Can Stocks and Rates Rise Together? 1/14/25
Halftime Report
Deep Dive
Why is the stock market reacting negatively to the PPI report despite a cooler inflation read?
The stock market is reacting negatively because, despite a cooler inflation read, interest rates barely budged. This is due to ongoing uncertainty about Trump 2.0 policies and whether they will be inflationary. The market is also assessing the potential impact of these policies on growth and inflation, which is causing volatility.
What is the historical relationship between stock market returns and rising interest rates?
Historically, there is no set negative correlation between stock market returns and rising interest rates. From 1950 through the pandemic era, the S&P 500 had an annualized return of just shy of 11% when the 10-year yield rose by 1% or more, which is the same as its average return in all periods. This suggests that rising rates do not necessarily hinder stock market performance.
Why did Stephanie Link buy UnitedHealth stock despite recent controversies?
Stephanie Link bought UnitedHealth because it is the number one managed care company in the industry, trading at a discount compared to its historical valuation. The stock is at 17 times earnings, down from its historical average of 21 times. She believes the company's strong fundamentals, including its Optum segment and $18 billion buyback program, will drive future growth despite short-term challenges like high medical loss ratios.
What is Josh Brown's outlook on the housing market and related stocks?
Josh Brown believes the housing market is poised for a rebound if mortgage rates decline. He notes that homebuilder stocks like KB Homes and DR Horton have been heavily sold off, with the median stock in the XHB index down 26% from its 52-week high. He also sees potential in mortgage companies like Rocket and United Wholesale Mortgage, which could surge if rates drop.
Why did Jim Laventhal trim his position in Apple?
Jim Laventhal trimmed his position in Apple due to concerns about the stock's valuation and the lack of a super-cycle upgrade in iPhone sales. He believes the stock has not fully priced in the slower-than-expected upgrade cycle and is rotating into other sectors like healthcare, where he sees better opportunities.
What are the key factors driving Stephanie Link's bullish stance on healthcare stocks?
Stephanie Link is bullish on healthcare stocks because the sector has lagged significantly, making valuations attractive. She highlights UnitedHealth as a top pick due to its strong fundamentals, including double-digit earnings growth, a robust buyback program, and its leadership in the managed care industry. She also sees potential in other healthcare names like AstraZeneca, which is trading at a discount due to concerns about its China business.
What is the significance of the Medicare reimbursement rate news for UnitedHealth and other healthcare companies?
The Medicare reimbursement rate news is significant because it indicates that the government recognizes the need for companies like UnitedHealth, CVS, and Humana to administer Medicare. The higher-than-expected reimbursement rates suggest that these companies will continue to play a critical role in healthcare delivery, which is a positive signal for their future earnings and stock performance.
Why does Josh Brown believe Reddit is a compelling investment?
Josh Brown believes Reddit is a compelling investment because it is an under-owned social media platform with significant growth potential. The company is launching new products like Answers, a ChatGPT-like feature, which could enhance user engagement. Reddit also has strong revenue growth expectations of 60% for the year and is generating positive cash flow, making it an attractive long-term play despite potential volatility.
What is the outlook for GE Aerospace and GE Vernova according to Stephanie Link?
Stephanie Link is bullish on GE Aerospace and GE Vernova. She believes GE Aerospace will continue to perform well due to strong execution by CEO Larry Culp and improving free cash flow. GE Vernova, on the other hand, is seen as a margin recovery story, with potential for margins to expand from 2.4% to 13% over the next decade. She also highlights the electrification theme as a long-term driver for GE Vernova.
What are Goldman Sachs' top equity strategies for 2025?
Goldman Sachs' top equity strategies for 2025 include benchmarking the MAG7 stocks, owning the S&P Midcap 400, and focusing on U.S. M&A candidates like Zoom, Twilio, and Take-Two. They also recommend stocks with small and medium-sized business exposure, such as Elanco and Zoetis, and AI-enabled revenue beneficiaries like Uber and ServiceNow.
- Debate on the relationship between rising interest rates and stock market performance.
- Analysis of inflation data (PPI) and its impact on interest rates.
- Discussion of Trump's potential economic policies and their inflationary implications.
- Experts' opinions on the likelihood of a stock market correction.
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