Trading Trump’s Tariffs 3/4/25
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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. All right, Carl, thanks so much. Welcome to the Halftime Report. I'm Scott Wapner. Front and center of this hour, trading day.

Trading the Trump tariffs with stocks down sharply again. As you know, so many names on the move today. We'll debate them with the investment committee. Joining me for the hour, Josh Brown, Stephanie Link, Kerry Firestone and Brian Belsky. We told you stocks are lower today. The Nasdaq is officially in correction. That means it's down more than 10 percent from its high.

The Russell is down 17%, so the small caps have been getting hammered, as you do get the first shots, if you will, in this new trade war. China's already retaliated. Mexico says theirs coming Sunday. Canada put an export tax on electricity to the U.S. The VIX is way up.

And Stephanie Link, J.P. Morgan's trading desk today, makes a tactical call. They say U.S. GDP to crater, changing their view to tactically bearish. You changing yours to tactically bearish? That means a shorter term view of this market. No, because we've been talking about the growth slowdown for a couple of weeks now. I mean, just a couple of weeks ago, you were at 3.9 percent in the Atlanta Fed tracker. Now you have negative. No one

was talking about a 600 basis point decline in GDP. And I just don't see it. Sure, tariffs are a concern. Sure, the hearts of the consumer being more choosy. But on the other side of things, guess what?

We have gasoline prices are down 10% year over year. You have much lower interest rates. Only about a month ago, we were flirting with 5% on the 10-year. Now you're in the low four, so that's good. And I do think that the job market is the most important for the consumer, and it's still fine. It's slowing, but it's steady. Wages are up 5%, and savings, Scott, 5.5%. So maybe consumer takes a pause for a little while. Wouldn't be surprised.

But they have savings, right? Delinquency rates are not going sky high. They're higher, but they're still historically low. So there are a lot of things, puts and takes. But I think it's the most interesting.

Up until today, we've had it being a tech sell-off for the most part, right? And the Mag 7, down 11%, with the S&P only down two. Today, now you have a broadening out. You had the leaders actually correcting, and that's okay, too. I think that's where your opportunity is in financials, in energy, especially in industrials, because I'm not backing away from manufacturing and the renaissance that we are going to see here. And the manufacturing industry will

actually benefit from tariffs if they bring the facilities here, which is what they're going to do over the long term.

their opportunities. You know, I've been very active in the last two weeks. I have nine percent cash. I've been nibbling. We're going to talk about it all day long. And I see a lot of things to be excited about for the longer time. Yes, this has been for Stephanie Link. And we will get into more detail. A shopping list moment, if you will. And she's been a buyer with that list. And I'll tell you some of the moves that she has made. What about it, Josh Brown? As

As JP Morgan also says, the guardrail of risk markets looks to have come off. Barclays today talking about the euphoria in the U.S. is on the retreat, and there is still room to wane even further. You've had $3.5 trillion of value wiped out of the S&P since Election Day. This is not what a lot of people thought was going to take place in the first 30 to 40 days of this administration.

I guess it's weird because this is exactly what they promised us would take place. They said on day one. This is what they told us. So I don't really understand like, oh, wait, they're really doing this? They did this in 2018. I don't mean the moves. I mean the moves in the market. You're right. You're right about obviously about the policy moves.

Obviously, but I'm not necessarily sure that on Election Day, if you would have told people that, OK, the Nasdaq is going to be down 6 percent by, you know, the second week of the first week of March, you said that doesn't sound right.

Yeah, no, no, no. That part I agree with you 100%. And actually, here's something very unexpected. In the last 50 days, Tesla fell into a 45% drawdown. It's the second fastest 45% drawdown ever in the history of Tesla.

The CEO basically lives in the White House slash Mar-a-Lago, and yet Tesla has now fallen out of the magnificent seven stocks by market cap. Broadcom is bigger. Berkshire Hathaway has a bigger market cap. So does Eli Lilly. So that was unexpected. There's a lot of unexpected things happening. I think the big picture here...

When you've lost the Wall Street Journal op-ed page, basically, you've lost the business community. And there's just a lot of blunt language now. There's a lot of chaos. I don't think it'll stay this chaotic. I don't think the VIX goes to 50 as a result of this.

I think this volatility will be with us for a little while, but I don't think it's a great time to panic necessarily. There's risk-off behavior everywhere in the market already, really fast. 8% of the S&P 500 now has an RSI above 70, which means there are very few stocks in a bull market. You're basically seeing a peaking in 52-week lows. 8% of the S&P are now making new year lows.

that's fairly high given what's gone on the last two years. 40% of the S&P components are making four-week lows. So if you think you're gonna be the first person to sell and react to this, you already missed it. So I think the way that you wanna think about this is what are the stocks that are holding up the best right now, not what's getting trashed the most.

And so my focus is on what are the best stocks in the market? Where are investors not selling and riding this thing out? Because in my opinion, those are the names where you'll continue to get all time highs once this volatility subsides. I know there are people with different strategies. They want to buy pain. They want to run into Tesla down 45 percent. I'm not saying that won't work. I'm telling you what I would be doing and not what everyone else should be doing.

Brian, is it time? And by the way, I mean, heck of a time to have you here, right? You do work for BMO. Last I checked, it's a Canadian-based bank. It is. Right? Yeah. So let me share a little bit about how my morning has gone. Please.

That's all right. So we have the very good fortune of running private wealth portfolios for both Canada and the United States. And so we own some portfolios that are a mixture of U.S. and Canadian. I can't tell you how many calls I've taken, Scott, that want to blow out these portfolios, like literally blow these portfolios out and go 100% Canadian, which I think this is exactly the wrong time to do that. That's number one. Number two, working now... You mean out of anger?

Working out of emotion, out of anger, out of just pure fear. Now, where I was going to go next is being in Canada for 13 years working for a Canadian bank, but marketing up there as a strategist.

for a lot longer, I'm not gonna tell you how many years, that the Canadian market is actually excessively contrarian. Whatever they're doing go the opposite way. They're typically led by fear and they're massively macro. Now what do we know about Canada versus the United States? Many of the economic projections for Canada just in the last 24 hours have cut GDP down to negative GDP for the year, two full percentage points, and the Bank of Canada

In terms of our own estimates from our great economic team at BMO, they're saying that they're going to be excessively aggressive in terms of cutting rates. So what does that mean for Canada in terms of the lending facility? We know that banks are tremendous managers of capital. The banks that are centered more toward in the U.S., I think, are still the place to be. The Canadian consumer is still very prudent.

in technology. So we think actually this is a longer term buying opportunity for Canada. But I think it's not time to leave the U.S. if you're a Canadian client. But do you think, do you agree with sort of J.P. Morgan suggesting that this is a time to be tactically bearish U.S. stocks? No, I don't. Because number one, no one can time the market. Number two,

We're investors, not market timers and not traders. And so many people have said, Belsky, you didn't make any changes in your portfolio this month. Well, guess what? The names that I own in my portfolio are the names that I want to own in any kind of pullback anyway. I'm not going to try to outsmart myself. So guess what? I think that the names coming out of this, and it's really interesting, is that the market has performed the way that it should. Take your generals out first, then take the lieutenants out, which are generals or tech,

lieutenants for financials. Now we're going after the other commissioned officers. So I believe from a near-term perspective, we're closer to the end than we were. How are you viewing the market and all your years of experience watching these markets? What does this tell you? It's not your first rodeo. It's not the investor class's first rodeo of a trade war and tariffs from this president. So what do you think?

Well, I'll tell you the thought that went through my head when I saw the market really fall when Trudeau was speaking. I thought, you know, the market could end up positive at the end of the day. Now, I'm not saying it's going to, but it's interesting that Nvidia right now is positive. What I think we're seeing is just this sort of reaction toward the mean. We had

three months, more or less, of financial stocks leading the market higher because euphoria about there aren't going to be any regulations, they do everything they want. I'm not even sure that that would be a positive, but the market got so enthusiastic it became unrealistic. And we sort of led

higher and higher. And now there's, oh, gosh, you know, maybe maybe there's a problem with your maybe there's some inflation. But manufacturing is still looking good. The manufacturing numbers, I think, are decent. The consumer numbers aren't great, but they're not terrible. If you heard what Target had to say. And there are pockets of concern such as, you know, let's not get too exuberant here and there. But that

That doesn't mean that this is the end, that we have to say, oh my God, you know, watch out below. We have to get extremely bearish. I think that we should always be concerned about valuation. Well, no one said you have to get extremely bearish, but there are times to be tactically bearish stocks. We're down a ton yesterday. You're down a bunch today.

and the market's been unsettled as it is, we may be in a prolonged environment that feels more unstable and unsettled because you're not sure how long the tariffs and this trade war are gonna last. Among other things, you're not sure about to what degree

Earnings power is going to deteriorate if you're dealing with a growth slowdown and trade war. You're coming off a 16% earnings growth in the fourth quarter. Yeah, I know, and expectations are falling fast after that. Actually, the numbers haven't been coming down at all, not yet. Now, maybe they will, and maybe the tariffs will clip.

earnings and the picture for earnings by five to seven percent which is what i've been saying for a while but you have such momentum with regards to the earnings power at these companies and so even if earnings were to fall that's not great for stocks that's probably why we're seeing a sell-off however that being said you're still looking at something like seven to ten percent earnings growth this year if you grow one and a half two percent in the economy which is what i am continuing to believe you kind of are i mean i get the feeling that you you think overall this is a not much to see here

moment. Which you sure sound like, because I can tell you, consumer confidence has been falling. Sentiment among consumers is not great. Hardly any of the retail-based companies have been talking up a

great game. Yeah, but hardly any. We haven't had a goods growth economy in four years since COVID, right? No one's buying goods at all. And so it's actually quite impressive to see what Walmart put up in terms of same store sales, what Target did, what TJX did. I mean, there are winners, Scott. Okay, but you're talking staples and lower end retail. Well, no, I mean, not really. I mean, I mean,

60% of Target's revenue is discretionary and they're tarjay, right? That that's what they sell. And they actually did quite well. But my point being is COVID happened, we bought goods.

Then we got out of COVID, we did services. We're somewhere in the middle here on services. I think we are slowing down, definitely, but I don't think it's a disaster. And at the same time, I think goods are overdone to the downside. Just look at what Walmart had to say in terms of where they saw strength. When has the last time we've seen discretionary goods actually surprised to the upside? Both Walmart and Target said it today. So Walmart said it last week, Target said it today. So my point being is you can't just look at retail

and say the consumer's dead. The consumer is not dead. It may be slowing, but they have jobs and they have wages and they have savings and that's the most important thing in my mind. The consumer holding up as strongly as it has collectively has been remarkable. The resiliency is one of the reasons why we've been able to put in new highs in the market this whole period of time.

The death, so to speak, of the consumer has been greatly exaggerated numerous times, obviously through the whole rate hiking cycle. And what if you get mortgage rates to come down? What if you actually have housing that then starts to actually improve? Mortgage rates have peaked at 7.3 percent two weeks ago. It's at 688. We're nowhere close for it to see momentum in terms of housing. But you get that into the low sixes. That is important because there's a multiplier effect to housing. You buy a house, you have to buy stuff for the house outside.

outside the house and a car to get around from the house to wherever you're going. So that's what I'm watching. So, Josh, Kerry mentioned NVIDIA being higher today. You know, that's been a pain point within the market. Bernstein, Stacey Raskin says valuations are looking increasingly attractive. They suggest that that stock has done historically well if you buy it at 25 times or lower. It's obviously had a huge pullback.

We've suggested we're not really going to get a better feeling market until the likes of NVIDIA looks a little better in its own right. I mean, yeah, there are so many green stocks right now that we should be talking to, like eBay, Alphabet, McDonald's. Like these are pretty big market caps. But Scott, you're right. To that point, nothing is big enough to offset NVIDIA.

There's no 10 stocks that are big enough to offset Nvidia. So I do think it's important for maybe not necessarily overall volatility, but just for the indices to kind of find some support. You kind of have to have a name like Nvidia, bottom and go green. Look, 26 times forward earnings with a 50% growth rate, a buyback.

and arguably some of the best news flow of the year out of any stock still ahead, including a huge developers conference in March. Why wouldn't this stock be a buy here? So I agree with that sentiment. And, you know, if I'm out looking for things to do and I haven't done this yet, I would have it on the list. Apple is so interesting, too. I think we would all agree.

given its reliance on semiconductors in general for its products, and given its reliance on China for a huge chunk of its revenue, 17, 20%. It's the best performing mega cap stock over the past one month, even though you could make the case that it has the most to lose from a trade war with China.

The NOC has been trading at a premium valuation for less than premium fundamentals. It's at 31.6 times forward earnings. Steve Kovach joins us now, our reporter, of course, who covers that stock. It's a great disconnect for people who say, wow, how is this stock still green and doing better than others when it would theoretically be so exposed to

to a trade war with Canada. Yeah, that's right. I mean, with China, excuse me. Yeah, no, that's right, Scott. And by the way, yesterday, once we got that confirmation from the president that these tariffs were happening, we saw the stock drop a percent and a half. It's up about half a percent now. And let's get some perspective here of what they think, analysts think the impact of these tariffs are going to be. They haven't gone through the second round and done that analysis yet. But the first round, they said, it's going to be low to single-digit prices.

percentage hit to earnings. We'll see what they say for this round. But, you know, they have to make this calculation out. Do they increase prices or do they absorb those costs? Either way, it could hurt them. So we do have some guesses here of what could be happening with the iPhone 16E, for example. That was a new phone they announced a couple of weeks ago. That was $170 price increase over the last model. And just this morning, though, we had the an

opposite example. There's a new iPad Air model that came out today that was announced today starting at $599. That's the exact same price that last year's version cost. And we're also expecting one more product to come out this week. That's a new version of the MacBook Air. Apple's been pretty silent, though, to be honest, about what's going on with these tariff impacts, how they're thinking about pricing. iPhone pricing is going to be the most important. They can probably absorb things from the Mac and the iPad and those lesser products. But

iPhone is where all the money is, and they're not going to be able to shift enough of those supplies of those iPhones that make in India, bring it over to the United States. They're still reliant on China. And I want to point to what the best buy CEO said today. His vendors are expected to raise their prices. Apple is one of those vendors, and it hits all those other PC makers we talk about. That means Dell. That means HP. And it also impacts Microsoft. Microsoft has already warned Windows revenue could take a hit as well, Scott.

Yeah, it's good stuff. Steve, thank you. That's Steve Kovach. Brian, I mean, maybe investors just simply think that, you know, Tim Cook's trying to make Trump his BFF and they're going to get some kind of exemption from a lot of these tariffs or that there's not going to be a protectionist play on China's part related to American products like the iPhone relative to competitors over in China. But Apple's already like we've already seen market share issues increase.

over there. What do you make of the fact that the stock has traded, I think, reasonably well, pretty darn well, when it would be front and center here? Yeah, this program in particular has done a really wonderful job talking about Apple the last couple of months or so, especially given the fact of

of where we've seen multiples that have been inflated, where we've seen all of this performance the last couple years in the Magnificent Seven, but our comments remain resolute. We think that Apple of the Seven should be the one that you overweight. Why? Because of cash flow. But we also think too is that a lot of times on this show we talk about

Quality, quality, quality. If you screen the S&P 500 for quality, it's gonna reign supreme with respect to a lot of tech stocks. So that's number one. Number two, when people get worried about the market, Scott, you go back to historically, you go back to liquidity, liquidity, liquidity, liquidity. So what are the largest stocks in the market? The big tech stocks. So Apple checks a lot of boxes there. That's why we've continued to own it for all of these years, and that's why we're gonna continue

to overweight it in our tech. Sure. But you do admit that you need to be more selective within tech, even if you like it.

Mag sevens are all significantly off of their record highs. Apple is only 8% off its record high compared to an alphabet, for example, which is 19. We mentioned Tesla. Josh did. The price target gets cut today. Wolf talking about Microsoft is the one who needs to make a stand here. So we will watch all of those. Stephanie Link is making a move in this space as well to a stock that's 18% off of its record high, that being Apple.

Amazon. Well, I started trimming it a couple of weeks ago. I went from really very much overweight to market weight. Now I'm slightly underweight. It's still about a 3.5% position for me. But you have 95% of the sell side that have buys on this thing. Just about everybody owns it on the buy side too. I think that it's had a nice run. It's up 23% from its August lows. And I just thought,

I could take that cash and put it elsewhere into names that have just gotten hammered. And we'll talk about some of them if you want. Like Broadcom? Yeah, like I've been adding to that for the last three weeks, and it keeps going down and down and down. They report on Thursday, so we've got to be careful. But I do believe in the long-term story very much. It went from 34 times forward estimates, which got rich.

to now 28 times. Now, I was buying it a couple years ago at 14 times, and we've talked about the multiple expansion, but it deserves to have a higher multiple because they are going to see something like 60 to 90 billion total addressable market in their AI business with two new ASIC customers coming in the next couple of years. And I think that's going to be very positive. Software, I love the VMware acquisition, what it's doing for their recurring revenue and margins. And their non-AI business, that has actually been horrible. And I expect it to be down 15% in the quarter, but

I do think you're in the process of troughing. So I liked the valuation, the pullback in the stock. And I just thought as an opportunity, I just don't have that much cash. I have a little more cash than I have, but I didn't have that much. You found some at the bottom of your handbag. Well, I found a little bit. To get Palo Alto too. Oh, I did. Yes, I did. You had some chains rolling around down there. I do. Well, I'm trying.

trying because I'm trying to look for ones that have lagged that I haven't been able to own. CrowdStrike was one I didn't own ever and I bought it when it fell 41% in the summertime. I've been trimming that because it's up 95%. It's held up remarkably well. I like cybersecurity very much. I think it's bigger than AI in terms of the total addressable market. And Palo Alto's lagged.

And I like their platform strategy. I think they've done a really good job there. Free cash flow is expanding. So this one, too, it's kind of lagged. It's hung around here in this downdraft, but it's not been a good stock over the last year or so. So I think it's a laggard that will win. Yeah, from chips to software. That's, Brian, how a lot of people are talking these days where the trend is going to continue. Money is going to come out of chips, even though there's some nice winners today, even in the face of the red on the screen. Okta is yours. Speaking of software, they gave Strongguide.

They have, and that's a name that has consistently grown, and it's another one of these names from a margin and revenue perspective that has beat, beat, beat, beat, beat. And I think in the SMID category, it's one of those growth areas in tech that offers some consistency, especially relative to a technology sector in SMID land that is much more volatile. Speaking of chips, I think we're learning firsthand, especially the last six months. If you look at the semiconductor space in the market, traditionally, it is the most volatile market

industry in the market in terms of earnings growth and especially performance. And we're seeing that come to life. Watching a lot of momentum names, as you know, Afflevin, Robinhood, Palantir, they're all lower today. So is Reddit, Josh, which has been weak lately. It's down, last I saw was about 6% today. We can pull up a real-time look, but it's down 18% since the beginning of that momentum sell-down.

Yeah, I just think that's the basket of stocks that it's in. The same people that are in that are in other momentum stocks. And when people hit these ETF baskets, these are the stocks that get sold off. There's nothing specific happening with Reddit. And if you've been following the stock for a while, it could be down 6% in the morning and up 6% in the afternoon with absolutely no news whatsoever. So I wouldn't make too much of it. Just understand that's the basket that it lives in and

That's how volatile these stocks can be sometimes. Banks have been brutal today, this week, most of them selling off pretty significantly. We'll run through some of the names, which include private equity stocks, which last I checked this morning, Kerr, were getting hammered. You've got Blackstone, but Apollo, Aries, KKR, Josh S. Carlyle. But what's going on here?

Well, I think that it's risk off and there's going to be a fear about doing deals. Yeah, deals off. Yeah, deals are off. So no one is feeling comfortable with that. However, if we have lower interest rates, you know, we're talking about leverage. These are businesses that require a lot of leverage. Lower interest rates are good for them. So that's a positive.

They've had a big run along with the financials. So we're talking about stocks that are up, you know, if you go a year over a year, maybe 100 percent. I don't have a problem with them trading down somewhat because of the big gains. And we've got, you know, enormous embedded gains. We've cut this stock back Blackstone over the last year a couple of times and it's still higher. So we've already seen $800 billion in M&A and it's only March. So I think...

I think that we are going to see deals, absolutely. Does it slow a little bit down? Maybe. We had the slowest start. We had the slowest January.

We had the slowest January in a very long time. I don't have the number on the top of my head, but we had the slowest start to the year in a number of years. I'm talking about M&A. I'm talking about M&A. M&A is at $800 billion, and I think it's going to be more than $3.3 trillion, which was last year. I absolutely think that is to be the case. Is it slower than what I initially expected?

For the year? Possibly. But deregulation is going to help, and we are going to get deregulation. And we're not only going to get deregulation for deals and CapEx and visibility, but we're going to get Basel III endgame rules that are going to be much less in terms of the capital that these companies are going to have to hold, and they'll be able to buy back stock. And at 1.4 times book value, some of these stocks are certainly still attractive. Josh, go ahead.

I was just going to point out cross-border tensions and countries throwing out entire U.S. industries is not great for the M&A picture. It slows everything down. It gives people pause. It makes them think twice about saying yes to transactions. So I would say, and I'm long Carlisle, which requires there to be M&A.

It also messes with the capital markets, slows down the machinery for IPOs. And that was one of the big things that we had expected to come back this year. Now that you're in like year three of a bull market, you should see more investor appetite for,

new companies come in public which also helps the private equity companies as they get exit liquidity if you're not getting cross-border m a you're not getting exit liquidity and you got a 20 to 30 vix regime these stocks are going to be in the penalty box not breaking out not looking good

And you've got to decide what's your time horizon. If you want to buy them down, now's your chance. If you're trading them, you're probably not interested. I think for many, it's a deal's not off, but delayed. That's fine. But there's also positives from net interest income that we haven't seen that you're going to see from the spread. So there's a lot of puts and takes to the banks. And loan growth is not going to fall to negative. They're just not, especially, again, if the capital levels are relaxed.

So to me, there are many ways you can figure this out in terms of analyzing. You want to own the banks? You want to own private markets companies? Go for it. But I just think that the valuations are still very compelling, and I do still expect activity to happen. Okay, so we'll take a quick break. We will come back. I've got a new move, a new stock that Josh Brown has added to his portfolio. It is in the insurance space. I will tell you what it is. We've already touched on some of these consumer concerns. We do have Stephanie Link making a number of

of new moves around this market that we still need to get to. Also, Josh Brown's hot take on this year's best performing sector. We got a lot to get to. We're back in two.

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Okay, welcome back. Let's get to some of these moves. I mentioned Josh Brown has a new buy. It's an insurance stock. It's a small cap name and the ticker is KNSL and that's Kinsale Capital Group. Tell me more.

You and I, Judge, were on the floor the day this company came public on the New York Stock Exchange. I'm pretty sure. It was 2016. I haven't looked at it since up until the last couple of months. I started following it again. This is one of the best performing stocks in the market so far, but it's early in the company's story. Since it's come public in 2016, the stock is up about 2,800%.

versus the S&P up about 200%. So it's more than 10X in the market. And the reason why is because it's got this incredible niche in the insurance business all to itself, excess and supply, E&S insurance,

Basically, any company that is non-traditional and falls out of what a large carrier would very easily want to bid for falls to this company, and they only have 1% market share. It's a $120 billion opportunity.

and they're at like 1.6% of that. So it's a 10 billion market cap. It's not in my best stocks in the market list. This is something entirely different. I think it's a really great long-term investment and I'll be in this for a while. Just started establishing a position over the past week or two. - Okay, good stuff. We'll follow that, obviously. All right, Stephanie Link has another move. You sold Amex. Now,

I'm thinking, like, pay more attention to what you're doing. I mean, come on. You trimmed more Amazon and you sold Amex, but you're making the big case about the consumer being great. But I'm buying other things. Last week I bought D.R. Horton and Las Vegas Sands, and today I'm buying more Target. Well, we'll get to the casinos later. Just give us a chance. Well, we can, but the point being is I'm not— They're getting hammered, too. No, no, no. It is not a negative call.

call on the consumer. It's I'm up 30 percent in the past year. I'm up 65 percent in the past two years with Amex. It trades at 19 times. I was buying it at 13 times. It's had multiple expansion. Yeah, they're seeing a little bit of a slowdown. I do not think it's horrible by any means.

I would absolutely buy it back if it fell, but I just want to take the gains and have cash to buy the things that are actually down and out. I'm trying to buy low and sell high, Scott. That's what I'm trying to do. All right. For instance, Target. For instance. You're buying low. It's low. Because you bought more. You bought more today. All right. So they beat.

They did talk about consumer uncertainty. They did warn that February sales were soft. They talked about prices on produce potentially going up in a matter of days. And to follow that, the CFO said at the company's investor day following the report, quote, the company expects to see meaningful year over year profit pressure in its first quarter relative to the remainder of the year.

of the year so why buy more today well that's why i think it's down obviously his commentary because the quarter itself was actually good something that i have been arguing for the last couple of years at target even in the really bad times is the traffic they have traffic they just haven't been able to convert it but this this quarter they actually did one and a half percent cop may not seem great but it's against a four negative four four last year they're making progress operating margins actually beat so they get the gist like conservatively guide

Operating margins are the most important in my mind along with traffic and comps and those metrics were good The full year guidance actually was better than the whisper number in my opinion and they will say operating margin small operating version expansion I think the CFO is being very conservative. Yeah, I didn't like the comments that they made about February, but that's nothing That's not target specific Walmart said the exact same thing and if I look at the multiple

at 12 times forward estimates, where I don't think estimates are coming down materially after this quarter. In fact, they might go higher. It's a very cheap stop with a 4% dividend yield, and I still think they are one of the haves versus the have-nots, right? We talk about Costco and Amazon and Target and TJX. Those are the haves. Is GAAP a have-not? Because you own that, and it's down 7%. GAAP is a very volatile,

volatile stock for sure. And it's down because tariffs. They do have exposure to Canada in terms of their sourcing. So I think people are a little nervous. But I don't really own it so much for the quarter. It's really the turnaround from the fairly new CEO. He's been there for about a year and a half. He was at Mattel. He turned around Barbie. He has revamped the product, had the

Entirely new management team, an old Navy Athleta. They're taking market share. Inventories are down. And the stock trades about 11 times earnings as well. So it's volatile. But I do like the turnaround story. And I like the management team the most.

We'll take another break. We will get to Josh Brown's hot take on a hot performing sector. But first, though, let's get the headlines with Silvana. And now I, Silvana. It's got good afternoon. Ukrainian President Volodymyr Zelenskyy today called his clash with President Trump Friday, quote, regrettable.

In a post on X, Zelenskyy said it was, quote, time to make things right and that he was ready to work under the president's leadership to achieve lasting peace. His statement comes as the Trump administration paused military aid to Ukraine overnight.

The Trump administration says it is reviewing Columbia University's federal contracts and grants over allegations of anti-Semitism, which it says the Ivy League University has failed to tackle. Columbia was the epicenter of pro-Palestine protests on college campuses that took place last spring. The government says $51 million in contracts are at stake.

And thousands of people are filling the streets of New Orleans today for Mardi Gras. But the weather may dampen the celebrations. The National Weather Service says thunderstorms with winds up to 60 miles per hour are expected today. The two main parades have already moved up their start times, shortened their routes, and decided to go without marching bands in a bid to avoid severe weather. Halftime Report will be right back.

CNBC News Update is sponsored by Morgan Stanley, where old school hard work means bold new thinking.

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All right, we are back. The best performing sector of the year thus far is healthcare. Yesterday, Goldman Sachs' David Koston recommended that space. I'm told that Josh Brown has a hot take on this area of the market. Do tell us more.

David Koston is absolutely right, but from my perspective, for a reason that he's probably not paying attention to. He's looking at the valuations in these names and the fact that they're acting well when the S&P is negative, and they should. They are defensive. I'm looking at the technicals. I

I have 12 of these names on my list of best stocks in the market. And if I'm not mistaken, I think healthcare now has the most amount of names on that list of all the sectors. AbbVie, Abbott, Bristol Myers, Cardinal Health, Gilead, J&J, et cetera. I wanna focus on three charts in particular. We'll do these quickly.

Sencora, C-O-R. Many of you know this stock, but you remember when its ticker was ABC and we used to call it Amerisource Bergen. Very 20th century name. Sencora is much sexier, much more modern, but basically it's a pharmaceutical distribution company. I know Steph knows this name.

RSI of 63, not yet overbought. It's within 3% of a 52-week high. Stock looks outstanding, up 2% during the volatility of this week. 15 times forward PE, expecting 12% earnings growth. That's a great setup for something contrarian. Striker, SYK.

Look at the way that this stock has bounced off its 200-day moving average. Look at how badly she wants to break above that $400 resistance level. Stryker is 4% below the 52-week high. RSI only 54. 3% above its 50-day, 8% above the 200.

I would use the 200 as a trailing stop loss. Check it every Friday. Do weekly Friday closes. If she closes above, stay long. Last one, trade update on Gilead.

I gave you this name at 104 when it first hit my list. I admitted I don't know much about the fundamentals. I love the technicals. This stock has exploded. It's up 22% from January 28th when I introduced it to you. RSI 74, slightly overbought. I would let it cool off a little bit if you still want to play it. But I think it'll set up and go higher. This is one of the best stocks in the market, hence why it's on my list of best stocks in the market.

All right. Thanks for that. Good stuff. We do have a market flash. I want to tell you about Hugh Sun is going to do that for us. Hi, Hugh. Hey, Scott. So I am just reporting on CBC dot com that the CFPB, the Consumer Financial Protection Bureau, has just dismissed its lawsuit that it filed in December against early warning services, which is the operator of the Zelle network, as well as the three major banks running on it, running on it.

which is JPMorgan Chase, Bank of America and Wells Fargo, Scott. So they were alleged to have allowed $780 million worth of fraud since its inception in 2017. And as you know, under the new direction of the CFPB, they're essentially reversing everything that the former has done with this. And this is the latest example of this, Scott. Hugh, thanks for that. Appreciate that update from Hugh's son. We will watch those stocks. We said already red on the day. Mike Santoli is next with his midday word.

Senior markets commentator Mike Santoli is here for his midday word at Post 9. What are you thinking about today? You know, during Squawk Box, I mentioned one of the things to look for is whether the MAG-7, the NASDAQ-100 type names start to act as defense again. That would be one sign that we were maybe getting to a different phase. That obviously happened, but it happened not for the considered fundamental reasons everybody's been talking about here, about Apple's insulated from this or that.

The NASDAQ 100 bounced right above its 20,000 mark. It was 9.8% off the high. And everyone is seeing all these things line up to say, OK, does this look like at least viable for a trade? Some people think the first mouse gets the cheese and they're going to try to grab it. We were barely above the 200-day average in the S&P 500. So tactically, it's not a good thing.

It makes sense that we're kind of letting up on the selling a little bit, led by those defensive stocks that have actually, they were like first in on the correction, right? So they're kind of first out. Banks buckling, good sign, means no place to hide. Beyond that, you know, obviously I think there's a high burden to prove as to whether this matters. We were straight down for eight trading days in the S&P, except for that phantom one-hour rally at the end of the day Friday. So I think that enough for now is the way it seems, although it was not.

a true comprehensive purge. A lot of people were looking for that. We're still going to be headline driven, obviously. I'll see you on Closing Bell. Just got to keep it short. Speaking of headlines, we have new ones from the White House. Megan Casella is there for us. Megan.

Hey, Scott. We're just hearing from President Trump responding for the first time to Canadian Prime Minister Justin Trudeau, who came out with very strong words earlier this morning vowing to retaliate against the tariffs that are now in place against Canada. Trump posting on True Social saying, please explain to Governor Trudeau of Canada that when he puts on a retaliatory tariff on the U.S., our reciprocal tariff will immediately increase the

by a like amount. So he's saying here that this trade war is only going to escalate. Canada, of course, this morning put 25% tariffs on about $25 billion worth of U.S. goods. They say about $75, $80 billion more will be targeted in three weeks' time. Trump now saying he will respond in kind. All of that is going to be added on top of what's already in place. Scott, I would also add, I was just inside talking with White House officials about what comes next here, what we're waiting for. There are

potentially some calls being scheduled, not scheduled yet. But I also asked whether the steel and aluminum tariffs that we expect next week on March 12th and the reciprocal tariffs that we expect on April 2nd, whether that will be added to today's tariffs on Canada and Mexico and China. And I was told yes. So that just means gear up. We're only getting started here. The tit for tat is likely just beginning.

Yeah, stocks like Cleveland Cliffs is off near 7%. So we appreciate that update. Megan, thank you. You'll keep that news coming as you get it. That's Megan Cassell at the White House. We'll take a break. We do have travel stocks getting hit hard today. Really anything related to the consumer is under pressure. We do have ownership. Got a lot of volatility there. We'll trade it next.

We're back. Do have another move to get to. We've had so many today. Kerry, you are out completely now of Booz Allen, really at the center of these defense cuts. You had been selling it down and now you're out.

Correct. Well, this is a company whose primary, in terms of all sales, customer is the U.S. government. So need I say more? And the government is cutting back. The government is certainly going to cut some of their contracts. It's possible that the government might shut down, that the government might decide that

It wants to defer paying bills. No reason to own Booz Allen in this kind of environment, even though we believe over the long term it's a great company and we believe they'll continue to outsource business from the government to Booz Allen.

I want to talk more about sort of travel experience stocks, if you will, because they're getting hammered today, too. JetBlue got a downgrade by Deutsche. They're talking about the economic soft patch hitting travel demand. It plays into United, Delta, American. We can show you these names. They're all down today. You have United and Delta, Brian? We do.

We do. And if you think about interest rates going down, and you think about fuel costs going down, people forget too that Delta has its own refiner. And so I think this is a pure overreaction. Anybody been on an airplane lately, you know that you're paying top dollar. And oh, by the way, we're coming into the summer travel season. I think this is a layup to be adding to these stocks here.

Expedia, Trip, Booking down. You own Booking? Yeah, I mean, Booking has compounded. It's a name, again, we've trimmed because it's been so strong. But this is also a company that does a lot of business within Europe with Europeans. And that's close to 50% of its business. So we think that it's still an attractive stock here despite this rumbles of fear. Casinos lower across the board. Caesars on pace for 11 straight down days.

LVS is on a three-month losing streak. That's yours. That's mine, and I've been adding to it because it's going down every day, just like Prodcom. No, look, the stock is down 12% year-to-date. This is a Macau story. This is a China recovery story, and China is actually recovering. So they get 60% of their revenues from this region, but they also had renovations over the last two years that really hurt their market share. So I think the

The renovations come to a close. They have an analyst day in the spring, and I think they're poised to do quite well in the second half of this year. Marriott's price target got bumped up today to $298 from $289 at Morgan Stanley. They're overweight. You own the name. Yeah, we love it, especially given the fact that it is the gold standard now for these bigger hotel units, and they've done a wonderful job integrating all these new properties.

and they've got more growth coming. And I think that's just a name that you absolutely have to own in the consumer discretionary space, which differentiates itself. What about Disney? Price target today to $130 from $125 at Loop. They think guidance was conservative.

Yeah, so it follows through with respect to how to position the communication services sector in general. You want to neutralize Google, Meta, and Netflix, and you want to own more Disney and Spotify and AT&T. So I think that's a great move to be adding more to Disney. You don't think about it in a consumer discretionary type travel way?

After the company itself had come out and suggested that it was concerned about the rising prices of parks? I think the park side of things and how, from an operational perspective, and how they've managed that is getting better. I think where you want to own Disney is because of the cash content and consolidation in terms of the streaming side. And it's one of the only streamers that make money, Scott, so that's why we like it. Okay. We should note Live Nation is also within the group that is down today. We have Final Trades coming up next.

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We will obviously have a very busy and active closing bell today with Lizanne Saunders of Schwab. Alex Lazzari is going to join me as well. He was just named CEO of the New York, New Jersey World Cup host committee, a World Cup that will be jointly hosted by the U.S., Canada and Mexico. Interesting day to talk to him, wouldn't you think? Let's do final trades. Josh Brown, what do you got?

McDonald's refused to sell off. Stock's been green all day. RSI 58. This thing is set up to break out. Brian Belsky. BMO's own. BMO's own. Thank you so much. On shoes. O-N-O-N. A discretionary stock that's actually working. Carrie. Charter Communications. It's U.S.-based. It's utility. Defensive. Lower interest rates are good, and it's breaking out technically. The Linkster.

Wells Fargo. I think the banks in general are a buy. And this one has a cost cutting story, an asset cap lift story and strong reserves, 14 times earnings as well. All righty. We will track this very interesting market into the close. See what happens throughout the afternoon. We'll be on headline watch as well. And I will see you on the bell at three o'clock. 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.

So

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