Can Stocks Withstand the Rate Surge? 1/10/25
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All right, Carl, thanks so much. Welcome to the Halftime Report. I'm Scott Wapner, front and center this hour. That blowout jobs reports, the yield's higher, stocks falling sharply. We'll debate the fallout for the market and your money with the Investment Committee today. We're all at post nine. Josh Brown, Joe Terranova, Jim Laventhal, Bill Baruch. We'll take you to the markets. Carl just told you what was going on here. Dow's down more than 700, but we're down across the board. Yields are way up. The 10-year and the 30-year, the highest since November of 23. The dollar's up, crude's up.

And by the way, Josh, the S&P's gains since Election Day are basically all gone now. Are we now worried that the economy is too hot?

for stocks. So I don't worry about that. And one of the recurring themes that I've talked about throughout the course of the last couple of years is that every time the market sells off because the economy is too good, it's a buying opportunity. Go back and look at the last three years. That's been the case. We've had these disturbances periodically as a result of forget inflation, just purely on labor reports.

where all of a sudden we'll see the belly of the curve moving a lot, which is what we're seeing today, three years up 10 basis points to 443. Or we'll see this moment where wage growth surprises the upside or confidence is higher than expected,

and they sell and they sell stocks off and i understand the impulse because a five percent ten year is real competition for an investor who's got a plan where they only need to make seven or eight percent a year to hit their retirement goals why would they want to take more risk so there is that substitution factor and i totally get it and i'm not dismissing the impulse i'm just telling you it's not a money maker

IT'S WRONG. IT'S WRONG. IT COULD BE A MONEY SAVER IN THE NEAR TERM. WE HAD 2.2 MILLION JOBS LAST YEAR IN TOTAL. THAT'S THE FINAL READING WITH ALL THE REVISIONS NOW. THERE WAS THIS WHOLE NARRATIVE STARTING IN THE BEGINNING OF THE YEAR AND ALMOST UP UNTIL THE ELECTION, WHICH IS THAT EVERYBODY

every jobs report's gonna be the last one, and then the bottom's gonna fall out, and it just won't happen. And so you're gonna have people trot out seasonality, you're gonna have people talk about it's holiday hiring and it's gonna go away. We're gonna keep doing that, and the bottom line is, if you wanna sell stocks because the job market is materially breaking down, that makes more sense to me than I need to sell stocks because the job market's too good. I get that it might be the right trade for the next 10 days,

I don't know the crystal ball neither does anyone else. I just think it's the wrong mentality if you're a long-term investor. And that's what I am. Not talking to the traders. I'm talking to the investors. I think, Jimmy, it's just sort of unwinding expectations that many investors had. As you go back to September, Fed's cutting rates. They're going to do the jumbo cut and a few cuts more. And you're going to have rates go up.

and that's what's happening now expectations for inflation are going up as we saw today from umish

Austin Goolsbee told Leesman earlier today there's no evidence of overheating in the U.S. economy. But, Josh, I think makes the best point here that you have competition again. You have competition again. You have the biggest inflow into cash, according to Bank of America's flow, since April of 20, $143.2 billion. And you have the biggest inflow into treasuries since August of last year.

Yeah, I think expectations clearly got ahead of themselves as far as what the economy can do without a little bit of inflation rearing its head. I'm not convinced that inflation is back. I do want to remind everybody the first quarter of last year we had three months of hotter than expected inflations. It kind of freaked everybody out, but then inflation started its march back down.

That may well be the case here. But in terms of expectations, and I like that word, I think it's healthy that expectations are being reset right now. The proximate cause is higher interest rates. But what I mean to say is, and I said this last week, we may be in the middle innings of a correction. Nobody can time a correction. And like Josh, I'm not suggesting that you try. I'm a long-term investor. I'm certainly not going to give up on certain great companies that I own because I think the markets might be punk for a month or two. But

But a correction which is long overdue will help reset expectations of where we go forward. And at the end of the day, this whole paradigm of good news is bad news, it's not a paradigm I ever play with. And it's also one that is much short-lived when you compare it to the good news is good news. We should focus on the good news is good news. People are employed. And on the inflation front, 3.9% in average hourly earnings increase year over year is below expectations.

and it's really not that high. Let me ask you a question. Did you buy the small caps when you did because you expected interest rates to be where they are today? That's kind of a rhetorical question because I expect you to tell me, no, I didn't. Of course, the answer is no, I didn't. However, if you'll allow me to just extend, people have, I've been saying this for quite some time, in my opinion, erroneously equated higher interest rates with negative returns on small caps.

The reason that higher interest rates could hurt small caps is if you get a recession, which will hurt the top line. The idea that interest expense being higher than expected hurts small caps is not right. Interest expenses, a percent of sales is around 4% in the small cap sector. Now it's clear by the way, Scott,

Trade hasn't worked, I'll be the first to admit. But I think with the continued strength in the economy that it's on the cusp of working. You go back to the 1980s, there's been, I think, eight recessions. I might be off on that number, but what small caps need is a recession because small caps work coming out of the recession. A strong economic environment is not conducive to small caps. The Russell 2000 looks like it's about to break down below its 200-day moving average.

Look, I just think we're in an environment where you have to understand sentiment. You have to understand positioning. The equity to bond negative correlation is the dominant force in the market right now. It elevates the importance of CPI next week. It elevates the importance of equities.

over the coming weeks, and it fosters a rotation internally in the market. Scott, it's hard not to talk about, quote-unquote, the market on a day like today, but I think you go underneath the surface and you're beginning to see that the rotation is actually happening. Energy, health care, some of the defensive-oriented sectors that sat out 2024. They're seeing the flows of capital. And that doesn't save the overall market. I was going to say, neither of those factors are...

uh... great factors for a positive equity market story. Correct. If you're looking at, look, where's the S&P 500? No. That's not good because you have a day in which Apple and Nvidia and Amazon, they're all down 3%. So that's going to be the drag on the S&P. Well, I mean, it's not just those names. If you say, you know, Bill, okay, it's not just bad for small caps, higher rates. Take a look at tech. NASDAQ's on track, by the way, to close below its 50-day for the first time since September.

That sector in and of itself, tech down two, three quarters percent today from the S&P. And many of the higher multiple names within that space or ones that have run up a lot are the ones that are getting hit the hardest today. We'll show you a smattering of them that have some ownership on the desk. Applovin, which we said a thousand times when it was on the way up last year, at some point it was up like

like 900% for 2024. Throw that stock up if you could, please, because it's down a lot today, down 5%, 15 or 16 bucks. Palantir's had a really terrible stretch here. It's down another three and a half, but there's Robinhood, there's Broadcom, there's Netflix, Bill, Salesforce is down. We freeze this screen, though? All five of these names are up 100% or more last year. Sure, but that's one of the reasons why it looks the harder you go up,

the harder you potentially fall. When you have a rising interest rate environment, it unsettles stocks, Bill, like these. Yeah, I think if you look at some of these names and Broadcom on there, I think Ultimates proved to be a buying opportunity. I think Mizuho came out, reconfirmed some of the price targets. They're going to introduce a two nanometer chip.

Take a step back. I mean, really, it is about yields. I mean, you're getting the 10-year closing in on 5%. And some of these names that are high-flying, it's sort of a valuation reassess. But I'm not sitting here scared. I think this is going to be a buying opportunity. If we finished out last year and had this nice little stroll higher into new all-time highs into December 31st,

I would be much more scared here right now, but let's take a look at the scorecard. We ultimately, we had the VIX go through 20, surge through 20, go through 25. We had the fear and greed index hit extreme fear. You know, the dollar index has been relentlessly higher for some time now. And everybody's been talking about the five-year, 5% tenure. So I think we've had a little bit of a cleansing already take place through the market, but we haven't really had it on the calendar year yet. So I think this is that little bit of a slip, a

I think it proves to be a buying opportunity. And say, yeah, some of the names that have been flying, like the Apple ovens, it's going to be a reassess here and start coming in. Now, I gave my head of research some homework earlier in the week. I said, Palantir, where do you want to buy it? Let's find a price target. When this thing comes down, where do we want to buy it? So I think this is that time to say, get your shopping list ready. I want to make sure, though, nobody has amnesia. It's the worst week ever for Palantir. But I want to make sure nobody has amnesia. So.

So right now, there's only a 3% chance of a rate cut at this meeting. Let's not act like that was a 50% chance last week. It was 11%. So it's not like the market was offsides. The bond market certainly wasn't, I should say. Was App love at offsides? I would argue every day you wake up, it's offsides. So we should just remember, this is not that big of a shift in expectations relative to seven days before we got the job support. You just said it.

Again, it offsides. Like a lot of these stocks went up as much as they did, not necessarily based on fundamentals, but the overall momentum. Sentiment. Environment, where sentiment was, expectations that rates were going to continue to come down, that the economy was going to continue under a new Trump administration. Yes, but these stocks rallied with...

These stocks rallied with the rally in the 10-year. On September 5th, just last year, not that long ago, the 10-year was at three spots, six, four. Today is at 109 basis points higher. And those stocks ripped during that entire rise in the 10-year. So that correlation isn't as perfect.

inverse correlation is not as permanent as we'd like it to be to the point where you could set up a trading algo and say, rates up, sell high beta tech. It literally hasn't worked that way. And you're right. It was the cyclical names, a lot of those industrial names, the small caps, those are the ones that were, remember the Dow was down 11 or 12 straight days during that period as the 10-year ascent did. Applovin still has positive momentum. It's not even back to its 50-day moving average just yet.

Netflix, Palantir, they've both broken below their 50-day moving average. Let's get a six-month. I'm sorry, John. I'm going to give it back to you in two seconds. Let's get a six-month on Applovin if we can. I'm going to show this to Josh. You want to buy that chart? Because that's not so bad. No, not so bad. Applovin?

That's so bad. That's not so good. That's so good, but not so bad. Put it in a logarithmic view. You can see a little bit. Because when these names that run so much, look at it at a percent change basis rather than just the chart. It makes it look a little more easy to digest. But, Scott, you said at the beginning of the show, we've given back now the, what do we want to call it, the Trump bump after the election? In small caps, gone. No, you basically, we gave it all back, right? We basically gave it all back everywhere. And a lot of those stocks that we're talking about,

They kind of went parabolic after the election. That's when I think you could say you had the exuberance and the excessive speculations and those types of names. So it's reasonable to see them fall back to where they were prior to the election. But you think that's a great looking chart right there?

I'm looking at today. I mean, I'm looking, we're looking at app loving that. That's what we're looking at. I think you're looking at the same thing. I'm looking at app loving over the last 12 months. That's app loving over the last six. Yeah. Over the last six months. Well, obviously if you look at it over the last 12 months, you're going to say, wow, unbelievable game. There are no good charts right now. There's, I have 16 names on my best stocks in the market list, which is driven by tacticals primarily. Uh,

There's only two tech names on there, Google and Roblox. I've got four energy names. I've got Baker Hughes, which I'm long.

EQT, which I talked about on the show last week, KMI and LNG, which I think is a Jimmy holding. That's it. And then I got some random weird stuff on there. There are not a lot of great charts in the market right now because December we slumped into year end. And now we've got this volatility that probably breaks a lot of uptrends. It's perfectly fine if you're an investor. It's new setups on the way is the rational way to think about this.

By the way, Chris Harvey over at Wells Fargo talking about the small caps and the relationship to rates says you can expect another 2% to 3% small and mid-cap sell-off, pushing that group into a correction. Okay. 2% to 3% doesn't sound that much. No, I got you. I got you. But, you know, something that Joe said on this topic I think is relevant and bears repeating. Better than what Josh said?

Just when you were talking about small caps need to come out of a recession. That's historically true. But I will say, I think that the last three years we have seen a lot of historical patterns broken. And the way I would describe it is this way. What you're looking at is an economy that has been late cycle for three years. I mean, literally for three years, people have been talking about late cycle. Let's get the recession. Let's clear the deck and then small caps will work. I don't think we're late cycle.

I think we're mid to early cycle. I think the cycle nomenclature and context has been broken, honestly. I think the pattern that you accurately described historically is broken. What if the economy is not the stock market? What if what small caps really need is a massive rotation out of technology? Because small caps don't have technology as a large allocation. Absolutely true.

I do think the economy is the stock market in the long run, over a quarter or even a year. I think I'm with Joe. I think I'm with Joe, though, Jim, because I think you'd have to agree with me. And you've been on the right side of this most of the time. We haven't had a cycle. We have what we have now. We have now is we have events. We don't have we don't really have like a classical recession, like inventory builds up a General Motors and they start laying off stocks.

they start laying off union employees and we have a recession. What we have instead are these events. And I'm not saying one is better than the other, but

For the last 15 years, we've only been in recession for two months. I totally agree. So can economists and politicians actually micromanage the economy this well? I don't think so. There's a difference, too. Let's be clear. There's a difference between directionally correct and positionally correct. Right. OK, so, yes, you can be 100 percent right on where the economy's direction is going to be. You can be 100 percent wrong on how to play that within a stock market that is spooked by higher interest rates. Yep.

and ones that are likely to remain elevated for some period of time. - Yeah, I do acknowledge the small cap trade, Scott, has not worked. I still, sorry, I'll make this quick. As you know, every day I wake up and I don't look in the rear view mirror, I say, what is the right thesis today going forward?

I give you my best thinking. It has been wrong. I think it's going to be right. Here's the problem. I think we really have to acknowledge that small caps, as these companies get bigger and they grow, they get out of the index. The S&P is the complete opposite of that index, where the companies that are making money, the companies that are getting bigger, become a bigger portion of the index. It's actually worse than that. Anthropic just got a $60 billion valuation yesterday. They're skipping over it.

OpenAI is worth $157 billion. They will never be small caps unless something goes really wrong post-IPO. So it's actually the history of small caps has been made irrelevant by the amount of the trillions of dollars that are available to privately held companies. It might be a broken investment.

People say, oh, doesn't it have a role in the portfolio? Yes, of course. The role of small caps in the portfolio is to make you not want to kill yourself over the EM sleeve. That's what we do. That's the small cap role. It's very, very difficult for us to look at past history and say, here's that traditional small cap role coming out of recession, going into a recession.

We just don't know if it's still going to be that, given how many small caps don't trade on the exchange. Josh, just to accent your point, and this is for the viewers as well, I mean, the IJR, the small caps, the S&P 600, is a position in my portfolio. It's roughly 5%. I'm not making my bed every morning saying, go small caps. I mean, I've got a lot of large caps as well. This should be a part, this is the point you're making, a part of the portfolio. But this shouldn't be your only position. I'm not calling for that at all. But I mean, if you look at

This week, financials are down 3%. You can be outside of small caps and still areas where you thought were going to do well because of the strong economic expectations, but that rising interest rates have sort of thrown a lot of things out of whack. What's funny is, as all this is happening, as we talk about tech and the Nasdaq's down almost 3% on the week,

You've had the first inflow into tech, Joe, according to Bank of America, and their fund flows in six weeks. So, you know, we had a top heavy market again, and now you had money chasing that trade just as it looks to be wobbly at best. Yeah, and I think it's the institutional investor taking advantage of the last several weeks and the correction that you've had in a lot of these names.

I think you have to acknowledge and set the expectation. I'll go back and reference Applovin, Palantir, Netflix, the charts that we were showing before. The near-term momentum points lower. I've said that in Palantir. Upper 50s to low 60s. NVIDIA, we've tackled that all week. You had the keynote address from Jensen Wang. You had a reach to an all-time high. You had no follow-through. Mid-130s, that's exactly where it is right now. So,

I think you have to understand what's very important always is where is sentiment relative to where is positioning. So capital is going into technology. Makes sense to me because we've reduced positioning over the last six weeks. There's room for capital to flow in there. What's interesting is the financial sector. I don't think the financial sector has worked off

the bullishness from twenty twenty four and the bullish positioning from twenty twenty four just yet and that actually speaks my point when i say sometimes the economy's not the stock market because you would think about financials and you'd see a steepening yield curve you'd see a pretty good economy

you'd say lending consumers in good place, that would be good for financials. But it's not because sentiment and positioning doesn't align. You have to work off that bullishness. But you'll get earnings next week, starting with the biggies on Wednesday, Citi and Goldman, JPM. Be careful on financials, too. These insurance companies had a good year last year. They've grown in market cap.

uh... they've grown in importance they're not banks but they're in the index take a look at an all-state that's getting black on the california wildfires saw the whole space of the job in all state yes it's it's so so they're they're factor in the index they're not as big as j_p_ morgan uh... i think progressive is maybe the biggest right now

Like Chubb? Or Chubb. Let me hit a couple of individual names that are interesting to me today. AMD, just to get back to tech for a second, but just as an individual story today. Take a look at the stock. Down almost 6%. The second downgrade this week, Joe. Downgraded today to neutral from buy at Goldman Sachs. The target goes to 129.

from one seventy five stocks can stay range bound on a relative basis until the market regains confidence in a m_d_'s future product of chocolate as i i i'd like it to stay range bound we have it in the t_f_ it's down uh... twenty two percent over the last fifty two weeks the stock has not worked it has not participated in the semiconductor a_i_ halo positive affect the stock peaked

in early march of last year and it's been in a downtrend of downtrend rather ever since so it's clearly has negative momentum uh... fundamentally we could speak glowingly about this company backwards and forwards but it's just not performed fundamentally big competition coming from all of the other mag seven names that are now going to manufacture own c_p_ use some of them are working with high one semi uh... but like in the end

It's a market under siege. They just did a deal with Intel where they're going to both build things with the x86 architecture. And that's literally what their former customers are now deviating from. So the ARM architecture is in ascendance. And this is a dangerous name. Well, you talked about working off bullish positioning and financials. How much more bearish can AMD get at this point with these downgrades, finishing last year, losing?

being the biggest loser. I think at this point, I mean, you can only have some surprise upside news. That's why we did buy it earlier. I highlighted on the show earlier this week, a small position with sizing it properly. I think there's tremendous upside in a name like this as the year evolves. It's an AI stock that went down in 2024. That's like a

Dave Matthews fan who doesn't get up when they play ants marching. What is even going on with this thing? I'm looking at analyst price target, 12 month price target, 178. Stock is 114. Yes. They're reaffirming these price targets. 52, 72, 77% of the street is bullish on the name. So I think the street is still in love with the name. I don't, I don't think you've, you've reset sentiment on it at all.

Well, you go through the end of last year, being the only loser in tech. I mean, how much more tax loss harvesting could it withstand? I think a lot of sellers had come in. Look at this name. Maybe if that took place in the middle through the end of December, wait 30 days. Let's see how this thing looks come middle of February. Yeah, crowded positioning, too. And it's very top-heavy with NVIDIA and Broadcom. Yeah. Right? So there are only so many dollars to go around to the perceived winners. One of the suggestions about AMD this week, I think it was in the earlier interview,

downgrade was, yeah, well, maybe they're not going to be as competitive as quickly as some had built their hopes on relative to NVIDIA. Well, cash flow-wise, I think is really the exciting thing. If they can come through with some AI upgrades in the PC space that has been taking a little longer than everybody expected, AMD is going to be a big beneficiary. And then if you see, you know, talking about

Nvidia being the king of the ball here, if it starts to come down a little bit, you may see some rotation. Some people move out of Nvidia, then they go to an AMD. - And what about Tesla real quick before we take a break? The target got bumped up today at Deutsche. They reiterate their buy rating. You take a look at the stock.

It's 420 is the new price target from 370. - How clever. - I know, exactly. It's the first thing I thought of, obviously. - You could skip all the rest after you say that. - I know. I literally saw that and that's all I saw and I was like, really? - We own the name, of course, and we've managed the position as it went through the 300s. We're basically just gonna let it run here. I think if it starts breaking down into some of that gapping, breaking out area, 300 to 350, I'd be worried.

But when a name moves and doubles in the manner that it has, you have to expect some volatility. I think it settles and trades really well around here at 400. It's going to build for the next move. I mean, it's obviously it's not it's much more than a car company here with Elon Musk aligning himself with the White House. I think big things are to come. But I think volatility is still heavy going to be here. If it gets to 420, I feel good about 469.

All right. We'll take a break. When we come back, we do have green arrows today, believe it or not, in the sea of red. A couple of committee names are bucking the sell-off, hitting all-time highs. We'll talk about it next.

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We're down to seven handle as you see there on the Dow. We want to talk about some stocks on the move. Delta is bucking today's trend. Take a look at that near 10 percent. Jimmy, I'll give this to you first. Strong outlook, record high for the stock today. What do you think here? I think all things are going right at Delta. And, you know, one of the things that I look at first in the earnings report is what's the leverage here.

They paid down 3.6 billion in debt last year from 21.6 to 18 billion in net debt, probably going to do another 3 billion this year. Now, why does this matter? It matters because this is the means by which the multiple is going to re-rate. I do think as the debt continues to come down, this could go to a 10 multiple or higher. Uh,

The guidance that Ed Bastian gave is $7.35 for this year. I think he's low-balling it. He knows better. Low-balling. He said that this year is going to be their best year ever. Well, yeah. Well, it looks that way. But here's the thing. We all know this as airline investors. Things can get out of control. You think about fuel prices. Maybe they go higher. Maybe there's a turndown in the economy. None of us, including me, see it. They own the refinery.

Okay. You know what I'm saying? It is the best of the airlines. Yeah. Unequivocally, it's the best of the airlines in terms of how it's run, the customer experience. Just to summarize the point, this should trade at a 10 times multiple or higher. I think they're low-balling the earnings estimates, probably do $7.50. $75 becomes a target. $4 billion in free cash flow next year, which would be 18% higher than 2024. Forget that it's an airline. How many S&P 500 companies can you say that about? Not many.

I think what they have done better than any other airline is focus on the service of the customer. Yes, absolutely. Absolutely. Over the last several years, that was low hanging fruit for the airline industry. And they've embraced that. I know people that will only fly Delta say to them, I'm almost there. You go to Toronto, fly Air Canada. No, I got to find a Delta flight. And I think that's exactly what they have done. I was as skeptical.

when the rules took the strategy into these airline names, I was as skeptical as any position that we've ever held. I was, airlines? Are you kidding me? But United Airlines, Delta Airlines, kudos, Jimmy. You've nailed these fundamentally all the way up. They have performed. They have worked well. And what's interesting about it

is I keep hearing about all the concerns surrounding inflation and the impact of inflation on business travelers and consumers. It's just not happening. Well, I was going to say, you guys are waxing poetic over here about Bastion. Scott Kirby's throwing something at the television. Say, what about us? Man, look at the stock chart.

Look at United over 12 months. You know what's not working? That's the best performer. JetBlue, because this is about the use. JetBlue has the worst record of on-time departures of any of the airlines. They just got a big fine over it last week. Remember when it was the startup? Remember when it was the company? Yeah, exactly. But look, I want to be careful here. I do think there has been a fundamental change in the airline industry, the biggest of which is restructuring the cabins.

You go back 10 years ago, this was all about business travel, charge multiple thousands of dollars to fly across country. Now it's not that anymore. It's charged maybe a thousand to get in that premium select economy plus whatever you call it. That's where these companies are making money. And I have

to give it to management, whether it's got Kirby or Bastion or the rest of them who have done this, because go back four years ago in the heart of the pandemic, everybody said these things were dead. Business travel is never coming back. We're doing Zoom. They figured it out. Kudos to them. All right. Constellation Energy, they're officially now buying Calpine 26.6. Bill, record high for that stock today. Joe, you own it. I do. We spoke about this the other day.

when the story broke. Yeah, and the stock was down then. The stock was 229 at the time, and we talked about that being an opportunity. I think there's something really important for investors to understand, and that is that the utility sector in 2024 awakened. And it awakened in a magnitude...

as it relates to investor opportunity that that sector has never seen before. And I think it's a secular story. I think now investors have to understand that the utility sector is part of the AI story, and that's going to continue to play out. I think it's well known now. So in a lot of conversations that I have had with advisors in 2024, when I talk about utilities and I say, you need to own utilities, they'll say, yeah,

this is just a one-year fad. They're just reacting to some partnerships like we saw with Constellation and Microsoft. No, I think it's more than that. I think this is a big story that's going to play out over the coming years. And I think that having utilities in your portfolio is not something which...

Which it's been in the past where it's something where you dismiss win resorts. They're buying crown London from Blackstone Jimmy you own that big disappointment this stock It has been a big disappointment and you know, it's talking with Patty's a producer this morning She said well is it under review and and I said to her and I'm saying to everybody now. Yes It's under review. Here's my review The company continues to generate fabulous operating reports and the share price stinks. It sucks and I know that and

I'm going to stick with it because, again, just going back to I look forward, these operating results seem like they're going to continue, whether it's Las Vegas, the pickup in Macau, the Dubai operations that should start next year. And I think that it's pretty soon that all of this will get priced into the stock. I can't tell you the exact timing, but the operational results are there to keep me in the name.

That's great. Sweetgreen upgraded to buy today. That's its city. Josh, you sold it in November and the stock's down almost 20 percent since then. But you want to talk about it? Yeah. When I sold it, I basically said it was a consequence of how much it had run. Longtime viewers of the show understand that on trades, I'm usually rolling a stop higher as they work.

I'm reviewing my stops each Friday. And what I don't want to do is turn winners into losers. Doesn't mean it's off my screen. Doesn't mean it's out of the question for me to get back in. I'm just not currently in. I do like the story a lot. And I do think that there are some interesting aspects of the story, including robot salad makers, which if you want to go see one, I think the one at One Pen Plaza in New York is

You can literally see this thing churning out like 100 salads an hour. You pop in there before the Knicks? I'm not a big salad guy, Scott, but I'm going to do Cicciamo tonight, actually, before the Knicks. So shout out to Danny Meyer. But look, Sweetgreen's an interesting name from that standpoint, but it's going to have its ups and downs. And right now it's in a down situation.

And I don't own it currently. What about BSX? That's Boston Scientific upgraded today at Deutsche. They had a hold on it. They put buy now. Price target to 108 from 87. So this is a stock, and we often talk about this on the show. You want to look at relative performance. You want to look at an individual stock versus the sector. What does the performance look like? And in a year of 2024 where health care underperformed, you saw a Boston Scientific outperforming.

actually outperform along with Intuitive Surgical. We own both those names in the ETF. It plays exactly into, I keep mentioning what Adam Parker's talked about, owning healthcare. It plays into it. And I think where we are today, January 10th, after the unemployment report, we really are in the midst of an internal rotation within the market that's going to favor energy, going to favor healthcare. Okay. Silvana now has the headlines for us today. Hi, Silvana. Hey, Scott. Good afternoon. How

Officials in LA say the death toll from the fires has now risen to 10 people as more than 150,000 remain under mandatory evacuation orders with more than 160,000 additional people warned they might still need to flee. However, a small piece of good news today as officials say the Palisades fire is now 8% contained, marking the first time firefighters have been able to establish a fire line around its perimeter.

Federal prosecutors recommended a sentence of at least 15 years in prison for former New Jersey Senator Bob Menendez's bribery conviction. And a memo filed late yesterday, prosecutors said the sentence would, quote, deter others from engaging in similar conduct. Menendez is set to be sentenced January 29th.

And global banks could cut as many as 200,000 jobs in the coming years as artificial intelligence takes over roles currently handled by human workers. A report by Bloomberg Intelligence says back-and-middle office operations are likely to be the most at risk. But the report said AI won't replace jobs, but it will change the nature of the job, Scott. I'll send it back to you. All right. Silvana, thank you. Silvana, now coming up, a tale of two crypto trades under investigation.

President Trump. Our Tanae McKeel explains coming up next. At Capella University, learning the right skills could make a difference. That's why our business programs teach you relevant skills you can take from the course room to the workplace. A different future is closer than you think with Capella University. Learn more at capella.edu. Global markets, up to the minute, front page news. Wake up to Frank Holland and Worldwide Exchange. Weekdays, 5 a.m. Eastern, CNBC. Live ambitiously.

All right, Bitcoin's bouncing today. It has been a shaky start to the year, to say the least. Our Taneya McKeel says it could be a tale of two crypto trades under incoming President Trump. She joins us now to explain. Hi, Taneya. Hey, Scott. Yeah, that shakiness could definitely continue through the first quarter. That's what traders are telling me after tariff concerns dampened enthusiasm this week.

Remember, crypto is, of course, one industry that stands to benefit this year from a pro-crypto White House and Congress. So Bitcoin rallied more than 45 percent in the month after the election. So on the tariff concerns, that's a theme that extends beyond Bitcoin. But it highlights these two opposing aspects of the Trump crypto trade now coming into conflict. So on one hand, the promise of better regulation that could help crypto companies survive.

versus parts of the agenda like tariffs that could strengthen the dollar but then weigh on Bitcoin price. Those two things have an inverse relationship and, of course, introduce risk to markets broadly. So a choppy quarter ahead before Bitcoin makes a run at a new record. But I don't want to overstate the risk long term. It's been a year today since the approval of Bitcoin ETFs.

And I'm told their popularity, combined with better regulation, could still support a doubling in Bitcoin price this year and that the market should feel confident that Congress is going to take up crypto issues like stable coins and or market structure. But even there, you know, the impacts may not be felt until the end of the year. Scott.

All right, Taneya, thanks for setting that up for us. Appreciate that, Taneya McKeel. You want to talk about that, Phil? Yeah, absolutely. We own Bitcoin, IBIT, and portfolios. And we actually are looking to add to that at some point here over the next month, increase the positioning. It's right around just under about a 1% holding. I also trade in the futures as well. And I think what we've seen here, obviously, this big run-up,

and a nice, healthy consolidation. On one hand, I think this, in a technically bullish market, you get a pennant building the way it has, and it leads to higher highs. On the devil's advocate side, the only concern I would have here is if we get sort of a buy the rumor, sell the news from the inauguration, and we get a little bit of a shakeout of weak hands, which actually wouldn't be so bad. You shake the weak hands out, and then you make the next move higher. I think the key thing here is a little bit of be careful what you wish for. For like five years, one of the biggest catalysts

for bulls was that at some point we're going to get crypto ETFs. And then of course that day came a year ago, iBit, BlackRock's product became the most successful ETF launch, any asset class in the history of the ETF wrapper and got up to like 54 billion.

What happened last week, though, was its first really big daily outflow. $337 million came out. I think all of the Bitcoin ETFs in total are probably negative $2 or $3 billion since middle of December. And now these are financial assets.

So I don't know that they'll be much less correlated than they used to be relative to the stock market. I think on risk off days, they'll be treated like risk assets, which is what they are. So it's great. It's democratized. Everybody could buy it. It's easy. But remember, what that means is the money comes out easily also. And that is a little bit of a change from where we were prior to these ETFs becoming as large as they have. Would those outflows have been on long-term taxable gains? Was it a

over a year, would that have anything to potentially do with the outflows? - I doubt it. I doubt most of the money that came out of the stock necessarily went in precisely one year to the day or one year and one day from the launch, but probably some. Look, we don't know how these things are gonna trade relative to the market. All we can say now is they are now part of the mainstream market. They're in people's brokerage accounts.

And that's got really great attributes to it, and it also has potentially negative attributes to it. All right, we'll take a quick break. We'll come back with Santoli on the other side. He has his midday word for you next.

We're back. Our senior markets commentator, Mike Santoli, is here with his midday word. Is this a good news is bad news reaction again? Is that what this is? I mean, on the surface level, yes, but I don't think it's as simple as that. I think ultimately, once you've had Treasury yields go up by a full percentage point in a few months, as they had going into today's number, you don't want some realization that the job market is actually weak and it was some massive offsides move. Well,

I think complicates the picture is the market is liking the fact that the economy is strong in general, but not confident that 250,000 monthly job gains is either fully representative, is not overstated, and it's a little bit nervous about the response of the bond market and the Fed to that number.

if it kind of bakes it in as the new trend and therefore keeps rates higher than the real economy can ultimately withstand. I know that's a lot of like turnabouts and pretzel logic, but I think that's what's going on here. If it were a steadily strong economy, rates were at this level, and we could count on it staying this way for a while and the housing market somehow could get off its back,

with this being the case, then I think we'd be fine with it. But in reality, I think it's worried that we're overstating job growth in the short term. First quarter, you've had these kind of economic acceleration scares in the data. And then guess what you had after that? A growth scare. And then I think that the market's a little nervous as it chops around this election day range that we're in for another one of those cycles. We'll see. I mean, we have earnings next week. You would think that, OK, we can rise above

to some degree and say that, okay. You get CPI and earnings next week, and 10s are right at four, three quarters. So I think there's the makings there of some relief at some point. All right, good stuff, Mike. Thanks. I'll see you on Closing Bell. That's Mike Santoli, and he'll do his last word for us a little bit later in the day. We'll do the setup next.

We have some breaking news down from Washington, D.C. We'll get to our Eamon Javers. Eamon, the Supreme Court has been hearing arguments about the TikTok ban all morning long. There was a suggestion a short time ago that that court was likely to uphold the ban. That was circulating among news reports that

That sent shares of Meta, for example, higher by about one and a half percent currently, snaps up by almost six percent. What's your interpretation in terms of what you've heard this morning, what you think it all means relative to the moves that I just told you about and what some of the reports are?

Yeah, no decision from the Supreme Court here just now, Scott, in terms of the fate of TikTok, just nine days ahead of that deadline for ByteDance to divest. But we did hear some probing questions from the justices asking serious questions about whose First Amendment rights are

are impacted by this law passed in a bipartisan way by Congress, which requires ByteDance to sell off TikTok US to a new buyer that would be American owned. The question here is, does ByteDance have freedom of speech rights in the United States? It's a foreign company. So no, it doesn't. Justices seemed very skeptical of the idea that ByteDance could somehow buy

its way into First Amendment protections by buying a U.S. subsidiary or having a U.S. subsidiary. So then the question is, does TikTok U.S. have freedom of speech rights that would be impacted by this? Do the creators, the content creators themselves who are on TikTok have freedom of speech rights? And then some other questions about whether or not foreign ownership of

media in the United States generally could be impacted by this law. For example, the example of Politico was raised, a news organization that is owned by a German entity, Axel Springer. Would that be impacted? Could Congress then come in and pass a law and say Axel Springer has to divest the news organization Politico? And whether or not social media is different from newspapers and traditional media, a lot of

questions here, Scott, about exactly where TikTok fits in U.S. life and how the Constitution should apply to that. I think it's difficult to say where the Supreme Court is going to land right now. I've seen some media reports saying justices were skeptical, but justices' jobs

are to ask skeptical questions here. So we'll wait and see what this decision is. No timeline for a decision just now, Scott. But it should be clear, and this is important, I mean, your own, after listening all morning long, your own interpretation may not be as conclusive as some of these other reports would suggest. Am I right?

Yeah, you know, I think it's hard to say what Congress will do. And I think the fact of the matter is that you've got a bipartisan piece of legislation that was passed forcing a foreign company to divest on national security grounds.

of a U.S. media entity, because that foreign company doesn't have First Amendment rights inside the United States, it would seem relatively clear as a matter of law that that law might be upheld. And the TikTok's bid here to block it is a long shot. The political overlay on that is that Donald Trump has switched sides on this. He was

for a TikTok ban when he was in office the first time. Now he's arguing that the Supreme Court should hold off here and wait until he gets in. Remember, the deadline is a day before his inauguration. Wait until he gets in and allow him to come up with a political resolution of this situation. So whether the court finds that

timing argument important, I think will be one of the keys to where they're going to come down here. And I just don't think we know right now, Scott, as to where they're going to decide. But it would seem as a matter of law, ByteDance certainly doesn't have First Amendment protections inside the United States. Then you get all the follow-on questions, and that's where the nuance comes in. Lucky to have you, Eamon. Thank you. Appreciate your insight there as we look at this developing story, and certainly the stock moves as a result. We'll do finals after this break.

Well, try and get you set up for some earnings next week. Mention the big banks. A lot of others, too. BlackRock, Jimmy.

is Wednesday before the bell. And like a lot of financials, it's come off of a tie, but it's certainly had a good run. I think this is a very simple story to understand. You've got asset levels higher overall, regardless of what they've done over the last four weeks, and that equates to higher fees for BlackRock. I do see higher assets continuing with volatility through the rest of the year. I like the setup for BlackRock. Got some regionals next week, Joe. Citizens, Huntington, Regions, M&T.

BNY, Mellon? Yeah, I really think this is going to be a big moment for a lot of these regional banks. They had very strong performance in 2024, but they're at this moment now where positioning is extreme, sentiment is bullish as well, and you're beginning to see these stocks are on the retreat. So I think this is going to become now an idiosyncratic story for each of these regionals to see who can outperform in this environment. It's

It's not no longer an environment where all boats are going to rise. They have to they have to talk about a steeper yield curve benefiting across all of the space. They have to. You would think that they have to. You would think that it would. If they don't, the reality is they don't. It's a problem.

SLB? Yeah, this is their moment. It's been a dog. I expect earnings growth. Deepwater deal with Shell. Some momentum there. You've got Trump's administration coming in. They want to drill more. This should be a tailwind to oil services. At this level, I like the name. We own it, and I think it can perform. Fast and all. Joe, right? You're in that? I am. Momentum's breaking down on this one. I can't say very much more on that.

Okay. For obvious reasons, UnitedHealth is yours next week as well. Well, this is going to be a story, isn't it? Because what are we hoping for? Are we hoping for blowout earnings? That probably doesn't help their PR case. I think more than anything, I would point to a strengthening share price over the last two weeks. Stock got knocked down to about 485. It's now at 530. Everybody knows I thought that drawdown over the month of December was wrong.

All right. I will see you at 3 o'clock, obviously, closing bell. Jeremy Siegel of the Wharton School is going to finish the week with us, which is great to have him here on a day like this where we've had a pretty big upset in the stock market. Rick Heitzman on tech, Avery Sheffield, Malcolm Etheridge, Shannon Sikosha. I hope you all will join me a couple hours from now. Let's do final trades. Bill Baruch, what do you got for me? Meta. I bought call spreads here on the show while the thing was popping. You did? Okay. That's nice to know.

Jimmy? I'll step into the battlefield with Citigroup reporting earnings next week. Not just a steepening yield curve, but better credit quality, corporate and consumer should help. Thank you very much for that. Joe T? You want to own stocks that are higher, specifically on a day when the market is down so aggressively. DocuSign is one of those names. Thank you. And Josh Brown? Baker Hughes, one of the few names clinging to that 52-week high. The real breakout is 45. I'm anticipating it. All right. So we've got a Dow down about 600. Again,

Economic data. The jobs report was really strong. Yields took a big jump and stocks took a big drop, to say the least. Watching big cap tech today. And we'll continue to follow that. NVIDIA is down about two and a half percent. I'll see you in a couple hours. The exchange is now. 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.

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