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I'm Scott Wapner, and you're listening to CNBC's Halftime Report, the podcast, the most profitable hour of the trading day. We record this live weekdays at 12 Eastern. Listen in.
Thank you very much. Welcome to the Halftime Report. I am Courtney Reagan. And today for Scott Wapner, front and center this hour, the summer setup for stocks as we kick off a new trading month. The Investment Committee is standing by, of course, with their playbooks as always. So joining me for the hour today, we have Joe Terranova, Steve Weiss, Jim Laventhal and friend Talkington.
Let's get you a quick check on the market here on this first trading day of the month of June. Dow Jones Industrials are the laggard here on the session, down about four-tenths of a percent. S&P 500, though, just almost marginally negative here. And the Nasdaq Composite leading the way higher by two-tenths.
of a percent. And of course, over the weekend, just domination of tariff headlines and officials talking on different shows, trying to figure out where we are with China or where we aren't with China, I suppose. Jim, I want to start with you because I know you've been watching a lot of headlines in geopolitics, not just tariffs. It's got you a little concerned, despite the markets generally shaking it off right now. Yeah, I've said for some time, Courtney, by the way, welcome. Good to be here with you.
I've said for some time that trade policy uncertainty is the biggest thing facing the market. Well, this weekend geopolitics said, I'd like a word. And there's some things that happened this weekend that are pretty dramatic. The Ukraine strike on the Russian air bases is one hell of a blow.
And I think we gotta be careful here. Now, I'm not pushing the panic button. I don't want anybody watching to feel that the panic button is being pushed. What I am saying is this would be a good time for geopolitical hostilities to ratchet down, not further upwards. It's not just the Russians-Ukrainian strike. It's the comments that Peter Hegseth was making on Friday, that's the Secretary of Defense, regarding China imminently being prepared to do something about Taiwan. And then there's the ongoing intractable situation between Hamas and Israel.
And Israel getting more and more concerned that the U.S. is going to make a deal with Iran, that it's going to allow Iran to eventually get a bomb, which to Israel is unacceptable. So there's a lot of geopolitical hostilities here that we would like to see ratcheted down. There is maybe, maybe, Courtney, going to be a talk between Presidents Xi and Trump. That would be a step in the right direction. I'd like to look for that.
in the meantime it is still trade policy uncertainty i don't want to lose sight of that we've got one month more or less until the pause on reciprocal tariffs goes away we need to see some trade deals come through uh... before those by reciprocal tariffs come back in and force the markets trading pretty well though despite that straight news we've got a lot of resiliency three weeks ago coming off of the geneva trade and economic meeting between the chinese and the u_s_
market gapped up higher from 5691 to somewhere around 5767. Since then, we've been in a range, 5830 to 5968. That's what we're doing. We continue to see stocks making 52-week highs. You look at the S&P 500, I think there's 15 of them today making a new 52-week high. 52-week lows, only four today. So you have momentum right now as a very strong factor. And what's interesting about it
is it's not in the normal places. We're not sitting here talking about, oh, Apple
Apple's making a new 52-week high, or Alphabet's making a new 52-week high. It's names that we really haven't spoken much about over the last several years. It's names like Zscaler and Spotify and Palantir and Netflix and Rollins and CME and Chewy and Hood and Howmet. These are the stocks that are moving the markets higher. You have equal weighting working once again.
And logically, you say to yourself, OK, we've had a remarkable run from the April lows. So it makes sense that the market now would maybe moderate those gains and correct at some point.
I wouldn't be surprised to see that. But you have to have the market dictate to you that that's actually what's going to unfold. And I just don't see that in the near term. Yeah, there's so many cross currents going on right now, Weiss. And it does seem like we were reactive to tariff headlines in March, April, maybe less so in May because the S&P 500, Nasdaq both coming off their best month since November of 2023. The leadership is changing.
What's your playbook right now to manage the cross currents? Yeah, so we had a great month. Then we just barely in the S&P, not so in the others, covered the losses that we had. So you can't look at one data point and say the market's been great. It actually hasn't. It's bounced back significantly since the lows. In terms of, I agree with everything Jim said.
I mean, you've got heightened issues across the globe. I don't know if you mentioned Poland or not, but that's another one to throw in there. Because we don't know what happens now with Poland and Ukraine, Poland and Russia, right?
Poland, in my mind, they'd be insane to not support the war in Ukraine. And in fact, the person who won the presidential election has historically been supportive of it, but now there's a question. Because they're next, right? They're on the board of Ukraine.
Look, you know, we're sort of immune to the tariff noise at this point because of taco, right? Because it always comes back and everybody's not getting work. Nobody's really getting worked up about the 50%. It's positive for Cleveland Cliffs if it happens, but
Who knows, tomorrow it could be 10% or it could be us paying them to export here. So you just don't know. But what you do know is that the market has done well, it has momentum. The places to be that I think are defensive, can you be, where most of my portfolio is, is in big cap tech. It's not in Apple though because of their unique China issues. But I still think that that's the most defensive place to be.
Healthcare typically defensive. It had the worst month last month, right? So all bets are off there. Every part of healthcare is up for grabs this month. - A lot of that though is because of UNH and Eli Lilly. That's 20% of the healthcare sector. - It's also up about Medicaid.
I'm saying when you look at the performance of health care. Yes, agreed, agreed. But I'm just saying that it's not a safe place to be. It's an interesting position that you're taking because Roth Capital thinks tech's losing momentum. The new money is focusing on defensive. J.P. Morgan thinks there's going to be a leadership change. They're not all in on the Magnificent Seven. Right. And I'm not all in on them, as I said. Not Apple. Not Apple.
Okay. Google, I think, is actually okay here. But to me, it's meta. To me, it's Netflix, which is not part of Max 7. So that's where there's a leadership change. But to me, they've got defensible moats. They could be taxed 10%, you know, as talk is around the world. We're just...
tax these tech companies 10%. Bottom line is, that's where you want to be. As far as the rest of the market, it's just way, way too tough. And anybody who can be sanguine about this market going forward, when you've got valuation levels that are where they were a year ago, where you didn't have a lot of this nonsense, you can't tell me why, reasonably, that the market should be valued.
But keep in mind the course of people saying that we were overvalued then due for a correction. Now that's on steroids. So just throw a number out there. If you're putting all the things that Jim talked about, some things I've talked about, some things Joe mentioned into the market, to me, maybe the multiple is 26 times. You're seeing a record cut in earnings estimates. And I'm just throwing it out there to make a statement, not to say it's the actual multiple. So look, I'm not adding here unless you get phenomenal opportunities in certain names
I just think that you want to wait and see. Jim, jump in before we grab Brett. There's one saving grace here which has to be acknowledged, which is the strength of the labor market. Because I understand, Steve, and unfortunately agree with a great deal of what you have kind of, for lack of a better word, your negativity. Right, yeah.
Right. I mean, whatever word we want to use. But what has not happened so far, and this is really important, is that companies have not been laying people off. Let me be a little more specific on that. Small businesses are having a hard time. If you read the Fed Beige Book, small businesses, particularly in manufacturing, are laboring.
uh... to maintain profitability in light of higher costs of raw goods because the tariffs but large companies are not laying people off we're gonna have an important tell on this on friday but so far the initial weekly jobless claims are hanging in there this is important because it's allowing g_d_p_ to continue to expand now the atlanta fed g_d_p_ has a lot of net export net import noise in it but still uh... consumption is growing that's the biggest part of the economy and until we see initial weekly jobless claims
start to spike, then it looks like we can get through all of what's happening. And that's not part of my thesis, by the way. And it is cautious, and there is a big difference between negative and cautious. And that's because the cost to recruit, to rehire, they went through that in the pandemic. They don't want to go through it again. So that's going to be the last to go. Cap spending, CapEx, which is a big part of GDP also, is the
burst to go. And we're seeing that already. If you talk to CEOs, they're frozen. I mean, Brent, it's very, it's very interesting. Eddie Ordeni sort of makes this point in saying the economy remarkably resilient, really, despite sort of everything that's happening with Trump's policy or potential policy that we're hearing from. I am, though, to the point that's being made on the desk, starting to worry about jobs. Obviously, you all know that I
cover retail as a reporter for the network. And so I'm really thinking about how they're going to manage the costs. And look, if a cost goes up here, one way to lower costs somewhere else is to cut some of your labor pool. What are your thoughts generally on where we're starting the month of May when we're trying to balance all, month of June rather, as we're starting to trying to balance all of this?
Well, May was the best year for the S&P in 35 years. And obviously, April is probably one of the worst. So they do balance each other out, as Steve said. I think as it relates to retail, we have to be careful. As you see, Abercrombie had great numbers, yet Macy's is closing 150 stores. So I think retail has its own retail issues and is not a broad depiction of the jobs market writ large.
I think the jobs market's gonna remain strong. It's gonna remain strong and we're a consumption economy, we're a service economy, and so we have so much resilience. And really there hasn't been much change. We keep talking about all these tariffs, et cetera, but really we haven't seen a lot of implementation
I think as it relates to like how do you play this market, we're in this let's say 5750 on the low, 6000 on the high. We couldn't punch through that and so now we're in this middle ground. I think what's interesting though is you have certain stocks and sectors are below their 200 day moving average, like an Apple, a Google,
Joe's point on health care, you've got energy. And so I think you need to be mindful of those sectors and security sales forces below the 200 day of being mindful of that ceiling versus if we get a little pullback, you have technology, you have
the financials, you know, you've got so many stocks above that 200-day. And so from a buy the dip mentality, I think you want to stick with those stocks that have punched through that 200-day and buy the dip if you see them come down and still like fade those names that are underneath the 200-day because I think that's going to continue for the summer at least. We've been talking about cautiousness or negativity, Brendan.
JP Morgan's Jamie Dimon, of course, made some comments on Friday with our Morgan Brennan, and he's worried about cracks in the bond market, basically saying it's going to happen. And when it's happening, when it happens, you're going to panic. That's what he says he's telling the regulators. I mean, we listen when this man speaks, right? I mean, what do you make of this commentary? We focus obviously so much on equities, but the bond market has really dictated a lot of what's playing out sort of writ large in the economy.
Yeah, well, I think he probably echoes what Rand Paul, Ron Johnson, also believed. And so he did say six months or six years, and I do think we're all concerned about, from both sides, this unregulated spending and the lack of cuts, because growth
If we get GDP growth at 3%, that's great, but it's a big if. And so I do think as Congress is coming back today to talk about this bill, you're gonna have, once again, Rand Paul, Ron Johnson, four other senators on the Republican side all pushing back saying, "Hold on a minute." And so I think that's gonna start taking front stage.
And that I believe that they're going to like Jamie Dimon continue to have that narrative, that drumbeat of we have to have some semblance of fiscal responsibility because a 3% GDP is a maybe not a certainty.
There's two things that you have to concern yourself when you're thinking about asset allocation and what sectors you want to go into for a portfolio. First of all, the market still wants growth. I'm talking about there being dispersion where an equal-weighted strategy can actually work, but that's not to say that the value names are working so far here today. S&P value is down.
the market wants growth and it wants growth in sectors like industrials like financials utilities are leading sector year to date in an environment where yields are actually moving higher why is that because there are some utilities that are experiencing growth
from the data center demand as it relates to ai itself so i don't think you trade down i don't think you look at an equity size class like small caps i think you stay high up mid caps large caps and if you find a company that's able to deliver growth in this environment where it's clear to me the biggest challenge i don't know if you guys
agree or brinif agrees with this but i don't think we're the concern really should be so much about inflation in front of us i think it's growth i think growth is the biggest concern and let's remember something earnings were good and as you look forward you say to yourself okay what's the margin compression
ultimately going to be if, in fact, my concern is about growth and economic conditions deteriorate further. Which, Joe, it all leads back to trade policy uncertainty. I agree with you, but we're not enjoying the benefits of what is a lowering inflation environment. The Fed can't cut until it sees the impact of tariffs. Said it won't, okay? And right now it's projecting or the markets are projecting that September is the first cut. That's if we get all this tariff worked out.
You know, the Fed needs to see what the tariff levels are. And it's for this reason this month, the month of June, is critical to get these trade deals in place. Steve, I can kind of hear you. Forgive me. I'm putting words in your mouth, but I'm pretty sure I'm accurate. You're going to say these trade deals are a bunch of hooey and I'm going to agree with you. But nonetheless, get it done with. Move on. That's what we need to do. But I'm not even I'm not.
I'm not suggesting that I need the Federal Reserve to save profitability and earnings. And I also think, you know, put the nonsense as it relates to...
tariffs and the mercurial nature of the way this is being implemented off to the side for a second, because there are companies that have the ability to still grow in that very uncertain environment. That's what I'm speaking towards, trying to identify what those companies are. I don't think it's universally where you say to yourself, oh, the entire S&P 500 is going to be challenged because this is such a mercurial process. But Joe, you've got a restrictive, I'll make this really quick. You've got a restrictive Fed interest rate environment.
It's restrictive. It's factually restrictive. And your point is well made. I'm just adding that if you want the rest of the market, like value, small caps, everything else, to start to participate, you're going to need some Fed rate cuts. And you're going to need growth. Let me get in here. First of all,
I don't think it's a bunch of hooey. I actually think that the trade discussions are incredibly important because that's what's chilling the CapEx market. It's irresponsible for a CEO to make an investment because he thinks it's going to be another taco trade. How do you allocate billions of dollars based on that? You can't, right? And...
In terms of inflation, it actually does matter, as we've heard what the Fed has said, and inflation bleeds into the other things, the other parts of the market. So, including retail, like who's passing on the cost? The auto stocks again today, back and forth, back and forth. Why do you think we're not seeing it just yet?
Because I think there's, you have said this many times, the market goes up 80, 90% of the time. So we're not seeing it in the market. We are seeing it. I mean, the inflation. Why do you think we're not seeing the consequence of this? Well, I don't know why it's not coming through, but I can tell you that.
I know a couple of people in this business, there are a few firms that do it, and they've got to write bonds based upon what the projected duty will be. And those bond costs, for example, on retail goods, on steel, on others have gone up tenfold. That money will come from somewhere. So it's only a moment of time.
that you're not seeing it. Some companies have said, let's just keep business as usual and then we'll decide what happens. But I wouldn't be lulled into this false sense of security that it's not going to matter. Of course, it's going to matter. And investing, as you all know, is composed of not what's happening today, but what's the future going to be. So I'd say to put roughly
75% of what the future's going to be and 25 to 10% of what the history was, such as the pedigree of the company. So we don't know what the future is. Anybody says they do, even from the administration, is absolutely wrong.
of their mind so how do you deploy capital again going back to my central question anybody's bullish should be able to answer this question why are you investing at the current multiple in the market when it was deemed to be overvalued last year by a lot of investors at the end of the year looking to their end of 25 26 starts justify it when you've got so many more issues here apart from the administration the uncertainty and apart from geopolitical issues globally which impact that
So if anybody, I'm throwing that out to anybody, anybody want to answer it, answer it. Let me respond by saying different people are looking at different things. And you could look at the market right now and find things that will give you the confidence to be bullish. Like you have DAI, which is idiosyncratic risk to this market. So in the near term, you could find things where you get confidence to be bullish and stay bullish for a little bit. Right. But...
you know, the best investors change their mind. The best traders change their mind when conditions ultimately change. That's what this business is all about. But for me, what I see in front of me right now is that momentum is powering the market higher. And that's probably...
probably troublesome to a lot of people who are watching the show who are in the financial services industry because they do a lot of real fundamental analysis. And if you do the fundamental analysis, there's challenges in front of you. But let's not forget momentum right now is a powerful force and it's taking us higher. And I respect your view. And I'm pretty certain and I'm not disagreeing with you that you probably think the lows for the year are not in. And that I have no idea. And that, in fact, that, in fact, you might revisit them.
Yeah, we'll find out. Brent, here we are sitting at the halfway point, right? June 2nd. Tom Lee, of course, we know he's very bullish, but he still calls this the most hated rally. He's looking at the S&P 500 to reach 6,600 by year end. We're just above 5,900. What do you think? That's a step too far?
Well, June 1st and December 31st, there's a lot of space between those two. So we'll see. I think it really depends. I think it depends what happens with bonds. I think it depends what's happened with these trade deals. If you go back to 2018, well, first of all, I think the lows are in. I think that April, was it April 2nd, surprise, that was an exogenous event.
that it made no sense. Those numbers made no sense. Everyone was like, what is he talking about? And so I think that exogenous event will not repeat itself. And so for that reason, I think the lows are in. I think that like 2018, we had lots of volatility with multiple 5% to 15% drawdowns.
And so I do think that later on in the year, there's definitely bandwidth for the Fed to cut rates because once again, to Jim's point, we are very restrictive and the Fed doesn't need to go into a 1% rate cut. It's like 2550. You can start bringing down that level. And so I just think there's a lot of variables that if we hit that 6600, you're going to have seen a lot of things go into place. I do think the one area...
that I would say where tariffs are negative, we really need to start hearing more about the deregulatory nature that the president and Besson, et cetera, are going to implement in the economy. We hear a lot about it, but from the people I talk to in utilities and infrastructure, everything is still very, to Jamie's point, blue-taped, and nothing really has been pushed through. So to me, that's going to be another piece of growth, but it has not even remotely started to happen yet.
Sure, that could sort of remove some handcuffs, definitely, on part of that. I mean, we've talked a little bit about
about tech and whether or not we think that that's going to lead the way. But if we drill down a little bit further, we've got Broadcom that's going to be reporting on Thursday and the SMH Semi ZTF actually coming off the best month since February of 2024. I know there's Broadcom in the in the JOTI. What are you thinking about ahead of this? Can the semi trade continue right now? I think it's a mean reversion trade. OK, I'm skeptical somewhat about it because there's been
a significant outperformance from software over semis over the last year. We've seen now a narrowing in that outperformance where semis are actually beginning to work. I think certainly I was a little disappointed in the response from NVIDIA after earnings. Not much follow through. We'll see how it trades in the coming weeks. Broadcom is close to a 52 week high. I think it's important for the company really to go out and to
underscore the diversified model that they have. It's not just about AI for this company. They've done such a remarkable job. They did an acquisition in 2022 for VMware. That's now a creative that's working very well. They've got a $10 billion buyback plan that's in place. Let's see what they do with that in the fourth quarter as we look towards next year. So I think right now for semis and our exposure is isolated to basically two names. It's NVIDIA and
and it's Broadcom and what the strategy has been doing is actually been moving away from a lot of the semiconductor names. So that's why I'm greeting this mean reversion recovery rebound with a degree of skepticism. We'll see on the other side of Broadcom, we'll see as we navigate through the third quarter if in fact we're able to see semi-equipment names like KLA Corp, Lam Research, Applied Materials continue the rally.
And at that point, we'd build more confidence to reestablish positions. Joe, I think I like Taiwan semis. Do I get Goldman upgraded in Asia today? Okay. Or put in their conviction list in Asia to have a buy on it? Now, you have to own the risk of China here. Right. But with Vance coming out and saying that, hey, we're going to defend them, don't try anything, adopting a saying from...
from the Shiites saying, "You will regret it. This will be like the mother of all, and it should be." So I think that's very necessary to come to the defense, which they had not before. Trump before had said, "You know, maybe we don't care." So it's critical. It's one of the cheapest semis out there. It's got some of the fastest growth out there. And they are always capacity constrained. So, plus they're putting up plants here. So I still love it still in my top positions.
But you have to have a strong stock. I don't know if Bryn's... I don't know, real quick, I don't know if Bryn still has Roblox, but on the software side, you've got Palantir. Great job with that trade, Bryn. You have Palantir, you have Snowflake making 52-week highs, and obviously I've mentioned Roblox. So
uh... i don't want to make the inference that softwares breaking down entirely because there are software names that are still working sergeant that's good that's okay but there is still an overhang incentives just going back to send out a spectacle yeah bomb you talk about the invidia price action i'm gonna draw an incomplete analogy which is a couple weeks ago i was on the cisco earnings call i'll tell you
The earnings were a blowout, the guidance was a blowout. When you listen to analyst questions, we all know this, if you listen to analyst questions on a conference call, you get the zeitgeist. And the zeitgeist from Cisco applies to Nvidia, it applies to the whole semiconductor space, which is this, that analyst community thinks there's a finite end to all of the AI trade. We don't know when it is. Cisco, by the way, it was very clear, it's years out there. The analysts were like, ah,
we're not quite so sure. DeepSeek definitely put that question out there about how long the spending will go on. And unfortunately, the only way to answer that question is the elapse of time. You got to get a few more quarters of all the hyperscalers saying we're spending this much, stop worrying about it. A few more quarters of NVIDIA blowing it out of Cisco saying, what are you guys worried about? You can only solve that with time. Well, if you're right on that thesis, go sell utilities because utilities believe the AI thesis is real. And
In case it wasn't clear, so do I. It was mentioned earlier, and I want to circle back before we lose that train of thought, Weiss, Netflix. It's an area that you've been paring back, but it's actually done very well. So you're just taking some profits there. What's your main thesis? I don't want to lose track of that thread.
Excuse me. I wouldn't say I've been, you know, paring back generally. In fact, I haven't. Netflix was my largest position. OK. It's still right up there as one of my largest positions, but just from portfolio management. I tend to run large positions. Jimmy runs a concentrated book about 20 stocks. 25. 25. I'm less than half of that. So when it gets to such a level that...
It's just, again, irresponsible to keep it at such a level. I see nothing wrong with the company. As a matter of fact, I think they've got some of the best growth prospects out there. So it's just a question of portfolio management rather than opining on the fundamentals. Okay, got it. Well, we're going to wrap that up here for a moment. Coming up, though, we've got our call of the day. It's a downgrade for one group of stocks that just broke a three-month losing streak. We will see where the committee stands on that. Next, Halftime is back in two minutes. Stick with us.
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We'll get back to halftime. It is now time for our call of the day. Oppenheimer downgrading bank stocks to market weight from overweight. Joe, you own several banks in the JOTI. You also personally own some names. What do you make of this call? I agree with the call. OK. And a lot of the momentum in regional banks, banks rather, is breaking down significantly. We own Fifth Third. We own Regents. We own Citizens. We own M&T.
It's Cincinnati, Cincinnati Financial. I'm sure you know that one well. I do, OH. Momentum is breaking down. And I think one of the reasons why is speaks directly to my comments before. I think the biggest challenge economically in front of us relates to
to growth, not so much inflation. And if you're going to see the contraction in growth, it's going to be a difficult environment for regionals. One name that does stand out that we own is Bank of New York that seems to be trading well. Even PNC, which is a super regional, is really struggling as of late. So
We're seeing the narrowing. We're seeing concentrated performance. It's really isolated to your JP Morgans, your Goldman Sachs, your Bank of New York and beyond there. There is a significant deterioration in that momentum. And I think a lot of it is predicated on the concerns of, OK, have these companies reached their peak in terms of profitability and margin expansion? You don't think it's caused anything to do with...
more risks to the financial bank, the regionals, like we saw two years ago. They're short up, they're stronger. I don't think we're in a place where you have that systemic risk. But yes, you could say to yourself, you know, we're going back and we're analyzing your assets to your liabilities. And when you're seeing the long end of the curve staying uncomfortably high,
certainly that creates a difficult environment for a lot of those regional banks. Jim, they're reiterating J.P. Morgan is the top banking idea and you own that one. Yeah, well, I think that's just a sort of tautology to say that J.P. Morgan is the best in the industry. If you don't mind, I'm going to move on from that because it's just so obvious. And I would say I was caught a little bit surprised, Joe, by your pessimism, but I understand it sounds like you're localizing that to the regional banks, to which I would say not to you, but to everybody like I.
I don't even know why I own the regional banks right now. There's such opportunity in the big money center banks that why take the added risk of being in smaller companies that have more monoline businesses to begin with? And I think there's plenty of big banks. You mentioned Goldman Sachs, Morgan Stanley. Citigroup is one that I own. And I just don't share this pessimism when you, as I was saying earlier, have a
labor market that's strong, which should help delinquencies. Capital markets, Steve, your point is well made, but hopefully this tariff stuff does eventually get worked out and companies can make decisions that will enhance capex and lending. And the capital markets itself, in the meantime, you do have volatile markets, which are helping trading. So I see a lot to like, including valuations in a lot of these larger banks. Before we end the conversation, Brent, I want to
I mentioned to you, of course, that Visa has been initiated by $400 price target at Truist. I know this is one that you own, obviously not a bank, but still in the financial groupings. What do you make of that $400 price target?
I think it's solid. Visa has basically no capex, very high margins. They basically have a moat. They have a global presence. And so this is a company that just like consistently quarter after quarter after quarter delivers. There's not a lot of surprises on the downside. So I think like at Costco, which is in a totally different sector, the valuation, people look at the PE and say, well, that looks expensive. But because the consistency, the durability, and the margins of this company,
I think it will continue to trade at a well above market multiple for all the right reasons. Jim, you've got Visa too. MasterCard also initiated buy with $640 target also. These two companies just keep hanging in there and outperforming as stocks. They will continue to do so until and unless, Courtney, we have a recession, which just doesn't appear in the immediate horizon.
Let's get the headlines with Christina Partsinellas. Hi, Christina. Hi, Courtney. Well, a massive eruption today at Mount Etna in Sicily forced tourists to flee the volcano as ash and rock filled the sky. According to scientists monitoring the volcano, it's the biggest eruption since 2014. At this point, no injuries have been reported.
Neurotech startup Paradronics announced today it has implanted its brain-computer interface into a person for the first time. The competitor to Elon Musk's Neuralink says once regulators approve it, the company will begin a clinical trial later this year to study the system's technology and long-term safety.
And speaking of Musk, the Financial Times reports his AI company, XAI, which is a competitor to Sam Altman's OpenAI, is launching a $300 million share sales that would value the company at $113 billion. The tender offer expected to be followed by another investment round where the company will offer equity to outside investors. Not bad. Not bad. Courtney?
That face-off continues. Well, straight ahead, today's ETF Edge. Dominique Chu is standing by with the man behind the iBit ETF as Bitcoin becomes, or comes, I should say, off a record-setting month. Stay with us. We'll be right back.
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We are back on halftime. We're going to send it over to Dominic Chu with today's ETF Edge. Dom, take it away. All right. Thank you very much, Courtney. So as we kick off a new trading month, can two of the biggest ETF themes from last month, which is AI and then Bitcoin, continue to hold up amid general market pressures? Joining me now is Jay Jacobs, the U.S. head of equity ETFs at BlackRock, the world's biggest asset manager. Jay, this is an important discussion because ETFs have become so hyper-specialized.
But AI is one that a lot of investors still have a lot more interest in. What exactly can they do to gain AI specific exposure?
Well, I think a lot of investors see the opportunity in artificial intelligence. I mean, this is one of the biggest technological revolutions since either the internet or the industrial revolution. But the challenge investors face is just allocating to big, broad exposures like the tech sector or core indexes is only giving you a narrow slice of the pie. So allocating to a fund like BAI, which has brought in over a billion and a half dollars this year, it's an actively managed ETF where our portfolio manager, Tony Kim, is picking stocks.
that are leading in artificial intelligence across the value chain from large language model developers to data owners to data centers and semiconductors, really providing that value chain exposure to artificial intelligence. All right. So, Jay, that's a hyper specific way of playing AI specifically. And then, of course, there are all the offerings out there with regard to gaining exposure for specific
cryptocurrencies, especially Bitcoin. You manage one of the bigger ones, one of the bigger funds out there. Other providers also have, you know, Bitcoin related ETFs. Just how important is this model becoming for for for advisors to maybe allocate towards cryptocurrencies?
Well, we're seeing a lot of advisors have started that educational journey around what is Bitcoin and what is the role that it could play in portfolios. And I think what's really spurred this along is two things. One is their clients are asking them about Bitcoin, particularly millennial clients who have been digital asset native. And then secondly, in this environment where you have more global uncertainty, there's more interest in assets that behave differently from traditional assets like gold and like Bitcoin that are a bit more of diversifiers in a portfolio.
All right. So there's a lot more coming up on the show later on today with regard to AI and Bitcoin and then some of the momentum ETFs that are out there as well. Just head over to ETFedge.cnbc.com. Jay is going to be joined by Nathan Jirasi, the president of the ETF store, to have a bigger discussion about just how important specific and more general ETFs are in a portfolio. Courtney, I'll send things back over to you guys.
Realty VTF certainly has blown up and changed along the way. Thank you, Dom. Well, coming up, more of the day's biggest movers, including the pop in oil. Now the committee is navigating the energy trade. That's next on Halftime.
Welcome back. Energy is the leading sector today, higher by about 1%. Oil higher on news that OPEC Plus will continue increasing output at its current rate. Brent, you own several names in the space here. I know Quatera Energy is leading the way here today, up 3.5%. EQT also up more than 3%. But you've got Energy Transfer, Diamondback, Viper Energy. Where do you want to go with this? I mean, obviously, you've made some really good plays there. You know the space. You're in Texas. Tell us what you make about the moves in energy here today and the short-term future, at least.
Yeah, well, the vast majority of my holdings have distribution yields between, let's say, 7% to 9%, so definitely cash flowing. I think you also have one of the reasons that energy rallied today is because, as Jim walked through what happened over the weekend with Ukraine and Russia. I think how you play this, though, is unfortunately the whole sector is well below the 200-day. So if I look at XLE, I probably have 7% to 8% more upside, which would be nice.
But I do think that this is one of these sectors below the 200-day. On top of that, Trump wants low energy prices. That is a key component to inflation. And so I think between his relationship with the Saudis, wanting low energy prices, mind the technicals, you can play this up to the 200-day as a trade, but then I think you want to fade it after that.
Jim, you've got Chenier, Exxon, Transocean. You obviously were hot on the geopolitical sort of transcurrence here this morning. What do you think of this one? Well, Bryn said it. I definitely think that's why oil is up today. It's because of the geopolitical situation. OPEC is rapidly increasing output, and that should be a reason for oil prices to go down, as they have.
You know, I do think you can see a further recovery in oil here, but it has to come from oil demand. And again, this gets back to sorry to be beating a broken drum here, but you have to get the tariff situation under control so that not just the U.S. economy, but the global economy can grow. You need demand growth right now to get a sustained rally in oil.
Be careful thinking that the increase in supply from OPEC is going to continue to pressure oil lower. I think it's beginning. We used the word last week, desensitized. I think you're beginning to see that reflected in what OPEC is doing. On April 3rd, they shocked.
They shocked markets with 411,000 barrel per day increase for the month of May. They followed that through in June. They followed it through again here in July. Guess what? August, September, October, you're going to see another 411,000 barrels added per day. So I think ultimately that'll get them to their goal of 2.2 million. But I think at a certain point,
That gets priced in. And I also think when you look at right now positioning and energy, I think it's pretty light. In fact, I think CTAs are short. So if you are desensitized to that as the market, what do you change in your portfolio? Nothing? Just positioning? No, I think you're going to see a turn in energy over the coming quarter where you'll see rebuilding in terms of sentiment, which is bearish, and in terms of position, which right now I think is being carried at an underweight. So just to be clear here,
are you desensitized to the announcements or to the actual commodity? Because the announcements don't mean anything. Yeah, I think at this point, OPEC continuing to say, okay, we're going to keep raising, we're going to raise production, we're going to raise production. The market knows that. That's priced in. I don't think that's going to force the market lower. I think if the market is going to get forced lower in energy, it's going to be because growth is going to contract, global growth. Wasn't today's announcement because the cuts weren't as bad as feared?
versus uh the cuts were consistent with previous months it's it's basically the same amount that was cut last week they were talking about it much larger yeah they were talking about the possibility of increasing it but because they're they want to they want to make it very difficult they want to shut down production they want to show that they want to they want to do well i think they want to show other opec members that they're in control and i think i think the saudis are in control when you're looking at opec for sure joe real quickly before we run out of time here you got a couple
names on the move there in the JOTI. So Rollins getting an upgrade to buy from Holden Jeffries and Church and Dwight upgraded to outperform from sector perform at RBC. More excited about Rollins. Church and Dwight seeing a little bit of a bounce off the low. And that's more of a recent position that was established in the ETF.
The industrial sector is a very strong sector year to date. Rollins is participating, but there's other names as well. There's Cintas, there's Axon, there's Uber, there's Halmet, Fastenal, Trane, Heiko. These are all industrial companies that we really haven't spoken much about over the last several years. But guess what? They have the profit margin expansion and the earnings growth and a premium is being paid for their share price now as a result. And that's why the industrial sector looks so good.
Got it. Well, coming up next, Mike Santoli. He's going to join us with his midday word. We're back right after this. We are back on Halftime. Senior Markets Commentator Mike Santoli joins us with his midday word. We were talking, Mike, obviously about the impact the tariffs and the discussion therein has on the markets. It seems like we were obviously very rattled after the April 2nd announcement, but maybe we've calmed down a little.
That being said, I don't know, this weekend kind of made us nervous with some other geopolitical tensions rising. What do you make of it? You can't get too far away from each little incremental test of that hypothesis that we've built up some calluses against the trade headlines.
That was, to a large degree, the story of May, though, is that the market just did not really allow itself to sell off heavily in a sustained way when you did get the tariff headlines and sort of trade frictions to the fore. Now, why is that possible? Well, it's because MAG7, to some degree, came to the rescue through earnings season. The earnings performance of the MAG7 has sort of plummeted.
provided a bit of support and we priced in some level of resolution in a favorable direction of the tariff situation. I think the market is thinking 10 to 15% blended net tariffs across the world somehow is absorbable. We'll see if that's true. But the other reason we've been able to handle it is the hard economic data have not buckled yet. Now the ISM number today, not good by any estimation. Um,
it's a matter of whether that becomes a snowball effect or if it's considered to be a one-off because of whipsaw from the tariffs. I think on Friday, the market wants a generally positive jobs number, should want a positive jobs number, as opposed to rooting for weakness, which maybe brings the Fed off the sidelines. It's a lot to consider. We still have a lot of time to go, but obviously starting off the month of June. Mike, thank you so much. Stay with us, though, everyone. Final trades are coming up next on Halftime.
We're back with the setup on CrowdStrike. It reports tomorrow after the bell. Joe, you own it in the Joe team.
Cyber is very strong right now, whether it is Checkpoint, Zscaler, Fortinet, Palo Alto, all of these names are working really well. Tomorrow night, if in fact CrowdStrike misses, I still think it's an opportunity that you buy the company because you're looking at the long-term vision for cyber, which I believe is a very strong one for this specific company, as well as the other names I mentioned. Brent, very quickly, you're nodding. I know that you own the cybersecurity ETF.
Investors have continuously been rewarded when they bought the dip in these names. So I agree with you. If it happens, definitely buy the dip. All right. We get to start off with you, Brennan. It's time for final trades. What do you got? Yeah, I saw I was talking about silver doing a catch up trade. It's breaking out and I think copper is going to join the party. So FCX for a breakout. OK, Jim, you're up next. Yep. In a lot of these trade deals, the low hanging fruit is LNG exports. And that's going to play very well to Chenier Energy.
Weiss? FTAI Aviation. It's just got, you know, it's a great story. It's done well since Lowe's. And, you know, I think it keeps going. Aviation is one bright spot. Joe, bring us home. I mentioned software before, and I got the approval to mention this name from Steve. We don't talk about Box often, but you want to buy Box here. Be a nice post-earnings rally. Buy it here around 30. Thank you all for joining us. That does it today for Halftime. The Exchange starts right now.
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