The Nvidia Aftermath 2/27/25
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Carl, thanks so much. Welcome to the Halftime Report. I'm Scott Wapner. Front and center this hour, the NVIDIA aftermath. That stock under pressure today. Other chips are down as well. We'll discuss what all of it means for that trade. We're going to hit the other big movers as well with the investment committee. Joining me for the hour today, Bryn Talkington, Josh Brown, Malcolm Etheridge is here, Rob Seachin, too. Let's check the markets here. A little bit mixed today as we do react to those NVIDIA numbers. Dow's positive. The others are in the red.

So you have President Trump talking about tariffs today. You do have the Nvidia aftermath, Josh. The reaction seems to be not a blowout. Demand is still strong. Deutsche Bank says a modest beat, nothing spectacular in terms of guidance. Is that why the stock looks like that?

Yeah, I think that's accurate. It's a beat. It's just not like the craziest beat ever. And understand, we're talking about like a company that over the last eight quarters, they not only blow the numbers out, then they give guidance that's so far above where the median sell side analyst is on consensus that...

it's it's almost like the analysts have been panting running behind this stock trying to keep up with it obviously a phenomenon like that can't last forever and ultimately it's going to run its course but that should not be interpreted as these are bad numbers or there's something wrong with nvidia um

the company is executing on its growth plan for this year we've got confirmation from their five biggest customers that the spend that was in the numbers is going to happen and then jensen comes out and with the cherry on top he gives you like 10 unsolicited minutes at the end of the call about how bullish he is because of deep seek which if you remember was the proximate cause of the sell-off that we had in january so i think it's really as simple as we

Okay, it's a beat. It's just not the same kind of beat that we saw last quarter, the quarter before. But the market's digesting it, and I think ultimately the stock resolves higher, not lower. And I think for people that don't own the stock, today is a great day. All right, Malcolm. I mean, you don't own the stock. You look at the price action. By the way, it's great to welcome you to our investment committee. We're happy you're here. You don't own the stock. You acknowledge that you missed it.

You got a little discount today and the stock hasn't traded well lately at all. How do you see it now? I think realistically, all of the sellers, the real sellers are out of that stock already. I think Deep Seek was with January 25th, 26th, something like that. I think that revelation really pushed out anybody who wasn't extremely bullish on this stock. So maybe you see some people taking some profits where they feel like they need to. But realistically, this sell off that we're looking at right now, I think Deep Seek did

this earnings report a favor. It basically pushed out anybody who wasn't a serious holder of those shares and made sure that if we did get any negative news about Blackwell, which we didn't, we actually got positive news about Blackwell, right? $11 billion of their $48 billion in the quarter were attributable to Blackwell. And on the call, Jensen says, this is the fastest uptick we've seen with any new technology we've rolled out. So I think there's reason to be optimistic if you're a long-term shareholder.

But for anybody who is just trading it for the sake of trading it, that's probably a little bit of a downtick. What if you're not a shareholder like you? I mean, at what point do you get interested?

I think the train has left the station. That's been my stance on Nvidia for quite some time because it does look like we're probably dislocating from really positive demand, really positive what we're 12 plus months out really from where they're able to meet demand. So they've got orders a year in advance. But I think the stock itself might become a little bit pulled apart from the story. And that's what I worry about as a potential shareholder. Okay, Bryn, what's your take? Longtime shareholder as well.

I mean, the call was so great. It was a great call. And if you look at this stock on any metric, P.E.,

PEG ratio, this is going to end up being 12 months from now, if you look at a Ford PE, PEG ratio, et cetera, probably the cheapest of the Mag 7. You look at Microsoft at a 30, Apple at a 30, not even remotely growing at the rate that NVIDIA is. And I just think you have this visionary leader that's

with Jensen looking out so much further than we as investors or as just individuals can see. And I think that today we continue to get data points that this AI transition is going to be a secular trend, not just a cyclical trend.

I think it's interesting. I mean, the stock is firmly in that eight-month trading window between 115 and 150, I think, at the high. So I think we're going to still be in this trading range. But to your point, Scott, this is a great opportunity to start buying this name if you haven't owned it, because the call was just exceptional. 70% margins, that's probably going to go a little bit higher. Just so much growth trajectory. And I just don't see any competition from them. Rob, it's...

It's funny, the sentiment around the name has changed a bit. I feel like after Deep Seek, the market is more looking to poke holes in the story than it has in maybe the last 12 months, at least. So maybe despite what has been deemed to be a great call from these guys, and by all accounts, good numbers, not like the guidance was bad, it's just the street has a different bar after Deep Seek.

I think the street's wrestling with something else on all these businesses. They're focused on the change in the second derivative, the change in the rate of change. So they all have terrific numbers, but they're not as terrific as they were. But on a relative basis, they're still much more attractive than almost anything that you could buy out there. You are able to buy, and this is why we increased our position last week, Scott. We're still underweight in video, but we've been buying

As you know, we started buying in the 90s. We bought a little more on the last dip. We bought a little more on this dip. And the reality of it is I think when investors step away and they're done wrestling with the slowing of the second derivative, they're going to look across the markets and realize that the fundamentals of these businesses, most of these businesses, their earnings have caught up. They've lowered the pricing, as has happened in NVIDIA. It trades at 28 times right now.

It's the cheapest it's been in a long time. To Bryn's point, it's one of the more attractive. Yes, Facebook is more attractive. Yes, Google is more attractive. And the reality of it is, is once we get this macro headwind, it's not in a downtrend. These stocks, as Josh will tell you, they're still in an uptrend. It looks a little shaky. They've lost some of their momentum recently.

but the fundamentals are still intact. And I think if we do get a little more of a pullback, I'll disagree with Malcolm a little bit, this train has not left the station.

It's left the station if there's some shock to the ecosystem, sure. I don't think we're seeing that yet. You saw the news from Meta the other day. To that point, nobody is overpaying for NVIDIA right now. 28 or 29 times forward PE. Keep in mind, over the last five years, the stock has sold at an average PE of 42 times forward.

forward and actually if you go back to january of 2023 at the dawn of this whole ai era it was like a 90 pe which people were screaming how expensive the stock was then it 5x because pes don't matter but that's another conversation

Right now, you are paying a below average P.E. over the last five years for this name. And if anything, they've earned a higher P.E. than the market just because of the degree to which they're executing. They haven't had a downside shock.

they haven't had a guy down that goes to the point i was making about deep seek doing them a favor right so they had a 40x multiple on this year's earnings coming into the year deep seek happens the shares sell off aggressively and it brings that valuation down to about 30 times now we're below it with the sell-off today and i think that gave it that that cloud cover for this earnings report to not have to be as good as uh expectations would have been

had deep seek not happened and the share sold off. So all of the sellers who really wanted out of that name are already out. Good point. Went into the numbers at a 12% drawdown. Did not go into the numbers at an all-time high. No, but you know what? Of late into the number, like you went yesterday into the number, the stock was up 4%. So it was trying to be as optimistic as it could be going into the number in the face of what had been

not so great. I mean, it's down 14% from its January 7th high. That's fast money, though, Scott. That is not real investors. I think real investors look at this as an opportunity. They're just trying to make sure that there's not some big, massive deceleration in cap spending, which, again, there's no indications that that is happening. But why not be certain about that? It's fast money also in Alphabet, which is down 17% from its high, and Microsoft, which is down 15%.

From its high in Amazon, which is down 12. But that's that's those are all this rewriting of the momentum trade. They're getting sucked into that. You look at the momentum indices and they're starting to roll over. It's starting. They're not starting. They started in July, but they've really rolled over. OK, so you look at it from that time frame. Right. And you say, OK, you've rerated fundamentals. Now, what do you do?

Now, what do you do given the relative attractiveness here? The momentum has been in financials, right? Can they deliver on earnings? I think you've got to be more balanced about all this. And while I'm not incredibly enthusiastic about the markets in general, I expect some volatility. I do think that we've re-rated enough that you can be selective. Those are bad comps, too. Alphabet, Amazon are not comps.

Keep in mind, going back to Q1 2023, when this whole thing really got started, NVIDIA has averaged quarterly year-over-year earnings growth of 127%. It's just a different world. Yeah, that's different than Microsoft and different than Google and different than Apple, right? I mean, those are different growth trajectories. There's haves and have-nots. So we've been watching the momentum trade very closely on this program. As you know, we documented it.

for you on the way up and then we've really hit it hard on the way down. And that's the direction it has been going, you know, X yesterday when you did get a little bit of a bounce.

Goldman today on both Nvidia and the market at large is talking about the momentum drawdown, says bottom line, they believe the print, the Nvidia print, was good enough to steady the market and put an end to this specific momentum drawdown. The factor backdrop appears to be stabilizing momentum longs, finishing plus 3% yesterday. That's the pop that I was referring to and pointing higher again today, which many of them, of course, are.

Their trading desk noted a material easing of sell tickets across the semi-AI and momentum universe yesterday. Bryn, we did have the MTUM ETF snap a five-day losing streak, but the losses are still significant for almost every name in that space, led by Palantir's not the worst decliner over a week. That's Applovin. But Palantir still is sort of in the really front and center in that story.

Right. So, I mean, Palantir, I think at its peak, what was it trading at 110 times sales? You know, really just like this parabolic move. I mean, I trimmed a huge position last year and we've talked about this. And I think where momentum works both ways. Everyone says, oh, when Palantir gets to 90, I'll buy it or 80. But all of a sudden it's working in the other way when you actually kind of look at metrics.

And that's where I think a name like Palantir could stay in this somewhat short-term doghouse from a technical perspective, because there's just no support underneath this name until I think you get at least $20 lower than this. And so I think...

A lot of the froth has come out of the name. I don't think we're going to see option buyers as much as they were coming in doing these zero-date options for Palantir or even week-long because those guys got wiped out. I mean, just completely wiped out as the stock has sold off. And so I think this is a really positive sign for the market to have these names come back down to some semblance of gravity.

it's gotten wiped out. I mean, that's a good way of putting it. The two-week plunge and our stock desk is just sending this through too. It's on track to have its first back-to-back week of double-digit declines, Palantir, since August of '22. The stock's lost nearly a quarter of its value over the last couple of weeks. Malcolm, you've got some of these names like CrowdStrike that's been right in the mix

as well. How do you view what's taking place with this momentum trade? But a lot of those momentum trades are widely held by retail, right? Save for CrowdStrike. 100% right. What we're really seeing is a lot of retail investors rethinking whether they want to be in this market or not and whether that cash needs to be somewhere else. So there's a lot of profit taking. You rolled the escalator up and now you're taking the elevator down. And I think retail has to be separated from the broader market in this sense.

Because no institutional investors are selling these names right now. If you look at what's happening with the price of Bitcoin, that's where I'm getting this from. So the VIX, if you will, for retail traders is the price of Bitcoin, which has fallen to a level we haven't seen in a while. Below 90K, where it still has been holding. I think those are inextricably linked. The price of Bitcoin and these Robinhood stocks, if you will, that retail owns, that's what's really making this move. Okay, so how about that? Right on the back of what you just said,

bespoke today talks about bearish retail investor sentiment spook to the

to a historic degree, they say. Bearish sentiment ticked above 60% for just the sixth time in its history, dating back to '87. The five-week change in bearish sentiment is the third highest in history behind only December 2000 and August of 1990. - I think Malcolm made the key point here. The retail trader who would probably be likely to respond to a survey like that is over-indexed to Coinbase, Robinhood,

Tesla, which is in a 50% drawdown, it's a falling knife. It's probably the most widely held retail-oriented stock. Palantir, on February 19th, the day it went parabolic, this stock was selling at 120. You know what the 200-day moving average is? 49. There are no professional investors buying the stock that day, okay? We all understand this. So

It makes sense to me to see a wipeout in sentiment for that trader. The names that they are over-indexed to, over-leveraged to are absolutely

are acting the worst. And unfortunately, a lot of retail traders these days are younger, the Gen Zs. It's perfectly fine. When I was 26, I wasn't doing responsible things in the market either. I had no idea where I was going. This is how investors learn. This is how they become better. They go through periods like this. And so you have that retail flush. They collect themselves, maybe some margin calls, maybe some...

options expire worthless and they say, okay, not gonna do that again. So it's perfectly fine to have those types of stocks. The key point here is with the exception of Tesla and Palantir and Bitcoin, which is not a stock, I call it the eighth mag seven. There's no market cap in any of these other names. - And the other thing is the fundamentals are vastly different in those names, Josh, to your point, right? Some of the fundamentals of Bitcoin, fundamentals of Palantir,

Fundamentals of Tesla. Are fundamental institutional investors really getting active in those names at these price points? I don't know. I mean, Brin is a fundamental investor who's buying more Robinhood today. Another one of the stocks that's right there front and center in the conversation.

Yeah, well, we talked about it, I guess, like a week and a half ago. And I said, if Robinhood comes down into the 40s, I'm going to buy it. I mean, it bounced right. I bought it at 45 when the market sold off earlier. It bounced right off the 50 day. I mean, Robinhood is not trading at a parabolic level. It has an E. And I just think this secular growth trend that you're having, you know, Robinhood just cleaning the clocks of a lot of other, we'll say, custodians just because their user interface is incredible.

They're doing great things on IRA, matching programs, a ton of education. And I think Vlad and them, as I've said before, we're watching them grow up. They have a ton of smart engineers. And so I think this was a really good opportunity to come in at, I think it was like 45, 50, bounced off the 50 day. And look, it's already back at 51. And so I'm in this stock long-term. And so I took the advantage to buy it. But I don't think you can even remotely compare

uh... robin hood to a palantir there's two different businesses in the charts look incredibly different sure but you know when you when you talk about

retail momentum trading and of the like, I think you can probably put those in the same type of group. Obviously, fundamentals are different. But when you look, Rob, at Arista Networks, we have that in the momentum basket as well, down 10.5% over a week. You stepped in and bought that.

We did. I mean, they make essential networking hardware, software that connects GPUs and servers, allows for more efficient compute. They're highly regarded for their AI networking in particular. Main customer base is the hyperscalers, which we continue to get good news around. There's not any indication that they're reducing CapEx.

And, you know, it now trades at a 37 times four of PE. Rich for us, but it's down from 50 earlier this year. These are not staggering numbers. It would be the equivalent of Josh taking advantage of the opportunity in CrowdStrike when it, you know, when it re-rated, right? Great business. Dominant in that space. That's what Malcolm did. Okay, Malcolm did. Right? You doubled down on that position during the CrowdStrike.

pullback. I thought that sell-off was absolutely short-sighted, and thankfully the market rewarded me for it. Here's the thing you need to know, the only thing you need to know about CrowdStrike as an investor. For the last two years, George Kurtz has been getting on earnings calls and basically saying we have a gross profit margin of roughly 0%, but we also know that that's because we're reinvesting in growth as aggressively as we possibly can, and we have levers that we could pull to get that number to about 30% if we really wanted to.

Well, last summer, it became showtime, right? So rather than reinvesting all those dollars in growth, you have to believe they had to turn on the growth engine to really show where that profit's going to come from, and that's what's been happening for the last couple of quarters, and I expect that to continue happening for the next year or two in CrowdStrike. Remarkable recovery, too. Which, by the way, the price target today, Rosenblatt takes it to $450 today from $385. One thing just generally on momentum, like...

Some of this is an education issue. It's like remarkable to me. You have people who will say like to their friends or they'll go on Twitter, I'm a swing trader, I trade momentum stock. They don't even know how to use RSI. When Robinhood's at 65, RSI is at 77. We're not buying stocks at a 77 RSI. What that means is a 14-day relative strength is so far off the charts

And so when Bryn says, if Robinhood pulls back, that's where I want to buy it. Bryn understands that concept. We don't want to buy empire state building charts. We don't want to buy parabolic moves the next day after they've gone parabolic. And again, a lot of people don't even know what that is or how to calculate it or why it matters. So a lot of what you're seeing in the markets is just due to this misunderstanding about how to behave in stocks that have gone up 100%, 200%.

It doesn't mean don't own them. Let them cool off. Let them come off the stove for a second. And I think there are opportunities in some of these names as they pull back. I agree with Brent. I like the opportunity in Robinhood. Today is a better day to buy it than at a 77 RSI a week and a half ago. We still react to other earnings as well. And there are several marquee names.

Beyond NVIDIA that had reported within the last 24 hours, Salesforce, Siege, they beat. Their revs missed. We can take a look at the stock today. Their guide was weaker than expected, and there is the result on the chart. What do you think?

I think this is one of the great businesses. Obviously, we bought it when it re-rated on a price-to-sales basis very aggressively. I'm very happy we own it. We happen to be a customer. I am telling you, this company is changing the efficiency with the way that we operate our business at New Edge.

AI is impressive and process engineering out of this firm is unbelievable. I think there has to be some adoption that takes time and I think you'll see it here. It's still not a wildly expensive stock, but I think the story is getting traction.

Berkshire Hathaway reported, I don't remember talking about it on this show, I think it's sort of important, one of the largest market cap companies in the world, $50 billion in operating income last year. I don't think people understand, this is like a Mag7 name that has nothing to do with AI. When you talk about profitability on that scale, stock today making a new all-time high, raised the roof, congratulations. And

one of the biggest winners over the last 12 to 18 months, even versus the rest of its sector. Even when you look at other financials and then they come in and report a blockbuster quarter, they choose to do so on the weekends because they don't want coverage. So apologies, I'm covering it. But like, why aren't we talking about the stock or does this go up?

We talked about it a lot, as a matter of fact. Was I not on that day? You think you're on every day? I don't think you are. We talked about it. If I recall as well. If I'm not here, there's a lot of solipsism coming from me. I understand that. I think the segue is going to work here if my memory serves me right. Didn't Berkshire own Snowflake?

for a minute or early. They did, right? Pre-IPO. They never bought it. They never bought it in the open market. Take a look at Snowflake today because that stock is pretty good after its own earnings. I know we're going to see it momentarily. By the way, there it is.

BTIG says they're hitting on all cylinders. Strong print, better than expected guide, excellent results. The CEO is going to be on closing bell overtime today with John Ford. It's an exclusive interview. You don't want to miss that. Great segue. Thank you. I thought that was going to work. Thank you. In fact, it did work. All right, here's what we're going to do. We will take a break. We will come back. We have a lot of moves to get to. One from Bryn. I've got, I don't know, five, six, seven from Siech. We will do that when we come back.

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All right. Welcome back. Let's do these moves. We did talk about Tesla and the decline, the substantial one that it has suffered, which Bryn is in. And you bought more Uber. We just make the segue from one to another here. But you bought that. You bought more Uber, correct? I bought more. Yeah. When the market sold off earlier, take advantage of a company has nothing to do with tariffs.

you know, this company is growing. It actually was in a downtrend. It's now in an uptrend. It bounced right off the 20-day. I bought it, like, right under 74. And so I took that opportunity to add to the position. And I think when you have a name that was in a downtrend, it's in an uptrend. Obviously, Bill Ackman coming into the name is another positive investor catalyst. I just think investors need to understand, take advantage of

when the markets sell off and there was no reason for uber to sell off except for the market itself selling off hey brin did you happen to hear jensen wang shout out uh... the uh... invidia automotive efforts as it relates to uber specifically i didn't okay that was my favorite part of the call um jensen wang said uh...

Automotive is a $5 billion opportunity for them, not long term, like right away. And one of the only companies he mentioned by name, if not the only, was the work that's being done right now between NVIDIA and Uber. I don't know if that has anything to do with stock being up a stick today. Probably has something to do with it.

Probably has something to do with it. That was specifically in trucking, too, though, right? Like his bigger vision is autonomous trucking that has to. I actually caught that, too. And it sounds like that is where he sees the next opportunity for NVIDIA to make a big pivot as an autonomous, but then autonomous long haul trucking, which if you're a long term Tesla bull is probably music to your ears. You don't own Uber, though? I don't. No. Let's talk about these other moves you got, Rob. So you sold McDonald's.

You sold the whole thing? Yes. Why so? So we started selling that in January last year, kind of had a rough year, wish we would have sold the entire thing. Year to date, it's up seven, really, versus the market kind of flat to down a little bit. It's a full valuation. We're worried about this transition to lower price items. We think there could be a squeeze there.

and so with the full valuation were jettisoning wasn't this on your list recently and of those good-looking stock scholar and it's making fifty two-week high right now uh... the way i was taught that's not what you sell you'd be probably made money in itself we could we could uh... we could we can all agree if mcdonald's gets the lower price menu right

and then they reinforce that message to the consumer, if that becomes like the thing that they're telling the consumer, come back, the Egg McMuffins aren't $46 anymore.

But the Egg McMuffins are getting a little upward pressure on food price. I agree with you on the momentum. And labor costs are going up. Who do you think has eaten an Egg McMuffin last between you and I? Come on. Probably you. Judge, I rest my... The defense rests. I feel like it's the opposite, though, that the stock didn't trade well last year. It didn't. So you did not do well and are using this...

move higher to get out rather than making a lot of money and getting out now. So the reality of it is we trimmed most of it in January last year. Good move. Our stock went nowhere last year. We

We have a stub position. It's up a bit year to date. We feel like that recent price move, we can take that and put that to work elsewhere where we're excited. You're going to talk about some of the buys. Well, let's just talk about one more sell real quick. Vertex. Completely out of that too? We are completely out of Vertex as well. It's a name we added in August of 22. We're up 60% since the addition, up 19% year to date. Again, we're not

We like momentum as a factor, but it's not our principal factor. And we're taking advantage of that recent price move. It's still a high-quality business, but it trades at a 27 times forward PE in most of the cystic fibrosis opportunity we think is priced in the stock. Okay, so let's talk about the buys. You bought more Amgen. Tell me. We did.

We did. So long-term holding for us, it's been a great compounder, generated 14% annualized returns over the last three years versus 5% for the healthcare sector. Diverse portfolio, really focused on oncology, cardiovascular disease. And the exciting news here is...

the attractive valuation at 15 times earnings. And so for us, that keeps us interested and we want to top that up. Again, we're trying to run the ball here. We're trying to get out of the investments that we have that are reasonably expensive and go with other investments that have a tailwind but don't have the same price premium.

And they've done well as well. NRG hit a record intraday high in trading today, earlier. You bought that? We bought it in January, so we're up 15%. We bought more. This is playing that same Vistra story that we talked about and got right last year. This is a company that's half the price. Ultimately, NatGas is reliable power.

And at the end of the day, if you believe in this power to AI, this is a great way to play that. They're incredibly well positioned. You bought Texas Pacific Land Trust. That looks to me like a new position. Is that correct? That is a new position. And that is really a derivative play. It's kind of a unique play on how to get exposure to the AI energy trade. They're a royalty company that leases land.

to these businesses, and they collect fees from wells, but also based on production volumes in barrels per oil. With oil in the '60s, you have, that's consistently been a floor, and if you're more optimistic about that, we think this has leverage to that. - Give me one real quick. You sold Eagle Materials. - We did.

And listen, this is obviously a cement, mainly a cement producer. It's been a good long-term performer. We added in January of last year. It moved 80% since we bought it. AI cement?

Regular cement? Regular cement. But would it move? Would it move? I mean, so that price move, we want to take advantage of that. There's obviously a little bit of a growth scare going on out there right now, and these companies are being a little challenged. You're seeing that in the bond market, right? Okay. Let's get the headlines now with Silvana Henao. Hi, Silvana. Hi.

Hey Scott, good afternoon. Members of the Senate Doge Caucus were at the White House today to meet with Elon Musk. Multiple senators and aides tell NBC News President Trump was not expected to attend. The meeting comes after the president's chief of staff, Susie Wiles, met with Senate Republicans on Capitol Hill yesterday. Some Republican lawmakers have expressed frustration with Musk's approach, particularly about not communicating his moves in advance to the Hill.

The Consumer Financial Protection Bureau said it's dropping several enforcement actions, including against Capital One. The agency accused the bank last month of taking from customer savings accounts more than $2 billion in interest payments. And it comes as the CFPB has closed its D.C. headquarters, fired employees and told those who remain to stop nearly all their work. And

And North Korea has sent more troops to Russia. South Korean media citing the country's intelligence agency reporting that additional troops have been sent to Russia's Kirk's region, but it's unclear how many were sent. So far, the U.S. and allies say the regime has sent more than 11,000 North Korean troops to Russia. Scott, I'll send it back to you. All right, Silvana, thanks so much for that. Silvana, and now coming up, the alternative universe, a new ETF.

Just launching, giving retail investors access to the multi-trillion dollar private credit market. Bob Pisani has those details right here at Post 9 Next. Auto insurance can all seem the same until it comes time to use it. So don't get stuck paying more for less coverage. Switch to USA Auto Insurance and you could start saving money in no time. Get a quote today. Restrictions apply. USA!

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We are back. A first of its kind private credit market ETF making its debut trading at the New York Stock Exchange today. Senior markets correspondent Bob Pisani is following the money for us now. You will be much more eloquent than I was in the intro, which I butchered dramatically. No, it was terrific because all we want to do is see, get everybody's opinion on this. Tell us more because my first reaction, I'm sure, was many, but you lay it out.

Okay, look, here's the story. Wall Street is very eager to provide access to private equity and credit to the masses, and ETFs are the obvious wrapper. Today, State Street launched an ETF designed to do just that. So this is called the Spider Apollo Public and Private Credit ETF. What a mouthful. It's even bigger than that. It intends to invest at least 80% of its assets in investment-grade debt securities, including, this is the trick, a combination of public and private credit.

Now, because private credit is illiquid, it has been a problem getting this in an ETF wrapper since ETFs obviously need liquidity. They are trying to solve this problem by having Apollo provide private credit assets that State Street will purchase. And Apollo will agree to buy those investments back

if need be. Now, normally ETFs are only allowed to own illiquid investments up to 15% of the fund. But in this case, private credit can range between 10 and 35% of the fund, but can be above or below that, much higher than what it used to be. So this filing has been very controversial from the start.

one early concern was that if apollo is the only firm providing liquidity it naturally raises questions about what type of pricing state street might get however state street apparently can source from other firms if you can get better prices another issue is

Apollo's required to buy back the loans, but it's not clear how much of the loans they're required to buy back. So this is a potentially groundbreaking ETF. If it works, it's going to open the door for a lot more of other ETFs like this. It's going to expand the ETF universe. I guess, Josh, what I'm wondering about, and I don't know what the guys think, is this peak private credit right here. I knew that was coming. You won't know it's the peak until it's too late. Right.

But that, I think we're still a ways off. There's still enough money rushing in. You don't have to worry about that. I'm curious, what's the, let's say they get up to 35% private credit. What's the other 65% of the ETF? Is it like high-yield bonds or? It can be anything. It can literally be corporate debt. There's a whole long list here. There's a 10-page small type. But it can be any kind of public credit. What's the AUM fee?

What's the total expense? I don't have the number right now. It's close to 70 points, 0.7% is what it is. That's high for an index ETF. That's very high. But for an actively managed ETF, that's not unbelievable. To your earlier point, those now obviously people talk their book, but...

Those who are in the private credit business don't even think we're even, we're not even the fourth, fifth inning. Can't believe it. There's so much money still flooding towards private credit, Bob, and so much interest from retail getting more exposed to alternatives like private credit. This seems like the beginning. I'm playing devil's advocate that this is a big moment that this goes through. If this works and is smooth for the next few months, there is going to be a

This is going to open the floodgates for this business. Can I just teach the- It's reasonable to ask, is this the late stages of the private credit cycle? I mean, were Bitcoin ETFs the late stages of Bitcoin interest? No, it exploded immediately thereafter. Are we in it now? I don't know. This is somewhat different, but I just think if you really want to invest in private credit,

The way to do it, you now have 10 publicly traded companies from Blue Owl, you have Aries, you have Blackstone, you have BlackRock. Agreed. All of these companies are minting money based on this avalanche of demand. Some of it's coming from family office, some from institutions, although they're already big enough there. Now wealth management. Just skip the products and buy...

Be an LP. Be a GP. Own the equity of the companies that are issuing these funds. Look at what those charts look like. Almost all of them look great. And the best underwriters. Yeah, they're great at this. This is what they do. Don't be retail. Be wholesale. Be wholesale.

Okay. Plus the new SEC is going to do away with the accredited investor rules anyway, right? So you'll get your access to private credit, truly private credit soon enough. Yeah. There's a fundamental mismatch here. You're taking long duration loans, not really long duration loans, but longer duration loans and marrying them with immediate liquidity. Yep.

We saw how that played out in 2008. In my view, you want to be with the best risk managers. Who are the best risk managers? Those that have covenants that will give them a holiday on the leverage they have in those systems so they don't get called out at the bottom and everything rallies back up. That stuff happens all the time.

the time you have to be careful if you're on the same side of the table it to josh's point as the firms that are the most intelligent it structuring these transactions they'll have back leverage also and that's really where you have uh... you can have issues also say

I understand it's diversified, it's non-correlated, et cetera, et cetera. In a market downturn or in, God forbid, a recession, there will be nothing non-correlated about this. We got a little bit of insight into what that looks like with B-Reed, which already is like a year and a half ago.

this will make that look like a picnic if and when we are genuinely worried about the economy. And so, like, I'm not saying this is the worst product ever or it's bad, don't buy it. I'm just saying, like, understandably,

Understand it could work well to the upside, but also it could work to the downside. I mean, that's kind of a warning like Jamie Dimon had many, many months ago talking about private credit. And when it does go bad, it ain't going to be pretty. We'll be monitoring this for liquidity. That's what you want to see. How smoothly does it go? If it works, you're going to see an avalanche of products like this. Bob, good stuff. Thanks so much for that story. That's Bob Pisani. Straight ahead, we have stocks on the move from the committee.

All right. Let's talk about Starbucks, because that stock right there on your screen is trading at levels not seen since May of 2023. Did a riff on this recently. Yeah. I'll just reiterate what I said on Tuesday. The next area of resistance is 125, 126. Those are the summer of 2021 highs. This is a company with new management. People are very excited about

about the potential to get back to basics and emphasize the things that people like about Starbucks rather than the things that they don't. You can see that Nickel is getting a ton of credit already before any sort of fundamental turnaround takes place. They kitchen sink the last quarter.

I think the next report will actually be the first positive one in a long time. People want to be in this name ahead of it. If it can get to that old high, 125, 126, that would be a logical place for price to pause. Now that it's broken out, that's 10 points higher. If it breaks that level, forget about it. You're going to have to be in it. I think the stock is up 24, 25% since Nickel got that job. That's right. PayPal.

Malcolm, yours, trim today, the price target was to 76 from 85 at Piper. What do you think about this stock? I saw the note and I didn't really see anything egregious about it. They basically reiterated a neutral rating and brought the price target down a couple bucks, which doesn't scare me very much.

I think this year is setting up to be a great year for fintech, primarily because deregulation really means more transaction volume for these fintechs, which is all that really matters for this category. And so PayPal specifically, the thing that Alex Chris is trying his best to do is find a way to squeeze some juice out of the Venmo product, reducing friction and throwing it on the home screen at checkout.

uh... pay with uh... bin mo is now a feature i think squeezing back and making that the profit center for pay pal is really where the opportunity is so it's a great set up in the shares right now trading well below its fifty and two hundred a moving averages and i think this is a place that investors should be buying ok good stuff we will take a break we will come back and do the setup next five is to the setup uh... before we get out here today a brandell is going to be a big one after the bell isn't it

It is. Everyone should pay attention to their infrastructure solutions group. It grew 34% last year. It is almost half of their revenues. These are the networking and servers that go into the AI hardware and the data centers. So all eyes are going to be on that. I think it's going to be a really good print, but it's all going to be about the ISG group.

Cici, you got EOG, too. EOG. Yeah, we're looking for negative revenue growth, negative earnings growth. So is the street, largely on weaker oil prices. The key to watch is production growth. It's expected to be up 7% year on year. They continue to be a low-cost producer. They will drive operational efficiency, and we think that could offset production.

Oil price weakness and give you some leverage to the upside and recovery. You got 20 seconds on Invitation Homes just because they reported and you own the stock. You got anything on that? Yes. Sorry to throw you a curveball there. Yeah. Stock's up 5% and changed today. This stock's done nothing for two and a half years now. It is a REIT, so most of the return that you're going to get is coming from the dividend yield or the distribution, if you will.

But today's a good day. I think this is one of the most underappreciated REITs in the market. It's rental single-family homes. If you're not familiar with it and you like dividend income, give it a look. Take a look. All right, good stuff. Thanks for that. We'll do finals next. I hope you'll join me. Closing bell, 3 o'clock Eastern. Ankur Crawford, Sarah Malik, and Sarah Nason-Tarahano, Goldman Sachs. So we're going to take you through that final stretch today with a great group. Bryn, give me your final, please.

Berkshire making a new all-time high. High margins, clean business, great way to play international.

All right. Thank you very much. Rob Seachin. Amgen up 18 percent year to date, but still inexpensive. Malcolm Etheridge. Yes. Prologis. They just announced a dividend raise, but I'm focused on the pivot to data centers from distribution centers. OK. Again, good having you here. JB. Look at that. All these stocks are up. That's great. What a coincidence. What a day for 3M. Still long. This stock wants higher. Analysts upgrades continue. All right. Good stuff. I'll see you on the bell.

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