Deep Dive
Shownotes Transcript
Your best hotel in Bethesda has every guest raving. How do you make every hotel like your best hotel? Your best plant in Atlanta employs 4,500 people. How do you get 4,500 people working at peak efficiency? Your best data center in Redmond is optimized every drop of water. How do you make every data center the pinnacle of sustainability? The answer is Ecolab. Ecolab, bringing out the best in your business.
The U.S. and China are competing for global leadership. The country who wins will define the world we live in. U.S. international assistance is vital to our national security. It helps prevent terrorism and avoid costly wars. It fights diseases and saves lives. It helps keep America as the number one economy in the world. U.S. international assistance protects our interests at home and abroad. If America doesn't lead, China will.
I'm Scott Wapner, and you're listening to CNBC's Halftime Report, the podcast, the most profitable hour of the trading day. We record this live weekdays at 12 Eastern. Listen in.
All right, Sarah, thanks so much. Welcome to the Halftime Report. I'm Scott Wobner. Front and center this hour, the rebound in stocks. S&P looking for its first positive day in four. We'll discuss and debate these markets with the investment committee today. And joining me for the hour, Josh Brown, Jenny Harrington, Carrie Firestone and Jason Snipe. We will show you the markets here. Yep, we have a good day going. We are off the best levels.
Yields are up again today, something to keep an eye on. We had the worst sell-off in treasuries in some two years yesterday. Josh, let's just sort of set kind of the mood of where we are. Obviously, we're looking better. We're still really uncertain on where things are. We know that a lot of damage has already been done by the administration's handling of all this, the way it was all handled.
done to the markets, to portfolios, to the economy. Larry Fink says yesterday CEOs are telling him they think we're already in a recession. Goldman Sachs today says we're in a event-driven bear market triggered by the tariffs. A point you made before all of this mess in the market happened, that we were already in a bear market. Because if you looked at all these stocks, you had hundreds of stocks that were down more than 20%.
And, you know, it still doesn't feel like this market is on any level of solid ground by any stretch. Yeah. And what actually the end of that Goldman quote was that we're in an event driven bear market that could tip into a cyclical bear market, meaning something that's driven more by the economy than just the shock of what we're seeing on the tape. And that's what I'm worried about. So if I were talking to my friend, Caleb Silver, who runs Investopedia, I would say, Caleb,
put today's bounce into the entry of classic bear market bounce, because that's exactly what you have today. 29 of 30 Dow Jones stocks are advancing, 88% of the S&P 500, 94% of the FTSE 10 is up, 86% of the stocks, and 98% of the Nikkei. So it's around the world.
You've got this bear market bounce phenomenon, started overseas, continuing here. When you look at the level of technical damage done though, I think you have to conclude, hey, this was warranted. We need to exhale. We need to take a little bit of a breath. Not every day should we be down 1,500, 1,700 points in the Dow. But what happens after today? Does anything change? Because if we think we're going into a recession and
And if Larry Fink is saying the average CEO thinks there's a recession, well, here's what's to come. Number one, earnings season starts at the end of the week. And you know what you're going to hear? Maybe not from the banks, but everywhere else, pulling guidance. That's never good. I've never seen it be the bottom when they pull guidance. So that's the first thing. The second thing, and this is more important, everybody understands this. If it's a recession, earnings typically fall 20% to 30%.
That's not in anyone's estimates. Even with all of the fear of the last couple of days, that's not where estimates have come down to yet. Plus, multiples are 18. Multiple on the market is still 18, not 17, not 16, not 15. So I worry you're going to get the earnings guidance yanked, followed by weak earnings next quarter. Not catastrophic, but weak. Plus, you have multiple contraction. And none of this is over. It
It's continuing. It's going to be every single day. I had a beautiful call with this one. This one's not doing their job and not helping us. And it's just going to be this constant in the headlines. So that's where I think we are. And if you were hurting last week, if you hadn't done anything defensive or you looked at your portfolio and you were way too aggressive going into this,
This is the type of day that offers you an opportunity to make the necessary changes and you don't have to sell down 7% in the hole on whatever's killing you. So I think that that's the way rational investors should think about this and not anything more. Kerry, you know, Mike sent totally made the point last hour at the very end there that the burden of proof is still high on this market.
uh... that you know some are going to use this opportunity to josh's point to to sell right into it because you still have this level of uncertainty you have this escalated now war between trade war between the u_s_ and china china says it's gonna fight to the end the treasury secretary was on squat this morning talking about their escalation being a big mistake i thought you miss you made a great point earlier on this network that the leverage between the two countries cuts both ways
And look, the fact of the matter is that wrecking your own market and your own economy is an interesting negotiating strategy. If somehow you think you're going to get leverage out of that, Josh has talked about that too. That's just you are to the deal, Judge. In terms of social media. So what do we do with all this? The burden of proof is still on this market.
We have a low bar for upside surprise at this point because we've done so much damage. BlackRock today tactically downgrades U.S. stocks to neutral from overweight. Tactically, not way out long term, but in the near term because they're not naive to what the environment now looks like. Right. So they're worried. And let's be honest, strategists at Wall Street firms generally are late or wrong.
But I would say the following. A market is not homogenous. And we can talk about how this market has not hit a low, and I'm sure that's true. But we have problems.
thousands of stocks and some of those stocks have gone down 50%. They may have gone down more than 50%. I have a list. I won't hold it up. It's a big list of stocks that are down 30% that we've been watching. On your shopping list? Yeah, on the shopping list. And you don't feel confident enough like right now to go execute that? No, for some we do. And I know we'll talk about that. And I think it depends. It's not as if we're saying...
Oh, gosh, the market was down 20 percent, bear territory, but now we're going to buy? I mean, that's naive to think that this is the end. We don't have any ideas, Josh, that what is going to happen later today, never mind tomorrow. So let's be careful. But if there have been
Names that you've been watching and you feel this is a compelling company. This is the job that we do as professionals. This is something that we want to own. We're starting to buy some of those names. Let's do it right now. I was going to hold off for a minute, but because you're making this point so strongly, you bought more Amazon, for example. Yeah, correct. The mega caps have gotten obviously crushed.
even more so in all of this. Amazon's 28% off of its high. You do have some target cuts today, by the way, for Amazon and some of these other names. But tell me more about this. Yeah, well, so if tariffs are the big issue, and we understand that if you're selling multiple items, every single one of them is going to face a tariff. But for Amazon, they make their money by the dollar amount that they sell.
And that dollar amount may not change. It can continue to go up. It's a different mathematical strategy on how they earn their profits. And so 28% down. And we think that they will make the numbers. They will continue to gain market share. And yes, tariffs will hurt. Some of these are unsustainable or they will move the source of production. But this to us was an opportunity and the price at which we felt it was an attractive buy.
Josh, what do you think of that real quick? I like it. I bought some Amazon on Friday. I called in and told you guys, anytime that name is in a 30% drawdown and there's no real fundamental problem with what the company is doing and it's more of a macro issue, that's where I think you say to yourself, look, I don't need for this to be the absolute lowest price. I just need to feel confident that this is a good price. And regardless of how long it takes, I will be justified in having added to it.
it's a core position what I'm not doing is saying this is it I'm buying it markets gonna rally now what is it up today 900 points on Monday and I'm gonna get out that's not gonna be a different target to did get cut to 220 from 270 overweight still though J at I'm at JPM by stocks have come down a lot and and you know you gotta believe that at some point people gonna think enough is enough
at least tactically. 100%, 30% off the 52-week high, I think, is a significant number. To Josh's point, nothing's really wrong with the business. And the other thing I always focus on is AWS is the largest Kyle player in the business, and they have been accelerating growth over the last couple of quarters. So I continue to like that. And also, operational margins have continued to grow over the last few quarters. So I think there are
business is really in a solid place. Jenny, let me ask you this. Do we think that the growing number of influential
people within the investing world speaking out is going to have now a real and changing impact. Because, you know, we talked about so many of the people yesterday. You can add Ken Langone to the list as well. He called the number in terms of the percentage of import duties put on Vietnam BS.
I don't understand the formula, he said. I believe the president's been poorly advised by his advisers with this situation and the formula they're applying. Ray Dalio today at CNBC, I agree with the problem. I'm concerned about the solution. And now Ken Griffin speaking out as well. He pointed to the fact that you're going to see prices go up for all sorts of products
bad for the middle class. Even if, quote now, even if the dream of jobs coming back to America plays out, that's a 20-year dream. It's not 20 weeks. It's not two years. It is decades. And we'll get to the whole Musk-Navarro battle in a minute. But the idea that if you believe that these influential voices are actually having influence on the president and his team here, what that might mean for the market being more durable in terms of a comeback.
So I think the interesting thing here is influential for the president, magnifon for what everyone's saying and thinking, right? They're not influencing how investors think. They're not influencing how the American public thinks. They're speaking up on their behalf. And everyone's mad. And so the administration, and my guess is all the Republicans in Congress are listening to this.
And you know what's going to happen a year from now? We're going to be really getting close to midterms. And if we're in this same position in midterms, the Republicans will be hearing this and it'll be amplified even further. And they're going to say, hey, we are at risk of losing the House and the Senate. And they need to maintain that. So I think they need to get this ugly market, these horrible feelings that a lot of people are having. And I need to say, like, not everyone's having horrible feelings. I sent out a note to clients on Twitter.
on Friday about what was going on with the tariffs. And I've always told you, I have a very mixed client base from a political perspective. And a lot of people are like, yeah, this is horrible. And a lot of people are like, hey, I'm great with this. You know, short term pain for long term gain. So there is a mixed perspective out there. But if the market's still down 20%, if we're in a bear market, a cyclical bear market, a regular, a tactical bear market, whatever it is,
You don't win reelection as an incumbent when you're in a cyclical and when you're in a bear market. So sometime between now and this time next year, if the Republicans want to keep control of the House and Senate, the administration is going to need to clean this up and get the market to a lot higher. I think sooner. I think sooner because this is a really important point. Every day that passes, more and more damage is done. Well, more and more damage is done to, you know, retirement portfolios.
More and more damage is done to stocks and CEOs like Elon Musk get tired of looking at his stock get destroyed in the market because now you have this brawl, if you will, at least verbally, obviously, between Mr. Musk and Peter Navarro. The Washington Post, by the way, says that Musk made direct appeals to Trump over the weekend to reverse the sweeping tariffs.
Obviously, it's getting spicy. You probably have heard about it to this point, but let's remind you with some actual video and sound. Watch. We all understand in the White House and the American people understand that Elon's a car manufacturer, but he's not a car manufacturer. He's a car assembler.
That was on this network. And, you know, the response by Musk, he didn't take too kindly to that comment because he took to his social media platform, the one he owns called X, and he responded, I think we have these made up for you, where Musk says, Navarro, you can read it for yourself, Navarro, truly a moron. What he says here is demonstrably false. He went on to say that
Navarro is dumber than a sack of bricks. Just quoting from the posts and social media from Musk about Navarro. Look, I'm not known to come on here and constantly praise Elon Musk, but this is a man who has built a global business, a multinational business. A lot of people have had issues with how he did it, but suffice it to say, he made himself the wealthiest man in the world.
and he didn't inherit it, he built it. And to have somebody who effectively was plucked from obscurity because Jared Kushner did an Amazon search to find a China hawk economist, and...
say that this guy doesn't assemble cars or this guy doesn't know what he's talking about. I mean, it's almost obvious which side most business people would fall on if they had to agree with one side and be against the other. I think there's room to say that the longer the market turmoil goes on, the more of a rift there's going to be
between actual business people and theorists. And the actual business people will ultimately win out because it's their actions, the way they run their business, the way they pull back CapEx, the way they are forced to lay off employees. That's the side that will eventually
uh... get the attention of congress to to jenny's point and hopefully get the attention of the white house just might be a while at these things don't operate necessarily as quickly as we would like them to you know you you you're forcing companies obviously to make
critical decisions that just can't be made in a minute. You know, what ends up happens paralysis. That's the, so we're not, when I talk about, I'm worried about the earnings picture and I'm, and I'm telling you what I think is about to happen in this earning season is pulled guidance. Of course they should pull guidance. How could you possibly with a straight face, talk to 45 sell side analysts on a call and give them any idea of what's going to happen. Now you can do worst case, um,
uh... middle-of-the-road case best case maybe that's a helpful exercise but in the end like there is no possible way that you can have any kind of confidence in what the rest this year's gonna look like in let's call it nine out of eleven s_ and p_ sectors so i think that that's going to be the theme of discerning season and i do think this will ultimately get the attention of politicians because it's their constituents
who are working at these companies or who own small businesses that cater to these companies. And it's not theoretical. It's not a Twitter debate. This is literally affecting people's real lives. And it's going to get worse, not better, the longer that the rhetoric continues this way. You've got CEOs scrambling to figure out what to do.
in the months ahead when it comes to supply chains and the like. Apple, according to the Wall Street Journal, planning to source more iPhones from India as a tariff fix.
You know, Jason, Apple's lost nearly $640 billion in market cap. Now, this was before today. $640 billion in market cap over the past three days alone. That loss in and of itself is bigger than the market caps of 489 S&P 500 companies. 489 of 500 S&P 500s.
Yeah. No, it's been a bloodbath, obviously, with Apple. 90% of their assembly is done in China, right? So they're widely exposed to the tariff conversation and what's happening. They're 30% off the 52-week high, just like Amazon, down 26% year-to-date.
And then you hear the news today is obviously they're starting to move some of those iPhones here to the US, 200,000 plus phones. That's a microcosm of the type of business that they do. So for me, I start to look at, not necessarily the Trump put, but if he is able to wave a victory flag
on any level, these are the companies that benefit tremendously. And there's not a huge hurdle for them to jump over if there is some victory flag wave. So that's why I continue to stay market weight here. And I'm opportunistic on this stock. Yeah, reiterated underweight. Apple was today at KeyBank.
Goldman still has a buy on it, though they do cut the price target. Now, you've got a stock, Josh, trading at 184 thereabout. Now you've got price targets around 240 bucks. The ones that are even positive, like Goldman, which says buy it, but we're cutting the price target by $50. You've still got a long way up.
to 240 now this stock is going to get used just so in prior bear markets that aren't caused by uh trade tensions like this thing acts really defensively and it tends to act really well and unfortunately i don't think it can in this particular environment and i'm telling you this as a long as a shareholder and somebody who doesn't plan to abandon his position anytime soon um but i
I have to be very honest, I think they're gonna use this stock in the public markets as kind of like a call option on the degree to which the trade war is going poorly that day or well. It's a gambit.
between China and the United States. So every time there's negative rhetoric coming from China, this is gonna be one of the epicenter stocks. And it kind of reminds me of the casino names. The last time we had a tariff war with China,
the way that Wynn used to trade, and MGM and all these companies that had so much susceptibility to Chinese authorities. I think that's probably overstated in the case of Apple, but this is where they make their phones. This is where it's their second biggest market to sell into. And a really big difference now versus last time is
The Chinese phone manufacturers that Apple compete with were nowhere near as powerful as they are today. So it's a really tough situation. I went into this year saying, I don't think this is going to be one of the best performing names. And I'm sticking with that call. This is just not where I want to be in this moment. It's just too much headline risk. Pretty big moves today, Kerry, in the semis. Got Micron up. We mentioned the nice 4% bounce in NVIDIA.
You know, the semis, there is belief in some quarters that you're first in, so maybe you're coming first out. Remember, they were getting pretty beat up where software was doing okay. Now I wonder if you're having a little bit of a reversal where semis are coming out. I lead you right into another move that you made.
Applied materials, is that new or an addition? That's new. Okay, why this one? That's new. So we've been watching that for years. This is a name that many years ago we owned in my life at Fidelity, owned lots of AMAT and all of the other semi-cap equipment companies.
47% down, 50% down roughly. And it's selling for 15 times earnings. It was selling for 25 times earnings. And there's also a short squeeze going on with all of the semis and these cap equipment companies because they have been pounded and pounded for months now.
So they are primed to have a big reversal. But that's not why we bought it. We bought it because it hit our target. And not only are there semis in everything now which need equipment and AMAT, it has basically a monopoly and a lot of
the products that they sell. But if you think about data centers and how AI needs more chips and needs more production of chips, that also is a big positive for them. The president and CEO of Applied Materials just stepped in and bought almost $7 million worth of stock.
It's his first insider purchase in 10 years. - Can I say something on this too? So I think it's so interesting the way Kerry laid it out because we used to own AMAT a while ago too. We sold it when it was at a stretched valuation. As you know better than anyone, this thing's traded at 14, 15 times forever. Like that's the multiple. And when Kerry said before, the market's not homogenous. This is where you have to have that price target of where you'd buy well in advance. You can't in the moment say, oh, I need to start looking at AMAT.
that price target and you say, okay, the market's down 20% from its high, AMAT's down, I don't know, what was it, 50% or something? Then if you're poised and ready to go, when this crazy thing gets down back to its historic multiple, you're actually ready to buy it and you can pounce with confidence versus freezing in your tracks. I think the, I just want to point out too the- But we might buy it too, by the way. The market move today, 21 and a half minutes into our show is interesting. It just goes to the
Lack of power behind this move as strong as it looks on your screen. Remember, why don't you guys show an intraday of the either the S&P or the Dow, which will probably give a similar sort of look at how the session has played out.
Looks to me like we're almost at the lows of the session. I think it's the earnings thing, Judge. It's the earnings. And you know what? The Fed is in a really, really tough spot here. Austin Goolsbee from Chicago, the Fed president there, is speaking on public radio in which he has said that tariffs are a negative supply shock. The response is unclear, that the tariffs are way bigger than anticipated, really echoing what I think everybody understands.
at least outside of the White House, was expecting this to be. By the way, the timing, like, all right, so let's say you want to go against consensus, right? The reciprocal tariffs go on at midnight tonight.
So we wake up tomorrow in a new world, effectively. You want to go against consensus, you don't think they'll actually do it? You think they'll pull back at the last minute? You want to play chicken with Donald Trump? You know what? I kind of would play chicken. So you should do it. I grew up in a household. By Apple. Yeah, no. I mean, I did. Okay, I'll tell you what I did. On Monday, I put a ton of work...
money to work for portfolios where they'd come in, they were new and they were sitting on cash. And it is a little bit of a good idea. Yeah. What did you do? I just put the portfolio to work, right? So whenever clients come in, I tell them, look, it's going to take me three to six months to get invested. If the market's terrible, it'll be faster because I'll pounce on the prices when they're low. If the market's great, it'll be longer. But I grew up in a household where I was threatened constantly.
Like I breathed wrong and I was threatened. I would say... That explains so much. I know. Three brothers, wild and crazy dad. It explains a lot. But constant threats. Of those threats, I'm going to bet you less than 2% were ever made good on.
I go back. So you think there's a high probability that these tariffs, the reciprocal tariffs specifically, do not go on at midnight? I think there's a high probability that it's not quite as bad some way or another than we're all expecting right now. I go back, though, to where I started 23 and a half minutes ago, that to many people, the damage has already been done. Yes, and to the small businesses, not just portfolios, but the underperformers.
but the underlying businesses. - What was it? Well, I mean, we're talking like $10 trillion worth of value wiped out of this market since the beginning of the year. - The reverberations, we don't even fully understand
American brands selling anything overseas. We don't even fully understand, like, remember what Kid Rock was able to do to Bud Light last summer. It wasn't that long ago. We don't even know. So that's number one. Think of Disney. Think of Apple. Think of Nike. We have no idea. Maybe it goes away. That would be great.
uh... i'm certainly not rooting for them describing we also don't understand what the shock waves mean to the u_s_ treasury market beyond twenty four hours uh... saw some huge selling yesterday as i said uh... what what it what it is that the largest in uh... as you know uh... number of the artist that the dollar selling no idea what this is like it's it's it's almost like the the bomb went off and then like
We have no idea now what the second order, the third order affects. And maybe they're not as bad as some of the worst case scenarios. That's certainly what I would hope for. But how can we know? I think they're pretty bad. So we've got to keep a close eye on things. Obviously, the markets remain volatile. Nothing like what we witnessed yesterday with the massive swing, almost unprecedented move midday that we had there. Let's get to one more stock just because it's owned on the desk and it is in the news and it is on the move. It is UnitedHealth.
You have the Medicare payment rates exceeding expectations. So that stock, with the others in that space, have been up. Jason, you take it first. You have a full position. Kerry, you have a big position there, too. But what do you guys think? Jace first. Yeah, no, I think it's huge because I'm thinking about the reimbursement rates. We're expected to be 2 percent. And we've got 5 percent reimbursement rates. So that's significant. The earnings have been solid here. Obviously, it's been
It's positive on the year. You know, and I think this has been, I almost liken it to what happened with Social Security through COVID. You know, inflationary costs for medical costs are going up, and they're trying to right-size what the reimbursement rate should be. And I think this is a signal to the market that the administration is supporting managed care businesses.
Well, I would say that UNH went through its own ultra bear market last year. I mean, you haven't seen a stock collapse that's a defensive stock the way this, unless it's a real catastrophe. And it's been climbing back for the last few months. It's a stock that sells 14 times next year's earnings. The earnings are coming through. Now you've got an additional positive. So I think it's
It's just perfect storm on the upside for UNH today. All right, let's do this. Let's squeeze in a break if we could. We do have more committee moves to get to as well. We do have more trades on the banks as well. Earnings are coming up fast. We have a move in the financial space, too, to tell you about. Back in two.
The U.S. and China are competing for global leadership. The country who wins will define the world we live in. U.S. international assistance is vital to our national security. It helps prevent terrorism and avoid costly wars. It fights diseases and saves lives. It helps keep America as the number one economy in the world.
U.S. international assistance protects our interests at home and abroad. If America doesn't lead, China will.
What counts most to you? Maybe it's spending more time with the ones you love. Or maybe doing more of what you love to do. The key to being rich is knowing what counts. At Edward Jones, our dedicated financial advisors are people you can count on for financial strategies to help support what truly matters to you. Let's find your rich. Edward Jones, member SIPC.
As a salesperson, the search for the right buyer or buying groups can feel like you're endlessly sifting through leads and hoping they're ready to buy. Thankfully, LinkedIn Sales Navigator is more than just a tool. It's your strategic sales partner. LinkedIn Sales Navigator is a sales intelligence platform that helps professionals effectively prospect and engage high-value customers, drive higher revenue, and increase sales performance.
Sales Navigator helps you target the right buyers, surface key signals, such as job changes or which accounts you should prioritize, and shows you hidden allies so you can find those buyers that are most likely to convert. Whether you're looking for new clients or strengthening relationships of current accounts, LinkedIn Sales Navigator has new AI features designed to help sellers find the right people and get right to the right conversations.
all at scale. Fueled by LinkedIn's 1 billion member platform, Sales Navigator gives you the most up-to-date first-party data, enabling you to unlock conversations with the people that matter. Ready to get right to the right conversations? Try LinkedIn Sales Navigator now with a 60-day free trial at linkedin.com slash halftimerport. That's linkedin.com slash halftimerport for a 60-day free trial. Terms and conditions apply.
All right, we're back. Let's get another move. It's from Carrie. You bought American Express. Yeah, exactly. So American Express is a stock we've owned for a long time, and it's had a great run. And then it's weekend. And once the stock was down 20%, we started to think about where we would buy it again. It backed at 13.5 times next year's earnings, 15 times this year's earnings.
Of course, the business gets hurt if people stop spending, but they have high-end customers. That part of the market is not as susceptible to the type of regressive type price increases we're going to see with tariffs. And we think that people are going to continue to travel perhaps less, but
still at this price we discount a lot of negative news and decided to add to the position i mean you do have you know the market getting crushed isn't exactly good for anybody at any level of of wealth of course right i mean you don't you're not factoring that's part of the issue yeah as well with you know cratering the economy and the stock market um
to theoretically get to a place you think you can get to. I understand, but think about it. COVID, right? The low, the low of COVID when the market was down 32% was essentially before anybody had died yet. I mean, not to be morbid, but the market began to go up when the world started to fall apart and shut down. Because it probably sensed that the Fed bazooka and...
three bazookas worth of fiscal stimulus was coming from the government. Neither are coming to the rescue this time. I understand that. But again, you look at stock by stock and there are opportunities that we felt at these prices. It's not as if we added
4%. Oh, sure. I hear you. I hear you. And I know how you invest. You're not looking for some dramatic outcome next week. Correct. I got you. Can I just throw an interesting stat on that? So I heard last night from JP Morgan, they said for the low-end consumer, 98% of their disposable income is spent. For the high-end consumer, 13% is spent. So even if there's massive destruction in their portfolios,
That 13% is so little. They could just go to like 13 or 14 or 15% of discretionary income, continue to spend at the same levels. And that's why there's such an enormous difference between a Discover and an American Express. I think American Express has an enormous level of insulation from a worst case scenario here. It's also why the outcome of this, however long it lasts, is going to be the wealthiest 10% end up with even more wealth.
Right. Because they will be adding to their portfolios of assets, whether it's real estate or equities or bonds, which will, when they do recover, you'll see even more dispro... No offense to anyone who doesn't believe this, but this is only the way it's always happened after every recession in history. So this won't be no different. What about...
You know, Josh, the outlook for bank earnings, which are starting, as we said, this week for your stock, you've owned a long time, J.P. Morgan. Let me just remind people, too, the alternative asset managers, their stocks haven't traded well at all. The Apollo CEO, Mark Rowan, is going to be on Squawk tomorrow morning at 830 a.m. And I don't want you to miss that because, again, this was somebody who was said to be in the mix for a potential cabinet role as well. So I can
I can bet you that he's going to have some interesting things to say tomorrow morning regarding the current situation and what he thinks needs to happen. But you'll have to watch for yourself and find that out. Back to you. My bad. Yeah, financials are having one of the biggest bounces today of all the sectors right up there with technology, which I think makes sense. These companies, thank God,
are going into whatever's to come with this economy, they're going into it in better shape than they've ever gone into economic turbulence before. From a balance sheet perspective, from an earnings perspective, and I think from a risk management perspective, I just don't see the public's
publicly traded bank stocks as being at the epicenter of what's causing this situation. It's a very different bank sector than we've had going into prior recessions. And they're also washed out. The average RSI within the S&P financials is 33. So these stocks are almost two of one, extraordinarily oversold.
But, here's what you're going to hear later this week and early next week when the majors report. I think they're going to have to raise their reserves. And what that does is it comes directly out of the profits that would otherwise be dropped to the bottom line. And this is just the way it goes.
I think it's a wise decision if that's what they end up doing. Jamie Dimon was notably fairly muted in his shareholder letter, which came out two days ago. It was actually kind of, oh yesterday? He was actually kind of surprised that he didn't have more to say
on the subject of tariffs but maybe that's what comes out during the conference call we'll see but in the end i think what the banks have to be thinking now is okay do we have enough reserves we're looking at spreads blowing out a little bit we're hearing about stresses all over the economy uh what do we need to do here and that's not great for shareholders quite frankly it's just not never has been let's uh we'll take a break and jenny you get ready okay okay because jenny has another new buy and jenny has a new book
And it's about dividend investing. What else? Something near and dear to many of you. We'll talk about both next. The U.S. and China are competing for global leadership. The country who wins will define the world we live in. U.S. international assistance is vital to our national security. It helps prevent terrorism and avoid costly wars. It fights diseases and saves lives. It helps keep America as the number one economy in the world.
U.S. international assistance protects our interests at home and abroad. If America doesn't lead, China will.
How will you shape the future of industrials with confidence? Whether you need to define your strategy, optimize your supply chain, or keep pace with data-driven manufacturing, EY professionals understand industrials and the sectors they supply, bringing the insights that deliver real outcomes. With a full spectrum of services, EY helps strengthen your business from factory floor to product development and beyond. So when the global market shifts, your business is agile enough to adapt. EY.
EY, shape the future with confidence. Welcome back. Okay, let's talk about Jenny's new buy. RHP is Ryman Hospitality Partners. Tell me more. You bought it. Okay, so oddly, this is exactly like your AMAP buy. We used to own this. We sold it a long time ago.
I looked at it again about maybe six months ago. Fantastic company. And I said, by the way, six months ago, I said, if this happens to reach 92, just buy it, right? Everything's there no matter what the market's doing. The only way it would reach 92 would not be on its own merits. It would be on a market dislocation. So here's what they are. They own five. It's the Grand Ole Opry? Yes. Oh, I love it. Thank you. And the Ryman Auditorium. It's fantastic. They own five of the 10 largest non-gaming conference centers. So they own the National in D.C., the Palms in Florida, Opry.
Opryland in Nashville and they've gotten beaten up because they're mushed in with hotel rates.
And they're very different. They have, like I said, non-gaming conference centers. So huge companies book out their corporate with their corporate conferences. They book them out two to five years in advance. If you cancel, you're in trouble. It's trading right now with a five and a half percent yield, really consistent earnings growth ahead of it. And you can look at a company like this. You don't want to look at the pandemic. That was too weird. But you can go back to to the great financial crisis and say, all right, when there was a deep and sustained crisis,
recession, a global depression, how'd they fare? And they fared okay. And you can stress test it and say, would they still be able to pay the dividend if we went through a scenario like that again? And the answer is yes. So sometimes you get to buy something really great in these markets, even though I think we all agree the market probably hasn't bottomed. This stock, I think, is really compelling right here. And you know what? It's already down 30%, 35% from its high.
it's down another 5 or 6 or 10 percent and I'm wrong and I didn't nail the bottom, I'm okay with that. This is a company I want to be invested in. It'll produce the income my clients expect me to.
You want to go? Well, I wanted to ask you, have you ever seen Jason Isbell live from the Ryman? No. That's the move. For due diligence purposes alone. When I should get a free ticket. Book your flight. Okay, good idea. So let's talk about this book. Yeah. Dividend Investing. Dependable income to navigate all market environments. Well...
Sure need it now, some are thinking. Tell me more. What am I going to learn from reading this book? So I tried to write a book that was going to be actually very useful for people, where they could read it, and whether you're a dividend investor or not, you
you could learn about investment behavior. You could learn how to construct a portfolio, how to research stocks. The whole second section is actually a research process. The whole third section toggles between stories of investments that I've made that have worked and investments that I've made that haven't worked. And they toggle between that also with client stories and say, here, this is how this client set up their portfolio. This is how another client came to it.
Here's a story on real estate investing that worked and didn't work and then why they decided to switch to equity investing. So I think it's useful. It'll give you something to think solidly about how to create a portfolio. Yeah.
Yeah. Who's going to play you in the movie? Can I say Jessica Chastain? That's very sweet of you to say. You're very, very generous. Kevin, can you make some calls? Yeah. I don't think anyone's going to make a movie. I have a copy of this book. I already started going through it. You and I are going to talk about it later this week. I'm super excited for you. Congratulations. Thank you. So your top three dividend income picks, Kinder Morgan, Verizon, and Bristol Myers. Yeah. Just quickly about those before we... Okay, sure.
So, Kinder Morgan, 4.5% yield. Bristol, 4.5% also. Sorry, what was the third one that I gave you? Verizon. Verizon, sorry. I thought I gave you Conagra. Verizon, 6.5% yield. What's interesting on these is you can look at where the revenues are coming from. And in the case of Verizon and Kinder, you have 100% revenues coming from the U.S. So, you're out of the tariff fiasco. Bristol, you have 71%.
But on Bristol, we know healthcare is being excluded. You can look at Kinder and Verizon and say, where are their cost of goods coming from? On Kinder, maybe some steel, right? Verizon, maybe some iPhone costs. But there's enormous economic insensitivity here. And there's, relative to the broader market, tariff insensitivity. And that's why I thought they'd make really good kind of,
top picks for right now. So they've paid their dividends for Verizon 40 years, Kinder 14 years, Bristol 92 years they've paid their dividend. Bristol's earnings look terrible, but they produced 10 billion plus of free cash flow for the next three years. So they can essentially buy their way to growth.
It's nice because, and this goes a lot to the book, when you're buying dividend income stocks in an uncertain period like now, some portion of your return is certain. When you're buying a growth stock, which works great too, but different strategies, 100% of your return is uncertain. You might get a bigger return, but on dividend stocks, some portion is certain. And all profits go to?
The Council for Economic Education. Yes, where I'm on the board. Very proud of it. Congratulations on the book. Thank you for educating us and our viewers on dividend investing. We will take a quick break. Mike Santelli will be on the other side. First, though, the headlines from Pippa Stephens. Hi, Pippa. Hey, Scott. The Supreme Court just moments ago pausing the reinstatement of thousands of fired federal employees.
The top court put on hold a lower court ruling requiring six federal agencies to reinstate the probationary workers who were fired as part of President Trump's effort to reduce the federal workforce. The stay is in place while litigation continues.
Elon Musk's Doge team is reportedly using AI to monitor communications among federal workers that are hostile towards President Trump or his agenda. Reuters reporting the team is, quote, heavily using Musk's chat GPT rival, Croc AI, to monitor communication tools, including Microsoft Teams, and communicating with each other through the Signal app, which could violate federal record-keeping rules. The White House and Doge team did not respond for comment.
And in a London courtroom today, lawyers for Prince Harry said he was treated unfairly when he was stripped of his British security detail in 2020 after stepping down as a working member of the royal family. He's appealing that decision, saying the government didn't follow its own rules when cutting the protection. Halftime Report will be back right after this. CNBC News Update is sponsored by Morgan Stanley, where old school hard work means bold new thinking.
Welcome back. Market picture certainly not as strong as it was at the outset today. Perhaps Eamon Javers has some news for us from the White House to help us understand what's exactly happening. Eamon?
Yes, Scott, that's right. There's an inaccurate report that appears to be floating around the market. The inaccurate report suggests that Caroline Leavitt, the White House press secretary, had said that the China tariffs go into effect or went into effect today at noon. That is inaccurate. I just spoke to Caroline Leavitt in her office just a couple seconds ago. She says that all of the China tariffs are scheduled to go into effect tonight at midnight, and any reporting that that happened at noon is not correct.
She is working to clear that up inside the building, and I'm here to bring it to you. So wherever that report was coming from, not accurate. Tariffs go into place, as was the schedule tonight at midnight, Scott. Yeah, as was scheduled. Those are really important words, as was scheduled, right? Right. Yeah, so no change here. Barring some development between now and then, obviously.
I mean, anything can happen, right, Scott? But no indication of any change here from the White House. Caroline Levitt says she may have been misquoted or this might have been misreported and attributed to her. But she has not said that. And she said to me directly that these tariffs are still going into effect tonight at midnight. She's going to be briefing here at the White House at 1 p.m. So we might hear more from her on camera on that.
Thanks for clearing it up very much so, Eamon. But yet again, you see how jittery the market is for headlines that, you know, either up or down. Guys, there's no denying the fact that the market is still around the lows of the day. Apple is red. Tesla was red.
as that, as Eamon was talking about, erroneous report was going through the market for a moment. Tesla's back green. But some of the chip names, AMD, which was green is now red. Some of the chip names,
We're a little volatile in those moments, too. But just welcome to the world that we're all playing in here. We put up Ford and GM, red all day. This is one of the biggest bounces we've seen since this whole nightmare started. Those guys are red. These stocks cannot attract buyers. It's incredible. Nike, Las Vegas Sands. We're talking about stocks with maybe the most acute kind of exposure. I'm thinking Starbucks, your Starbucks. Yep.
Where's that on the list? We can throw that. I got so many stocks in front of me, I can't even find it right in this moment. But nonetheless, you get the point. It's still green. Anything with like, you know, big time exposure in that part of the world on this kind of a headline,
which our Eamon Javers in his own reporting has shot down and suggested that what he was told, or said what he was told directly from the press secretary at the White House is that the tariffs on China, 104% now, because remember they were raised, go into effect as scheduled at midnight tonight, barring something that happens. We'll be right back. Well, welcome to another day of swings. That's the current market picture here. Again, after a really strong start,
An erroneous headline.
Clarification and just on the ground reporting from our own Eamon Javers. And here's what you have at the current moment. The Russell's now negative by a couple of points. It's, you know, a marginal move to say the least. But you're pretty much at the lows of the day off of where we started, which was such a strong bounce back right out of the gates today. So we'll keep watching that. I want to bring some more stocks to your attention, too, if I could. Netflix named the new top pick at Morgan Stanley replaces Disney.
The target, $1,150. Jason, you own Netflix. Yeah, I mean, Netflix has been a great stock. It messed into all the carnage, obviously, that we've seen. You know, when I look at the last quarter, which they had a double on EPS on 16% revenue growth, they continue to focus on profitability, which has been...
very positive for the stock. And then when I think about just potentially the break in the consumer, there is optionality now with ad-supported tier. Their foray into live sports, I think, has been uniquely positive. So I continue to really like this stock in this environment.
You have a thought here? Yeah, I totally agree with what Jason is saying. And this name is in the communications sector, but the truth is it's consumer staple. I defy you to find somebody in the middle class or above who would ever cancel their Netflix, almost no matter how bad things get. Netflix you would hold even through unemployment, honestly. Like, I think it's super defensive. Yeah.
super profitable now relative to the way streaming used to be. You're making money around the world. You've got geographic diversification there as well. No tariffs whatsoever on film production until I hear otherwise. I would assume that that won't happen. I shouldn't have said it out loud. I don't want to give anyone any ideas. Peter, forget I said that. But I think this is the type of name that investors who have to be fully invested, portfolio managers, they will gravitate toward this because of the defensive characteristics.
Otis Worldwide and 3M mentioned as core defensives to own today at Wells Fargo. Happen to own them both. You own both. And Otis is one of your most recent buys. Yeah, I think the analyst heard me on TV last week talking about Otis. Because it can't be a coincidence, right? Yeah, you're right.
Nobody ever talks about this company. It's a tiny market cap. You just get in the elevator. You go up, you go down. You don't think twice. Yeah, you just get in the elevator. Cancel your elevator? No. So this is the thing about Otis that people don't understand. They look at it and they say, oh, no, this company must be so reliant on steel or they must be so reliant on selling elevators. It's a services business. The maintenance contracts, which cannot be canceled, 87% of the companies in that income. That's why I think this is defensive. All right. We'll take a quickie. We'll come back with finals.
All right. We'll see a closing bell three o'clock Eastern time today. Aswath Damodaran is going to be on. He's going to talk about the valuation now of this market. Ellen Zentner will be with me. Alicia Levine as well. And Goldman Sachs' son, Cho. So I hope you'll join me. Let's do finals. What do you got? Palo Alto. Stay long. Thank you. Carrie? Microsoft. New safe haven like Apple was for years. Jenny with the book.
Dominion, 5.3% yield. Regional utility, 100% earnings coming from U.S. All right, Josh. I think Netflix will work. You can hide there. All right. I'll see you for the last stretch of trading on The Closing Bell. You've been listening to CNBC's Halftime Report, the podcast. You can always catch us live weekdays at 12 Eastern, only on CNBC.
Thank you.
but only as an expression of an opinion. Such opinions are based upon information the Halftime Report participants consider reliable, but neither CNBC nor its affiliates and or subsidiaries warrant its completeness or accuracy, and it should not be relied upon as such. To view the full Halftime Report disclaimer, please visit cnbc.com forward slash Halftime Report disclaimer.
The U.S. and China are competing for global leadership. The country who wins will define the world we live in. U.S. international assistance is vital to our national security. It helps prevent terrorism and avoid costly wars. It fights diseases and saves lives. It helps keep America as the number one economy in the world.
U.S. international assistance protects our interests at home and abroad. If America doesn't lead, China will.