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.
As America's leading business lender, Bank of America is on your corner and in your corner. With $215 billion in business loans and over 3,700 business specialists across the nation, we help businesses thrive so communities prosper. What would you like the power to do? Learn more at bankofamerica.com slash localbusiness. Bank of America, official bank of FIFA Club World Cup 2025. Copyright 2025 Bank of America Corporation. All rights reserved.
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 very much. Welcome to the Halftime Report. I'm Scott Wobner, front and center of this hour. More Trump trade fallout. Nvidia shares falling sharply today on those new export rules. We're trading that stock, of course, and the markets at large with the Investment Committee. Joining me for the hour on the show today, Joe Terranova, Anastasia Amoroso, Steve Weiss, and Kevin Simpson. Let's check the markets. NASDAQ leading the declines today. You know about that. Nvidia, obviously, and the chips are dragging things lower. Gold is at a record high again today.
So we have the NVIDIA news, Weiss. You know, it's obviously sinking on the export rules, the charge, $5.5 billion. Piper Sandler takes the price target to $150 billion. Raymond James takes it to that same level. You sold half your position today, this morning, on this news. I did. And as you recall, I put it on...
about a week ago, and I said when I was on the show last that it was a trading position. So the reason for holding on to the trading position at this point escapes me. Now, on a day like today, which is part of motion and mostly reality as to what the future may hold for them, in terms of perception, we obviously, we don't know factually what it holds.
I just said, let me get rid of half of it and wait for a better opportunity to get rid of the rest of it. Because my bearish sentiment on the market has not changed.
And as a matter of fact, it's fortified by announcements like that. NVIDIA will not be the last one to do this. Well, AMD already did. I mean, AMD is getting hammered today, too. AMD will, and you'll see others that will do it. Micron, Marvell are down. It's going to be across the board. It's going to be across the board. And there's just, you know...
Haven't attended a few different conferences, small conferences. Haven't spoke to many bankers, many PE people, many single family offices that invest directly in the cap table, CEOs. Nothing is going on. Everybody's frozen. And what you're using your capital for is to protect the companies you already own. If you're a CEO, you're using it. You're not spending it.
it capital expenditures are grinding to a halt except necessary ones and frankly I'm going to think we're going to see this when the hyperscales report and talk again about a slowdown in cloud spending so look this just is another warning sign and I think that you know plenty plenty trouble ahead
I mean, are you suggesting that chips at this moment are, I don't know if the right word is uninvestable, but unanalyzable at minimum just because you really just don't know where this is going?
Yeah, and there's another element. So with the embargo, and that's my term, but it's accurate, that China's putting on rare earth, and with Ukraine not mining rare earth yet, and with the U.S. sole mine already committed, frankly, comes on the end of the year, you can't make semis without rare earth.
So even if you've got facilities up and running in the U.S., which you really don't, I mean, you've got Skyworks or something, et cetera, you're not going to be able to make chips anyway. So, yes, so they're unanalyzable. It doesn't mean I'm selling Taiwan Semi because ultimately we will get through this. I'm not buying more because I'm full, number one. I wouldn't buy more anyway because I think you get a better point of entry. Joe, you have NVIDIA.
Obviously, what do you make of this move? Selling half the position on this news. NVIDIA's down 7% right now. As Steve said, it's a trading move. And in a very mercurial environment, that's exactly what you're doing right now. You're trading. Everything is mercurial right now. The policy, the market.
a read on the economy, soft data, hard data, retail sales comes out, people are buying cars, people are buying electronics. Is it because the economy's good or is it because they're getting ahead of the tariffs? Yeah, front-loading. Right. We talked about on Monday, Semi's technology leading the market higher. Now you have a day where they pull back. So I think
In totality, what does that all mean? I think you're stuck with the trading range. I think we've seen the upside. We've capped the upside for now at that $5480 to $5500 level. We've defeated what was six consecutive days where the S&P, the intraday low, was higher than the previous day. And then if you look on the downside and you say to yourself, it's a very challenged environment. I keep using the word mercurial. Why not think we're going lower?
Well, because you're probably going to get a tweet at some point. You're probably going to get some reaction from the Treasury Secretary. So then why isn't it, Kevin, a 22% discount year-to-date on NVIDIA is a buy relative to what their position is, what their position is going to remain to be, the fact that the hyperscalers suggest they're still spending all this money. There's no reason to believe that demand is going to tail off anytime soon. Why isn't $104 and change a gift?
I think it is. I think we had a better gift last week when I think it got down to 88. Maybe that was a little bit more attractive there. But it's very difficult to pick bottoms and tops. So to Steve's point, from a trading position, this could be dead money for another year in a range-bound stock. But I think to your point, Scott, at 104, when you look at all of the metrics that they can predict, and there's a lot that they can't, and your word unpredictability, I may have to steal that and borrow it because there's so much uncertainty. But yes, if you're an investor and you've got a little bit more than a few-month timeframe,
I think 104 is a buy. What do you think of the chips here? Yeah, I think the word you used, Scott, uninvestable, for now it actually is the case. I said unanalyzable. I don't know if you would go as far. I mean, that's not for me to say, but...
But for me, at the moment, they are actually uninvestable. And it's for a couple of reasons. You know, first of all, chips are completely a bargaining chip in this trade war. And we're seeing that on full display today. And then there's this longer term consideration, I think, of this U.S.-China decoupling. And there's a long term intent to not let those chips go to China. So,
The other reason why I think chips at the moment are uninvestable because they're highly cyclical. And so they're going to get caught up in what Steve is talking about, which is lack of capex, lack of any sort of cyclical momentum. And if you look at the last instance of the trade war in 2018, chips really did take it on the nose. They were down 30, 35 percent. So I think we may still have more downside to go. And yes, I like the valuation, which is the lowest levels. But
In a market like this, you can't look at valuations purely, you can't look at technicals if you can't identify a catalyst. And right now, I can't.
Yeah, and I'd say valuations are moving target because things change. So, you know, look, I think you can predict the playbook for this market is that you'll see agreements in principle announced with former partners, but counterparties in trading. Market will bounce, but there's no there there with the agreements in principle. It takes years to negotiate a trade agreement, but you'll get that headline bounce. And eventually the market will tire of it.
Right. So it's going to be what's the new flavor. So I don't think there is a there is a there is a very positive, still fundamental backdrop around NVIDIA. CapEx. There is. But you're also seeing a slowdown in CapEx to data centers as well. That's an end market. And China is a huge market for them.
Right. So China's China's had this playbook to wean themselves off dependence. You're not really seeing that much of a slowdown yet, though. I mean, you have talked about potential if things go bad with GDP and the growth in the economy, then, of course, you could potentially see it. But you haven't really seen it.
uh definitive pullback we are we are not from hyperscalers from the hyperscalers you're seeing delays you're seeing more importantly like you know one company once i was talking to who's looking to build out a warehouse not a data center warehouse switch their supply chain their vendors from china to india and they've been told that
Those supplies which are critical to them are going to sit on the ocean for four to six months. So it's going to take a while to get things here. The juicy part of this story is a Reuters exclusive report today that suggests Nvidia didn't warn at least some of its major customers in advance about all of this. And it was told a week ago. That's according to a couple of sources that Reuters cites.
in what they say is an exclusive report. It leads to the question, of course, what did NVIDIA know and when did it know it? Who better to chase that down than Christina Partsenevalos? Do you have any insight in that very question?
Yeah, the answer is Chinese hyperscalers. They've been apparently anticipating these restrictions, and I say that because they've been stockpiling H20 chips before this ban was even announced. Supply checks, and this is not coming from me, but from sell-side research, has confirmed big players, which we would assume Tencent, Alibaba, were actually
actively purchasing these H20 chips throughout this entire quarter. And there was even a report from the information indicating $16 billion worth already sold to China. I'm unsure if that is 16 billion, but we could assume it's in the billions. So to your point that Reuters reports saying some Chinese customers are frustrated because Nvidia didn't warn them despite knowing a week in advance, this really suggests two things, Scott. Either Nvidia selectively informed major customers, which would explain the stockpiling,
or was genuinely surprised by the shifting White House position. Because keep in mind, Jensen Wang, the CEO, was just in Mar-a-Lago at a supposedly $1 million dinner. But analyst estimates are coming down today across the board, lowering price targets. And I know Weiss was just talking about how much China represented of NVIDIA's total revenue. It was about 13 percent fiscal 2025. So this write-down of $5.5 billion is substantial and indicates a big
that Nvidia really has little confidence in securing export licenses, which could take up to a year to process. In other words, a ban. And I'm using the word ban. I took that from UBS. So a lot of people agree with me. And Mizuho calculates this loss at about $7 to $9 billion, which is approximately 5% of total July quarter revenue, which could be explaining this 7% sell-off and maybe why, Scott, to your question, why people may not be interested in buying into the stock just yet.
Yeah, yeah, it's really interesting story in the total of what we're talking about today. Christina, thank you very much. It's Christina Partsenevelos. We'll watch the 7% decline there. By the way, another lower target for NVIDIA, 160. B of A has taken their targets down across the board.
for semis, which have a lot of rain clouds over them today. I mentioned AMD, Micron, Marvell, ASML. They missed their orders expectations. The CEO suggesting that U.S. tariffs are creating a lot of uncertainty. No kidding. Reuters again says that tariffs may cost chip equipment makers more than a billion dollars.
a billion dollars. Those are what the industry is estimating. LAM, Applied, KLA. You've got AMAT and KLAC, which, by the way, are part of that Bank of America target cut. They are. Look, collectively, universally, when you look at semiconductors, you have to question now, does this change the entire AI narrative?
And I think there's some uncertainty in answering that question because you don't know if the policy remains entrenched. Is this something that is going to be permanent or is this part of a temporary negotiation? I don't know the answer to that. Maybe you guys know the answer to that as well, but I think if you could unlock that answer, then you could make a clear determination on where we're going. If, in fact, it's permanent, it's very obvious to me that a 166 price target for NVIDIA, which is literally 58 or 59 percent higher than where we are here, I mean, that
that is extremely ambitious. So what about the others? The aim, the AMATs that you have, which is target goes to one 90 at B of a KLA goes to eight Oh five, uh, as part of that call as well. And lamb, lamb goes to 90. Right. But in videos, the leader in video leads everything else. I don't think you're going to, uh, be able to see, uh,
a bifurcation in terms of the performance. Wherever Nvidia goes, it's gonna drag the rest of them down with it. So you're looking at the semiconductor industry in totality when you're making a determination where you wanna invest there. If you wanna say, okay, I can pick a winner here, I can look at KLA Corp, I like the valuation, I understand that. But there is so much uncertainty in front of us right now surrounding the AI narrative, surrounding the CapEx, it's not clear, permanent, temporary, which direction do you go?
Yes, Scott, I would add that maybe there's a little bit of good news here, which is yes, China's 13% of Nvidia sales right now, but that number was a lot higher several years ago. And I think that's true also for some of the other semiconductors. So in a way, we have de-risked some of that foreign revenue exposure.
So we can take some souls in that. But the thing that still keeps me cautious on the likes of Nvidia and others is that I think the hyperscaler spending that Joe is talking about, I think that is very much a question mark. Because if you look at some of those largest companies, they're not immune from a consumer slowdown. They're not immune from any sort of retaliation from other countries. So I think they're going to start to worry about the top line. And what do you do when you worry about the top
line, you think about cutting your cap back. So that's why I still say for now I need a positive catalyst and I haven't seen it yet. I mean, there's been so much gloom and doom, Kev, around the tech space of late. Wells Fargo Investment Institute has seen enough. Okay. They've seen enough of the negative. They upgrade the space.
to favorable. They had it at neutral. Everybody seems to have it at neutral right now, at least. And they say, quote, we believe the sector's quality characteristics will serve investors well.
While the AI tailwind likely has legs to continue to drive above market sales and earnings growth for years. In our view, the sharp sell-off provided a potentially fleeting opportunity to add exposure. What do you think? Is a lot of these stocks from Tesla all the way down or down a bunch from their 52-week highs? Is enough enough? I mean, they...
perfectly set it for investors. There's an opportunity here and there is. So last week we bought Apple at $177. We bought Meta at $510. I mean, I think you can lean into these positions here if you're willing to hold them through volatility. Because Joe's point is perfect. We don't know what the outcome is. And that's what makes it so much fun. If we had all the variables, then we would know the outcome. But
I think the old adage of wanting to make investments and buy cheap stocks is something that you want to lean into here at least a little bit. The biggest mistake you can make is trying to time it or to go all in. So just follow our lead. We put a little bit in. If it goes down another 10%, we'll put a little more in. I don't think any of these businesses are in jeopardy of really rolling over at this point. Because to your point, Scott, they're down a lot. You can still, Weiss, think that something is a buy.
buy here and temper your expectations on what you once thought was the possibility of a gain, that's what a lot of price target cuts would suggest. Like Microsoft, for example, BMO. Okay, its target is cut to $470 from $490.
Expectations tempered, but they still reiterate it, outperform. You can still outperform what may be a slower growing stock market. Yeah, but outperformance is not my benchmark. My benchmark's absolute performance. But I mean, you own Microsoft. It's kind of my point. I do, I do. And I have gains in Microsoft. And so I'm not selling it, you know, but...
the return I think is unquestionably going to get extended. So at some point, sure, and it really depends on what your horizon is, again, as we discussed the other
The other day, it depends if you're the asset allocator or if you're being allocated to put in equities. Completely different view of the market in that case. I'm going to guess that a lot of our viewers are not tactical, fast traders in a lot of these mega cap names. They probably lean a little bit longer term in terms of those stocks. And they're most likely long.
Well, yeah. Yeah. I would say the great majority are long. It depends where you are, though. It depends where you are. It depends how old you are. It depends if you're retired. You know, it depends how much risk you take. Everybody's got a different risk appetite. I can tell you, though, that I did sell calls against Meta. I did sell calls against Netflix.
They're far out of the money, but they're near-term expiration. The April 17th, I think that's the date. No, I'm sorry, not 17th, that's tomorrow. April 24th or 25th, I forget what it was.
You sold a covered call on Microsoft in May 430. So let's talk to our viewer who is the long only investor in Microsoft. We've owned it for over 10, 12 years. We sold a one month covered call. So just standard expiration. It's 7.5% annualized return. We sold a call 10% out of the money.
We brought in $2.75. So imagine doing that each and every month, and we do it most months, but you're getting a 7.5% cash flow over and above anything that the stock may generate in dividends. And essentially, that gives you a little bit of a buffer for another 7% downside protection. I have some breaking headlines I want to get to right now as well, because there is a Fed speaker who is making some headlines. Our Steve Leisman has flagged those for us. Beth Hammack, what's she saying?
Yeah, the new Cleveland Fed president, ex of Goldman Sachs at the Treasury Department, says there's a strong case to hold monetary policy steady, Scott. She says the currently modestly restrictive stance of policy is appropriate. But she goes on to say this, if the economy falters and inflation declines, it may be appropriate to ease.
On the other side, with a steady labor market but higher inflation, the Fed, quote, may need to follow a more restrictive trajectory. She's one of just a couple Fed officials who have said maybe the Fed needs to get tighter if inflation is a problem and employment doesn't decline. It's important to ensure inflation expectations remain well anchored, she says, echoing the ideas of Fed Chair Powell. The Fed faces a difficult set of risks, possibly higher inflation and slower growth.
We follow her in part for her comments on the financial markets. And she said the rise in bond yields and the decline of the dollar are not a typical risk-off episode. Scott, I'm interested this morning. Bank of Canada came up with two scenarios. United Airlines, two scenarios. It looks like the quarterback is faking out his own team and maybe the other team, too.
yeah i mean there's a lot of ifs and mays uh in the comments from hammock uh as well which which seem you know rather obvious to market participants i i would think don't you yeah i mean what's unique about this whole situation is generally a company a fed
picks a forecast and goes with it. You may be wrong, but it's your best guess of the lowest risk scenario, lowest risk path to follow. The problem we have right now is that nobody seems able to pick that forecast and go with it. So you have to talk in multiple scenarios, which
Sounds to me like the way a lot of people around your desk there are talking these days, Scott. Yeah, but I actually think that you can paint like, OK, that's good. Like, don't pick a forecast actually and go with it. Be able to adapt to what could be a changing environment and then decide what you have to do when you have to make that decision. I don't necessarily think that's a bad thing when it comes to the Fed at this point.
I think that's right, Scott, given the situation. But it's interesting to think about if we were in a place where a whole bunch of economists saw enough risk to the economy that they were forecasting a recession or an increase in the unemployment rate, the Fed could be in a position right now to be cutting rates or signaling rate cuts. It's not in that position now. So its ability to act preemptively. What about Waller? Yeah.
Yeah, Waller. Waller is alone in that situation so far. He's the only one to say that in both of these scenarios, rate cuts are coming. I'd say the vast majority of the board, Scott, is not on board with that, where if they see, as you just heard Hammock say, who I think is much more in line with where the center of the board is on this particular issue, that if you have this surge in inflation while the unemployment rate remains steady,
You may have to hike more. So she's not on board with cutting in either case the way Waller seems to be laying out. Yeah. Now, Waller doesn't mind being an outlier from time to time. Can I ask you a question? Hold on real quick. Speaking of all this, Steve, the Fed chair speaks today in Chicago, I think, in a little more than an hour from now. What's the context of these remarks, do you think?
Well, that's sort of why I brought you the hammock remarks, because I wouldn't be surprised if what Hammock is saying echoes what Powell is saying echoes what others have been saying, which is that the Fed is in this very, very unclear situation. I really think the operative metaphor comes from Tom Barkin, who said this is not just a regular fog where you put your fog lights on and your windshield wipers. This is the kind of fog where you pull over.
Turn on your hazard lights and stop driving. I think that's where we're at I think you actually just correctly characterized that words just do nothing now till you're clear the way things are going Scott we've had crazy data like this morning's retail sales report heavily flattered by auto sales Which are front-running you went up to nearly 18 million units on an annual basis now you have to tell me what's going to happen auto sales in the coming months and
How much of a drop-off do we get? Same thing when we had a surge of imports, all this front-running. So now you have the front-running and then you have the bounce-back or the bounce-down from the front-running. All of that makes it very unclear as to how the economy is going to operate. And you just don't know, are these 90 days of successful negotiations, unsuccessful negotiations,
More so than that is when you talk about what happens with negotiations with Japan, this notion of currency manipulation being out there could involve changes to exchange rates. And I'm not even sure the market has started to embrace that idea that there's more at play than just the tariff level here, but also things like exchange rates and the way that monetary policy may react to all of this. Bank of Canada saying there may be
potentially deep cuts later in June if there's a fall off in the economy. And we puzzle, of course, over how the Fed could react to all of this. Yeah, all great points, Steve. Thank you. We'll see what the Fed chair himself says in a little more than an hour in Chicago. That's Steve Leisman, our senior economics correspondent. He did reference retail sales. It just leads me to a move that Goldman today made on Target. They're done with it.
they're done with target at least for now because they cut it down to neutral and they say quote we're concerned about seeing a recovery and growth for discretionary categories which was a key tenant of our original buy thesis nobody owns that on the desk but you have tjx you have walmart so you take target somewhere in that context don't you oh i have tjx i have walmart i have costco
These are all, whether it's off price with TJX or whether it's the scale of Walmart or Costco, these are retailers that in this environment are able to manage through. The issue and the concern I have surrounds building inventory, a contraction in the economy,
And then that inventory just kind of sits there. That's the negative to the individual stocks which are in the ETF. As it relates to Target, I just think they have idiosyncratic problems. I mean, the stock is down literally 32% so far year to date. I understand the long-term investment thesis and the brand recognition that this company's afforded. But for me, something that's down 32% in 90 days is not something that is going to be appealing to me.
Joe owns the right stocks. He's got the big three. You've got Costco, Walmart, TJ Maxx. If we go into a recession, and I hope we don't, that's where the consumer can spend down. So TJ Maxx, the one that we own, we think that does well in great times. It does well in slower times.
It stalled a little bit for a few years after the pandemic, but this is a stock I would be adding to on any pullbacks. And I like your other two names as well. All right. We're going to take a quick break. When we come back, excuse me, interactive broker shares are tumbling after earnings today. Joe owns the name, as you probably know. We'll find out what he's doing with it now. Next. What does it mean to live a rich life? It means brave first leaves, tearful goodbyes and everything in between.
With over 100 years experience navigating the ups and downs of the market and of life, your Edward Jones financial advisor will be there to help you move ahead with confidence. Because with all you've done to find your rich, we'll do all we can to help you keep enjoying it. Edward Jones, member SIPC. How will you shape the future of consumer products in retail with confidence? Behind every favorite product or seamless checkout, there's a series of strategic decisions to make.
EY brings real-time insights and deep sector expertise to create value in the moments that matter. Whether it's untangling global supply chains, managing cost pressures, or leveraging emerging tech, EY's full spectrum of services help CPG and retail companies deliver profitable growth. EY. Shape the future with confidence.
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. Welcome back. Let's take a look at shares of Interactive Brokers, which are lower, as you see, following earnings. I thought this was supposed to be a really good environment for those who are capitalizing on the increased volatility and the increased trading around it. What happened? In fact, it absolutely is. And we'll get to the good stuff in a second. Let's acknowledge the bad stuff. Why is it down? It is down because they missed by four cents on EPS.
they missed net interest income they had elevated at expenses to the tune of about eight million dollars and that's the margin loans were down ten to twelve percent which they should be in a deal averaging environment so if you tell me that we're going down another fifteen to twenty percent really fast in the market okay we've got a problem 'cause margin loans are gonna be down again
25 cents to 32 cents, dividend increase, four for one stock split. Here comes the good stuff. And here's why I think you can buy this stock against 140. Over the last six months, it literally traded below 140 for 15 minutes. It got down to 131 on April 7th. So I think you want to buy it here against 140.
I'm maintaining my hold position, and the trading activity was ridiculously strong. Customer accounts up 32%. Stock trading up 47%. As I said, you would expect. Options trading up 25%. As I said, you would expect. Futures trading up 16%. So I'm focusing on the trading, and I don't know. I'm pretty confident what's been going on so far with trading activity. Pretty good chance it continues. All right.
You know, Goldman obviously capitalized and some of the others on this increased trading environment. Speaking of, a couple of calls on banks today. Wells Fargo, top picks. JPM, Citigroup, B of A. That's from Mike Mayo at Wells Fargo Securities. Big banks should benefit.
That's sort of the Goliath is winning perspective that he's had for many months. Weiss, you own B of A. You've got JPM. And then we'll get Anastasia's view on the banks in general in the current environment. Weiss, B of A. Yeah, B of A. Look, we heard the report. I thought it was a good report. It's important to understand that JPM,
B of A, Goldman, same people who navigated the other crises, and they are in just unbelievably great shape on their balance sheets. They literally can weather any recession, any downturn, and they just run those scenarios every day. So to me, they're no safe place in the market in terms of stock price, but they're safe places
in terms of business models enduring and I believe it's Goldman, it's B of A, it's JP Morgan. I don't know about the others. Anastasia, good environment for the banks or no? I think the banks are relatively well positioned given everything else that we have going on. First of all, they have the domestic tilt and we don't have to worry about their supply chains. We don't have to worry about, except for maybe with the exception of Citi, we don't have to worry about a huge customer base outside of the United States.
So I like the domestic focus. If you also think about the rate environment in which we're in, you've got the yield curve that is steepened. And maybe we will get a rate cut or two this year. So that actually could spur lending demand. And we mentioned car sales being fast-tracked in retail sales, and that requires a loan. You know, the Trump administration wanted to bring down the 30-year mortgage rate. So maybe consumers will actually start to take advantage of that. So lending could pick up.
So no capital market activity, but I do think that the domestic nature and lending could be catalysts. Joe, of travelers, citizens, USB, and PNC, which all either had earnings or calls today on the street, which one do you like the best?
uh... travelers citizens usb or p_n_c_ travel at what the without question i i'd love insurance business insurance for travels was ridiculously strong i think when you're looking at the banks the opportunity is beginning to narrow by i'm not excited about the regional banks and we own a bunch of them we own fifth third we own regions we own huntington as far as super regionals p_n_c_ usb i see it narrowing i think the opportunity to stay high up
Big is best there. Goldman Sachs, Morgan Stanley, J.P. Morgan, Bank of America. All right, let's get the headlines with Pippa Stevens. Hey, Pippa. Hey, Scott. California is suing the Trump administration in federal court over President Trump's tariffs on the country's trading partners. In the lawsuit filed today, the state argues President Trump doesn't have the power to unilaterally impose tariffs. In his latest podcast episode, Governor Gavin Newsom said...
Because the state was the number one manufacturing state in the country, the Golden State in particular was feeling the impact of the tariffs.
A federal judge has temporarily blocked the Department of Energy from cutting federal research funding it gives to universities. The judge said she will consider issuing a longer-term preliminary injunction later this month. On Monday, a group of universities, including MIT and Princeton University, sued to block the White House from cutting funding meant to support general research costs.
And Ferrari's CEO says the company will continue to develop gas-powered hybrid and fully electric vehicles. He made the comments during the luxury sports car maker's annual shareholders meeting today. Ferrari started selling hybrid models in 2019 and will unveil its first electric vehicle in October. Scott, back to you. Pippa, thank you very much. Pippa Stevens coming up next. Kevin Simpson making a move in a commodity play hitting a record high. We'll give you the details. We will debate it as well.
Plus, we have our calls in the day coming. At Firestone Complete Auto Care, we hold our service to the highest standard. That's why we have thousands of ASE-certified expert technicians nationally. So if you're looking for car service that's got your back on the road, choose the place that treats every car like their own and every customer like family. Don't wait any longer. Call your local Firestone Complete Auto Care and book your next appointment today.
Are you still quoting 30-year-old movies? Have you said cool beans in the past 90 days? Do you think Discover isn't widely accepted? If this sounds like you, you're stuck in the past. Discover is accepted at 99% of places that take credit cards nationwide. And every time you make a purchase with your card, you automatically earn cash back. Welcome to the now. It pays to discover. Learn more at discover.com slash credit card based on the February 2024 Nelson report.
We're back always active. Kevin Simpson has another move for us, a mining name. Record intraday high today. What did you do? Well, I don't know if this was a good trade or not, Scott. We covered it up about a week ago, a week and a half ago on the 120s, expiring tomorrow on the 17th.
And yesterday we covered it again on the 125s, also expiring tomorrow, thinking we would be able to take some real nice premium, in which we did. But with gold at a $3,300 price target or current price, this Agnico Eagle is at a 52-week high of around 124. We may have to roll the 125s tomorrow. We'll see about the 120s. But believe it or not, this thing's up almost 60% year-to-date.
Wow. Because you can't say that about a lot of names. There's always opportunity somewhere. That's right. Kramer says there's always a bull market somewhere.
There are some interesting calls today as well that we want to get to. Morgan Stanley making several related to machinery and construction. Caterpillar is an interesting call today. I'm coming back to you because Morgan Stanley's taken off their sell rating. They upgrade it to equal weight, but nonetheless, it's not a sell anymore. They do dial back the price target, their expectations to $283,000.
from 300. And they say after the stock's recent underperformance, they think the market is more appropriately calibrating the near-term risk. What do you think? Yeah, so unlike Agnico Eagle, this is down 20% year-to-date. So we did add to it last week. You have to look at this as a longer-term investment, not a trade, especially considering everything that's happening globally. But they have a management change, a leadership change. The COO is taking over on May 1st. So he's going to succeed Jim Umpley, Joe Creed,
has been at the company for a long time really really well positioned to lead this into the next uh... the next phase of growth but i wouldn't expect it to move quickly i think this is again little bit more of a grind cocaine uh... joe apart of this call uh... all stocks you own here united rentals pack our comments balkan price targets taken down everywhere now they may like still some of the some of the names
They just reduce everything. And they should reduce everything. So in the industrial sector, United Rentals, PACCAR, and Cummins, these are three of the worst performers that we have. We'll see what we do with them at the end of the month. The same can be said in the materials sector for Vulcan. So in the materials sector, what do I prefer? I prefer Ecolab over Vulcan Materials. In the industrial sector, I would look at Rollins or Republic Services over the three names they cite.
There's an interesting call on Alibaba today. You know, we talk about this trade war with China every day. Weiss used to own the name. I don't think you do anymore. Joe still does. And it was called a top pick at JPM. Quote, some of the China internet stocks could be even more counter-cyclical. They say in general, we think the impact on online consumption will be insignificant.
Baba is their top pick. They like Trip. They like Tencent as well. Sold a little bit. I think I sold half my position at $138 when I came back from Florida. I spoke with Steve the other day about buying back some of it. He talked me out of it, I think. So I'm just going to sit with the half remaining position that I have currently and see how this environment plays out because I don't think... I mean, Baba has a clear sensitivity to what's going on. And what if they get delisted, right? You...
They're variable interest entities, won't go into long detail, but you only own a revenue stream. You don't own any assets. So if they get delisted and you have to own the listing in Hong Kong, then
then you can have issues. You can have issues collecting. Definitely the companies that can't own foreign stocks, the investments in mutual funds, will be mass sellers right away. So I just don't see the upside here right now. I'm looking at some stocks, three stocks in front of me here that have done really well year to date. And one of them, Kevin, is T-Mobile.
Verizon, AT&T, T-Mobile. We can throw all of them up year to date if you guys want to cycle through those just to show our viewers what I'm talking about. B of A reiterates their buy rating on TMUS. They take the price target up to 295. They had it at 255.
Maybe this is the lesson, Scott, in going back to the chips and the semis to buy them when they're down because there were three or four years in which these stocks couldn't get out of their own way and you were just clicking coupons for dividends. T-Mobile's up over 60% the past 12 months, over 20% this year. They have earnings on the 24th. We expect them to be really good. So I'm behind the call and I'm glad we're in this space. Yeah, I think another message that we could share with all the viewers is, look, center court is clearly semis and technology names. It's been that way for the better part of the last several years.
But look at the performance of EqualWay today. It's down slightly, down a couple of bips. And I think there's the message really for the long-term investor is, okay, maybe 2025 is the year that you maintain positioning in some of these semis and technology names. But look elsewhere.
Look into other sectors. Look into health care. Look at Sencora. Look at Boston Scientific, financials. We talk about all the time some of these insurance names, but there's other names like Arthur J. Gallard or W.R. Berkeley. So I think there's an opportunity to kind of go to places that have been underappreciated the last several years.
I think there's some interesting trends around these calls. You know, first of all, defense has been the way to approach this market. And that's why telecom staples utilities, I think, will continue to outperform. But one quick comment on the industrials. And if I'm looking at the U.S. Goldman Sachs U.S. on-shoring beneficiaries basket, it has names like Caterpillar. It has names like United Rentals.
So if you're playing the long game, if you can stomach some of the short-term volatility, and if you think that the end game is actually going to bring supply chains into the United States, and we're going to build those factories here, and they're going to be factories of the future that's going to require a lot of that technology, I think maybe that's the buying opportunity right now in some of those industrials. Okay, well, speaking of short-term, coming up...
The booming business behind short term options. Kate Rooney breaks down who's driving it, what the risks are around it as it relates to your portfolio. We will discuss next. Welcome back to the Halftime Report. A lot of talk lately about the role a certain type of options trade might be playing in this increased market volatility. Our Kate Rooney following the money for us and has more from San Francisco. Hi, Kate.
Hi, Scott. Yeah, so these short-dated options have seen an explosion lately in popularity, especially those that expire the same day. It is partially thanks to more hedging traders wanting to take a more defined risk, but they've also become widely available to retail investors who now make up the majority of action in what can be a really risky corner of the market. In April, J.P. Morgan noted about a 23% jump in zero days to expiration options tied to the S&P. These expire, as the name suggests,
At the end of the session, same day, they are designed to trade intraday moves, and they're volatile. They're really all-or-nothing trades. And five years ago, if you look back, these made up 17% roughly of all options. Now it's closer to 54% of all of the activity. Part of this is wider availability on exchanges and brokerage firms. Robinhood was the latest to roll these out, the same-day options, earlier this year. CBOE tells me 60%.
of those short dated options volume coming from individual traders that is well above what you see for retail participation in other types of options closer to forty percent overall the options market has been growing interactive yesterday during earnings mentioned a quarterly record for their options volume and it's not all gambling investors do use these for downside protection the bond market i'm hearing is also one factor for the recent boom treasuries do you guys have talked about hasn't been the greatest head to options
appear to be picking up some of that slack Scott. Yeah, a really good tee up for us. Kate, thank you. Kate Rooney out in San Francisco for us. You have thoughts on this? I know. Look, I do. I think market structure has changed so dramatically.
um personally i think it's to the detriment of market conditions but you have to acknowledge institutions have embraced the usage of zero-dated options i know we're reporting on that retail is participating and here's the degree that they're participating you're talking about options volumes that exceed 1.5 million on a daily basis talking about just alone halfway through the day options expiring tomorrow have exceeded 1.5 million in nvidia
Institutions have embraced them. What does that mean? That means algorithms are being written. Algorithms are being written surrounding the zero-dated options and literally towards the end of the day,
the movement between two o'clock and four o'clock is being driven without any news not on a fed day not the the white house stepping in on a day where there's no news flow from two to four o'clock the direction of the market is being driven by zero days so you you agree then with the the concept that it has added a degree of volatility in an already hyper volatile market environment is that fair to say exacerbates
volatile conditions and in non-volatile conditions, it actually suppresses the volatility. It is the dominant force as we move towards the close every day. Between 2 and 4 o'clock, you watch those options, the underlying on individual names and on the SPY, the QQQ, the IWM, and you can see where we're going to go into the close. Wow. All right. We've got to take a break. When we come back, we'll find out from Kevin another move.
StockDent reports earnings tomorrow. It's in the setup next. All right, the setup, Amex. So it's going to report tomorrow before the bell. You bought more a week ago Monday.
And you actually sold some yesterday. Take us through what's going on. Yeah, just real quickly, we have a $300 call that's going to expire tomorrow on it. It pulled back a lot last week. At $235, we added. It's run quite a bit. I think it's $256 now. Yesterday, Scott, we were forced to trim it back. It was up $20, and it became a too large a position for us. I think the earnings are going to be stellar. It's going to be outstanding. But the problem is it's backward-looking.
And I don't know how much that's going to matter to the markets moving forward. Yeah, good point. We'll see what they say as well. You know, the numbers maybe are sort of insignificant, but it's the commentary. What do you think? You own it too, right?
I do. I think Kevin did an eloquent job explaining of the setup for it. I think on any decline, though, I'm a buyer. Yeah, 100%. I want to stay in the stock. What about UnitedHealth? Because that's going to report as well. Weiss, you still own that name? I do own it, and it's a pretty decent-sized position. Look, I don't know. I don't know what the quarter's going to be.
There are challenges. I don't know what the future is going to be near term in terms of what the government does with Medicaid. So there's definitely risks and there's also opportunity when it comes to it. You know, aside from social socialized medicine in the UK, elsewhere, it's the largest insurer in the world for health care. It's a critical business that they're in. So I think the future continues to be extremely bright for them. All right. We'll take a break. We'll do finals next.
I'll see you at three on the bell. Robert Kaplan, Jeff Richards, Lauren Goodwin, Chris Harvey. I hope you'll join me as well. What's your final? Robinhood. Joe gave us the great bull case on interactive brokers. I think Robinhood will have great numbers. Okay. Thank you very much for that. Stephen Weiss. I like the safety of two-year treasuries. Okay. Okay. Anastasia.
Software. It's been a remarkably resilient month today, and I think it continues. The margins are high and sticky. Joe T. And one of the software names that has been very resilient to the rest of the industry, Datadog. Okay. We will see what this market does. The NASDAQ is the big drag, as you know, down more than 2%. That's 367 points. I'll see you on the bell. Now the exchange with my man Wilfred Frost. Hey, Wilf.
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.
How does Arizona become America's chipmaker? How does Arizona deliver healthcare professionals? How does Arizona provide great teachers for its classrooms?
With the help of AZ Opportunity. AZ Opportunity invests in Arizona's students and their families to meet workforce demands in high technology, healthcare, education, and more. AZ Opportunity, Arizona's path forward. Supported by the Arizona Board of Regents. Learn more at azopportunity.com.