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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.
All right, Carl, thanks very much. Welcome to the Halftime Report. I'm Scott Wapner. Front and center this hour, the state of the tech trade after NVIDIA gets crushed and we're not seeing much of a rebound today. We will discuss with the investment committee. Joining me for the hour, Josh Brown, Jenny Harrington, Jim Labenthal and Bill Baruch. We will show you the markets here, obviously being heavily skewed. The Dow is by UNH. We'll
We'll get to that a little bit later. We're going to get to Powell versus the president a little bit later as well. But a really big story continues to be tech. We're watching it closely. You had the double whammy yesterday, Josh, the export curbs. And then you had The New York Times reporting about a possible deep seek bar of buying tech from the U.S.,
How about this stat, too, before you give me your thoughts here? J.P. Morgan's retail investor tracker, not institutions, not the fund flows that we cite often from Bank of America, but J.P. Morgan's retail investor tracker, the biggest NVIDIA outflow since 2015. Think about that.
yeah i look i think this is an area of the market where people got really excited and of course the promise of ai is exciting but you know allocations got stretched valuations got stretched people were looking at the sector as this incredible secular growth story where it almost didn't matter what was happening in the rest of the economy because it's this technological shift and everyone has to invest and etc etc
There's really no such thing as a technology trend that is 100% completely impervious to the cyclical picture around it. As much as we would love to believe that that's a thing that exists, it really doesn't. And then the other thing is, this is not just a cyclical story, it's a political story wrapped around a cyclical story.
And the AI chips and semiconductors and the data center spend and the AI spend, it's all like highly politically fraught. So it's not secular to the point where you could just wall it off. And I think when you talk about the flows that you just pointed out, Judge, I think that's just like an acknowledgment.
on the part of the public at large, yes, Nvidia is great, yes, GPUs are strategically important, yes, it's really cool, all the things that you could do with AI, but this is gonna be a roller coaster.
Because you've got now the political angle, you've got the cyclical economy around it, you've got crashing stock prices amongst the companies that are supposed to be the companies that are going to spend the most. Right now, the median percentage below the 52-week highs for a technology stock, by the way, is negative 29%.
So the S&P negative, I don't know, 14 or 13, the median tech stock is in a 30% bear market. So all of that gets called into question. People look at a stock that they're up 500% in. The easiest decision in the world is, all right, I got to take something off. I got to lessen the pain here. I'll sell a little Nvidia. And that stat that you just quoted is all of those things writ large in one number distilling it all down.
I've got ownership obviously on the desk. Bill, what do you do within your own Nvidia position here? We know that Jensen Huang has flown to Beijing for talks. You got price target cuts consistently now on the street, including yet again today. UBS did it today to Nvidia 180.
from 185 that looks a little adventurous considering you're at 100 bucks right now is it going to get back to 180 anytime soon what do you think
Well, we're not projecting 180, you know, anytime soon. I do think the back half of the year for Nvidia and the AI trade is going to be much better than what we're seeing right now. Why is that? Well, I think a lot of these policies we're going to work through, right now it's uncertainty. I mean, let's talk macro about it. I mean, uncertainty is really driving this market. When those April 2nd tariffs were announced,
The result was not on the probability spectrum. The market raced to then discount the situation. What we saw in the aftermath was the VIX hitting 60. We saw three of the five most highest volume days in the S&P in history. That's capitulation. I mean, those are things that we had some cash on the sidelines. We wouldn't be looking to be a buyer today.
You know, Nvidia at 95 to 100 is attractive. Now, do I like seeing the move we've seen the past week where it went up Sunday night, I think it was trading as high as 115, and then it's surrendered all that? The news flow is not good, and it hasn't been good. But I think there's a light in the tunnel here where we're flushing out
A lot of the negativity. And we get the semiconductor news this week that everybody was really anticipating. And yesterday it got bludgeoned again. So I am looking forward to the earnings that we're going to see in the coming weeks from some of these hyperscalers. Where is their spend? How are we flushing out the negativity? It feels like we're surrounded by it. Oh, yeah. Like we're not ridding ourselves of it in any way as it relates to export curbs, whether it obviously relates to tariffs and the trade war with
with China. And then you have the residual effects potentially of a slowdown in the economy further than now, which you get a drop in spend from the hyperscalers. So what are we flushing through? Well, I think looking at the flushing out, the negativity of VIX at 60, I mean, could you believe, I mean, and imagine us going back up
there. So what causes a VIX get to 60 is flushing out the negativity. You have hedge fund desks that take on exposure, a certain amount of exposure when the VIX is 15 to 20. They have to de-risk when it's 20 to 30. Imagine how much they have to de-risk when we're talking 50 to 60 VIX or constantly above 40. We are flushing out. There's positions being taken down. If the market can steady a bit, even if we go down and make a new low with lower volume, that is a very positive thing here. Okay, so you're talking about
negativity of the overall market, not around Nvidia. Well, I do. I'm a macro real quick on it. And I want to say that what we're looking at with Nvidia, I mean, there's still high demand for deep seek. And if you didn't expect that China was going to get some some export controls, then I mean, it wasn't factored in to your to your narrative. Then you should you would be surprised. But I don't think you should be totally surprised about what we saw.
On last Sunday, when Lutnick came out and poured cold water over the Saturday news, we knew something was coming from semiconductors. We didn't know how bad it would be. It's down 7% in a day. It was down as much as 10%. I think we're flushing out some negativity. It can't find ground right now. There's a lot of uncertainty.
Look at the reaction. The market is very reflexive right now. And if we get any sort of positive news here, Nvidia's going to be back at 115 to 120 over a couple of weeks. And then if we get good earnings, I mean, that's how we get back to 130. 180 is not what we're concerned about. Let's get back to 120s. Well, that's why it's been hard. You know, I hear a lot of people say it's really hard to get all...
bared up now from here because we are a few type keys away from anything. You just don't know. Right. In both directions, right? Yeah. We're a few type keys away from good or bad. And I think what the challenge of being a portfolio manager in this moment is, is that we're all looking for the answer.
And the answer doesn't exist right now. There are no concrete answers. I've explained it to clients like in a normal market environment and we're trying to make decisions and the decision tree has three branches or five branches and we can kind of say, hey, here are the two statistically most probable branches. In this environment, the decision tree's branches have exploded to, I don't know, 100. You know, and when we say things like, what, you know, what's behind this policy? What's behind that policy? What's the end game? I'm going to tell you all
There's not an answer to that right now. Right. There's really not. I know. But everybody knows that. You know, I think I don't think you're right. I think how many times I mean, we've had uncertainty like six hundred and fifty thousand. There's a reason last week. There's a reason. And people still think that if they read enough and if they dig enough, they're going to find it at the macro level. You can't. So I think, Bill, you know, this is getting semantic on what Bill's saying, but Bill's saying we're flushing it out. And my question to you, Bill, would be, OK.
at what point is it flushed out? And what makes it complicated too is you never know. But you know what? It's like, what's that porn thing? Like you can't define porn, but you know it when you see it. We've all been around long enough. I think my larger point, honestly, is...
The idea that why we're focused so heavily on this trade is because there was a defensive tilt to it for a good while in this market. When things got a little bit dicey, these were the stocks that hung in there more than the others.
and they were a port in what was a storm over periods of time. Now, I think they're more questionable, which is why the market is questionable in its direction right now. Has questioned it. Absolutely, the market has questioned it. I mean, NVIDIA is one-third off of its high from just several months ago.
the S&P 500 is off 15 percent from the high of just two months ago. So, Jenny, when you said, you know, the tweet can go or the news item can go either direction, that's absolutely true, but the market has already taken us in one direction, whether it's the market for Nvidia or the market overall. And just to put
a little bit of a finer point on this. We've already gone through the risks. And Josh, you mentioned valuation, but you went by it. I just want to add a little more to that. I mean, Nvidia is now trading at 22 times forward earnings. We can have a discussion about whether that's expensive or cheap. I will give you my opinion that it's cheap. And I will base that not just on the growth rate of 40-odd percent going forward in earnings that's estimated, but a
I'll also put that multiple of 22 times forward earnings up against other companies that I think we know and respect. Think about, for instance, a Procter & Gamble, which has a forward earnings roughly 23 times. Think about a John Deere, has a forward earnings roughly 24 times. And my point with this is not to say anything negative about those stocks.
But to say that the earnings growth rate projected in Nvidia, even after all the bad news on China on Deepsea, is still multiples of the earnings growth rates on those stocks. And here's my beef on that. That's the multiple it was when it was a gaming chip company. It started the fourth industrial revolution. I mean, that's a great time to be looking at buying long term for Nvidia right here.
But the earnings are not as certain today as they were before. That's fair. Reflected in the price. No, I don't think so. I definitely think so. No, because you're saying it's 22 times forward earnings. Well, the multiple is derated. Fine, but who knows what those earnings are going to be? Well, I don't know. I think Jenny's point is maybe it's not fully reflected in that.
If you have an actual recession, right, so you have a... Okay, you're right. Hold on, let me finish. A larger retraction in GDP, then you have what potentially Satya Nadella warned about a week or so ago that, well, of course we expect to spend all this money, but it is somewhat GDP dependent. Like, you have to maintain a certain level of economic power to expect that this stock is going to continue to power forward.
I mean, even over the weekend, what was it, 12 billion hit to revenues? Josh. No one saw that coming. Sorry. I think what the hardest part about this. So you have Fortune 500 companies right now coming out and saying, OK, here's our guidance.
if this, and here's our guidance if that. Like this is where we are because it's so binary. The thing about recession and Nvidia may or may not be a great example of this, but just generally speaking, I think this is really important. The thing about recession that's so frustrating for investors
It's not just that economic activity turns down and that companies start to revise their guidance lower and that analysts then get in on the game and they try to beat the companies to the punch. So all of a sudden the sell side is trying to cut numbers faster than the CEO can cut. Like that's, that dynamic sucks. Like we all hate it. We've all been through it. But while that's going on, the other thing that's happening is that the multiples are coming down too. So you get hit twice for the same thing happening.
So it's not just earnings falling. It's what we're willing to pay for a dollar of earnings falling because, to Jenny's point, those earnings become less certain the longer that that process plays out. So we're seeing that market wide right now. I would argue that's like one of the things that we're fighting with. Typically in a recession, you get an earnings multiple decline down to like 13, 14 times, which is not there.
And you get earnings fall off of that 20%. We're definitely not there. In the midst of this quarter, we still think we're going to do like 7% growth. So if we don't have a recession, these valuations are great. I totally agree with Jim. Which is part of my point. Forget it.
Which is part of my point, but back to you, Bill. Making the argument where all the negativity is getting fleshed out, not if you get closer or have a recession, it's not. Are you making the argument that 5,300 on the S&P is...
That reflects all of the negativity in the market? I think we'll be higher than 5,300 six months and a year from now. But let's, right or wrong, what's the administration's goal here is really onshoring. And onshoring is a tailwind to GDP. Tech is not what you're doing for me right now. It's what you're going to do for me in the future. So we're onshoring all of this in six months? We're building. I'm not saying what we're going to do in the future. So it's not going to be priced in at the moment, but we know what the plan is. They're signing contracts for data centers. The White House is...
bringing a tailwind to this onshoring of AI. They're bringing the Taiwan semiconductor into the White House. Right. The CHIPS Act had already done that. Yeah. But there's a lot of tailwinds behind this. And at the end of this, coming out of the next six months, it could end up being, and I believe so, we're going to see, right or wrong, it's going to see a tailwind. So is that why you're buying Broadcom? Which, by the way, JP Morgan today says about the semis that you could have another 10% to 15% downside.
potentially that you have to remain really selective. I see you bought more Broadcom. - Yeah, yeah. And when we bought Broadcom a day or two earlier, we had added a little more Nvidia. We had about 10%, there's just under 10% cash. We raised in the weeks prior to that from a higher level. And if we're not going to strategically get this to work, then really what are we looking to do? And now this is very tactical. If the market deteriorates, we're going to look to raise this cash, whether it be from Broadcom or another name. But what we're looking to do here
is get that to work. Broadcom announced a $10 billion repurchase. They are showing confidence in what they're doing as a company. They think their stock's undervalued. I think within the infrastructure of AI, if we're looking at onshoring and we're looking at US-centric growth in the space, I think Broadcom is right front and center. Now, they also hit a big support level. I'd like to see the stock get above 185%.
But right here, yeah, we are in a little bit of no man's land. I'm not sitting here and denying that there's uncertainties. We're going to listen to President Trump now at the White House. I'm sure I'm here to help on that. I cannot appeal in the name of the European Union. My goal would be to invite President Trump to pay an official visit to Italy and understand if there's a possibility when he comes to... And understand if there's a possibility when he comes...
to organize also such a meeting with Europe. I think the best way is that we simply speak frankly about the needs that every one of us has and find ourselves in the middle. That's useful for all. Somebody calls me such a Western nationalism. I don't know if it is the right word.
but I'm sure that together we are stronger and I have to find a way, I'm here to find the best way to make us both stronger on the two shores of the Atlantic. - Mr. President, I'm afraid we're gonna have very little problem making a deal with Europe or anybody else.
Because we have something that everybody wants. You know what that means, right? We have something that everybody wants. We're going to have very little problems. So we'll see you in a couple of minutes. We'll be right there in the Oval Office. Thank you very much. Thank you, Mr. President. Thank you. Thank you, Prime Minister. Thank you. Thank you. Thank you. Thank you. Thank you. Thank you. Thank you. Thank you.
All right, I'll take it back. We'll obviously monitor what's happening in that room. The Italian prime minister is there, Meloni, in a meeting with the president and others from the cabinet and other staff, as you saw there. The president saying very little problem making a deal with Europe. So he's trying to suggest that they'll be able to make some deals regarding the tariffs that are on Europe.
everywhere, really. So we'll follow it. Any more headlines come from that, we obviously will bring that to you. So we're talking about Broadcom. You also bought more Meta. Yeah. I mean, in the AI trade, I think Meta is actually the one that really has the best leg in implementing it in the advertising. When you're looking at the spectrum, all right, you're looking at
if we do go into a recessionary-like quarter or two, who's going to be the strongest? Who's going to be that floats up? And I think meta and the advertising that companies are spending, spending through their AI tools and through their platform is the last one that's going to be cut. So we own meta, and it's a name that we strategically wanted to get more money into at the right time, and we think this is the right time. Jenny, you bought Microchip.
Why'd you do that? Yeah, so this was an interesting one. So we actually owned Microchip in the portfolio back from 2011 to 2015. And it had a big yield back then. Haven't seen it on the screen since in 10 years. And about a month and a half ago, it popped back on because the share price had gotten clocked.
not just on tariffs, but because they did a terrible job with customer and order management during the pandemic that then continued to reverberate. So fast forward, they brought in the new CEO, shares trade down, they start showing up on my screen with like a three and a half percent yield, a 4% yield. So we started to do work.
And we really accelerated that work towards the end of March into beginning of April when the shares were down 60% from their high. And here's what we found. We found that the business is still intact. It's a great business. They make really small, nothing little semiconductor chips, things that go into like remote controls and gaming console, the little controller things there, and medical devices and small parts. Nothing like Nvidia, nothing like what AMD makes, just small little chips.
Three of their five manufacturing plants are here in the US, two are overseas, but we know they're still global, so they do have serious tariffs there. But as we started looking at the company, we saw two things. One, I'm not sure that microchip common is going to be able to cover the dividend. But when you look out three years, you see a huge earnings recovery coming. And this goes to me picking on Jim saying, can you really count on earnings?
I don't know that you can for the short term. I think as we look out longer term, three and four years, we kind of can guess directionally where earnings are going. I totally agree. Just to be clear, you're not picking on me. Okay, thanks. The short term is always unknowable. Right. So we're researching this stock, and I'm like, look, the dividend is not going to be covered at the common. But what we found was, and this was so exciting. I know you all think I'm a nerd on this, but I was so excited. They have a convertible preferred that they issued about three weeks ago. The ticker is MCHPP.
And the convertible preferred at this price has nearly, not quite, but nearly one for one upside on the common shares. So if we can look out three years and say those earnings should be three to four bucks in three years from now, and that would put the stock trading at a 10 times multiple, we think it deserves a premium. The worst case is it should stay flat.
In addition, the coupon on the convertible preferred is 7.5%, which means the yield at this price is over 9%. So this is fantastic. I've got a three-year convertible preferred. I've got equity like upside. The yield on the convertible preferred where it stacks up in the corporate structure is much safer. I know I'm going to get that. There's no risk of bankruptcy here. They brought the old CO back in to manage it. The company's on much sounder footing.
clocked because of too much noise. So I was thrilled on this one. Okay. We'll watch it get in a nice move in the market. We're going to get to the UNH story, I promise you that, because it has just killed the Dow today. Steve Weiss is going to join us in a little bit to tell us what he's doing with the position that he's advocated for repeatedly.
We're also going to get to another move that Bill Baruch has, and it's related to a really important earnings report that's coming up. But I want to get to the story that a lot of people are talking about today, and that's Powell versus the president, the chair of the Federal Reserve versus the president of the United States.
As you know, the chair was in Chicago yesterday. He said a number of things and was asked about the idea of a Fed put to which he said, quote, I'm going to say no with an explanation. And he gave an explanation. But he was blunt about the president's trade war. He said much higher tariffs than they expected, higher than Smoot-Hawley. He said will lead to higher inflation and slower growth. He used the word persistent when talking about what inflation is going to do.
to which the president weighed in today on Truth Social, to which he said, quote, "Termination can't come fast enough," that the Fed is too late and wrong, and he's urging Powell to cut rates. Megan Casella, within the last hour or so, reported from a White House official that that post should not be seen as a threat to fire Powell, to which we bring in our senior economics correspondent, Steve Leisman, to weigh in on this battle royal.
It's pretty clear to me at this point, based on the comments of Powell himself, forget the president's stuff on social this morning for a moment.
Just Powell alone yesterday, that if he thinks there's an issue with current policy, it's the president's policy, not the Fed's. And I think he was making that point fairly clear yesterday without being so explicit to call out anybody. He was just telling it like he sees it, making the case that, well, bigger than expected tariffs, maybe more persistent inflation than we first thought. And it's anyone's guess where all this is going.
Yeah. And we're not the ones who did it. I think that's clear, and I don't think he's shy about saying that, that his problem with figuring out what to do with policy is the tariffs and, to some extent, the other things that the president is tinkering with relative to fiscal policy deregulation
as well as immigration is an issue we don't talk enough about when it comes to the overall economic outlook. So all those things are in play, and they're saying, look, I got to figure out what all this means. I have a job to do. Part of my job is making sure unemployment doesn't go up. Well, it's at or near essentially maximum employment at 4.2% unemployment. My inflation rate is running higher than I want it to. I just had a big bout of inflation, and you're raising prices on things so fast.
It's not rocket science to say, I've got to pause to wait to see what happens. Right. And then there was this report earlier that the Treasury Secretary had been telling, or is telling,
uh white house officials like okay the market is going to have a problem if you actually fire the fed chair and the bond market has been the point of pain and concern in this in this whole thing right to this point and and they don't want the treasury secretary being the principal they
doesn't want a larger issue beyond worried about tariff stuff with having to think about the idea of the president firing or at least attempting to fire the Fed chair. I don't know that there's any actual limit to the number of fights that President Trump wants to have at any one time. It appears to be an infinite number. He has his prerogative. Seventy five trade negotiations going on. He has fights with all the universities. So I
I don't know. And he has multiple court cases now. So maybe he wants to have this fight with the Fed. But I think what Besson is saying, Mr. President, of all the things that you're on your plate right now and all the things that markets worry about, you don't need to have a problem with the Fed, in part, Scott, because Powell is not saying I won't cut.
I think Powell would like to cut. I think Powell's a little more dovish than some people on his committee. Like Waller. Like Waller. Well, Waller's more dovish, I think. We could have that debate, but I think Waller's more dovish. No, I mean he's more dovish than Powell. Waller's more dovish, right. That's what I mean. But I think there are people on his committee like Musalem, maybe Hammock, depends. Some people have talked about the idea of needing to raise rates. He's not talking about that. I think he wants to cut. I
I just don't think he has essentially the license or the clearing to cut until you figure out what happens with inflation here. So it's a reason I think the market is a little out ahead of itself and banking on and hoping for a June cut. And there's another debate to have, which is what good would cutting do? If you have a supply shock to the economy, do you really want to goose aggregate demand, which is what rate cuts do, which we found out.
not all that long ago, makes the inflationary effects of the supply shock worse. I know. The other side of this whole thing, though...
Duh, did we really not understand that? There is a belief, and people on the street are talking about it, like Wolf Research today, about the Fed, the risk of the Fed being behind the curve. You know why they have the phrase behind the curve? Because the Fed's been behind the curve before. And people worry that they are going to be again. I mean, it's a legitimate thought. Which curve are they going to be behind? The one of rising inflation or the one of declining growth?
I don't know. Misreading one at the expense of the other. I didn't read the Wolf report. But maybe it is not understanding fully that inflation is coming down. The greater risk at this point is the labor market. Okay, from what do you take that full understanding?
You don't think inflation is coming down? Well, because we've been through this before and there is some model with which to understand the future here. I don't think... The Fed chair's own words up to yesterday were transitory again regarding tariff inflation. They've used the word transitory. He thought or thinks now that these tariff inflation...
issues are temporary. He used the word transitory. Yeah, but he's been wrong in the past. I don't think that's what he's saying now. No, no, no. I'm saying like, what was it, two weeks ago he used the word transitory.
He said it could be transitory, but you have to guard it. Two weeks ago, he said it's the Fed's obligation to ensure that one time price hikes from tariffs do not become secondary or embedded or more widespread. That was their that had been there. That's but that was their base case at the time. That's that is that is the operative phrase for how the Fed is running policy right now.
making sure given that unemployment is well contained, growth is good, jobless claims are low, you do not have an
an obvious worry right now on the unemployment side of the mandate. You take care of the inflation side of the mandate, which is the one that is obviously clearly under threat right now. - The point is that they may have a faster evolving problem on the labor side of the mandate. - They may. - And they may be behind the curve. - They may, but we just heard that the tariffs are a tailwind for growth.
Can I jump in here? I think they're ahead. Can I jump in as a market participant? Because I'll tell you what the markets want is no surprise. All right? I'm looking at the Fed futures curve right now. All right? And we're projecting the first cut in June. I'm not saying either one of you is right or wrong. I'm saying as a market participant, the worst thing in the world is to now move a rate cut up from there because the market's going to freak. The market's going to say something is really amiss and the Fed's got it. Josh wants to get in. Josh? Yeah. Yeah.
I think, like, I think I'm going to take both sides here. I'm going to say...
I'm going to say Powell's going to be doing more cuts in the second half of this year than he thinks he is. And he's already he's spent his entire tenure telling us that the Fed is data dependent. So it's not his fault that he has no idea what he's about to do. Hang on one second. Forgive me, but I'm going to go back to the White House because Megan Casella has more from there on what the president's saying in the room that we showed you a little while ago with breaking news. Megan.
Hey, Scott, absolutely. So that was a surprise press appearance in that lunch. Didn't previously think that we were going to be able to see that. But the president was asked a few questions there, mostly on trade, the headlines to bring you. He was projecting confidence, really. He said that we will have a deal with China on trade, although he hadn't answered an earlier question about whether he had been in touch with
President Xi. So as far as we know, those two leaders still aren't speaking. Looks a little dicey between the two countries right now, but the president projecting confidence saying we will have a deal with China. EU trade talks have also not been going especially well. We heard earlier this week that the EU thinks this has to be a two-way street and that the U.S. hasn't been offering enough. But the president and the Italian Prime Minister Maloney, who's here for a visit, both projecting confidence on that deal as well. The president saying he is very confident he will be able to make
a deal with the EU. Now, I will say, Scott, both those, the China and the EU deal, seen as sort of the ones that aren't going as well, even as negotiations are progressing with countries like Vietnam, Canada, Mexico, you name it. The EU and China are both the two that have been talking more about retaliation and pushing back. So interesting now that the president is projecting this confidence.
also say though that I've been waved off the idea by White House officials this morning that we're likely to see any sort of trade deal with the EU announced today. That the Italian Prime Minister, I've been told, is not exactly the right person to talk to when you think about EU trade and broader trade talks for the bloc. But she is a very close ally of the president. They're seen as two both right
far-right candidates you could say and have some back in the spirits there if you will so some something of a liaison with the broader e_u_ but that this meeting had been scheduled before at the reciprocal tariffs were announced it's not expected to be a focus of the meeting today make it thank you for the update come back with anything else you learn uh... from inside the white house making seller joining us there uh... i had a follow-up if they make a deal with china
And or with the EU, the Fed will be clear to cut. That's the kind of thing that would provide the kind of certainty that Powell needs to say, OK, here are the tariffs. Here's the inflationary effect. I'm sorry. I don't want to cut off Josh. No, but don't we believe I'm going to go back to Josh in a second. Yeah. Don't we believe we're eventually going to have a deal? What do you think? We're never going to have a deal. You don't think we're going to ever have a deal?
I mean, it's a question I think more so at this point of what have you damaged along the way to get to the deal? What impact have you done to the economy in the process of getting to that deal? And however long it takes. Maybe I'm being overly optimistic and thinking we're going to have a deal. But I mean, I feel like we're going to have some kind of deal at some point.
But that's the thing, right? What's the point that we get to a deal? The longer it goes on, the more damage is done. So I agree with you. That's part of the issue. That's the hard part, though. Is it two weeks? Is it a year? That's what potentially Chair Powell is going to be left to pick through. Right. You can't get to that. Josh?
The market is no longer worried about whether or not we're going to have a deal. Of course we're going to have a deal. Donald Trump's weighting on the economy last week just hit its lowest level ever. Not his weighting period, not his weighting on immigration, not his weighting on how he talks. His weighting on the economy.
hit the lowest level ever. Of course there's a deal. Everybody knows there's a deal. If we didn't think there was a deal, the S&P would be at 15 times earnings, would be at 3,800 right now. So what we're really talking about is, is the damage done anyway, does it no longer matter? Because this all started at record high earnings, record low unemployment. It's hard to picture us getting those two things back.
to where they were just in february and i'm going to tell you right now he doesn't have to get rid of powell he doesn't is unnecessary his kevin warsh is the fed chair in waiting everybody knows this he was almost the fed chair in 2017 just so people understand kevin warsh was on the fed from 2006 to 2011 he's married to jane lauder jane lauder is ron lauder's daughter of este lauder
That's Donald Trump's best friend. What he wants in this role is a loyalist who will do exactly what he thinks needs to be done. And I actually think Trump is right. This economy is not a 4.5% Fed funds rate economy. It just isn't.
And I think this business with the 10-year last week and capital flight and blah, blah, blah, I think it's a huge head fake. I think rates need to be lower. I think financial conditions are too tight. And I worry, Scott, like you do, that the damage is already done. It's now four weeks of incredible uncertainty. It almost might not matter. They'll make a deal. The NASDAQ will rally 6%. Then what? Now you're still facing a cyclical, potentially a cyclical recession.
Steve, I've got to take a break, but I'll give you the last word on all this. I hope you guys are right that there is a deal. It's a good deal for the U.S. economy. I think that
The idea that onshoring is a tailwind for GDP is very suspect to me. It requires you to believe that American companies have made the least efficient, least profitable choice with where to source their products. But don't you think onshoring of chips alone is good for GDP? Onshoring of chips makes a lot of sense in national security. I'm primarily talking about that. I'm not talking about T-shirts and sneakers. But if you look at what's been tariffed right now,
All the inputs have somehow have a tariff on them. Things that it makes no sense for us to buy that will create, make the economy much less efficient and make companies much less profitable. That has to be said a hundred times. Okay. Thank you for being here at the New York Stock Exchange. 101 times.
Up next, our chart of the day. It is UnitedHealth for obvious reasons today. Steve Weiss owns it. He's standing by to tell you what he's doing with it today. We do have more moves from the committee. We're back right after this break. What does it mean to live a rich life? It means brave first leaves, tearful goodbyes, and everything in between.
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All right, we're back. We want to talk UnitedHealth. It's obviously the chart of the day, and it is accounting for basically the entire Dow loss. The Dow loss would be even bigger if not for the other Dow stocks in there, some of which are green, which is why you have what you do. A loss of, as you see on your screen, 23%. Steve Weiss owns the stock. Steve Weiss has defended this name. He's bought more at times recently, and he joins us now to tell us what he's doing today. Did you sell? What did you do?
No, I actually bought some more this morning. I bought it a couple of points higher, probably more than a couple of points higher. But here's how I look at it, Scott. It's been a good position. I'm down slightly. I'm right now above cost ever so slightly after having nothing to gain from defensive play.
from moving defensive stocks. As I go through the quarter, and I was able to speak to top management today and go through the quarter and their expectations, et cetera. And look, it's been a very tough environment to navigate. The narrative last year was
that this is a year of peak usage because we saw the backup from COVID, et cetera, and so forth. And it turns out it wasn't the peak that we're seeing the peak now maybe extends. And that's occasioned by a few things. Some it's good news actually that occasioned it. They've raised premiums out of necessity on some of the large plans for, you know, from $50 a month per member to $200 a month. And as a result, they've seen an increase
in uh in usage employees saying hey if i'm paying for it i'm going to use it then when you take a look at the transition to value-based care that's bringing people in for wellness exams particularly seniors so you see an upfront cost on that and that will actually lead to better mlr going forward so the bottom line is if there's any companies been able to navigate these
issues uh... it's been united health and then the final part this is very important is that i'm really took a hatchet what the typical rate increase you work so for this year it's only about two percent just over two percent but for next year and this will drop the stock last week uh... it's over five percent first expectations of four percent
knowing management known the copy for many many years they've built its cushion for the remainder of this year and uh... i think it's seventy times earnings is an excellent valuation to the company down twelve percent guidance stocking down twenty two percent the map doesn't add up to me for one that is just uh... a critical company to uh... to the country and uh... you know just stands alone in a class by itself
All right. Thanks for the update. We'll see you back here on the desk. Steve Weiss up next. Another move from Bill Baruch. We'll tell you what it is next.
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We're back on Halftime. I'm Silvana Henao with your CNBC News Update. The Department of Homeland Security is threatening to revoke Harvard University's ability to enroll foreign students unless the Ivy League hands over detailed records on its foreign student visa holders' illegal and violent activities. A spokesperson tells the Harvard Crimson that the school's aware of the letter but won't surrender its independence or relinquish its constitutional rights.
At least 300 National Weather Service employees are expected to take the latest federal buyout offer by today's deadline. According to the Washington Post, the agency's top official told employees this week it could leave the agency understaffed to properly monitor extreme weather events. And it comes as a massive storm is set to hit the central U.S. from Texas to Nebraska, bringing fire risks and damaging hail today through the weekend.
And ESPN's legendary college game day analyst Lee Corso announced today he is retiring in August. ESPN said Corso's final broadcast will be on August 30th. It ends a nearly 40 year career with a show where he was known for his signature line when disagreeing with a panelist. Not so fast, my friend. Halftime. We'll be right back.
One of the best names in the Nasdaq not having to do with the mega caps is Netflix. It reports today. And Bill Baruch, you bought it. This a new position? Yes, it's a new position for us. Obviously done well in the wake of a lot of this trade war talk just because people say, well, it's it may not be recession resistant, but it's maybe.
recession resilient. Yeah, it's done well. And I'll pick up where you from that point there. The Nasdaq relative to the Q's, it's back at that gangbusters 2018 level. Price is telling you something here. I think it's going to break out above there, which tells me the Nasdaq will continue to outperform the Q's.
It is resilient. I mean, I think just know anecdotally, if you know, if we are in a recession, I think the last thing that people are looking to to cut is their Netflix subscription. However, I think there are some fears here around this earnings report where we're going to start to see some slowing subscriber growth.
And I think they may have front-run the story a little bit, talking about doubling their revenue by 2030 and increasing the operating income. Revenue expectations are at 12% year-over-year. It's down from 16% year-over-year. But again, I'm leaning on the fact here that price is telling us something. And we added it open to the 2% position. All right. Josh, you own the stock, and you bought it recently, too.
Yeah, Bill and I are on the same page. I basically said that whole thing, but I did it yesterday. Netflix is going to report something like 11% revenue growth.
So $10.4 billion in earnings, excuse me, in revenue, $5.74 in earnings. And if they do, that would be 7% year-over-year growth, which is not like crazy earnings growth anyone's expecting. So I think what's really happening here with the story is people are waking up to this idea that this is one of the most defensive markets.
consumer facing businesses, not just tech or not just communications, but you think about what consumers are going to do if and when we have an actual slowdown, one of the things they're probably not going to do is walk away from their Netflix sub. This is TD Cowen. They said this last week. Given macro volatility, we expect Netflix as arguably the most defensive stock in our coverage universe.
The monthly price of Netflix premium costs the same amount as a single IMAX ticket in major markets for two hours or one fifth of the average price of a single Live Nation ticket for a two hour concert.
So the bang for your buck entertainment-wise that you get with a premium Netflix subscription is head and shoulders better than what you're getting from anything else you could spend money on. And people don't let go of these smaller luxuries. They keep going to Starbucks. We've seen that through multiple recessions. And they don't drop Netflix. So I think, I don't know if that means the next 50 points are up or down. I think this stock will outperform most if we have an outright recession. Okay.
Okay. We'll take a break. We'll come back. We're talking gold because a new name related to it has just popped up on Josh's best stocks in the market list. We reveal it next. All right. I mentioned gold has been hitting record highs. There it is. And a new name, Josh, on your list. What is it?
Newmont Mining just popped onto the list this week. I haven't spoken about this name in a long time. I was told to be brief, so I'll just tell you this. Gold's surge 24% year-to-date is now at $3,300 per ounce. This price level is basically double Newmont's average all-in sustaining cost of pulling this stuff out of the mine. So it costs them $1,600 to pull out, and they can sell it for about $3,300 annually.
That is the most favorable situation Newmont's been in in a while. I'm not in this trade personally, but if you missed the gold rally, this is the largest gold miner in the world, the largest publicly traded gold name here in the United States, and might be the way that you can play that catch-up trade as their earnings outlook improves with a much higher gold price than their cost of production.
Your light dims as you go longer and longer after they told you brief. But I mean, if that was brief for you, that's good because the information was perfect. Thank you. We'll do finals next. All right. Closing bell three o'clock Eastern Lizanne Saunders, Cheryl Young, Rick Heitzman, Alex Kantrowicz, Jason Snipe and Philip Boe has the Mercedes CEO. So that should be an interesting interview, too. I hope to see you at three o'clock. Josh Brown, the light is once again shining on you. What's your final trade?
One of my names was made a top pick at Redburn Atlantic, and that is Toast. They say bullish on resilient restaurant spending and recessions, favorable environment to add more locations, ability to expand margins to protect earnings and an attractive valuation. I remain long here as an investor, not a trader. OK, thank you very much for that, Bill.
Bill Baruch. Berkshire, I wanted to highlight a non-tech name that we bought in a slew of moves. Berkshire Hathaway. Berkshire, yeah, Hathaway, sorry. Sorry. What I'll say is May 2nd comes, that earnings report. We may have one man that could bring some calm over this market. Looking forward to hearing it.
Thank you very much. Farmer Jim. Citigroup reported earnings earlier this week. Really good report. Now, we know that the future is uncertain, but this is a company trading at nine times earnings estimates, 3.6% dividend yield. Buying back shares equal to 1.5% of its market cap in each of the first and second quarters. Okay. Jenny. Stanley Black & Decker. If you do believe a trade deal's reach that supports rational supply chains, it's really oversold with a 5.7% yield.
If not for UnitedHealth, the Dow would be green. I mean, I think everybody knows that by now. Everything else is green but the Dow, and even the Dow is off its worst levels. I'll see you at 3. You've been listening to CNBC's Halftime Report, the podcast. You can always catch us live weekdays at 12 Eastern, only on CNBC.
Thank you.
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