Reassessing the Rebound 5/9/25
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Because with all you've done to find your rich, we'll do all we can to help you keep enjoying it. Edward Jones, member SIPC. 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.

Thank you very much, Carl and Leslie. Welcome to the Halftime Report. I am Frank Holland in for Scott Wapner. Front and center this hour, reassessing the rebound. Is there more room to run or are the gains fully baked in? Our investment committee is standing by to debate that and much, much more. Joining me for this hour, Jim Labenthal.

Brendan Vangelo, Kevin Simpson, and Steve Weiss. But first, let's get a quick check on the markets. You can see a bit of a muted day on Wall Street today. Taking a look at the action that we're seeing right now, you are seeing the Dow down very fractionally, the S&P and the NASDAQ up very fractionally right now. And I think really that's where we need to begin. Jim, you're right here next to me. Where are you seeing the markets right now? So B of A, hard net coming out with a note. I'm just going to read the headline. I want to get your take on it.

says the U.S. stock rebound is likely over despite the U.S. taking steps towards trade negotiations. Of course, U.S. officials and Chinese officials are meeting in Switzerland over the weekend. Well, I think we have to start by acknowledging, Frank, that this is one heck of a rebound off of the April lows. I mean, I'm not going to calculate it right this second, but I think we're up 16%, 17%. So when we say that the rally might be over for now, I don't think that's too provocative a statement. I think also we have to acknowledge that while there does seem to be a little bit of progress on trade deals,

A lot more needs to be done. The financial markets, to me, are clearly saying that they are willing to look through the damage that has been done over the last six weeks if we can get meaningful progress on reducing those reciprocal tariffs. If somehow we got down to just the 10% universal tariffs, the markets would be fine with that. But we need to see meaningful progress on getting those reciprocal tariffs reduced or even eliminated.

before the pause is over in early July. If that happens, let me be clear, we may well still have a recession in the back half of the year. Certainly, profit estimates have been coming down and should be coming down. But again, what the markets are saying to me, whether it's crude oil rallying, whether it's bonds being stable, whether it's the equity markets, as I said, up 16%, 17%, is that they, the financial markets, are willing to look past.

short-term damage as long as we can get this all behind us get a tax bill going and look into 2026 with a much more clear windshield ahead of us. So Brenda same question for you I mean Bank of America saying this rally it may be coming to an end Jim saying that's not very provocative it's been a big run-up from the lows where do you sit? Well I think we're all the way back to where we were before the tariff announced the reciprocal tariff announcements so I

Yes, I think we've come a long way. And it comes back to fundamentals, which we know from corporate earnings. In Q1, we're good. Consumer also seems to be hanging in there. But as we know, the longer this uncertainty persists, the more at risk the underlying fundamental picture becomes. And so I think it's a matter of how fast we get through some of these trade negotiations. There's hopefulness about what's going to happen this weekend, but I don't know if we'll really have anything terribly meaningful

to hang our hats on that the market will like on Monday morning. So I do think it behooves investors to take advantage of some of the volatility, which that's what we have been, that's our tact and what we have been doing over the last

uh eight weeks or so uh but so i do think if you have a position that's moved up nicely not probably not a bad moment to take a little bit off the table but i think also staying really diversified is also very important because if we look at other areas like outside of the us european stocks they've been having a tremendous year

So I think having that diversification is a really important piece. Steve Weiss, coming over to you. Surprised at all we're not seeing more optimism today. Again, the markets are pretty muted, and we're talking a lot about Bank of America and their call that the rally's over. Barclays also out with a note. I'm going to read part of it to you. They say bring on the deals. A lot is baked in, but don't fight the Trump mantra. It may still prevail so long as there's a path towards more deals and less tariffs. We at least can see the path, especially, again, with U.S. officials meeting with Chinese officials in Switzerland. Which side do you fall on?

Well, in the near term, I still think the market's in an okay place. I don't believe we're going to see the big rally we've seen in the past. There's also a question is if the market is developing some sort of immunity to the headlines. The UK deal was really in principle, it's our easiest trading partner. We actually were in surplus there.

So that was not an impressive deal. Now, in terms of China, you would naturally expect, and you alluded to in this question, that why isn't the market reacting more positively? We're talking about cutting tariffs down to 80 percent post-meeting, assuming it goes well. Well, there's the issue. There's still 80 percent. There's still the uncertainty.

And so right now, I think headlines are going to have a limited impact. We will. And today wasn't only the China announcement. It was also the announcement of major deals coming in the near term. So I expect to see headlines. I expect to see deals in principle announced. But it takes years to negotiate a trade deal. Years. So the devil's in the details.

Now, when I say immunity, we've gotten so many headlines that eventually the market says, OK, what's next? I know those headlines are coming.

Excuse me. So then you go to the what's underlying this. Now, we talk about 10 percent tariffs like, oh, 10 percent tariffs. We can deal with those. But you actually can't because the economy was already slowing prior to Trump. It accelerated when you froze corporate capex and when people got scared, justifiably so. So if you could tell me that the uncertainty of this administration is going to be

with a few headlines with tariffs and the economy is going to reverse a trend that was in place before that I'd say great but let's not find false comfort in buying ahead of tariffs both on the corporate side and the consumer side and let's not find false comfort in headline deals so the bottom line for me is we're still going towards a recession it doesn't matter at this point if we get to one or not if the economy continues to slow

and we don't find a reason for CEOs to start deploying again, then we'll be fine. But I don't see that as the base case. I see my base case continuously. Near term, we're okay. Intermediate term, we're not.

You know, to your point, Kevin, I'm going to come over to you. A lot of CEOs are talking about tariffs and concerns. According to our data, Goldman Sachs, excuse me, their data, 89 percent of S&P 500 companies that have reported they've discussed tariffs on this earnings call. Where are you sitting with all this? And I think it's also important to know all three indices, they just turned negative a short time ago, fractionally lower, but negative a short time ago. Again, going into a weekend with

potentially a framework for a trade deal coming up or something like that. But again, I just want to get your take. Where are you falling? Rallies over or don't fight the Trump mantra?

Well, I think we've had a tremendous rally to your point. I'm surprised that it's not 100% of CEOs mentioning tariffs because of the uncertainty. But the way we're playing it, Frank, is we're selling into the rips. We're writing calls. I would take profits here. I agree with you, Brenda, that we've seen such a massive run-up that the good news isn't an all-clear signal. The good news is way better than where we were. May 9th feels 100 times better than it did on April 9th, I can tell you that.

But I would say that if you're running a portfolio, it's about risk control here. Selling into profits, trimming positions, and buying the dips is how I would play it. And I would caution everyone that it could be a situation where over the next couple of weeks, it's a sell the news instead of rallying on the news.

Well, to that point, can I ask you a question? Yesterday, the president said, you know, buy stocks. Remember when he did it before, before the tariff pause? Big rip when it comes to the markets. Why do you think we didn't see a big reaction this time around? It seemed like last time around, people were like, hey, kind of caught off guard. But this time around, we saw the pattern. We knew that he says buy and then potentially some trade deals are coming on. So why aren't we seeing that in the markets? Yesterday really was kind of muted or today. Kevin, you first, if you don't mind.

There was great value the last time he said it. We bought stocks. There was not the same value yesterday. We did not buy stocks.

And I think that the retail investor is probably feeling the same thing, that you can have that work one time, but I don't think yesterday was the day to be backing the truck up by any means. You know, also, I mean, let's call it like it is. If we get down to 80% tariffs, that doesn't do it. That's disastrous for the economy. That's not going to have Trans-Pacific container ships loading up in the port of Shanghai to go to Los Angeles. So, you know,

Look, he's in this negotiating phase. Maybe 80 percent comes becomes something less. Steve, I certainly hear you and respect you when you say 10 percent is too much. Got it. I'm just I'm just playing the deck of cards we've been dealt. And I'll tell you, I think at this point, as much as I wish they were zero, I think 10 percent is something the world can live with. But 80 percent is just a complete nonstarter.

So as far as why we're not rallying further, I think that's got something to do with it. You know, just get us all on the same page again. The president, wait, really quick, Steve, if you don't mind. You know, the president threw out 80 percent, but he says it's up to Scott Besson, the Treasury Secretary. Reports from Bloomberg earlier today that they were looking to get it under 60 percent for both China and the U.S. So there are some questions. Still too high. A lot of people are saying, like you, it's just too high. It just is. I'm not.

I'm not being provocative. I don't mean to interrupt you, but it's a nonsensical number. But you know, in all fairness, none of us are trade experts. But Steve, I want to come over to you. For the markets, does the number actually matter? I mean, as long as a deal is struck, is that going to potentially give investors more confidence? Or does it have to be below a certain number in your mind? And again, we are not trade experts. I'm not trying to figure out what the right level is.

-Well, just reading your question before, all Trump has to do is come out and say, "Buy stocks," and then the market's off. I mean, that's just a ridiculous premise. Every president wants you to buy the market because every president uses it, some more than others,

as a barometer of how the public perceives them. I wouldn't listen to Trump saying buy stocks. I mean, his analysis is nonexistent. Just like you meet with John Voight, he complains about Hollywood, all of a sudden, the executive order, 100% tariff on films. So I don't even know what that means, he's saying buy stocks. Now, in terms of finality, no, it doesn't mean anything. It may mean something, I don't think it will, if we're at 40% or 25%.

on tariffs. We still have tariffs and we still have an issue with the instability of policy. Now, think about it this way. If you're a former partner, trusted partner, trading partner of the U.S. and U.S. has turned that upside down, as we've heard from Ken Griffin, as we've heard from some of the best investors and traders in history,

American exceptionalism and the American brand has taken a hit. So what are you gonna do? Let me give you an analogy. When I was running a large division at Lehman Brothers, I had somebody during critical time come to me and say, "I'm leaving. Hold me up for more money." You know what I did? I paid them more money, and then I took note of that, and eventually I fired that person.

That's what our trading partners are going to do for us. They are not going to forget this. It will not be okay for them. If they can buy the goods, and we don't make a lot of goods at export in terms of percentage of our economy, but we still do on a dollar amount. If they can find other places to do this, they will do it. Defense in particular.

European countries are now going to buy defense products, planes, et cetera, from the manufacturers in Europe, not from us. And you'll see that repeated over and over. So it's not just about the top line. It's about the longer, short-term and longer-term damage to our economy. You know, Steve, I'm going to do some reporting really quick. I want to jump in. Frank, let me just finish. Frank, let me just finish.

I'm not saying that the end goals aren't good. I'm not saying that we should address, we shouldn't address trade balance. Of course we should. I'm not saying we shouldn't address the incredible bloat in the government. I'm just saying the execution is flawed and may wind up being more damaging than the end result.

All right. Well, number one, to your point, the president met with John Boyd, Mel Gibson. I think Scott Baio was in there, too. So if you're going to do some reporting, you've got to get all the people in there. I feel better. I didn't say he only met with John Boyd. So if you're going to comment on my comments, they should be informed comments. All right.

On a serious note, I want to go back to that Bank of America note we've been referencing, the flow show data. They actually say you want to sell the U.S. going into trade deals. Another thing they mention is some of the biggest selling or outflows when it comes to tech over the last 12 weeks. Brenda, I want to get your take on this. When we're talking about tariffs, there's a pause in a number of areas that seems to have given tech investors a lot of confidence. In your mind, as we go into this trade deal, how are you viewing tech?

Well, I don't think tech is immune. Certainly, even if tech itself, if the company itself isn't directly exposed to tariffs, their customers are exposed to tariffs. So, they're definitely exposed.

But I do think, you know, tech has come, it was the first to start correcting. Part of that had to do with the large valuation that was in place heading into this year and also just the tremendous amount of CapEx that's happening and a lot of the hyperscalers and concerns about when, you know, investors were going to see a return on that investment. And now there's just, as we've seen with Google and others, there's a lot of concern about

traditional search and how that's going to ultimately play out as more people turn to the chat GPTs, the groks of the world, the perplexities to perform their search for them rather than relying on traditional Google search. Well, you're mentioning Alphabet. Kevin, I want to come over to you. You actually trim some of your Alphabet holdings. I'm looking at the charts right here. Alphabet shares down about one and a half percent or so since earnings. What was the motivation for you to trim?

Exactly everything Brenda just said. This is a situation where we talk about it on the desk all the time. How many times are you using Google versus ChatGPT or one of the other AI companies? And I think I'm about 80% Google, 15 to 20% ChatGPT mostly.

But the reality is that those advertising dollars are going to go somewhere. We're going to see them decline within Google. We're looking at this exactly the way we did UnitedHealthcare with the DOJ news. We just wanted to get away from an overweight position, still have a little bit in Google alphabet. We still have a little bit, unfortunately, UnitedHealthcare. And then it'll just be a question of how the stock trades, whether we get stopped out of it or not. Lots of reasons to like it.

but a big reason and a huge catalyst earlier in the week that we hadn't really put into our thesis. - You know, a lot of people are talking about selling Alphabet right now. I think the metaphor a lot of people use is Eastman Kodak, where they could have bought digital cameras, but they didn't. But in all fairness, Alphabet has its quote-unquote digital camera. It has Gemini, it has Gen AI capabilities. So why are you so sure those ad dollars don't stay with Google search and also go to their Gen AI product? - No, you make a great point. It's not Eastman Kodak, but if you were gonna divide that 20% in my world up

Gemini is not going to get all 20% of it. So you're going to see less ad revenue flowing through. They've got lots of other catalysts, lots of other things and businesses under the hood. But when you lose the golden egg or the golden goose completely, it's going to affect your margins for sure. So I agree with everything you just said. And the question, I think, for anybody who's long the stock is whether it's priced in or not.

And we're not going to know, all right? The stock will either dribble down for the next several weeks or it will start to recover. I think actually a better analogy besides Eastman Kodak is Xerox, another nifty 50 company from 50 years ago. Because Xerox, like Google, became a verb. You Xeroxed something. You Googled something. And that changed. And the question for me is whether Google is going to go where Xerox is now, which is not even an afterthought. Sorry, XRX.

The answer is, for exactly the reason you just said, Kevin, I don't think so. I think it will stay relevant. It's not just the other businesses, YouTube or web services or Waymo or anything like that. It's that there's an incredible amount of intellectual property and talent at the company, which I think will allow it to modify its business. It won't retain 100% of the market share. Its moat to competition has been decreased. But much like when you look at meta,

however many years ago, that mobile was a threat to it. And then after that, the Apple iOS system change was a threat to it. But the company adapted because...

it because it had good intellectual property. It had good talent. And I think that's what's going to happen with Alphabet as well. Jim, by the way, you own Alphabet. Brenda, you own Alphabet as well. You were just talking about it a bit ago. When we're talking about Alphabet, though, it's kind of a conglomerate. We're not just talking about search and also AI. I mean, there's a lot of different parts of the business, including Waymo. We heard Lyft talk about moving into autonomous driving in their earnings call. And then also YouTube, big, huge ad business there.

What's your view? Are you that worried about disruption when it comes to the search business? And I want to ask you, why can't Alphabet just buy one of their competitors in the AI space? I mean, they made a big acquisition earlier this year with $32 billion. I mean, certainly Alphabet has a lot of cash.

They do, and I don't think the company is going to sit still. And Gemini is really highly respected, although I don't think the company has done a good job of really getting it out there and having people use it. So I think there is opportunity. I think the biggest problem, though, is when you look at today how the company's revenue and profitability is generated, a lot of it is coming from traditional advertising.

on Google searches. So that's a problem. But I agree that there are lots of other interesting parts of the business. YouTube is fantastic. When we think about where those advertising dollars go, YouTube is a great avenue for that. Also, if you look at, you know, metas of the world, I do think social media is another place where it's probably going to be pretty sticky in terms of the ad dollars going there. But I still think -- and this is really, you know,

a problem everywhere is how do you monetize the chat GPTs of the world, the Perplexities of the world, the Geminis of the world? How do we do that in a way that is really profitable for these companies or is it not? Does it become a commodity business? So I think that's a big question that the market's grappling with.

But when I think we look at multiples, Google's multiple, to Jim's point, has already come down. It's been low for a long time. So this has been an overhang. So you could argue maybe some of this is really already priced into Google. But is it priced into some of the other players out there? That's a bigger question. JIMMY KIMMEL: All right. Speaking of valuation, Kevin, you made another move. You bought some Palantir. And a lot of buzz about this stock, the Ford PE. I'm looking at it right now.

191 times forward earnings. Kind of walk us through the trade here. You bought at 109, so just kind of walk us through your thoughts here. Again, very high valuation stock. One of the questions here, does valuation still matter?

Valuations do matter, and this is in our growth strategy. And remember, we can write cover calls against this thing and bring in massive premium. So it's a little bit different for me in this strategy to look past some of the high multiples. But at least this doesn't have this thing. Remember this, Jim? The infinity sign. So it had some earnings. We owned this last year. It got called away. We missed a big part of the run-up.

When it rolled over, we were not part of that either. But on earnings, we thought they were fantastic. The stock sold off. We initiated a position. We actually bought more this morning. Stock's down about $2. We like what they're doing in the commercial side. That was up 70% year over year. It's not just reliant upon government contracts, which...

also were up handsomely in the first quarter. But this is a name that we think it certainly has to grow into that multiple and a little bit more volatile stock than our normal name. Yeah, by the way, I mean, the commercial and government business are about 50-50 now. It used to be kind of a black box, a lot of government contracts. They've certainly expanded. Brenda, does valuation matter? I'm looking at 191 times forward earnings.

Does that matter to you? And then also, Kevin mentioned the government work. Over in Europe, a lot more defense spending expected. You would think that Palantir would be a beneficiary of at least some of that. Absolutely. And no doubt the fundamentals are positive for the company, but

Our concern is the valuation. So it's just too rich for us. We would wait for a more meaningful pullback. And when we see that, we may become more constructive. But for now, we see lots of other opportunities out there in the market, given the volatility that we've had this year. Weiss, I don't want to leave you out of this conversation. Do you have any thoughts about Palantir? I mean, either for the commercial business, which is AI software, or for the defense business, which is, you know, it's more well known for, at least for now?

Yeah, look, I love the company. They are truly cutting edge and leaders in defense space. This company was founded by, you know, co-founded by Joe Lonsdale. And obviously he's still somewhat involved and has tremendous connections with government. And Joe's just a brilliant investor and manager.

So while I love it, I just can't come to grips with the valuation. Now, your question of valuation matter. I mean, that's an excellent question because that's the heart of it. Look, we see valuation paradox that can endure for a long period of time. And even if the valuation doesn't go up from here, there's no reason for it to. Their growth is so tremendous that you'll see a nice move in the stock. Where valuation really matters is if there's a pimple.

So if they get a pimple, then you'll see it burst and that'll burst the valuation. So either that's an opportunity to get in, depending on how far it goes, but I wouldn't mind that happening so that I can get into it. I've been watching it for a long time. And I actually thought the valuation was high when it was $30.

So I missed it completely and good luck to Kevin. I'm sure Kevin's risk managing it appropriately, his percentage of his portfolio, knowing him and he's a great risk manager.

All right, we're a good ways away from 30 right now, though. Palantir shares pulling back about 2.5%. All right, let's hit a few more moves this morning, this afternoon, I'm used to saying this morning. Kevin, back to you. You're doing a lot today. You're selling some Vertex. I want to ask, why sell Vertex? Obviously, the pharma space, the biotech space has been under a lot of pressure. But if you talk to any analysts, including the analysts at Jefferies, they say Vertex is the best position to deal with any possible tariffs or changes to regulation. Yeah, long term, I think it's

I think it's great. And if we can get back into it, we will. We were a little bit concerned about it heading into earnings. So we wrote a covered call, brought in $19.50 the day before. So on Monday, we wrote this call, $19.50. The earnings were a little bit less than expected. The stock sold off. It's down about $43. We bought that call back for $0.50. So we hedged

Half of the decline, $19 of profit. And we basically got stopped out of the position, Frank. Not anything having to do with the name long term, but to Steve's generous compliment before, it's pure risk management. Weiss, you trimmed a little bit of a vertex. What was the motivation for you?

Well, Frank, just give me a minute here. I'm looking for, see if I missed a call from Kevin telling me about those selling the cover calls. No, I didn't. Thanks, Kevin. I closed everything online. Every single trade we do, you can check it out online every day. Yeah, okay. Yeah, look, I saw part of the position. You know, I was troubled by the position for other reasons. Jeremy Nex, I knew, would be a slow ramp, but I expected positive commentary on it.

But look, the FDA in the first quarter had just about a record low in approval of drugs. They've got a couple of important trials going on, and we'll see what happens in that regard. So from a macro standpoint, I was nervous about it. I was not nervous about it from a, you know, really from a fundamental standpoint, because I didn't think it got ahead of itself like a lily. And I thought the valuation was very reasonable.

So I'm going to hold the rest for now and hope for a bounce, and then I'll reassess. All right. Jim, you actually bought a little bit more of BirdTax earlier this week. Brenda, you own it. But we're going to move on to something else that Brenda's doing. Brenda, you're actually buying Qantas Services, and you're selling Zoitis. Give us the rationale on Qantas Services first. Yeah, so Qantas Services is a specialty contractor that really is kind of a go-to for building out and upgrading the power grid in the United States.

We think that is going to be an ongoing trend. No matter what the economy does, we think that's going to be a priority. So we established a position. We used Zoetis as part of the funding of that position. Zoetis is within the animal health space.

It's such an interesting business because it's not exposed to Medicare. It's paid out of pocket. But the stock just was not acting as well as we'd like it to. And we just think that when we look at what is the market going to be excited about, what are we excited about in terms of being a priority of spending, quanta is definitely falling into that category. So we decided to use Zoetis as a--

Qantas is part of the AI trade. Ticker, I believe, is by power. So that's their whole thing. Back to Zoetis, though. Do you think that they're kind of being impacted by the trade war? Because a lot of their business is agricultural animals. Some of those exports are going to decline quite significantly unless we reach a trade deal.

It is. I think that even more importantly for that business, again, as I said, for us, the most interesting part about it was the pet piece of it because so much of it is there's no insurance company to deal with for the most part. Most of it's paid out of pocket in cash.

It's a good business, but the market just was not rewarding it the way we would have thought. Yeah, my dog's pretty expensive. Definitely pay out of cash. All right, coming up here on Halftime, more committee moves. Brenda has another big sell, plus Jim is ready with a trade update on a stock. It's down 20% this week. We've got to talk about this one, Farmer Jim. Halftime back in just two minutes.

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And welcome back to Halftime. Let's hit some stocks on the move. Cleveland Cliff shares, they sunk yesterday after missing earnings. Jim, you own this one, and you're actually buying more. I'm looking at Cleveland Cliff stock right now, down about 2%, week-to-date down more than 21%. Yeah, yeah, bad results. And by the way, I want to be clear, I'm just buying in my personal account. I'm not buying this for clients. And the reason why is because

The stock's plan, the company's plan has not gone according to what I thought would happen. What should have been a growth story has now become a turnaround story. That's not the sort of thing I generally invest for my clients. But I do have a lot of faith in management. They laid out yesterday a very clear explanation of what went wrong, what they're doing to fix it. And I do know this management, and I have a lot of faith in them. That's why I'm buying a little bit for myself. I do believe that this turnaround will work. I also believe it's going to take time.

Now if you're somebody who's listened to me on this over the years, I'm telling you that I'm holding it. It will take some time, but you do have to understand that this is part of a portfolio. I own 25 stocks. This is not the only one, nor have I ever recommended that it be the only stock in your portfolio. I do think it will work.

But I think this is why you have to have a diversified portfolio overall. Jim, we love you, man. But just because you say it louder doesn't make the trade any better. I've got to be honest with you. Well, I'll be honest with you. I mean, I didn't realize I was being loud, but I feel like crap about this. I do. I feel like crap about it.

I want to talk to you. Steel and aluminum tariffs, was that, I guess it was supposed to boost the price of steel in the U.S. Obviously, Cleveland-Cliff is a big steel producer. I'm looking at the chart, down about 3.5% since those tariffs were first announced. Is that part of the problem, the fact that the steel prices haven't moved higher, or is there something else? So steel prices have moved higher, but a lot of the business at Cleveland-Cliff is on a contracted business. And so those contracts need to roll up.

to get the higher prices. At the same time, it's unquestionable that for the last few quarters, the automotive business, which is very core to their business, has been more abundant. A lot of that has to do with imports, which should get switched, should get changed with the tariff regime that we're entering into. So as more domestic production comes up,

volumes should increase at then higher prices. There's also a lot of other things there, idling plants to basically get rid of loss making operations. That hurts the CEO. He doesn't want to lay people off. I know him personally. I know that hurts him.

But he's got to balance all the stakeholders, including not only employees but shareholders, and he's doing it. All right. Crick and Cliff shares down about 2% year-to-date. I believe they were down about 25%. Moving on. Adobe is set to offer a discounted package of products to the government amid scrutiny on software spending. Brenda, you actually recently sold Adobe. We did. And if you look at the story of this company, you know, it's been relatively undervalued. It's very dominant in its space.

But what we've seen is slowing trends, and that has just contributed to this narrative about the company losing share and not being competitive in AI. And so when we looked in our portfolio of where can we take from to add to new ideas that we had in the portfolio, like Aquanta, this was one that bubbled up to the top. So we decided to reduce exposure. We still think the company is really dominant in its space, but it's just not going to be. It's not rewarded. The company has to prove itself.

And we don't know how long it's going to take and what it's going to take to get there. Adobe shares up about a quarter of a percent right now. Jim, you own this one, but we got to move on. Time for some headlines now with our Silvana Henao back at Englewood Cliffs CNBC headquarters. Hey, Silvana. Hey, Frank. Good afternoon. The new head of FEMA told staff today that he will, quote, run right over anyone who resists changes to the agency.

According to Reuters, Drew Richardson added that the delegation of authority is suspended and all decisions must now go through him. The comments come just a day after he was appointed to replace acting FEMA Chief Cameron Hamilton, who at a congressional hearing said that he didn't support the agency's elimination.

The FDA has granted the use of three new natural source color dyes. The agency approved today two blue dyes and a white dye, which expands its use to color cereals and snacks. Last month, HHS Secretary Robert F. Kennedy Jr. and the FDA commissioner announced the agency plan to remove food dyes from the U.S. food supply.

And candy giant Ferrero announced today it's adding peanuts to its Nutella and Dr. Pepper flavor to Tic Tacs. And that's ahead of the annual sweets and snacks expo as it tries to attract more American customers. The European candy company has been expanding in the U.S. during the last decade through acquisitions and introducing its iconic brands to U.S. customers, Frank.

Yeah, I don't know if that's good or bad. I'm just trying to figure it out. It doesn't Dr. Pepper. I don't know. I don't even know. You try it. Report back. Let me know. So Vonna now back at CNBC headquarters. So Vonna, thank you. Up next, our call of the day is a price target cut on one of the big retailers ahead of earnings. We're going to tell you where the committee stands on the consumer. That's coming up.

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And welcome back to the Halftime Report. Let's hit our call of the day. It's Target. JPMorgan cutting its price target to 105 down from 140 ahead of earnings later in the month. Brenda, you own this one. Shares down about three quarters of 1% right now. Yeah, so Target's a relatively new purchase for us. We added it in late March of this year, but really bought it on the hopes of a turnaround that really is what the company is trying to focus on differentiation, having better in stock positions, providing more newness,

So early days there, we're not expecting a huge significant move. But I think outside of that, when we look at the overall consumer, we're seeing a story of relative health with some of the recent earnings that we've had with Disney, DoorDash, Lyft, all citing relative strength of the consumer. So I don't think we can count the consumer out.

But Target we really own as a turnaround, so not expecting a full turnaround to happen over the last month. So we're in it. We bought it when it was down and out, so we're going to stick with it for now. You know, it's interesting because Walmart has its earnings coming up next week. A bit of a different business. Walmart is much more grocery-focused, but are you going to use those earnings as a read on what you're expecting from Target? Like, are you looking to hold on to this for this full turnaround, or would you possibly look for a chance to, you know, jump ship on this stock if you don't like what you hear from Walmart?

We're not like, so we tend to be long-term holders and have a little bit more patience. Target also has a significant part of its business in grocery, not as much as Walmart, but would certainly look to hear what Walmart's saying about the overall consumer. But I do think they're different. I think Target caters to a little bit more of a higher income consumer overall. And as long as there's newness and something interesting there, the consumer is likely to come. The problem is they just need that. They need that to drive sales.

and to drive purchases. Walmart, I think, has been a beneficiary of trading down in this higher-cost inflationary environment that we've been in. So I think even though they play in the same space, they have a slightly different consumer, so I wouldn't do a one-to-one read-through. Steve Weiss, your view on the consumer, also target, again, earnings coming up, getting a downgrade today. Pretty significant price target cut as well.

Yeah, look, Target's been a problem child and had such great hope when Brian Cornell went there. Did well initially, got rid of Canadian assets, but it just doesn't seem...

It just doesn't seem worth the headache of going into when there are other retailers to play. Look, the consumer has to be under pressure. It doesn't take a clairvoyant to figure that out. With rising costs across everything they buy,

They're under pressure. And with most two-thirds of the country living paycheck to paycheck, it's a real issue. So I'm not particularly positive on the consumer. We've even seen the high-end consumer over the last couple of quarters cut back, not because of affordability, but, you know, tired of spending, you know, $4,000 for a handbag or things like that. We've seen it in watches. So it's not a good time all around.

All right. Kevin, you've got quite a bit of retail exposure. You've got Home Depot. You also have TJX. What's your take on the consumer? You have kind of two different segments of the consumer there. Well,

Well, I think the Home Depot play is more of the rates coming down at the end of the year and maybe a five-year super cycle in terms of the major renovations that we did during COVID. TJ Maxx is really a play where you don't have to worry about tariffs. And if the consumer does trade down, it's a very loyal base. I think they do well in a recessionary environment or a thriving economy. Love the name. All right. Home Depot shares pulling back about a half a percent right now.

Got a quick programming note. Our friends over at Fast Money, they're holding a get-together on June 5th over at the NASDAQ. You can grab a front-row seat to watch the show live to order a ticket. Scan the QR code on your screen right now or go to cnbcevents.com slash fastmoney. All right, coming up next, Mike Santoli joins us with his midday word. We're back right after this break.

And we're back on halftime. Senior markets commentator Mike Santoli joining us with his midday word. Hey, Mike. Hey, Frank. Yeah, I mean, we're kind of being held in a bit of suspense here right at this crossroads point in the markets. Hanging around that April 2nd level, Dave, the tariffs were described right there with the S&P 500 managing to kind of just churn in that area to get clearance.

one way or the other is to see whether we have further de-escalation. I don't know that there's a specific scenario right now precisely priced into the market where it is at these levels in terms of tariff outcome, in terms of net cost down the road. But I do think that incremental progress is pretty important after this weekend with the talks with China. Any gestures toward, hey, we're looking for wins and off ramps as opposed to trying to dig in. It's probably a prerequisite for the market making progress from here. I'll just point out a couple

things. One, risk sentiment in general has firmed up pretty nicely since the lows of a little over a month ago in the markets. You got credit markets saying that things are looking a little bit less frightening. On the credit side, you have Bitcoin obviously above 100,000. You have non-U.S. stock markets doing well and actually having it looking like a V bottom from the lows. The question here is whether the S&P 500 can incrementally make any progress based on what's happening in the here and now in terms of policy.

You know, Mike, you said that's the question. We've had an incredibly strong earnings season. We're going to probably show it just a second ago, but EPS up 14% year over year. Is there another catalyst besides a really great trade deal? Obviously, China would be one of those that can continue to power this market after earnings like this. I think, well, first of all, I think

the context is the catalyst, which means you're going to constantly have to monitor whether, in fact, those earnings are going to be supported in the second half of this year. The revisions for the majority of companies has been lower, not higher, even though the overall reported beat rate was pretty impressive. So I think those things, along with

trade progress. We've got to keep an eye on the budget progress as well, demand for treasuries. All that stuff is going to be in the background for a little while. So I think we're just going from macro data point to macro data point to figure out if the hard data, the real economy is holding up as we hope, or if in fact it's starting to give way.

Yeah, to your point, we had a 30-year auction this week. Rick Santelli only giving it a C when it came to demand. Mike Santoli, midday word. Great to see you as always. Thank you. All right, coming up here on Halftime, more on that Bitcoin breakout and gold's record run, how the committee is positioned. Also looking at the markets in the red across the board right now. We'll be right back after this.

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And welcome back to Halftime. Bitcoin trading right around $103,000 a coin, just under that right now, made a few moves. Weiss recently bought the IBIT, the Bitcoin ETF.

Yeah, look, this is a trade. And as I mentioned yesterday, I bought it just below 90,000. I think it continues. Let's face it, the administration has been very, very vocal in their support of crypto across the board. And new SEC commissioner is just as supportive. So I think sell-as-momentum, I think, goes. You know, we've seen periods of time, and most recently when it traded down from 105, 106 into the mid-80s,

So it's not out of the question that it will happen again. The key to Bitcoin, if you're not a believer as I am not, is positioning it appropriately in the portfolio as a specular of asset. So I still don't see the use case, still don't see the business case, but I do see that others see value in it and things that I do not appreciate. So momentum is there, I think continues, and I think it moves to new heights.

You know, funny, the IBIT saw the biggest ETF inflows this week, according to Betify. It was the top ETF outside of index funds when it came to inflows, over a billion dollars. All right, we're going to move on to the gold trade. Earlier this week, DoubleLines' Jeffrey Gunlock told Scott Wapner, gold, it could hit 4,000. Kevin, you own Agnico Eagle Mines.

Agnico Eagle's been one of our best performers. It's got great margins. They've cleaned up their balance sheet. They pay a small dividend, but it increases at a very, very rapid clip, which we like. I hope Jeffrey's right. It'd be great if it goes to $4,000 because Agnico's been one of our best trades this year. We rotated out of Freeport to get into it. We wanted more gold than copper. So far, it's worked out really well, and I think there's more momentum to go.

Is there a trade risk in here? A lot of this gold buying has been actually from China's central bank trying to hedge against the dollar and kind of hedge against, you know, American supremacy, if you will, when it comes to the global economy. If we get a trade deal, are you worried that buying is going to slow down? Also a lot of buying from other central banks. Yeah, I think that's a real...

threat to the momentum trade on gold, but I don't know that it's going to go back to 2,500. I think to your point, maybe it's not going to run to 4,000, but it kind of hovers here in the threes. All right, Brenda, you own Newmont Mining as well. We do. So Newmont's the world's largest gold miner. We've owned it since late 2023, so we've owned it for a while. Similarly, it's been one of our best positions, especially over the last year.

But I would say, you know, given the move we've seen in gold and just how that translates into EBITDA. So, for example, for Newmont, EBITDA was up 55 percent in Q1, really based on a lot of the gold prices that we've seen. So I think if you're looking for a place to trim, it's probably not a bad spot. But we're certainly happy to have had it in our portfolio. Jim, you got some bullion up there on the farm. What do you think? I can't tell you.

value gold. I mean, obviously, I see what it's doing, but I can't place a value on it. I'm a cash flow and earnings and balance sheet kind of guy. I'll leave the gold to you find gold bugs over here to my left. All right. Newmont up almost 2% right now. All right. Stay with us. Final trades. They're coming up on halftime. We'll be right back. And we're back on halftime with final trade. Steve Weiss, you're up first.

Yeah, two things. Vertex, my final trade, because I think it will bounce, number one and number two. As a public service announcement, I'd like to perform an intervention for Jim on Cleveland Cliffs. Anybody who'll join me. Duly noted, Steve Weiss. Kevin Simpson, over to you. Palantir, admittedly a high multiple, but very impressive earnings. Revenue's up 39% in the first quarter. Brenda.

WIN RESORTS, REALLY FANTASTIC ASSETS. HAVE SEEN SOME WEAKNESS IN MACAU, BUT I THINK THAT COULD CERTAINLY CHANGE, PARTICULARLY IF CHINA STARTS TO DO MORE WESTERN-STYLE STIMULUS OF THE CONSUMER. FARMER JIM. MICROSOFT, YOU KNOW ALL ABOUT IT, BUT THERE'S A DIFFERENT MESSAGE I WANT TO GIVE TODAY. OFTEN TIMES,

Oftentimes when you're watching us, we refer to people behind the scenes, and Patti Martell is one of those people. She's been a producer of the Halftime Report since it began. She's been spectacular. And more than anything, she's been a friend to all of us, especially to me. Patti, thank you. I know you're moving to a new show. I just want to congratulate you and say thank you. I want to agree with you. I think we all agree. Patti, you were excellent. Best of luck on your new show. That does it for Halftime. The Exchange starts right now.

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