The Slowing Economy and Stocks 6/4/25
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Carl, thanks very much. Welcome to the Halftime Report. I'm Scott Wapner, front and center. This hour, stocks not too far from all-time highs. At the same time, the economy showing some signs of weakening. We'll tell you what that's all about. We'll discuss and debate and how to navigate these markets with the Investment Committee. Joining me for the hour, Joe Terranova, Jim Laventhal, Surat Sethi, Bryn Talkington. Dow's going for a five-day win streak.

ISM non-manufacturing PMI below 50. That was notable. The lowest ADP print in more than two years, notable. Yields falling, something to keep an eye on. The president once again all over the Fed chair to cut rates. ADP number out. Too late, Powell, must now lower the rate. He's unbelievable. Europe has lowered nine times. At the same time, Joe, the president says it's extremely hard to make a deal with China's President Xi.

You have the drama over the tax bill. You have the Musk versus...

Republicans on the Hill now, Ray Dalio on CNBC earlier today, agreeing that the debt's a big problem, nothing new from him, of course. He said, quote, we're going to be in a period of greater than normal risk, citing a number of factors for that point of view. And yet the S&P is 2.5% from a new high. And I think our viewers care more about that than any of the other surrounding noise. I

Dare to believe. I would agree with that and everything you're identifying is going to be featured on the next episode of how the market continues to move higher because in the current episode right now the market is running off of a rebuilding of sentiment

and positioning and that is absolutely what is driving the market in the near term what you've identified the concerns that are in front of us the concerns surrounding absolutely there is a hesitancy to transact that was clear in the month of may it is reflected in the services it is obviously reflected in the ADP report tomorrow we're expecting a hundred thirty thousand jobs in the may report down from one seventy seven in the month of april i think we're gonna see that there as well

in the near term, the market has the ability to move towards the all-time highs. I acknowledge that. But I do see in the third quarter there is difficulty ahead and it's related to an economy that is going to cool. And I've said this for the last several weeks. My biggest concern is not

inflation it is growth and i am concerned that growth is slowing rapidly well and and i guess you have to be concerned that the tariffs are the contributing factor or the leading factor as to why growth would be slowing you know i don't know what you guys think about the what the future of the tax bill means to the future of the market

I think it means a lot. I think it means a lot. Here's my opinion, and we wrote this at Serity Partners. It's up on our website. The CBO, the Congressional Budget Office, which scores this thing, says it's going to be $2.4 trillion over the next 10 years, $240 billion a year in deficit increasing. But there's two things that are left out of that. One is the fact that the CBO...

does not do dynamic scoring. It doesn't take into account any economic growth that may come from this. We're of the opinion that there will be economic growth that comes from this. Well, the other side of this equation, I'm sorry to interrupt you. Are you going to steal my thunder? I'm sorry to interrupt you, is that they also came out, because Megan Casella was doing this reporting earlier and saying that they said that the tariffs would cut the deficit. Thank you. However, okay.

Let me finish, because there's a big asterisk by this second one. They say it would cut the deficit, the tariffs would, by $2.8 trillion over 10 years. So let's just call it a net-net zero. That is assuming, of course, that the tariffs are in place for 10 years. Anybody believe that you're going to have tariffs in place for 10 years? I hope not. Well, I— Listen, listen, wait a second. You're even debating that they could be? No, I think—well, 10 years, I mean, let's just— That's what they said. I—

I know. That's what the scoring is based on. That is what the scoring is based on. I mean, I think all of us on this desk and the ones who are not here today will admit that it's a difficult job to predict what the rest of this year is going to bring, let alone 10 years. We have to deal with the cards as they're dealt. And you just showed them to us, Scott. And that's what I was going to say is that

Right now in the month of May tariffs ran at an annualized rate 190 billion more than a year prior. That's just a fact Okay, so that 190 billion up against the 240 billion of deficit increasing again not dynamically scored from the deficit I call it a wash will it will it last? I don't know I don't know if the tariffs will last and I think frankly what I'd like to see before we discuss whether they last through next year's midterms is let's get them in place and move forward

This economy, this world wants to know what the rules of the road are, corporate-wise, investing-wise, and move forward. It still leaves you, even if it is a wash, it still leaves you with the current state of the deficit, which is not good. Not today, but tomorrow. The trajectory that we're on. You want me to say the quiet part out loud? Yeah, go ahead. Yeah, the way you get out of this is not austerity. You grow your way out of it? You grow your way out of it. I mean, and I'm sorry, there's a little inflation involved in that, too. That's the quiet part out loud.

Well, I mean, that's clearly their belief is that you can deficit spend your way out of it because you would ignite a level of growth that would eat into the deficit and get it off of this train wreck trajectory.

I mean, that's the key question, right, is to if the growth is there, and I think the leading indicator is going to be the bond market. And when your 10-year is now 4.4 and kind of on the cusp when you were talking about this tax bill, if the tax bill comes as where it is, the 10-year might move up, and that will have an effect on the stock market. So in the short term, I think you can expect a lot of volatility. Bryn, how much of this matters?

The market knows a lot of this already. And as I said, we're-- what are we, 2.5% from a new high on the S&P? I think there's like trade war fatigue, tariff fatigue, warning fatigue, diamond dally-o. It's like, OK, we get it. We're 2.5% away from a new high on the S&P. Do we get there in the face of all of that noise?

as long as the bond market lets us get there. And I think that's where ultimately that will be the judge and jury around deficit spending and what the market is, the bond market, not the stock market, will, I think, solve that equation. Obviously, you have Ron Johnson, Rand Paul,

and other senators that are saying, are doing the work that we're all talking about. And so I think the bond market is what to watch, but I do think this wall of worry we're climbing that we're a whisper of at an all time high, I think that I'm in the consensus, which makes me a little nervous that everyone feels like we're in this range bound market between 5750 and a little bit over 6000. And so I do still think though,

that the pain is on the upside because people all say not retail investors, not our clients, but a lot of people, institutional investors are under invested. And so we'll see what happens. But to me, I do think we have trade fatigue. Absolutely. And I will say within the numbers, what we haven't talked about are the jolts numbers.

that the jolts numbers actually yesterday came out better than expected or however you want to look at it. And so unemployment is low. There are more job openings than were expected. And so as it relates to, you know, Trump and Powell, I just think he's barking up the wrong tree. There's really no data that says that he needs to cut right now. And the tariff uncertainty is just going to even push that out further, unfortunately. Right. Well, I mean, the person's policy is...

the thing that's lighting the fire that's hurting the economy and that same person wants the Fed to come to the rescue of the policy that has caused the uncertainty to begin with. I mean, that's the irony, obviously, of the whole thing, irrespective of any of that. I don't want to spend the next 20 minutes talking about trade tariffs and all that other stuff. Okay, let's not do that. Because I think there's, like...

We're 2.5% from a new high on the S&P. Technology has been ripping. That trade is back in a very big way. So if I think we're getting to a new high, where do I want to ride that? What's the goal here? Well, that's the current episode of how the market gets to the all-time highs. And it is really predicated on, first and foremost, the momentum factor. I think I've come on the show multiple times in the last week and talked about it.

about names like Netflix making a new high, like Axon making a new high. I talked about Dash yesterday as a final trade. So it is very much the same equity names that are powering the market higher. What we're benefiting from is in addition to those names, like Broadcom,

which is moving higher today. It is semiconductor names that have not participated over the last three to six months. It's semiconductor names in which positioning was reduced dramatically. The momentum factor moved away from the KLA core, the applied material, the lamb research. But there's momentum back in the semis. Semis are up 15% over the past month. There is near-term momentum.

back in the semis and that is what the market is benefiting from in addition to the momentum names that have been there for the last six months now you have the added benefit of okay let's go back into the semi so i keep suggesting it's very important to watch the semis this afternoon's

Broadcom report is very important. Does capital go out of Broadcom into a name like AMD, which has struggled over the last six months? Can the semi-momentum carry forward over the next several months? And if it does, it's one of the primary catalysts. And we'll look back and say that's one of the reasons why we achieved all-time highs. I mean, it semis up 15% over the past month.

Cloud up nine, cyber up eight and a half, a new record high today. Software brand up five and a half percent. And technology far and away the leading sector group over the last month. Even as some try and suggest that the rally's complacent on both fundamental and technical grounds, I don't know. What do you think?

I think that you want to kind of build on Joe's momentum area. If you look consistently, the areas you named are all above the 200-day moving average versus a Google or a Salesforce or an Apple or healthcare, which are all under the 200-day moving average. And so I think you've got to stay with who brought you to the party. And not only with the momentum names, but I feel like those companies and those sectors

that are above the 200-day moving average, if we do get any pullback, which doesn't look like it right now, those are going to be the sectors and securities that continue to march higher. And so I think that's where, once again, Apple well below it, Google well below it, those names are going to struggle versus the Netflix, the Meadows, et cetera, that are well above that, that very simple but important 200-day line.

- Sir, I feel like if not everybody, certainly the majority and most of our viewers are thinking the same thing or wondering the same question. Is this market on a trajectory to continue to go up? Is there enough momentum to have a little bit of a sizzle here in the summer for stocks? Or is the you know what eventually gonna hit the fan from the tariffs? And now if there's drama extended over this bill,

whether that's going to cut into whatever momentum seemingly existed for this market. Yeah, I think you have to break it up into two parts. I mean, the momentum stocks, the ones Joe's talking about, have earnings growth behind them. So right now, as the market is moving, the money is flowing to earnings growth that we see in the next couple quarters, as opposed to the uncertainty as to what's going on in some of the stocks, like the Googles of the world, where growth is slowing. However, what could happen, to your point, is

If we get too much of this negative news, the macro effects, the algos come in and you just get equity selling a broad base. So that's when you pick up even more of these growth companies because they're on sale at that point, even though they have growth. - It's not just a growth conversation. I mean, if you like Jim is probably more positive on the state of the economy than anybody on the panel, certainly today, then you must think that other areas of the market are gonna work and get you to those new highs

even if tech maybe tech doesn't have to it might well i think i'd take your words and i'd rephrase it this way i think it's a stock picker's market i mean we often say that but i do think and we're all saying i think the same thing that the market will set a new high maybe goes a little further so scott maybe we get a five percent rise from here uh in the s p 500 and then it consolidates over the summer i think you can find stocks out there that might do 10 in that environment um

I've added to a couple of them today, Cisco Systems and Qualcomm. You know, Surat was just mentioning about positive earnings growth. What I also look for, and I know Surat does as well, is positive earnings revisions. Cisco, if you look at the earnings revisions, is definitely going higher, and it's with good reason. If you've listened to their last several earnings calls,

they are definitely benefiting from AI, definitely benefiting from the data center build out, and it's just not reflected in the multiple. With Qualcomm, it's a little bit different in that the earnings revisions are very slightly upwards, but they are being anticipatory, and I think those earnings revisions are going to start marching higher, not on the back of cell phones, which we all know waiting for this much heralded super up cycle is not happening, but where Qualcomm's gonna really get the earnings revisions upward is in automotive and internet of things,

the latter of which also does play into the data center build out. So my point being is that you can pick stocks and not have yourself involved with this discussion about whether the market's too high or it's going to hit a new all-time high. You can pick stocks. The payoff in all that, you didn't mention those two names by accident as we have on the screen. You bought more of both. Yes, I'm sorry. I thought I said that. But yes, thank you for pointing that out.

That's what I'm here for. Thank you, Scott. Please, go ahead. I'll also, look, Stacey Rasgon yesterday had a research note in which she called Qualcomm the Rodney Dangerfield of semiconductors. And that's, get no respect. I'm not sure everybody listening will. Qualcomm's one of our largest holdings, and it hasn't really gone anywhere. But what you're also getting through is this overhang period of every time people talk about, well, Apple's going to do this and Apple's going to do that, you're going to get secular growth out of Qualcomm and other areas that are not just dependent on Apple.

And that's the thesis of that one. You trim some Microsoft at the same time. You got to find money with which to put the new money to work in Cisco and Qualcomm. And I looked at Microsoft. It's had a fabulous run. I still own the stock. I'm not saying anything terribly negative. But at 31 times forward earnings, I think it might be at fair price. So if I look for a source of funds, Microsoft is the one. Amazon's target today in that group gets raised to 240. JP Morgan. Meta's target gets raised, JP Morgan, to 735.

as well. So there continues, Joe, to be optimism and a lot of it around these names. There is. You know, the panelists missed the...

the last run in May, which was so significant, they're going to chase it up even further. They are. But let's keep in mind right now of the 11 major sectors, technology is running in eighth place. I know recently we have a revival for semis and some of the mag seven. But so far, year to date, it's been industrials, financials, utilities that are

carrying the market higher. As it relates to the MAG7, the strongest momentum that I see in the near term, and even if you pull back the calendar over the last year, is certainly with Meta. Meta is up 16% year-to-date. It's up 6% in the last five days. Sorry, Jimmy, I'm seeing very strong momentum

for Microsoft, which is pressing towards an all-time high and looks like it wants to break out above there. It's only 1% away. Yeah, and you see, remember, positioning is so important in these names. You see rebuilding and positioning here in Microsoft

because let's remember it struggled. It had the relative underperformance last year versus the other Mac 7. Well, we could turn now to Apple because a reminder, Monday, of course, is the Worldwide Developers Conference. So we're going to be live there for both halftime and closing bell. We'll have several guests on site. And it really does come at an especially critical time for Apple. Over the next three days, we're going to look at the most pressing items that Apple has to offer.

investors need to hear. What does Apple really need to address? We're going to tell you that, as I said, over the next three days. Well, that man right there is Steve Kovac is thinking about this in a special report. Tell us.

Yeah, Scott. Well, let me give you those three things to watch for. We're going to be talking about this the rest of the week on your program. What's Apple's AI strategy now? What's it going to do with AI search, which has been teased a little bit by executives the last several weeks? And what can Apple offer developers to keep them in its ecosystem? Now, WWDC is coming after that.

that failure to execute with Apple intelligence, which was unveiled at last year's event. And just now, this just came in Scott, the Financial Times reports, Apple intelligence's approval in China is now being held up because of the trade war. Now, since last year's WWDC, they have indefinitely delayed the AI upgrade to Siri, took Siri away from AI boss, John Gianandrea, chat GPT integrations there, but it's kind of lacking the service's best features.

and other AI features just aren't that impressive. You know that because, well, when was the last time you got one of those Genmojis sent to you by one of your friends on Apple Intelligence? Look, the real kicker, despite the hype around Apple Intelligence, it did not drive iPhone sales in a significant way as so many people predicted it would.

So as for a clear AI strategy, not expecting a ton of fireworks here next week at WWDC, but the most notable one, Bloomberg reporting that developers will be able to tap into Apple's AI technology for their apps. But as we all know, Apple's AI models are not as powerful or as robust as those from OpenAI or Google or Meta and so many others.

Apple's going to have to show developers that they have the advancements that can keep them in Apple's AI ecosystem instead. Now, tomorrow, Scott, we're going to dive into AI search and who Apple may be partnering with there after missing big time on that Siri AI update, Scott.

You get a feeling that inside that building, that beautiful building out in Apple Park where this is all going to take place, that they're feeling the pressure of what didn't take place over the last year since we sat together at the prior WWDC? Yeah, they have to. I mean, part of the reason that Apple Intelligence dominated last year's event, Scott, was because they were perceived to be behind Apple.

in artificial intelligence after we saw so many of their peers and competitors put out just this huge cadence of products and innovations, one after another after another, especially at OpenAI. And then you have the Johnny Ive thing that happened with OpenAI, that partnership, that puts more pressure on Apple. It also puts pressure on OpenAI itself. So, and then look, let's even rewind two years, Scott. Two years ago, they announced the Apple Vision Pro, that new headset, the new big computing platform that,

launched to so much hype and that has really failed to take off. So they're coming off of two really tough years where they kind of didn't deliver what they said they would. And so the expectations here are pretty enormous for them to show us stuff that is actually going to launch. But right now, expectations are relatively muted. So we'll see if they can kind of turn that around. It's a good chance for them to reset the narrative, especially on AI, Scott.

All right. We'll see you tomorrow with part two, as again, we do a three-part series here leading up to this incredibly big event for Apple, where once again, we'll be live from WWDC at Apple Park. Live coverage is starting at noon Eastern. Steve, thank you. Let's just go through, Bryn, this downgrade today one more time from Needham on Apple. It's to hold from buy. They removed the $225 target, and they do it because they say Apple

on a number of fronts. Threats to Apple's near-term revenue and EPS growth. Every big tech competitor wants to take Apple's 15% to 30% platform tax. Gen AI innovations open the door for new hardware form factors that threaten iOS devices. And Apple trades at a forward year 26 PE of 26 times, which looks expensive on several metrics. Any one of those might be concerning, taking in total

And there's the analyst who did it, Laura Martin. She's on the exchange at 1:00 today, so you can get more detail from that. But what about this call?

I think it's a little bit late, we'll say. The stock is not even near 225. But I think that the first point about the threats to revenue and earnings growth, like I cut half the position back in December because it's like what revenue and earnings growth? The only earnings growth we've seen is because when their earnings per share come out, their per share number is lower. The denominator is lower because they're buying back so many shares.

The challenge is there has not been revenue and earnings growth. I do think the app platform fee that they're charging, to me that is the biggest risk because those services, that is a huge cash cow for them. I think what happened with Epic and with games, I think that is a risk in the name. And the 225 is actually its 200-day moving average. I think it's a good call and I just don't see the catalyst

to get this stock going again versus the other names like a Meta or an Amazon that you just like consistently are just running on all cylinders moving in this direction and executing. This is a hardware company that to me has a software problem. - Yeah, speaking of software, I do wanna hit our chart of the day, it's CrowdStrike.

We're going to pivot there because it's down significantly today. And if we talk about it 10,000 times on the way up that everybody loves it, we're going to talk about it on the way down, Joe. It's down 6.5%. George Kurtz is going to be on with Jim tonight on Mad Money. So you'll want to check that interview out. What's the deal here? Why is the stock down 7%?

For other reasons, then, it had been straight up and to the right to a new high, as we pointed out, I think, yesterday, if not almost every day recently. Well, you can't dismiss that because when a stock goes up so significantly and you know the positioning is full, you need to see an earnings report and guidance that really blows away consensus expectations. Is that the problem? The guide was weaker than expected?

I don't know that any of it was bad. I think it was a really good report. I just don't think it was an overwhelmingly great report. And I actually think it's somewhat healthy that it corrects. ISI says Evercore ISI downgraded it today and they said it's a full valuation.

I disagree with that. I think this company is in the sweet spot, as is most of these cybersecurity names. I own the company personally, and I've said I'm maintaining it for long-term positioning. I'm not going to have a reflex reaction to a earnings report based on one quarter that I don't think

was troubling. I just think positioning was very full and you needed to blow out the numbers. Is that the same thing? I mean, if positioning's full and the valuation's full, why does it have to be anything wrong with the report? Maybe the report was just fine. I just said that. Yeah, but the stock just

Stocks just don't go up into the sky forever. Of course they don't. And that's why I'm saying this is healthy. Because a lot of times when positioning is full, you have hands that are involved in a particular equity name that are not comfortable maintaining positions. And you need to kind of work that off. Positioning is so critically important. I'm not saying that this was a fine report. It was okay.

It needed to meet and go beyond the wildest expectations to go even further higher. All right. Coming up next, after this quick break, we're going to trade committee stocks that have been on a hot streak. Well, I mean, for the most part, there are some losing streaks that we need to get to as well. We're back after this.

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Since I've stopped the program, we are really not that far away from a new high on the S&P. 75 S&P stocks have hit new highs since the April 8th low.

They've not only come all the way back, they've hit new highs. 18 today, as a matter of fact. Lots of stocks have been on hot streaks. Church & Dwight is up seven days in a row, Joe. Consumer staple name exhibiting strong growth. And interestingly enough, you're seeing that momentum funds are allocating in the direction of consumer staples. A lot of the reasoning behind it is because of the success previously

allocating towards Walmart, allocating towards Costco. Now you have new names like Church & Dwight and Monster Beverage. Visa, Surat, a six-day win streak. It is a new record high for shares of letter V. I mean, this is a stock when you see more spending coming, and if you get inflation in the system, they make money. It's a toll. So their multiple is going to keep where it is. The earnings are going to keep on growing as long as we have some inflation in our system. It's interesting. Everybody owns this. Bryn, why is Visa doing so well?

I mean, they're out of the crosshairs of the tariffs. But I mean, we've talked about this before. High margins, no capex. This is an asset-like company. They have a duopoly basically with MasterCard. And also, as it's making new highs, there's a really good rule to remember. Don't short a stock making 52-week highs and don't buy a stock making 52-week lows. So I think the stock momentum alone is going to continue to go higher.

Jimmy, Wynn is on a five-day losing streak. Uber is as well, but we did that yesterday. Let's do Wynn. And I'm Ubered out. I want Wynn five days down in a row. It's stuck in this channel from a technical point of view. It's stuck between 80 and 100. And I mean, if you stretch that channel out for a couple of years, that's a long channel. I'm not a great technician. Joe, you may have something to say about this. That's fine. Not the dinosaurs in the desert thing. But when you get this long of a channel, it's breaking out one way or the other. It is. It is.

And I'm telling you from the fundamental point of view, not just of what Las Vegas is doing and what Macau might do, but the growth properties in Dubai, some other things they may do internationally that I very strongly think that the breakout is to the upside when it happens. So 15 percent the last five years.

Okay, I mean, let me look at this chart. Like, pull up a five-year chart. Somebody's already said he doesn't care about past performance. Oh, come on. It's in a channel here. It's in a channel here, and it's going to break out one way or the other. Now, if you honestly think, and this is fine, if you think that there's going to be a recession out there, we're going to start parking planes in the desert, we're going to be laying off staff at Wynn Resorts.

Then it's going to break to the downside. You know my economic point of view. That's not my economic point of view. Your Honor, can I respond? Go ahead. Down 20% last 10 years. Okay. I haven't owned it for 20 years. I haven't owned it for 10 years. Jim said prior he doesn't care about what a stock's done for the prior 10 years. But unless that sounds dismissive, as a value investor, and this applies to Cisco and Qualcomm, which I'm building up more now,

You build these things not knowing when it's going to hit. I don't know when it's going to hit. Obviously, I thought Wynn would have taken off a long time before this. And I'm sorry, Scott, I say this a lot. It's why you build a portfolio. I can't tell you when Wynn's going to hit. That's why I have a lot of other things in there, a Wobb Tech. Cisco's actually doing well, Citigroup, you name it. But that's why you build a portfolio, because they're all not going to work.

at the same time. Jimmy, if you're in a channel for that long, you send up a flare. So Equinix is up six days in a row, as is Workday, Surat. Both of those are yours. Both of mine. Equinix is a data center play. And when you get more money and you get Amazon announced today, more money coming towards data centers, Equinix is in the sweet spot. And you're going to see earnings momentum there as well.

And then Workday is just coming off the bottom. They had a quarter that they disappointed, but it's a great company that's got really good secular growth. And I think it's a core holding that you want to own. Joe Zoetis is up four days in a row. Amgen is as well. Affleck, Amphenol, Linacol.

Lilly, Marcia McLennan. Amphenol hits a new record high today. All of those stocks are yours. Some of those names, those health care names, Lilly getting a little bit of a bounce, but I've said over the last week we're seeing momentum deteriorate there. Zoetis is a new position that we've taken, getting some positive momentum. Amgen as well. One more name I'd add there. Take a look at Viva Systems. That's a health care software name. That today made a new 52-week high. All right. Let's get the headlines now with Silvana Hanau. Hi, Silvana.

It's got good afternoon. The FBI arrested a man at New York's JFK Airport overnight in connection with an explosion last month at a fertility clinic in California. And that's according to NBC News, which reports investigators are looking into him to see if he helped provide materials for the bomb. Authorities say the man suspected of setting off the bomb at the clinic died in the explosion.

Ukraine's president is proposing a ceasefire between Kiev and Moscow until the country's leaders can meet. Vladimir Zelensky said today he is ready for talks from Monday onwards in Istanbul, the Vatican or Switzerland. Russian President Vladimir Putin said he doubts a summit would be possible following Ukraine's recent attacks deep inside of Russia, which he called crimes against civilians.

And the United Nations Security Council will vote later today on a resolution that demands an immediate, unconditional and permanent ceasefire in Gaza. Diplomats say the U.S. is likely to veto it. The resolution also calls for the immediate release of all hostages held by Hamas and demands an immediate lifting of all restrictions on aid into Gaza, Scott.

I'll send it back to you. Silvana, thank you very much. Silvana, and now up next, Santoli. He's here with his midday word when we come back.

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We have some breaking news. Steve Kovach has that for us. It's related to CrowdStrike, Steve. Yes, Scott. We just got this SEC filing from CrowdStrike where they say they've received requests for information from the Department of Justice and the SEC related to last summer's outage. You might remember that took down

pretty much every PC around the world here. And they're saying this is related to what they call the company's recognition of revenue and reporting of ARR, that's annual recurring revenue, for transactions with certain customers. They also say they expect to incur significant legal expenses as they go through this. Keep in mind, they're also going through that legal battle with Delta and maybe some other partners as well. We don't see shares moving too much on this. The move that you're seeing right now in CrossFact shares, that's all.

about yesterday's earnings. Shares barely budging on this notice. But again, that big fallout from last summer's outage, Scott. Yeah, I appreciate that, Steve. Thank you. Also glad that Steve reminded us the stock was under pressure already long before this news hit the tape. Mike Santoli is here, our senior markets commentator for his midday word.

What do you make of the action today? Running into a little bit of a headwind on the softer economic data. It's sort of just challenging the market's ability to look through it. I guess it's hard to say exactly when you kind of have picked the bone clean in terms of big investors feeling like they need to re-risk this sort of positioning squeeze that's been going on. That's been able to happen recently.

largely because you have had more reassurance that the consumer is okay. And, you know, even Jolt's data yesterday was fine. So it wouldn't overreact to the ADP and the ISM numbers today. ISM still kind of fits into the soft rather than hard data category. But I think that's where the market is. And sort of up here, a few more things have to go right. It can't just be

we're kind of working off the negativity of that shock. - It's interesting to watch the grind of the bond market. One moment concerned about the deficit, the next moment concerned about growth.

I guess that's the perpetual pendulum in the bond market. My take has always been it hasn't been as concerned about the deficit as maybe people had made it out to be with the longer end yields going up as much as they have. But this definitely shows you're going to get traction if the cyclical headwinds pick up or if the perception that they are. Also, with the jobs number coming on Friday, I do think it's like how negative do you want to be on bonds going into what could be an unpredictable print? Yeah. And how much...

cred the market gives to that number based on what was happening over the last 30 days in the month of May. Right. So we've been feeding off of this period where the data were de-risked because, you know, it's either it's before tariffs or it's pulled forward or it's in limbo and it's not yet affected by what's going to happen policy wise. So, yes, it is true. I don't know that they're going to overreact to one month.

But again, after we've had this nice run, you know, we almost get back to the highs. And, you know, it sort of has to give you a little bit of an excuse to back off a little bit. But really, this is nothing. I mean, the market has really kind of won back the benefit of the doubt, especially the momentum and mega caps side of it. All right, good stuff. I'll see you on Closing Bell. It's Mike Santoli coming up. Calls of the day, including a very bullish call on a stock that's already trading at all-time highs. We'll debate it next.

Welcome back. Our friends at Golf Channel are up north this week for the second oldest non-major event on the PGA Tour. The RBC Canadian Open gets underway tomorrow. NBC sports reporter Kira Kay Dixon joins us live from Ontario with what to expect this week. Hi, Kira.

Hi, Scott. Yes, as you mentioned, there's plenty of history here at the RBC Canadian Open. Been played on the PGA Tour since 1904. And TPC Toronto at Osprey Valley is playing host for the very first time. We've got 21 Canadians in the field, but we also have the Masters champion in the field, Rory McIlroy, making his first start since a tied for 47th finish at the

PGA Championship. Now, if you remember, he did run into some challenges that week, both on and off the golf course. He elected ultimately not to speak with the media. He also had some challenges with his driver, but he's been spending the last couple of weeks getting back to baseline. Someone else

In the field is Robert McIntyre, the defending champion. Now, if you remember, last year he created one of the most heartwarming moments on the PGA Tour when he won for the very first time on the PGA Tour with none other than his dad, Dougie, on the bag at

the time Robert was going through some emotional things when it came to making the transition to the PGA Tour, figuring out life in America. And he said, you know what, dad, why don't you come over and caddy for me? Caddy for him. He did to the point of winning. I asked Robert if Dougie was going to be back on the bag this week. He said, no, absolutely not. That's far too stressful.

And something that is a little bit stressful coming up for all of the golfers is the U.S. Open next week at Oakmont. This is last chance saloon to get your preparations done for the third major championship of the year. Rory McIlroy was just there actually on Monday. He told me that it is going to be an absolutely brutal test. He thinks that even par is probably going to be a great score. But all you have to do if you're in the field is just practice some acceptance.

Well, he's won this event twice, in 19 and 22. And I did see that he met the media, or at least he spoke today, which normally, as you said, wouldn't necessarily be notable, other than for the fact that he didn't address the media at all following what happened at the PGA. And then, of course, he took a little bit of controversy, I suppose, for not playing Jack's event last week, the memorial. And

not telling mister Nicholas that he wasn't coming either which became its own talker in its own right here yes that's right well I spoke with worry about these two topics he told me when it came to the memorial tournament first of all that something that he decided on for his schedule earlier in the year that he was always going to miss the memorial tournament because he wanted to make sure to be able to play the travelers which is after the US Open if he had had the memorial tournament on his schedule that would have meant four weeks in a row and he said look

I'm not 25 anymore. I'm 36. I can't be playing four weeks in a row anymore. So that's why he decided to prioritize this week. A place that you mentioned is a two-time winner. He loves the RBC Canadian Open. Then he has the U.S. Open, then Travelers to follow up with that. When it came to the driver, yes, we didn't have an opportunity to hear from him about that at

the PGA Championship. And what he told me about that was that he didn't want to speak about anything negatively, that it was quite a negative situation. Also, he wasn't playing his best. So it all added up to him deciding to take a step away from the media that week. He also told me he was trying to

protect some folks. When that driver testing is conducted, those names usually are kept confidential. And his name was the only name that was leaked. He told me that that annoyed him. And ultimately, he decided to take time away from the media. And he did speak today on the topic and answered questions both for me, for Canadian Media Assembled, and for the press conference for the general media as well.

Yeah, he's a huge draw. A lot of eyeballs, obviously, are going to be on Rory this weekend. Kira, thanks so much. That's Kira K. Dixon up in Ontario for us. And we look forward to that coverage this weekend. Be sure to follow Golf Channel's coverage of the RBC Canadian Open beginning tomorrow, round one, 3 p.m. Eastern time, as we said, on Golf Channel. Up next, our calls of the day.

Calls of the day start with Spotify. Outperform at Bernstein, $825 is that price target. The stock's up 515% in three years. It is a new record high today. It's up 4%. Joe T owns that name.

It has been a clear winner as it relates to momentum and it has a lot of fundamental strength behind it. Monthly active users up to 678 million and tier supported about 423 of that. Have you owned this since the inception of the Jyoti? Bought it on Halloween. We're up 85% since then.

So you could argue that we missed a significant portion of that large advance. But one of the reasons why is the quality factor prevented us from owning it because you did not see consistent with what you saw on the momentum side, the technical side, a lot of the revenue growth and the balance sheet did not rather look as good as it does today. Are there stocks that...

you've owned since inception that are still in there, or did the rules just not last that long? No, I think we're down to maybe one stock. We might still have, I think we've had Amphenol since inception. Wow. Okay, Honeywell, the target to 265?

Buy at Citi, Surat. Well, this is in front of a breakup that's going to come and you're going to get three different businesses. So all three certain businesses are good businesses. You'll get more value just owning it once they're broken up. So it's a good call. Give me kind of where the situation is this time. Live Nation outperform 185 at Bernstein, Joe.

I don't feel as good about Live Nation as I do about Spotify. The note that Bernstein talked about here is that they mentioned superfans powering a group of stocks, entertainment stocks higher. Live Nation's kind of moving a little bit of sideways pattern. What about Mellius today turning more cautious on defense names? Jimmy owns Lockheed. The Jotis got Northrop Lockheed and General Dynamics, and Surratt's got Transdime. What do we think, Jimmy?

I think that, unfortunately, the world is a dangerous place and not getting any safer. And I think there's going to be demand, particularly with the change in stance from the U.S. versus Europe. There's going to be a lot of demand from Europe for defense products. They're not going to be able to supply them all internally. So companies like Lockheed Martin and the rest of the U.S. defense sector, I think, are going to benefit over the next several years. What's this stock up over the last year? Lockheed? Yeah. I mean, even the ITA.

Because I mean, I guess when people say, well, the world's a dangerous place, so it's good to own defense stocks. I mean, the world's always a dangerous place. So, well, OK, my opinion is it's getting a lot dangerous, but that's OK. Let's not have that debate.

I will say it's worth pointing out I bought Lockheed Martin in December of last year. It's relatively new. It went down to begin with. It's coming back. Now, it went down on those F-35 comments from Elon Musk. I don't know if everybody remembers them. I thought they were preposterous. I said so at the time, and I think the stock market is now catching up with that assessment. All right. We'll do finals next. All right. Adam Parker, Ed Yardeni, Abby Yoder, Keith Lerner. I'll see you at 3 o'clock on Closing Bell. We'll see what this market does in the final stretch. Bryn, what's your final trade?

Dell, one of my favorite GARP names, $10 billion buyback. Michael Dell, founder, owner. Great company to own long-term. Thank you. Sarat. Data Centers, Equinix is the company to play in that. I think you have so much secular demand here. Farmer Jim. Wabtec, just a solid industrial. And Joe. Guidewire proved itself today on a pullback. You definitely want to buy it. We're not pulling back today, 15%. Does it for us. I'll see you on the closing bell. The exchange begins right now.

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