for the operating leverage story to really pan out. But I do like the fact that the top line in same store sales is beating.
- [33:12]
Scott Wapner
All right, thank you. Let's get the headlines with Silvanaha now. Hi, Sylvana.
- [33:15]
Stephanie Link
Hey, Scott.
- [33:16]
Amy Raskin
Good afternoon.
- [33:17]
Contessa Brewer
Republican Senator Joni Ernst of Iowa is.
- [33:20]
Stephanie Link
Reportedly not going to seek re election next year.
- [33:23]
Contessa Brewer
CBS News reports Ernst told people close.
- [33:26]
Amy Raskin
To her that she plans to make the announcement next week.
- [33:29]
Contessa Brewer
Spokespeople for Ernst, who have served in the Senate since 2015, did not comment.
- [33:35]
Stephanie Link
Republicans currently control the chamber by a.
- [33:37]
Amy Raskin
Margin of 53 to 47. Texas Governor Greg Abbott announced just moments.
- [33:42]
Contessa Brewer
Ago that he has signed the state's.
- [33:44]
Stephanie Link
Redistricting bill into law.
- [33:47]
Contessa Brewer
Before signing the bill in a video.
- [33:49]
Amy Raskin
Posted on X, Abbott said the map, which he called one big beautiful map.
- [33:54]
Contessa Brewer
Would ensure fair representation and that Texas.
- [33:57]
Stephanie Link
Will be more read in Congress.
- [34:00]
Contessa Brewer
And the Trump administration canceled $679 million.
- [34:04]
Stephanie Link
In funding for 12 offshore wind projects today.
- [34:08]
Amy Raskin
Transportation Secretary Sean Dunn, he called the.
- [34:10]
Contessa Brewer
Projects wasteful and noted the funding would.
- [34:13]
Stephanie Link
Be redirected to upgrade ports and other infrastructure projects.
- [34:17]
Contessa Brewer
The move comes after the president announced.
- [34:20]
Amy Raskin
Last week that he will not approve solar or wind projects in the U.S. scott?
- [34:25]
Scott Wapner
Okay, Silvana, thank you very much. Up next, sports betting's biggest season is kicking off. I think you know what that is. Contestant Brewer follows the money for us. And we do have that trade to get get to. Still with Jim Leventhal. We're back after this. Sometimes an identity threat is a ring of professional hackers. And sometimes it's an overworked accountant who.
- [34:49]
Jim Lebenthal
Forgot to encrypt their connection while sending bank details.
- [34:52]
Stephanie Link
I need a coffee.
- [34:53]
Scott Wapner
And you need Lifelock because your info.
- [34:56]
Eamon Javers
Is in endless places. It only takes one mistake to expose you to identity theft. Lifelock monitors hundreds of millions of data points a second. If your identity is stolen, we'll fix it, guaranteed. Or your money back.
- [35:08]
Jim Lebenthal
Save up to 40% your first year.
- [35:09]
Scott Wapner
At lifelock.com Specialoffer terms apply.
- [35:14]
Jim Lebenthal
Football season is back. Sports business expert Mike Ozanian breaks down the latest numbers. The biggest and most profitable sports league in the world. Exclusive NFL team valuations. September 4th CNBC.
- [35:41]
Scott Wapner
All right, we're back. I told you. Jim Lamenthal has a move so repeatedly, repeatedly love this stock. I mean, people are going to Vegas, cow wherever the heck they need to go to gamble at win. And the stocks finally turned around after being a little bit of an underperformer. Now all's well, and now you trim it.
- [36:06]
Jim Lebenthal
I swear, I have to tape this episode and, like, send it out as a Christmas card. This is a good trim, Scott. This is a good trim. The stock's up 70% in a year. It's up 40% over the last three months. If you want to buy low, you have to sell high. I'm trimming it here specifically, though, I'm starting to see the 2027 estimates start to go higher meaningfully. And what that tells me is that what I've been saying for quite some time, that the Dubai new resort, the Al Marjan resort, is now finally starting to be priced into estimates. I've done, in my defense, your honor, I've done a very good job of staying out of the way of this thing.
- [36:43]
Scott Wapner
Just kidding.
- [36:45]
Jim Lebenthal
I've done a good job of staying out of the way of this. It's up 16% in a month, for crying out loud. Finally, it started to show some weakness today, and I just decided to trim it, actually cutting it it about in half.
- [36:55]
Scott Wapner
Oh, wow. Okay. Yeah.
- [36:57]
Jim Lebenthal
So I am retaining a position. I know you hate it, your honor, when I do that. I'm selling it, but I still hold it. But look, the sale is what it is. I'd love it if we get a pullback and I add that right back into it. I do still think it's a good stock for the long run, but I think in terms of share Price, it's ahead of itself right here.
- [37:12]
Scott Wapner
You know it's about to start, like soon is.
- [37:15]
Jim Lebenthal
Yes, I do. I think this might be priced in. Go ahead. You want me to steal your thunder?
- [37:19]
Scott Wapner
NFL priced in.
- [37:22]
Jim Lebenthal
I think it might be.
- [37:23]
Scott Wapner
I mean, this is.
- [37:24]
Jim Lebenthal
By the way, by the way, this.
- [37:25]
Scott Wapner
Is the biggest, this is the biggest season. Yeah. Brewers is going to be with us right now. Hold on, hold on. I'll let you. I'll just talk on the other side. I promise, I promise. Contessa is going to tell us that it's the biggest betting season ever or it is the biggest time of year for betting.
- [37:40]
Contessa Brewer
I mean, I mean, depending on where you're betting. I, I don't know if we're going to talk about Macau right here or whether you want to talk about football.
- [37:46]
Scott Wapner
Football fans all over the world. Maybe they're going to go to the sports books in Macau too. I don't know.
- [37:51]
Contessa Brewer
Listen, international expansion for the NFL is a real thing, Scott. But, but for us sportsbooks here, this is the biggest season to win new customers, to grow the pot of wagers. And what we're hearing is that Americans will bet $30 billion this NFL season. That's according to the American Gaming Association. The lion's share of that money is going to go to fan dollars which is owned by Flutter and DraftKings. They dominate this space. Both are seeing their shares double digit gains in the stock price this year. But look, they're facing growing competition from BET mgm, jointly owned by MGM and Entane and by Caesars. The biggest threat still offshore unlicensed sportsbooks. Those are big competition, raking in an estimated $400 billion, 30 billion on legal sports books. $400 billion for offshore sportsbooks. 50 attorneys general wrote a letter to the Justice Department earlier this month. They said, look, the federal government really needs to crack down here on unlicensed gambling because the states are losing money, an estimated 4 billion bucks in tax revenue. And geocomply looked at the numbers at states that are seeing aggressive enforcement and what they saw is when states enforce the action again, legal sportsbooks on averaged licensed Sportsbooks see a 10% active player spike year on year and 39% more new account signups. So it really matters to enforce the law not only to the companies, but to anybody who's invested in those companies.
- [39:23]
Scott Wapner
As well as the. As the expert witness in my courtroom today.
- [39:29]
Contessa Brewer
Yes, you, Honor.
- [39:31]
Scott Wapner
What do you think of Jim, looking at the appreciation in the stock which you obviously cover closer than anybody and you don't have to Opine necessarily on his taking profits in it, but just the fact of what the stock has.
- [39:45]
Contessa Brewer
Done, it's a huge run up. I mean to, to be hovering where it is now around 1:26, $127. It looks good especially when you draw it past that era where Steve Wynn had to resign. But then what happened Scott, is I went out say 20 years when Macao was coming online and the big growth there and you know what you see over 20 years, it's basically flat. And so my, my take on it is maybe Jim is onto something. It's a, it's a stock that maybe it's not a whole hold for the whole life kind of thing, but you get in, you take your profits where you can, you get out, then you get back in when there's a dip because it's a very volatile stock. The whole sector sort of runs like this.
- [40:32]
Scott Wapner
Contessa, thank you very much. Contessa Brewer. So I mean I guess the only question is like after such a prolonged period of flatness so to speak, whether it is starting a new trend higher.
- [40:49]
Jim Lebenthal
You know, it's actually has nothing to.
- [40:51]
Scott Wapner
Do with whether you trimmed it or didn't trim it. Just the idea of you're obviously content with living with the fact that if it continues to go up be.
- [41:01]
Jim Lebenthal
I am cool with that. And, and part of this is the actually the three year annualized return annualized is 30%. So it's actually not just the last year or the last six months. I mean it's had good run here and I keep saying that it's pricing in a lot of good news. I do think Contessa hit the, hit the nail on the head that it's trading at a stock price that it first hit in 2007. So you know, a little bit of history here does, you know, does have some bearance. I know sometimes.
- [41:28]
Scott Wapner
Oh, don't even go there because I know what you always say and I was ready right when you were going to say it. I was ready when you were going to say it because you're not going to do that. You're not going to. You have made the point. Past performance has no influence on what I think when I'm thinking about selling a stock.
- [41:46]
Jim Lebenthal
It's like Jack Nicholson and A Few Good Men. I mean you're that good. Okay, look, look, it's like with you.
- [41:53]
Scott Wapner
You can't handle the truth. I just throw it all out.
- [41:57]
Jim Lebenthal
No, look, I knew as I was saying that I was going to, I was going to get my just rewards on it. But look, it's trading at 24 times forward earnings. It's a little pricey. It's had a heck a of a run up. I think I'm going to be able to buy this back on the cheap and I still have some shares.
- [42:11]
Scott Wapner
All right, we have the top performing sector of the month. We're going to debate it next. Been watching gold lately. It's markets closing in on a fresh all time high. The ETF named the GDX is pacing for its best month since 2020. There was a call today on Franco, Nevada. We're talking about materials because materials is the top sector of the month. Franco, Nevada target hiked to 211 from 186. B of A has that. I bring it up because Amy owns it, which means we should talk about it.
- [42:56]
Amy Raskin
Yeah. And I've used it as my final trade for a few times this year so far. The stock's done really well this year, up 60% year to date. We think there's more upside there. We also own the gold ETF which also as Scott mentioned has done really well. Just supply demand. M2 is going up around the world. Demand for dollars is a little bit weaker. We think that all benefits gold and you just haven't found new reserves. So we like, we like both, we like both, both the etf, both gold and, and with Franco you have the Cobra Panama decision which you'll get at some point, which could be further upside.
- [43:33]
Scott Wapner
Is there, is there. Okay, thank you. Is there, is there less enthusiasm around copper? Because Freeport, I mean Freeport's up 3% in a month. I mean, you know, I'm excited about.
- [43:43]
Stephanie Link
Copper which is why I own it. It's about 70% of their revenues. Yeah, it is tariff stuff. It's only about 30% exposure to gold.
- [43:50]
Scott Wapner
Takes a lot to get, get excited about copper. So I give you props on that.
- [43:54]
Stephanie Link
Well, if you believe long term in all the things that we were just talking about in terms of EVs and the grid, I have been a very big bull on housing. It's the number one material that goes into housing. So if you believe in that and just general growth, I mean we're growing more here in the United States than we had been. We're growing globally because of fiscal and monetary policies that are favorable for growth. And so, so I think that that's pretty positive. Now for every change, 10 cent per pound change in copper, that's $200 million in EBITDA. So it is very levered to copper. But I do Believe copper is poised to go higher and the stock is trading at a discount to its historical ebitda.
- [44:31]
Scott Wapner
All right, I'll take a break. We'll come back. We'll trade the record rally in the banks next. New high for the XLF record highs. Synchrony, American Express, jpm, Morgan Stanley, BNY Mellon and Goldman Sachs. Amy, your take on the banks right here.
- [45:02]
Amy Raskin
They're having a great run. It's good news actually for the market. Banks being strong actually signals a strong market. So take that for what it's worth. But I do think there's a little bit of a rotation. It's an expensive market and people are looking for sort of less expensive sectors and the financials sort of stick out like a sore thumb for that. So I do think it's getting a little extended here. We'll probably trim some of our financials going forward.
- [45:29]
Scott Wapner
Yeah, yeah.
- [45:30]
Jason Snipes
I like the alternative managers here like Blackstone. Apollo is some of the names that we own. So I think private credit and private equity are finding life here. So I continue to follow this trade.
- [45:40]
Scott Wapner
Well, dealmaking is coming back for sure. That's going to help there. We'll take a break. We'll do finals next. All right, closing bell, 3 o' clock today we will trade this final trading day of the month of August. Mohamed El Erian will join us as we continue to debate Fed independence. The fallout from what's happening with the president and Lisa Cook, Anastasia Moroso will be with us. Ryan Dietrich, Stephanie Guild as well from Robinhood. I hope you'll join me then let's do some final trades on our desk right now. The sniper is first.
- [46:16]
Jason Snipes
I like servicenow here. These new agentic AI tools are boosting average selling prices. Stocks up 14%. Here's an opportunity.
- [46:23]
Amy Raskin
Amy Raskin Regeneron stock's been cut in half for on a Leah Concerns they have lots of shots on gold. We like it a lot here.
- [46:30]
Scott Wapner
Okay.
- [46:30]
Jim Lebenthal
Farmer Jim, Cisco Systems, they reported two weeks ago and there was a bout of profit taking. Now it's clawing back and it's pretty close to to a 52 week high.
- [46:39]
Scott Wapner
Okay, thank you very much for that. And speaking of the financials, we just told you trading at a record high Truest Steph.
- [46:45]
Stephanie Link
I still like the banks very much inclined to buy given the steep yield curve, especially the regionals.
- [46:50]
Scott Wapner
All right, good stuff. Great weekend. Long week everybody. I'll see you on the bell. You've been listening to CNBC's Halftime Report, the podcast you can always catch us live weekdays at 12 Eastern only on CNBC.
- [47:07]
Stephanie Link
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 Football season is back.
- [47:49]
Jim Lebenthal
Sports business expert Mike Ozanian breaks down the latest numbers. The biggest and most profitable sports league in the world. Exclusive NFL team valuations, September 4th CNBC.