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I'm Scott Wapner, and you're listening to CNBC's Halftime Report, the podcast, the most profitable hour of the trading day. We record this live weekdays at 12 Eastern. Listen in. Carl, thanks so much. Welcome to the Halftime Report. I'm Scott Wapner, front and center this hour. Stocks searching for direction following the Fed meeting and that uncertainty over Iran. We'll trade all of it with the Investment Committee. Joining me for the hour today, Josh Brown, Stephanie Link, Jenny Harrington, Jason Snipe, our senior economics correspondent.
Steve Leisman is with us as well. As we check the markets here, we are mixed across the board. So we're thinking about the Middle East. We're apparently two weeks away from any kind of decision there, according to the president. The markets obviously are reacting to the Fed meeting a couple of days ago and Powell's comments, which were deemed to be more hawkish than not. Yields are up, maybe representing all of that. Josh, what do I do with all of this?
Well, I think the question of whether or not we can make a new high, I think we have to give that a little bit of time to breathe because historically it doesn't really happen right away. In fact, that's fairly rare. What tends to happen after a 20% drawdown, when you come all the way back
to within 5% of those old highs is you stall out a little bit. We're coming off of one of the best 40 day periods ever for the S&P. We've had this huge rally from negative 20% all the way back to within a couple of percent.
If history is any guide, the average period of time it takes that you have to stall out just below those highs is about 3.6 months. We're about 1.1 months since we got within 5%. So just a very quick example that everyone can relate to because it just happened.
in July of 2023, I was probably on the show, we were probably having the same conversation. Can we make a new high? We had just come back from that horrific bear market in 2022 and we had to stall out a little bit. It took six months in order to get that new high back in the summer of 2023, but ultimately we got it. So it's early.
We got to within 5% after just an absolute brutal, very fast, but very sharp bear market. We might have to tread water a little bit here, and that would be perfect. That would be about August, would be 3.6 months from when we got back to within 5%.
Let it breathe. The jury's still out. We don't know if it'll happen, but it's certainly there's nothing wrong with biding our time at these levels. Tread water step because we need to do so. We need to buy ourselves some time. It sounds until we figure out whether there's going to be this tariff inflation or not. That was the word from Powell just continued. Stay the course, which is stay the course of doing nothing and trying to watch and look.
around all the corners to see what might be coming. And they just don't know. Right. We're watching the geopolitics. I'm assuming there's going to be a resolution. So what that means, we focus back on the economy and back on the Fed. The economy is actually doing just fine. We're running at about 2% in terms of GDP. The consumer is hanging in there despite the soft surveys and the confidence numbers, but they are spending. Inflation is coming down. That's good. I will say there's this one yellow flag, Scott,
that's new for me and that is that the weekly jobless claims, they're going higher. Now 240,000 roughly the last three weeks is not concerning but we were at 200 to 210 so just watching the direction and the speed of that. I think
I think 260 and higher will get me more concerned. But for now, I feel OK. And so the pullbacks, I think, in the market are going to be shallow, mainly because there's $7 trillion of cash on the sidelines. What I just mentioned about the economy hanging in and doing fairly well, and that leads to earnings. And I always bring it back to earnings, Scott. I know I'm a broken record on it, but it's the thing that drives stocks on the way up.
and on the way down. And numbers are going, I think the second quarter numbers are going to be pretty good. And we only have to wait two, two and a half weeks for the banks to start telling us that. Yeah. Tom Lee also thinks that pullbacks are going to be shallow, says by the dip. He'll be on closing bell with me a little later this afternoon so you can hear directly from him and get a little more granular detail onto why he believes that. You know, Steve, I'm really struck
today, I guess, by just a couple of days following Powell, which was clearly deemed by the market to be more hawkish than not. You see the move in interest rates today. The tension between the Powell commentary and the Waller comments that he gave to you, the Fed governor did, this morning, they are at odds with one another.
Not so much at odds over the direction of rates. I still think Powell is somebody who thinks, and when he says the word modestly restrictive, I think that suggests to me that he's still a guy that wants to reduce rates. The question, I think the two questions are, when you should begin cutting and how much risk do you want to take on ahead of those cuts from the potential for tariff inflation?
Waller feels very confident in the idea that tariffs will be a one-time rise in the price level. And he's willing to act on it. I do not think that is a broadly shared point of view at the Federal Reserve Board or the Federal Mark Committee.
But I do think that there are others who think that way. And the question becomes, what are the what is the litmus test? What's the bar for raising is actually the question that I asked Powell yesterday. We did get some answer there where he wants to see, I think, several months where this stuff has increased the price level as expected and not pass through either to other items that are non-tariff or especially high to the tariff items and whether or not that has a broad impact.
If you read the monetary policy report, the Congress say they did note that there had been increases in goods inflation. It did show up in May and more is expected. I don't think Powell just wants to take that risk to hike. And plus, Scott, I think the optics really are potentially troubling, right? Is the Fed going to be cutting interest rates in a month when inflation goes up? Waller seems confident or comfortable to do that. I don't think Powell is.
It's not the first time that Waller has sort of put himself as an outlier, especially for someone who was thought to be hawkish, who has made more dovish comments in the past that seem to be at odds with Powell's perspective. He's a Trump nominee. I think that's worth putting out there. I'm not going to suggest that he's
auditioning for anything. Even though I just said it, I'm not going to say he is, even though others might take it as that. But he's unafraid to put a perspective out there that would seem to be just at odds with the most recent commentary from the chair himself. That in and of itself is noteworthy.
Yeah, well, let's just be clear. Waller is also someone who expects inflation to rise and rise as a result of tariffs. So that's clear.
And Powell is simply not willing, I think, to risk the gains that he had. And I think it was Mike Santoli was talking earlier. We have lots of evidence that the Fed fights the last war. And that was a war they fought. And they seem to get inflation back under control. And I don't think Powell wants to squander that. There's also, I think, a question about what Stephanie was talking about, which is how much weakness is there in the economy? When you look around and you say,
What troubles me that is a sign that parts of the economy need help from the Fed or that the rate is far, far higher and restrictive to the neutral rate? Perhaps there is some weakness. You have the problem of graduates not finding jobs. You do have a somewhat elevated, but not alarmingly so, claims numbers. The Monetary Policy Report today to Congress did say that you have
not a lot of firings going on, but also much more muted hiring. So there is some softness there. Does any of this tell you you have an emergency? No. So Powell says, you know what? I don't have an emergency. I'm going to wait. Waller says, you know what? I feel confident that we're not going to have a broader inflation problem. I'm willing to cut now.
Yeah. Jenny, how much does the Fed matter right now in the run to new highs and or beyond? Yeah, I don't think it matters. And I'll tell you why. Because one year ago, we were, the 10-year was at 4.35. Today, the 10-year is at roughly 4.35. The Fed cut,
100 basis points last year. And the short end of the curve isn't really what impacts the stock market. What really impacts it are two-year, five-year, 10-year treasury yields. And so they didn't move with the Fed cutting. And that's because we have a fiscal spending problem and we have a supply-demand problem for our bonds. So I think what really matters
is how really the tenure responds to that. And so what I think could happen is if and when the Fed cuts, maybe there's a near-term psychological pop in the market because traders like that, but then reality sets in. And if bond yields don't move, that doesn't do anything for corporate America. It doesn't do anything for individuals. It doesn't do anything for mortgage rates, car lending rates, credit card rates. So that's what matters.
And so I don't know that the Fed can contend with the bigger problems we have, which is a budget deficit that's totally out of control and a government that's showing no signs of acting responsibly. That's what's going to impact the rates that actually matter to the market. Jason, how do you see it? Yeah, no, I think Jenny makes some great points, but I do think psychologically it is important for the Fed to...
at least from a directional perspective, we know where they're going. I think that does play in the market. Yes, the 10-year is a proxy for all the numbers that Jenny just mentioned. I think to Steph's point as well, earnings, two weeks. We had obviously very strong earnings in the first quarter. Yes, revisions have come down somewhat, but I do think they'll be better than expected.
which I think is going to be important in the next catalyst for the market. So that's really what we're paying attention to. Yeah, I mean, I just wonder how much of a tell on anything second quarter earnings are going to give you. It's like the inflation data now is still kind of too soon.
You like, that's what Powell's problem is, right? He's not willing to go out on a limb on either direction because he just doesn't know. Waller feels like he can be a little more forward because he doesn't, it doesn't sound like he wants the Fed to be in a position where it has to react to some flames that, that,
that turn into something bigger than they need to be. Yeah, there's no doubt about it. And obviously, you know, the difference between Waller and Paolo's perspective is significant, right? Waller believes this is going to be a pass-through event, you know, that, you know, one time. But we'll see how that plays out. I think at least what we've seen thus far is corporations and enterprise has been willing to
to digest that pill. We'll see if they pass that through to the consumer. I think we'll likely see that in Q2. Like Steve, you, you, the risk of course is that you just let the labor market get too weak and then you're forced to react. That clearly seems to be what's on Waller's mind. Even if he's worried about inflation, he feels like it's worthy of, of acting sooner rather than later so that you don't have an issue with the labor market you're forced to react to.
Right. And the economics of that are if you are indeed well above neutral, if you're indeed restrictive in the economically with your rate, then you would be putting downward or unnecessarily downward pressure on the employment market. But it's also worth talking about the other side of the equation, Scott. What are we not talking about in the face of higher tariffs and inflation? We're not talking about inflation.
Raising rates and when the Fed chair says we're in a good place he means that for all potential outcomes
The Fed does not, because it's restrictive, if it does end up having an inflation problem, the bet is that the Fed does not hike rates. So that's something that's a bit of a, it's a positive that I'm not sure the market has really digested. That's a good thing. And then if not much happens on the inflation side, the Fed can stand pat. And if it continues to go down, the Fed can cut. That's what the Fed chair means by being in a good place. All three bases are covered.
I'm not sure that Waller is thinking about all those potential outcomes because he's not the Fed chair right now. He doesn't have that responsibility necessarily.
No, but he does hold a lofty role, right? He's a Fed governor. So, I mean, what he says matters. Sure. The market thinks about it and if not reacts to it. Steve, thanks as always. Steve Leisman, our senior economics correspondent. Josh, you know, if you just it feels like the same sort of equity stories are the ones that are dominant every week, if not almost every day. AI investing mega caps making the news.
incremental investing dollars going to the mega caps, which is why the NASDAQ has done better than most everything else over almost any period of recent time you, you want to do. I bring that up because all the news today, meta doing this, Microsoft doing that, Apple thinking about this and Amazon doing what it does and everything else seems like a sideshow at the moment. Yeah. I don't think market participants are spending, uh,
a ton of time worried about the timing of the next interest rate cut. I agree with what Jenny had to say. It's not a stock market story right now. There's an ebb and a flow to like how much we pay attention to the Fed at any given juncture. What I would tell you is if we all of a sudden started printing claims numbers
255 260 like if we start getting into that area the people that at least the people that i talk to that's when they think the market will sit up and start like putting that minute focus of attention on the feds every word and we're close
but we're sorta just not there. And Stephanie made the most important point, which is that all you had to understand was what the earnings picture was. By the time we got into late April, early May, we knew the quarter would be fine. The beat rate was good. The percentage of companies beating, the degree to which they were beating, the breadth of the beats, like almost every sector had a majority of the larger companies doing well in earnings.
If you just have that component to the market, it doesn't make a difference if you're getting two cuts or three cuts or one cut this year. At least not yet. So I agree with the comments from the panel. As to what stocks are working, look,
I'm focused on the best performing stocks in the market. That's why we're keeping our best stocks list. And the great news is it's industrials, it's healthcare, it's financials in addition to tech. It's not just all tech.
And I continue to see incredible setups on an individual stock basis. And so long as that's the case, that's what the market's really reacting to. Great Oracle last week, AMD last week. Reports like those make people want to buy. Announcements like those, AI announcements, way more than whatever Fed governor happens to give a speech on any given day. No, it's a good point. It's a good point. I mean, banks, for example, are on track with their third positive week.
in four. Steph, week to date, Wells is up 4.5%. So is JPMorgan and Goldman. And even if you're dropping down the
gain rate, if you will. Bank of America and Morgan Stanley are each up 3%. So these stocks have been working, too, having a pretty good week. So we talked about this last week. Morgan Stanley had a financial services conference, and just about every CEO or anyone that presented had positive things to say about deals, equity capital markets, about bottoming NII, net interest income and net interest margins, and deregulation. I mean, Ted Pick, he said, I'm super pumped. Of
quote. I'm super pumped about the business. I mean, that's pretty remarkable actually. And these stocks still trade at a very attractive valuations. I was looking at like Truist, I haven't talked about in a while. It's trading at
0.9 times book it, it yields 5%. And they're going to benefit big time from NII troughing and recovering. That's about 70% of their revenue mix. So I think there's a lot of places you can invest. I have Morgan Stanley. I have Bank of America. I love Wells Fargo with the asset cap lift. There's plenty to choose from. All these stocks are still trading well below the S&P 500 multiple. The IPO market's clearly woken up. Yeah.
people are thinking about the idea of more deals, more offerings coming to market. No surprise that Goldman Sachs is up 4.5%, as I said, a week today. No, there's no doubt about it. And we keep talking about the M&A cycle. And, you know, when I think about the recent EPOs, whether it's Circle, whether it's eToro, whether it's CoreWeave, all these companies have done very well, you know, in terms of
being priced and growing in the market. So if you're on the sidelines and you're kind of concerned about the tariff environment or the macro, big macro, you're seeing success. And I think that that's the start of a potential upswing in a lot of these next. Streets getting more bullish to be of a throw that up. If you guys could please target goes to fifty seven from fifty four outperform once again at Oppenheimer. You own the stock to.
Oh, I do. Yeah, it's trading at 1.25 times book value and it trades almost at 3% yield. I just think that they're doing a really good job in terms of growing the revenues, increasing their market share. They will benefit from IPOs and M&A and deals in equity capital markets. They also have a wealth management piece too and that's more recurring revenue. And they also have done a really good job in terms of keeping costs low. So I
I think this, I mean, I can't believe Wells Fargo trades at 1.5 times book and this trades at 1.2. I think there's going to be a catch up for sure. You're not at all worried about, as you started off the conversation with, you know, elevated claims, B of A probably has the closest view into the consumer. I think you get that idea anytime Brian Moynihan does anything public in his commentary. They have that sort of microscopic view into what's going on with the consumer. You're not, you don't,
bring those two together and say okay maybe that's an issue i mean look i watch it but i'm not worried about the consumer just yet i'm going to watch claims and i said 260 is the number and if it gets to 260 i'm going to start to worry a lot and i think a lot of people are going to start worrying a lot and then the cyclicals and that kind of trade are going to really roll over hard you're going to see defensives do better but let's get let's wait till we get there let's let's hear from some of these companies what they have to say about the labor market and about the consumer you're right brian moynihan he's the best in the business
And he actually said the consumer is just fine. Why don't you own any of the big banks? For two reasons. In our growth strategy, generally the free cash flow yield's not there. In the equity income strategy, the dividend strategy, generally the dividend yields aren't there. So Steph and I were just talking and she said, hey, are you looking at Truist? And I said, actually, that's on the short list. So right now we're researching KeyBank and Truist. So I might end up owning one. But historically... You look on the long list.
more the regional perspective than the larger money centers. The big money centers, they just don't have the dividend yield and they don't have the free cash flow yield. It's the downside to managing strategies that have really strict disciplines. And the regionals have more NII exposure. And if you think it really has troughed, which everyone said it's troughing.
then you want the regionals because you really get the operating leverage. Right, and we own that little regional Columbia, C-O-L-B, but it's, you know, it's not a truest, it's not a PNC. How about this story, Josh, since you own J.P. Morgan that our own Hugh Sohn scooped, that J.P. Morgan is beefing up its mobile app with bond trading as the bank targets a trillion dollars in assets, just wants to give people more tools, investors more tools to be able to trade bonds more easily.
I suppose there'll be a market for it. I'm not sure how excited the average investor is to go on an app and pick individual QSIPs for bonds. But listen, it's certainly not a negative. I think of JP Morgan as probably the large banking institution that has done the best
with its digital strategy and seems to be the most aggressive, probably neck and neck with Morgan Stanley in that regard. Um, both of these firms have just demonstrated a, a really, uh,
unique ability to stay abreast of what's happening in fintech, bring it in-house, and provide a version of it to their customers, or if they were a tech company, they would call them users. But yeah, I mean, J.P. Morgan is at the vanguard of most of the large technological trends among the big banks. I want to hit a couple of things before we get out of here for the very first block. We talked somewhat about the mega caps, and I don't want to go any deeper on that, but I
IBM is worth another mention. I can't believe I'm saying that, but it is. It is. We've been telling you that for two years. The stock chart says mention it. Longer period of time, not intraday, please.
The target goes to 325 from 300. Outperform from Dan Ives at Wedbush. Acknowledges the fact that the stock's already had a great run. He says it's still under-owned and still in the early stages of a renaissance of growth with AI being the key driver. Took them a while to get the Red Hat acquisition integrated. And Arvind, the CEO, kept telling you, we're going to do it.
Trust me, it's going to work. You're like, I don't know, man. It's like IBM. Have you seen what the stock's done for all the years prior? And he's like, trust me, it's going to work. And he has the last laugh today. There's no doubt about that. If you look at the chart, correct?
Absolutely. When I was buying it, it was trading at 12 times earnings and it yielded over 5%. Nobody believed the 5% yield. Oh, I did. Okay, you did. But I'm just saying I didn't believe it, but I still bought it. But I think, yeah, the strategy of diversifying away from being a mainframe company to AI, cloud, data center, blockchain, all
all of these things will lead to better growth going forward. They might even have better growth in Accenture. I know we're going to talk about that later, but I will say they are taking market share and to the point of it being under-owned on the buy side for sure. But on the sell side, there are only 10 buys on this stock. There was a reason to under-own it from 21 to 23. No, no, no, no. That's the reason to own it. When it went sideways for seemingly forever? Yes, that was the reason to own it. And this is what one of my like recurring beefs is, is people are like, oh,
well, it's been flat for the past decade. And I always say, your starting point is today. And there was a time about three years ago, maybe two years ago, where Steph and I were the only two who owned it. And we got into a major pissing match with a short seller who thought we were idiots. Yes, we did. Right? For owning it. And you have to look ahead. And you can't look backwards all the time. Like, you can look backwards just to check the rearview mirror and inform what you're doing. It's outperformed all of the Mag7 names this year. Right, and you had to look forward. 28% year to date. Now, Oracle's done well. Josh mentioned it.
And it was a big earnings winner last week. Cisco, a 52-week high today. I kind of put it in the same category, though not a direct compare. Cisco reiterated overweight. $73 is the target at J.P. Morgan. Yeah, yeah. But people weren't giving them credit as much as they were the other ones. And then, lo and behold, they end up outperforming, at least in IBM's case. Now, Cisco has some work to do. But, you know, again, like Chuck Robbins is like,
We're going to get this right, too. And here we go. You own Cisco still, don't you? Right. We own Cisco and it just got upgraded today. It's trading at 66. The upgrade was to 73. So that's 10 percent. It should be more than that. It's trading at 16 times earnings, has a 6 percent free cash flow yield. So this is actually in our growth strategy. And earnings should grow like mid to high single digits. That's a pretty compelling setup given this market. And this is another one where you don't look
at the past 10 years, you know, you look forward and see what can happen going forward. But sometimes the last 10 years dictate what the next 10 might be. But you know, Microsoft was flat for a decade. There are so many great stocks that were flat for a decade. And it kind of goes to Josh's opening comments on the market. Sometimes things just need to consolidate. We're going to take a quick break. We have many committee stocks on the move today. We also have Josh Brown adding to one of his positions. And we will document all of that when we come back.
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All right, welcome back. Let's update this move from Josh before I tell you some stocks that are on the move. You bought more toast. Why now?
Yeah. Look, I think one of the most interesting things about Toast is that most of the analysts who cover it are fintech payments and they've done a good job. And most of the price targets are mid 40s, right about where the stock has gotten to. And they're all bullish. But I think we're not thinking about this as having the potential to become an AI consulting company.
Most of the large restaurant chains and the hotel chains and the big hospitality businesses in this country are going to be eager to experiment with making their businesses more efficient with AI. Toast is arguably in one of the closest positions to be able to utilize its software business
and its knowledge in this area to actually make that kind of thing happen. So it's just like one more way to win in a stock that's already been a huge winner. So this is now a long-term position for me, and I added to it here in the low 40s. I think it's consolidating before the next move higher. All right, let's see if it can't get across the flat line and go positive here.
CarMax is higher. The earnings revenue beat, comp sales were good. Jenny, that's you. Yeah, so it's interesting. So it's still down about 10%. This is in our growth portfolio. I think it's a fantastic buy here. And the reason I mentioned the down 10% is because it hasn't run so much this year. So where you stand is retail sales came in at plus 9%. Gross profit was up 13%. And what's I think the most compelling part is that
As tariffs do kick in and cars get more expensive, new cars get more expensive, that's really favorable for the used car market. CarMax had a tough time because there were supply production problems during COVID, and now we're past that. So, supply is there, used cars are going to be compelling, trades at 16 times earnings, and the expected growth is 14% to 18% for the next three years.
Not bad, right? Yeah. Accenture, that is falling after a drop in bookings stepped at you. It's a 52-week low for shares of Accenture today. I know it always trades crummy around its earnings reports, but usually it kind of recovers. I don't see this recovering anytime soon. Not when they saw soft bookings down 6% year over year. Now they're restructuring their services business, which none of us can understand, and they had a gross margin miss.
So, to me, into strength, I'm likely to trim. Rocket companies, you've been flagging this, breaking out above its 200-day. Have you, Josh? Tell us more.
Yeah, so this is a really interesting situation because it is both going to be, in my view, one of the biggest beneficiaries if and when interest rates do fall. They don't even have to come down much because effectively this is a mortgage business and what we want is at a minimum a refinancing boom. So if you get rates coming down and not coming down because the economy is crashing, then
you're going to see a ton of demand for what Rocket does, and I don't think that's in the stock. But more interestingly, now you have Value Act Capital, which is arguably the activist fund that was most behind the turnaround at Microsoft and at Salesforce. They are 9.9% of Rocket now. They bought 15 million shares this spring.
And I think that when they get into a situation like this, it's probably something where Rocket is going to at least be willing to listen. They're not the type of activist that comes in and starts saying, "We're firing everyone. "We want all these board seats." It usually starts with a constructive conversation. So I think that's what this stock needs. They're in the midst of two massive transactions.
They're buying a huge mortgage servicing company called Mr. Cooper, and they're buying Redfin, which most people know as like a lead gen website for realtors, also refers a lot of mortgage business. They're trying to checkmate the entire online real estate ecosystem while things are depressed.
And when rates come down, mortgage rates come down with them, demand for new mortgages and for refinancings comes back. This is the type of stock that benefits. And that's the play here. And I think it's very, very early to that potential happening. All right. Good looking chart and move there as we're talking about it, too. Let's get the headlines now with Silvana Henao. Hi, Silvana.
Hey Scott, good afternoon. President Trump is calling for a special prosecutor to investigate the 2020 presidential election that he lost to former President Biden. In a Truth Social post today, the president reiterated his claim that he lost that election because of fraud. Now, despite the president's claims, which have already been rejected by the courts, there has been no evidence of widespread voter fraud.
The Justice Department declined comment. The Supreme Court has ruled the victims of terrorism can sue Palestinian entities in U.S. courts. The court today held unanimously that a law Congress passed in 2019, which allows such claims to be brought forward, didn't violate the due process rights of the Palestine Liberation Organization and the Palestinian Authority. And Maserati could soon be on the auction block.
Reuters reporting Stellantis is considering a possible sale of the struggling Italian luxury automaker as it looks to overhaul its portfolio, which does include Chrysler, Jeep and Alfa Romeo. A Stellantis spokesperson tells Reuters, respectfully, Maserati is not for sale. Scott. All right, Silvana, thank you. Silvana, now up next, Josh Brown's best stocks in the market list. He's ready with a spotlight on an under-the-radar AI play. He'll tell you what it is when we come back.
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Well, it's a hundred year old company and most people think of it as a boring industrial, but as you can see in the stock price over the last year, the world is waking up to a very important concept, which is you cannot build data centers without connectors. And Amphenol is the connector play. Um, anything, anything to do with power, electricity, uh,
printed circuit boards, cables. All of these things have to be connected together in order to make all of the trillions of dollars that the world is spending on cloud, data centers, etc. actually function. Look at the first quarter earnings this company reported. $4.8 billion in sales. That's up 48% year over year. Earnings were $0.63. That's up
58% over the last year. These are AI numbers in a company that prior to the last couple of years, nobody really thought of as having been that important to high tech. Now people are starting to understand this is at the center of this AI infrastructure build-out story. What I like to do with a situation like this because it's already run a lot,
is think about what a good entry might be. I'm looking at like high 80s. I think if you get a low volume pullback, the uptrend is still intact. I don't know that today is definitely the best entry, but people should have this name on their screen. As far as risk management, very obvious.
You have a rising 50-day, about 81 and a half if you're a short-term trader. That might be a place to exit to the downside. If you're an investor, I think you could have a little bit of a longer leash. I think 71, 72, there's a gap just below that level. That might be a place where you would say, you know what? Maybe the story has changed. The sellers have taken control.
So long as it can hold that level, though, I think this is a name that you want to be involved with because they affirmed guidance for the year. And everyone who's spending on AI today is probably still going to be spending three months from now, six months from now. And that's what's happening with this company. And it's a very exciting situation. All right. Good stuff. We'll take a break. We'll come back. We have a new street high target.
For Netflix, that stock has just been amazing this year. We'll tell you what the number is. We'll hear from our shareholders as to whether they think it can get there or not. We're back after this. All right. When stocks continue to go up, analysts continue to chase. They're doing just that with Netflix today. It's twelve hundred and thirty bucks as we speak. Pivotal says it's going to sixteen hundred. That's a street high. Also, optimism today at Wells. They go to fifteen hundred. They go to overweight or they reiterate that.
Jason Snipe, you own the stock, which just has been a remarkable winner. It has been a great winner, Scott. I mean, the stock's up 37%, obviously, year to date. You know, one of the key components for me was operating margins. Operating margins were 32% last quarter. EPS growth was 25%. I think one of the blemishes that we might not talk about enough is, you know, the U.S. growth was only up 9%. So I think
as it relates to this call there is definitely lots of room to run internationally so that's why i continue to like this stock again they have many levers to pull expenses are going to go up this quarter with the content slate that's coming up in the second half but i think they'll they'll continue to grow margins and it will continue to be a strong story part of the call you you nail it here they say it remains under penetrated globally they
They say it offers extremely compelling price to entertainment value. They like the ad tier, which they think the company can continue to grow subs as a result, even if you get a more, Josh, uncertain economic environment. If we have that now or if it becomes even more so, you drop down to the ad tier, you still get subs, and they think it's a powerful thing.
Yeah, you know what term we don't use anymore on CNBC or I don't hear it anywhere else? The streaming wars. You know why? The streaming wars were already won and Netflix won them. You got to stop right here above both major moving averages.
RSI is 62, so not overbought. Stock is 3% below its all-time highs. And I have to tell you, if they do go down the road of user-generated content or experimenting with some big YouTube creators who may want to do something a little bit more institutional, a little bit more substantial, that's a whole
line of business that no one's even thinking about in the same way that no one was thinking about live sports even two or three years ago. And now we're talking about the potential for live sports on Netflix as being literally through the roof. So I'm long. I'm not selling. I don't think it'll go up at the same pace it's been going up. But I also think people are going to want to continue to own it. Is it a... It doesn't have to be a winner-take-all? Or how do you look at it as a Disney shareholder? I mean, because there's...
You look at a longer time period, you have a different perspective. Hold on. I'm asking Jenny because she owns it. Because she owns it. It's up 18% in three months. I know, I know. And Disney's up like 6% year to date. But this is, again, the blessing and the curse of managing a strategy with really strict parameters around it. For the growth strategy, it needs to have a 5% or better free cash flow yield. For the dividend strategy, 5% or better dividend. You just can't get into Netflix and it stinks. But you don't need to own everything. Give me a five-year, guys, while we're looking at this, please. Thanks, thanks. Just rub it in.
Basically to make the point that it's done nothing for the last five years. Right. Thank you so much for reminding me of that. But again, our starting point is today. And where you stand with Disney is it's trading at 19 times, which is a decent discount to the U.S. market. It's got between 16 and 13 percent earnings growth ahead. And the movie business has rebounded. Theme parks are doing well. It's a great company. I think I'll still make a lot of money in it.
To Josh's point, he said, don't expect Netflix to do as well as it has. Right? I think he's right about that. I don't know. It continues to defy all expectations. Right. And past performance is no guarantee of future returns. So, you know, in both directions, that happens. Netflix is not a compelling valuation, at least for us. So I think we can do perfectly well. We don't need to own that. I think I'll get a decent return out of Disney. Josh, you just want to finish that up? If you have a response to that? He just feels sorry for me. I like Disney. It's in a...
I like Disney. It's in a very different business. Yes, they both have streaming services. And then the similarities end. Until Netflix starts building roller coasters. I don't think they need to be compared with each other. I think the opportunity in Disney is the succession plan and the street starting to think about the next 10 years instead of the next 10 minutes.
And that'll be a positive catalyst if and when it happens. And I don't hate that situation. I just like Netflix better. All right, Santoli, he's next with his midday word. Senior markets commentator Mike Santoli here at the desk for his midday word. We had Berkshire on our list today to talk about it and then heard that you're looking at it of late just because it's down 10% since May 3rd. What was that? That was the day that Mr. Buffett announced his plans to hand over the reins. And it is underperforming the S&P, but...
You always have unique perspective on it. So why are you thinking about it today? I'm certainly not denying that the Buffett exit is probably part of why there's been this bout of profit taking. But I think there's other things going on within the market that it tells a sort of story about that as well, which is it's the ultimate quality, you know, kind of bulletproof trade in tough times. If you look at how Berkshire has traded relative to the Nasdaq 100, which is MAG7 dominated,
You see, they've kind of together and then Mag7, NASDAQ 100 sells off hard. Berkshire picks up the slack almost perfectly mirror image because it's the next largest stock after the Mag7 basically. It's a trillion dollar market cap. Maybe Broadcom is bigger sometimes. So I think that was part of what was going on. But also it was piping hot going into the shareholder meeting. It was up 19% year to date.
at the moment and there's also 1.9 times book values basically as expensive as it gets and as hot you know high momentum as it gets and so that's why i do think there was this vulnerability to have that premium come out of it to some degree at the same time mag 7 ramps back and all of a sudden you could buy them again so
All that stuff, I think, is in the mix, as well as, you know, Progressive has actually kind of rolled a little bit. Allstate's not traded well. And so that's at the core of the obviously the Geico business. Josh, you have a thought. You're the shareholder here. And I know you're always thinking about Berkshire.
I totally agree. If you're investing in mega caps and the tech trade hits a major snag because we're worried about international tariffs and trade or whatever, this is one of the names that is the recipient of the money coming out of the others. The other thing to keep in mind is the Apple position. They've sold a lot of Apple, but they still own a lot. They have 300 million shares of Apple as of the end of last quarter. They own 2% of that company's float.
They did nothing last quarter, no buying, no selling. So they have a $66 billion Apple position. It's about 25% of Berkshire stock portfolio in that one name. So I think the weakness in Apple probably isn't helping the situation here.
And I totally agree with Mike. This is sort of a risk-off mega cap, just generally speaking. And the whole insurance sector has been acting as a great place to be in a risk-off market. We're not in a risk-off market right now. We're in a circle and core weave market. It's another planet. So I totally get what's happening. That's all true. Although right now, the Apple position is like...
6% of Berkshire's market cap. It's the dawn of the days when the stocks should move together, at least in the short term. All right. I'll see you on the bell. Mike Santoli, thank you. Finals are next. All right. Jeremy Siegel, Ashley McNeil, Aswath Damodaran, Tom Lee, Chris Harvey. How's that for a lineup for 3 o'clock? I hope you'll join me then. Final trade, Josh Brown, what do you got? Oh, for final trade, I'm going to say Rocket. I remain long. Thank you. Sorry to interrupt you. Jason Snipe. KKR.
Jenny. GXO. New CEO announced today. Stock's up a lot, but it's still compelling valuation 16 times with great earnings growth. Continue to buy Uber. A most favored name on this committee. All right, good stuff. I'll see you at 3. The exchange is now. You've been listening to CNBC's Halftime Report, the podcast. You can always catch us live weekdays at 12 Eastern, only on CNBC.
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