Shownotes Transcript
Your best hotel in Bethesda has every guest raving. How do you make every hotel like your best hotel? Your best plant in Atlanta employs 4,500 people. How do you get 4,500 people working at peak efficiency? Your best data center in Redmond is optimized every drop of water. How do you make every data center the pinnacle of sustainability? The answer is Ecolab. Ecolab, bringing out the best in your business.
The U.S. and China are competing for global leadership. The country who wins will define the world we live in. U.S. international assistance is vital to our national security. It helps prevent terrorism and avoid costly wars. It fights diseases and saves lives. It helps keep America as the number one economy in the world. U.S. international assistance protects our interests at home and abroad. If America doesn't lead, China will.
I'm Scott Wapner, and you're listening to CNBC's Halftime Report, the podcast, the most profitable hour of the trading day. We record this live weekdays at 12 Eastern. Listen in.
Carl, thank you very much. Welcome to the Halftime Report. I'm Scott Wagner. Front and center this hour. Good question for you. Is the worst of the turbulence over for stocks? We will ask the committee. We'll also document some very interesting new moves. Joining me for the hour today, Josh Brown, Joe Terranova, Stephanie Link and Shannon Sikosha. We will check the markets. We are green across the board. We do feel, Joe, a little more settled down.
Today, yields are down. Maybe that's the reason why. Bond market seems to have calmed down just a touch. However, Wells Fargo today, the investment institute, they take their S&P target to a range of 5,900 to 61. Jefferies lowers its target to 53 from 6,000. And Bank of America's Global Fund Manager Survey was the fifth most bearish in 25 years.
Fourth highest recession expectations of the past 20 years and a record number of global investors intending to cut U.S. stocks, to which Jim Cramer declared this morning on Squawk on the Street, that says buy, not sell.
What do you say. I think they're reacting to price. They're reacting to price more than anything else. The consensus is pivoting away from where they were at the beginning of the year. I continue to try and focus on what is the messaging in the market. I thought yesterday the messaging in the market was positive.
you had a lot of the technology, the semiconductor names that were participating. Today there are other things that I like. I like the fact that the VIX is below 30. That's the first time it's been there since April 2nd. I like the fact that we finally have the offering
in high yields. We've got a junk offering today, an LNG distributor. We haven't had a high yield offering since April 2nd. And then lastly, and we'll talk a lot about this, we could actually focus on some pretty strong earnings. We've seen the last several days the trading revenue has been really strong for the likes of J.P. Morgan, Goldman Sachs,
and Bank of America follows along with it today. So what does that do? That gives the market a degree of comfort. Does it take us away from the extreme volatile scenario of the last couple of days? No, it probably does not. But it feels much better this week, certainly, than it did the end of last week. Steph, is the B of A...
Fund manager survey, a contrarian indicator, as people are trying to suggest, because it is true that everybody does feel like they're on the same side of the boat. Now, that doesn't always mean that you're on the wrong side of the boat. And there have been reasons to all be gathered together in a consensus of caution and negativity because
because of all the uncertainty. But a lot of the times when you're on one side of the boat, you don't make that much money. It's when you're in the center or off the other side. I don't want to be on the other side where no one is, but I want to be kind of like in the middle because that's where you can make a lot more money. We are not as oversold as we were two weeks ago when I was buying when it really was hard to buy. But we had fear and greed. This is a sentiment indicator that got to four. So zero is really, really bad. And 100 is really, really good. We got to four. Today it's at 22.
So it's up, but we're still in oversold conditions. I look at an S&P oscillator kind of index, negative 11 two weeks ago. It's now negative 4. It's still oversold, but not nearly as much. But Joe made a good point. Earnings are actually pretty good so far. We're really early on, but everyone thought it was going to be doomsday for the banks. And we all thought, well, we all were watching guidance. And the guidance actually is pretty good. I mean, I was pretty impressed with Wells Fargo and Net Interest Income, Bank of America, Net Interest Income. These are big
parts of their businesses that they're guiding in line. And the fact that they're even giving guidance is a plus at this point. And just given that fact that we sold off ahead of time. Now, we have a lot to get through in terms of earnings, but I do think we are going to continue to see solid earnings. Something like, let's forget tariffs for half a sec, 9% to 10%. That's X tariffs. With tariffs, is it 5%? But I still see growth, Scott.
And I still see growth in a lot of sectors that will be beyond that 5% growth, namely in technology, which is what I have been buying, but also in industrials and parts of discretionary as well. So I think you can pick your spots. You know, I don't have that much cash anymore, right? I went from 9% to 1%, and that was two weeks ago. And I think I'm set up pretty well, at least into earnings, because I do think you're going to see a pop. Shan, is it time to buy or is it time to sit tight?
I think our view is that it's more on the side of being time to buy. I mean, we went overweight, Scott, in global equities this week. This week? Yeah, as part of our... Well, why'd you do that? Because, I'm going to tell you why. Because you buried the lead.
I don't see that on the front, back, page two through 10. Otherwise, you would have come to me first. I didn't want that. So, you know, listen, when we came into this quarter, one of the things that we really thought about was if you're a client of ours or you're an investor who's been sitting on cash, who's been waiting for that opportunity, April 2nd gave you that opportunity, to Stephanie's point, to be able to buy at much more attractive valuations. Even in technology, where the valuations were very vulnerable coming into this year and we were underweight areas like technology and communication services, we
our view is that this re-rating may still have a little bit to go, but you're not going to be able to time that. So areas that we've gotten more constructive on, I think we're still very constructive on the cyclical part of the market. We are still overweight small and mid-cap stocks. Again, we could talk about treasury yields and the potential pressure on that trade and some continued concern as it relates to tariffs and their impact on small and mid-cap
companies but we also went overweight in developed ex-US stocks and our view is that from our perspective we have been constructive on Japan we are much more constructive on Europe bottom line here is that we're looking for areas where one there's going to be additional stimulus so I look at Europe and China as being two areas we're going to see fiscal stimulus in 2025 and then the third thing is again this re-rating if you look at multiples not just for the S&P 500
for the S&P 600. If you look at those multiples, they're a lot closer now, Scott, to, you know, EM and Developed X International. So it feels like if you've been sitting in cash, this is the time to start putting money into the market. So overall, bottom line,
You went overweight U.S. stocks. No, we went overweight global stocks. We are still neutral U.S. stocks. Oh, you're still neutral U.S. But we are, but we have been, and you know this, we have been more cyclically, you know, up
more cyclical in terms of our allocation. So we're not quite there yet to add to large cap because we're waiting for potentially some additional pain, particularly in some of those vulnerable parts of the market. Okay, so I'm glad we drilled down on that. We think we're all on the same page. Which brings me to Josh Brown, who has made some interesting moves today that I wanted to have a little larger conversation about where we stand before I get to that.
So how long have you owned Alphabet, which you sold today? I'll talk about what you bought. You can, but you've owned it for a long time. Yeah, I had sold earlier this year half my position, which we talked about a couple of times on the show. I don't know where that was in the 180s, the 190s. I sold the rest. And I think that Alphabet will be fine. Not everything is an extreme. I'm not in the camp that thinks...
Alphabet's going to lose the AI race or it's got like this fundamental issue with all of these large language models taking away from the use of search. I think they will be one of the top AI
services but it's just it's never had to compete the way that it does now and younger generations are jumping literally right into chat GPT when they want to know something they're not looking for blue links and sponsored links and ads they look they just want the answer and so like Google's gonna have to come up with an answer to that and I think
that's reflected in the multiple that the stock now sells at. I think other people understand that. This is not a unique insight to me, but I think it's going to be a defensive year.
And I think when you look at who is most reliant on advertising revenue amongst large cap tech, it's really meta and it's alphabet. And arguably, the meta mode around Instagram is stronger than the Google mode around Google search. So I think it's just that simple. I wanted to do something more defensive. And so what I bought instead of alphabet in that category is Netflix.
You want me to pause here so you can ask the question or check it down? Yeah, I mean, it was your final trade about a week ago. I guess exactly a week ago Netflix was. So maybe the writing was on the wall that you were looking at this name for a while, which has proven to be resilient relative to many of the other names in that universe, certainly of the larger cap audience.
but not mega cap tech. But what made you finally buy that? So it hit my list of the best stocks in the market a while back. I've been stalking it ever since. I've come to the conclusion that not only is it on the list of best stocks in the market quantitatively, I actually think it's the best stock in the market for this year. That doesn't mean I think it'll go up the most.
But I am not on the hunt for the hardest hit stocks to try to bottom fish. I'm not on the hunt for falling knives. I'm looking for resilience because I think in a defensive bear market, that's the number one quality of the stocks that
by year end will have performed the best. So consider this, from the market top on February 19th, Netflix is down 5.9% going into today. The S&P 500 is down double that, 12%. And NASDAQ's down almost triple that, 15%. It's been a remarkable name in the tape this year. It's only 8% below a 52-week high.
The median communication stock is 17% below the 52-week high. RSI is still 58. So in a market where almost everything's got a relative strength right now of like 40s, 50s, nothing special, this stock stands apart from almost everything else.
There's a piece in the journal that I think everyone should read about the discussion taking place at Netflix's annual business review meeting. They're talking about literally doubling revenue by the year 2030, which is only five years away. And they're talking about joining the $1 trillion market cap club. Market cap right now is about $400 billion.
I think that this is the most defensible technology company almost to the point where it's a consumer defensive stock. I don't think this is the type of service that anybody cancels. And even if they're thinking about canceling, the lower priced ad supported tier will catch those people. And actually what's interesting is Netflix makes more money.
from the head supported tier than they do from a premium tier household. So I love everything about it. I don't think it's necessarily a cheap stock at today's price. Obviously Alphabet's cheaper. I just think it's going to act more defensively and has way more potential upside.
It has, Joe. Right. It has acted more defensively. It may not be. I think I asked somebody yesterday, maybe it was you, if it was recession proof. And I think your answer was it was it's recession resistant. Oh, maybe. I don't know that anything in the market is necessarily recession proof if the market comes down. But Netflix theoretically would come down less.
potentially than some other names. Well, think about consumer behaviors in a recessionary climate. What are you going to be doing less of? Less of going out to find entertainment and actually staying home to actually enjoy the entertainment that you have at Netflix. So I think in that regard, it is. And I think
since April 2nd, Liberation Day, Netflix is actually higher. So there's the resiliency being reflected in this company. It's a classic example of buying something that appears to be rich in evaluation, buying something that
appears to be high in terms of price and seeing it move higher we have a 78 gain in this over the last year after purchasing it in april uh at around a little bit below 550 and at the time you know some people looked at me puzzling for doing it but i recognized clearly the fundamental chain that you had
as it relates to being able to have pricing power with the price hikes, the add tier subscription model, seeing the benefit there, and now you're seeing further evolution in terms of the technical. So Josh reaching for it here close to 1,000, I have no problem with that because I think the stock clearly takes out the 1064 high and goes to 1250. I mean, Josh, we do have price target cuts for several of the mega caps today, including your alphabet or your former alphabet.
Meta, Amazon, Alphabet all cut at Wedbush. I mean, there does seem to be a re-rating at the very least of expectations. And I think that's what you're talking about. For these kinds of stocks in this kind of environment.
Yeah, look, one of the things that makes this moment in time so difficult is we're all so excited about AI. We all see it sort of like at the edges, transforming our workflows and the things that we're doing professionally. And we have this kind of like, we have this sense that this is about to spill over into the consumer economy and just
completely rewire all of the various tasks and work that we have to do and shorten the length of these things and speed things up and it's exhilarating so we so we have that on the one hand but on the other hand we kind of know that if the economy materially gets worse from here so right now if you're thinking about we're downshifting into like a one to three percent gdp growth world
and all this uncertainty makes it even worse than that we don't have to have a horrific recession for it to be plausible that these ad supported businesses are going to start off bomb uh... group of warren on earnings that gets it's very plausible a lot of those companies that you posted on in that graphic they need the ad market to stay really strong it's also plausible that they i spend
could take a hit from all this uncertainty. There's news everywhere about Microsoft abandoning an AI-related build-out in Ohio. It's not clear why they did that, but it seems really sudden. Are there more of those, or is that like a complete aberrant one-off that's going to have its own explanation? I don't know, but I think that gets to the heart of why analysts are saying, look,
We still love these businesses. We still think they have huge advantages and enduring moats and blah, blah, blah. 2025 just might not be the best year to own them. So that's the way I'm thinking. And I totally agree with the point that you're making. Okay. Let's get the view of our halftime headliner today. It's Dubrovko Lekos, JP Morgan's head of global market strategy. He's with us here at Post9. It's great to have you. Thanks for having me. Man, I can't imagine what it's been like for you trying to model
all this through. But you did take your target down for the year recently and you did take your earnings estimate down as well. So your new target is your base case, fifty two fifty two hundred or is that is that your base case case? Fifty two. But that's also assuming that tariffs, reciprocal tariffs from April 2nd
stay in effect. Since then, we've had change. We've gone from like a broad trade war to a little bit more of a concentrated trade war now, focusing more on China. So the way we've been thinking about it, I think thinking about it just through one number, I think it's a foolish game because forecasting in this environment, I think it's very hard. I don't envy the job that you try and do at your best because nobody can model anything in
in this environment and yet you're charged with trying to figure out where nine months or eight or nine months from now the S&P 500 is going to be. So we're trying to think about it through scenarios. So we basically put a bull case of 5800, a bear case of 4000, which obviously would then imply some form of recession and contraction.
52 was sort of more of the middle ground where you do get a hit to growth, but you sort of, you know, you come out of it and you sort of started thinking more about 2026 as a year where you start to see growth again, right? Well, because you're, let me just stop you for a sec. Because with your earnings number coming down to 250, $250 for the S&P for calendar year 2025, you put a multiple on that of 20 times growth.
You get to $5,000. No, but I would think about, if you think about any kind of year-end price target, I think the 2025 EPS number is irrelevant. You really need to think about what kind of anchor do you get in terms of earnings in 2026. 2026 number now is that I want to say 305. Who has 305? The street, consensus. 305? 2026. I know 2026. So let's say if you shave off $30, $35, $40 off of that number,
than your modeling off of, let's say, a 265, if that makes sense. So that's what I'm saying. I think that we're basically one or two months away from people completely dismissing 2025 from an earnings point of view, and everybody's going to start focusing on 2026. Do you have a growth anchor in 2026, or is this now some form of recession that's going to spill over in 2026? Because in 2026, we do have potential catalysts that could help growth.
get a bit of an uptick. What's the growth anchor in '26? The tax cuts? Well, you could get some form of tax cut. I do think the on-shoring and near-shoring story that many people sort of completely disregard, I do think there is some partial validity to it. So again, if I think we can avoid some form of deeper recession, 2026, and if not the first half, certainly the second half, I do think could see some growth.
And you think 305 is, forget the number itself, but the number reflects a level of optimism that I haven't heard from anybody. And extrapolation. I mean, what analysts do, they'll generally extrapolate. I mean, for that matter, also 2025 at 277 that we started was also based on extrapolation.
So I'm not saying that 305 is a number that you want to sort of anchor yourself to. I'm just saying that number gets revised lower, but I don't think it's necessarily a 250. That number could be more like a 265, 270. In an environment of, call it, mild contraction, something that doesn't become sort of systemic. Because we don't have a credit issue at this point. We don't have a banking crisis. We have more of a big, massive tax cut or tax hike, sorry, that's hitting potentially U.S. households, U.S. consumers,
And then also we need to see how the corporates basically play out in all of this. What am I supposed to do? I've asked everybody this and I think everybody's thinking the same thing. What are we supposed to lean into in the market right now if you actually think, as I asked at the very top of the program, is the worst of the turbulence at least behind us for now?
I don't think we're out of the woods. I think the volatility likely persists for longer. Do we have to hit lower lows?
Not necessarily. I think a lot of that depends on how the trade discussion negotiations continue. We've gone from a very broad trade war to more of a concentrated China. Then China got some exemptions, but we're still basically looking at, I believe, $350 billion worth of goods that are not tariff exempt. So it just depends on how things play out. But I will say that time is of essence.
And the more time that passes and that we sort of stay in this uncertain environment, there's a sentiment shock that could potentially magnify and start to spill over into hard data. Are you surprised in any way relative to how you would have probably naturally come into the year feeling a little more bullish about the administration and what, you know, was lying ahead of us, which I think consensus was pretty bulled up on all of that?
Are you surprised with the willingness, what seems to be a willingness, to let the equity market go down to some degree more than you probably thought and let the economy deteriorate to a level that you otherwise and initially wouldn't have thought would have been possible? And I'm talking on the administration's part. I am surprised. I did think that from the get-go this is going to be probably part of a broader negotiation.
I didn't expect things to go as far as they did. And I think the issue here is, well, first of all, we're starting from a very healthy spot when you think about balance sheets, when you think about credit. But the problem is that if you, I think, push it too far, you could then potentially start to face unintended consequences that tend to be more nonlinear in terms of impact. And that's where you're basically dealing with a potential fallout or bigger downside risk. - De Profito, when you think about the sequence of fiscal policy, now there's the belief that the tax bill
comes in to save the day. That tax bill might not look like what we anticipated it to look like at the beginning of the year. How are you modeling that? So we're modeling it with a very fat standard error around it. So, yes, we don't know how exactly the sausage is going to get made and what's going to be the ultimate output in terms of not just the original sort of tax bill, but they're talking about potentially tax exemptions for
you know, overtime income, tip income. Some of those things could be quite powerful for people with most need where balance sheets are getting the most effective negatively. So we don't know how that's going to play out. Good for Main Street, not for Wall Street, right? Broadly, yeah, yeah. But at the end, I think the issue still, I think, remains right now. How the...
trade discussions are going to play out. China, I think, remains a big one. And especially China is important, I think, for a lot of U.S. businesses, small cap businesses, private businesses, mom and pop shops, right? Their margins are getting potentially wiped out if these tariffs stay in place. And so...
I think the big ones are probably going to be better off because they'll have pricing power. Josh talked about some very interesting names. There will definitely be resiliency in some segments, but the small segments of the U.S. economy, I think, get hit pretty hard. So that's why time is of essence. And yes, I think we need to see more progress. That's a question mark. You have a really, I'd say, I think it's fair to say a defensive bent in the market, obviously. You like your overweight utilities, staples, health care. I mean, there's three hallmarks of defensive real estate.
For example, aerospace and defense. Yes, comms services is on the list, but neutral to both tech and financials. Why? Because I think the asymmetry is much better for some of these what I would call low vol, bond proxy, defensive names. Because again, I think that they give you pretty decent protection on a relative basis in any kind of downfall. And I think in an environment where perhaps rates come down some,
because of Doge, because of some of these government cuts and so forth, I think these names can also do quite well. So in other words, if we're moving away from this higher for longer, I do think that all of a sudden a lot of these, what I would call bond proxy names, valuation-wise start to look more appealing, and they do give you that downside protection. Having said that, I do think that as part of the big momentum crash that we faced earlier this year,
a lot of good high quality names have gotten hit. So I do think this is an environment where you do think about doing some bottom fishing, but not in value, in good quality businesses. And so like when Josh talks about a Netflix, when you talk about some of the Mac 7 names, you think about 2026, 2027 earnings,
and there you potentially could have some interesting value. - I mean, someone who's been a value person who's been putting a lot of money to work lately. - In some of the growth names, 'cause I've just bought Meta, for example, 'cause it was down 33%. - But you continue to lean into the financials, so I know, what did you wanna ask? - 'Cause I do, I do wanna ask a question though, you talked about resiliency.
Have you been surprised at how strong the consumer has hung in there? And what does that do to your forecast? Let's just say they stay okay. They're not happy. Sentiment's terrible, but they still are spending. And they have jobs. And they have wage growth. So that's a big part of the...
economy as a whole. So I kind of find it hard if the consumer stays strong to see a recession. I'm having a hard time deciphering the data that we're seeing. I don't know what percentage of the current activity that seems to be relatively resilient is a function of front loading. So I don't know if the true effect, once you sort of strip the, you
uh... you know strip the sort of the the headlines of some of these like seasonals are one of factors i don't know what the true effect is maybe the actually very strong consumer over the last several years no no no questions that they were dying yeah but that doesn't mean it last that way just because it was a good time for us well if they have jobs they wouldn't be a rick home was saying a lot of the the same thing about the front loading when he was on within the last hour it's just hard to know it's also hard to know well where soft data ends up being in the hard data as the fed is trying to figure that out
as well. On that note, before I let you go, how many cuts do you think we're going to get this year? I mean, how do you think about Fed movement relative to what your expectations are for the market? So we've basically pushed out the first or the next Fed cut to basically third quarter. So we pushed it out a bit. So we do think the Fed starts to ease, but sort of 3Q and then continues thereafter.
From everything we're seeing so far, it looks like the Fed is still very much so anchored around the whole inflation story. And we're seeing anecdotally more and more businesses using the current environment to potentially introduce a bit of a price hike.
And so I'm not sure I would be counting on the Fed right now. I think we really need to sort of see if the Trump put is still alive. It looked like it was alive sort of at that 4,900 level. Yeah, at lower levels than people thought. Right. That's fair, right? Because I think at the same time, President also came out and said, sort of, we're disregarding the stock market in the near term. Yeah. Well, the bond market's calling the shots. Let's not kid ourselves. I mean, we know that the bond market
tantrum of a handful of days ago made a big impact on a lot of people. I'll just leave it at that. Dubrovko, thanks for being here. Thanks for having me. It's good to catch up with you again. Dubrovko, Lake Coast, JPM. Up next, we have more committee stocks on the move today, including Stephanie Link's favorite 2025 story. We will discuss that next.
The U.S. and China are competing for global leadership. The country who wins will define the world we live in. U.S. international assistance is vital to our national security. It helps prevent terrorism and avoid costly wars. It fights diseases and saves lives. It helps keep America as the number one economy in the world. U.S. international assistance protects our interests at home and abroad. If America doesn't lead, China will.
A rich life isn't a straight line to a destination on the horizon. Sometimes it takes an unexpected turn with detours, new possibilities.
And even another passenger. We're three. And with 100 years of navigating ups and downs, you can count on Edward Jones to help guide you through it all. Because life is a winding path made rich by the people you walk it with. Let's find your rich together. Edward Jones, member SIPC.
As a salesperson, the search for the right buyer or buying groups can feel like you're endlessly sifting through leads and hoping they're ready to buy. Thankfully, LinkedIn Sales Navigator is more than just a tool. It's your strategic sales partner. LinkedIn Sales Navigator is a sales intelligence platform that helps professionals affect
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, stocks on the move today. We do start with Boeing on a report that China is ordering a halt to Boeing deliveries because of the trade war. This is your favorite story, your favorite stock, you said before. 100%. Coming into this year. 100%. It's down 50 basis points on this news. So clearly this is not material for Boeing at this point in time. They were supposed to deliver 10 737s in the next couple of weeks to China.
that will probably go elsewhere. By the way, I think that goes to India because they need planes too. There's 130 of unfilled orders from China on Boeing. So if you add it all up, that's about 2 to 3% of the overall exposure to their back. So their backlog is 5,600, right? So this is immaterial at this point in time. If it lasts years, well, sure, that's a problem. But guess how old the Chinese airplanes are? 10 years.
Guess how old the global airplanes are in the world? 15 years. So you're getting service. And both GE has service and so does Boeing. And that's where you're going to make up the margin of shortfall, in my opinion. OK. Palantir, Joe, shares are up 25 percent in the last week in the market recovery. A story today that their AI military system acquired by NATO.
What do we think? I think that's a big deal. I think it's a big deal because it proves that Europe is still going to be buying U.S. defense products. And the belief was that, in fact, they would not be. For Palantir, this is a huge win. It speaks towards the products that they have as it relates to AI and the integration of AI and defense weaponry. This has had a very significant bounce back, and the analyst community actually
ex-Dan Ives, who maintains the outperform. But the analyst community, 92.30, I think, is the 12-month price target. And the analyst community collectively in the last several weeks has been downgrading this stock. What about Autodesk? There's a report today that T. Rowe Price Investment Management is going to vote for the slate of nominees from Starboard. Yeah.
So, you know, a lower dollar benefits this company. You're talking about 64% revenue exposure outside of the U.S. The problem is that they are front-facing for the manufacturing and construction industry. And with a lot of the tariffs, that's going to be ultimately a headwind for them. Okay. We'll take a quick break. Up next, we do have another move from Josh Brown. We will document that. We have a couple of new stocks on his best stocks in the market list as well. But first...
We get the headlines with Silvana now. Hi, Silvana. A federal judge has thrown out a Consumer Financial Protection Bureau rule that caps credit card late fees at $8. The judge granted a joint request from the CFPB and a group of businesses and banking groups that argued the rule adopted during the Biden administration was illegal. Congress last week voted to overturn a rule that would have kept late fees at $5. The
The rotor from the helicopter in last week's deadly crash that killed all six people on board has been retrieved from the Hudson River. The NTSB said the recovery Monday night including included the transmission. The main fuselage was already pulled from the water. The agency said recovery efforts are now complete and the evidence is at a secure location for examination.
And the University of Chicago has received a $100 million gift from private equity investor Konstantin Sokolov. The university said today the funds will go to the school's MBA program to help fund scholarship and the school's operations. The gift comes as several top universities are at risk of losing billions in federal funding. Halftime Report will be right back.
CNBC News Update is sponsored by Morgan Stanley, where old school hard work means bold new thinking. The U.S. and China are competing for global leadership. The country who wins will define the world we live in. U.S. international assistance is vital to our national security. It helps prevent terrorism and avoid costly wars. It fights diseases and saves lives. It helps keep America as the number one economy in the world.
U.S. international assistance protects our interests at home and abroad. If America doesn't lead, China will. How will you shape the future of 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.
All right, welcome back. Let's get to Josh for another move. Energy, by the way, the worst S&P sector month to date down 15 percent. Josh, we know that oil prices have been on the retreat on demand concerns. You sold Baker Hughes, which was really, I think you're what you only had a couple of oil related positions for the last, however, you know, long period of time. Why did you sell this now?
It broke down below a preset stop loss. Nothing wrong with Baker Hughes. It's in the wrong sector. Still think it's a great company. Maybe I'll take another shot at it at some point when it sets up again. But when you buy things because technically they're trending in the right direction and then something market-wide changes that, you either have a discipline or you don't.
Do you still, I think the other one was the IEO. Am I right or am I wrong about that? That's not a trade. That's a longer-term holding. I've been in that forever. I'm not looking at that technically or anything like that. I think the thing with energy equity exposure is you never want to completely leave the sector regardless of what the outlook is because...
It's your only hedge against the spike in oil prices. It's the only thing that you know will work in that sort of environment. You don't give up your hedge against something like that. So it hasn't been a great sector. This year was not a great sector. Last year, it's okay. Okay. Joe, what about you? What do you think?
uh... high-risk josh would have sold some for may uh... energy's been a struggle down fourteen percent month-to-date i i agree with his comments in terms of having some energy exposure on but remember a lot of what by him doing a lot of what josh does looks at price we hold
ExxonMobil, Diamondback, Baker Hughes, EOG. ExxonMobil appears to be the most resilient of all of them. I still think when you're looking at natural gas on a discretionary basis, to me that is more relevant and you have more opportunity there versus crude oil itself. EQT, look at it, it's up 38% so far year to date. It's a name I own personally. I forgot that Josh had recently bought Chevron. Forgive me.
uh... i'm reminded on our on our website to more defensive you know if it's fit that fits with this idea you want to be invested but it's a more defensive way to be an energy stone majors white is reliant
on day-to-day spot price moves. And so we're going to stay long Chevron. And Baker Hughes, it might set up again in the future. Got some power, energy-related stuff for Nova GE. Price target gets cut to $387 from $448 at Baird. They're still outperform. They just think that the outlooks are likely to be a little more muted given the uncertainty that we're all seeing in the market.
And the stock is down 25% from its highs. So it's not exactly a great call, but it is up 126% from its peak, sorry, from its trough. And I still think the electrification story is alive and well. I just prefer Qantas Services and Eaton on the same theme. They're cheaper. They haven't corrected as much.
but they haven't actually, they're not up triple digits in the last year. So I still like the theme, still want to be there, but a little less so on GE Vernova. - Vistra, Joe, price target gets cut a little bit, 148 from 152. That's at B of A. They still look at Constellation, which I think is another Steph name, and Vistra as, no? - No. - Somebody else. As you? - No. - Constellation? Whatever. It's Vistra. - It's all the same theme. - Trust me. - It's all the exact same theme. - Somebody on this desk owns Constellation, okay?
Well, we did own it. Previously, we've owned in the ETF. And it's all momentum-based, and it's all on the AI-fueled affection regarding a lot of the utility names. And Vista falls into that category as well. Texas-based company. Vistra, don't get upset with me. You're a great company. You've got a lot of great fuels, but the momentum is completely lost. Do companies get mad when you rebalance and bounce them?
Sometimes. Is that what you're saying? Sometimes. All right. Sure. Visa and MasterCard, safe havens according to Deutsche Bank. That I agree with 100%. I think you could factor in. Steph, do you still have American Express? No, I didn't. I took games. Okay. So I think you could factor in American Express is there as well. All right. We'll take a break with a hot take on the other side from Josh on one of this year's top performing tech trades. Plus, I mentioned a couple of new names on his best stocks in the market list. We'll tell you what they are.
Hey, we are back. I said we had two new names for the best stocks in the market list, according to Josh Brown. Northrop Grumman made it. Tell me more.
Northrop is obviously defense, military systems, aircraft, spacecraft. They do radar. They do cyber defense. And this is actually a name that has underperformed its own sector for a long time until recently. I think what's important here is it's a $77 billion market cap. It's one of the larger names on the best stocks list.
with a 1.5% dividend yield. It's only 4% below its 52-week highs. It's got an RSI of 67, so not overbought yet. As you can see, I think we're showing you a one-year chart here. Yeah. As you can see, this stock's on the verge of a massive breakout. I'm going to go ahead and assume the market has this name right. They want to be long defense. They want to be long the industrials that don't necessarily...
have this secular economy uh... hanging over their head like a sort of damocles and north of fits the bill i'm not personally in the stock at this very moment but i do think it's a a break out in progress and i think you're gonna see a lot of momentum if you get through this level fast at all is the other one so fast and all is really interesting this was one of the harder hit names during the first
tariff fight back in 2018. They need a lot of steel to do what they do. This is a US-based industrial supply company. It's like tools and fasteners and all sorts of supplies for construction. And what they said on the heels of that is never again. And they have gone out of their way over the last five years, including during COVID,
to fix those supply chain issues, fix those tariff related issues. So if and when it would ever happen again, they would be ready and look at what the stock is doing
as we head into the next tariff trade war. It's not acting at all the way this name acted during 2018, which is the market realizing, oh, these guys figured it out. 2% dividend yield, $47 billion market cap, growing revenue at a 7% CAGR over the last 10 years, earnings at a 9% CAGR. And here you have an RSI at 63. It's only 4% below its 52-week high after all this market turbulence.
it's a pop both moving averages and it's one of only seven industrials on the list i think it's one of the best stocks the market and i also think this is the type of name that could break out classic example of bad news good price action they report earnings last week earnings were not spectacular in addition to that they announced that the cost of the tariffs they're raising prices three to four percent and the stock rallies off of all of that
stock is up 13% or 18%. Well, if you're raising prices, of course it would rally, right? If you have pricing power, that's part of the reason why you would be in a name like this, right? Assuming that demand remains strong. Fair. We'll keep an eye on that stock. You also have a take on probably the sector, Josh, that you've been hottest on within this market for, it feels like at minimum, two years, and that's cyber. What's your take here? Yeah.
Look, I had George Kurtz in my office the other day and we talked about, you know, just sector-wide some of the things that are happening. And if you listen to technology CEOs right now and you listen to companies that are doing business all over the world, there's a lot of trepidation. I just don't think that that is a thing in the cybersecurity space. And if anything...
as geopolitical tensions flare over trade and other issues, this type of spending becomes even more mandatory. And one of the biggest problems in the financial media is people think like you have to have new ideas every day or it always has to be something new or a new trend or...
sometimes the the short-term ideas are just as good over the intermediate term and the long-term i think this space and i i'd love to have step agrees i think this space has legs throughout the rest of the year
Cyber, the ETF, CIBR, is flat on the year with the Q's negative 10%. Only 12% below the all-time highs. Crowd is the largest holding within Cyber. That's the one that I own. It's about 8% of that index. But Cyber itself is above its 200-day. Very rare for an industry group within tech. And within the index, there are only three individual names above both the 50 and the 200-day. CrowdStrike,
Zscaler, which I've also mentioned is part of my best stocks list. And CHKP Checkpoint. And I just think like this idea, even though we've been talking about it for a while, it has legs. And if people aren't in the space, they should be considering it right now.
Yeah, I mean, I agree 100%. I actually think this is my favorite theme for the next decade. Decade. It's a trillion dollar total addressable market. It's bigger than AI. Because of AI, you're going to need cyber. And CTOs are only spending on AI and cyber. They don't have enough money. There's only a finite amount of money. So I like Palo Alto the best at this point in time just because it's lagged.
Yeah, I mean if you think about installation of Terra, Scott, software pretty well insulated, but you know if you look at cybersecurity, really just the firewall vendors are really the only ones who have a lot of exposure here, potential exposure, so it's good space to look. Okay, setup is next.
All right. Let's do the setup. We got some earnings after the bell. United and Interactive Brokers. You have both of these in your book. Well, I'm sure the guidance for United is going to be overwhelmingly optimistic, especially after what we heard from Delta. Look, they have a real challenge ahead of them. And full disclosure, any time the strategy goes into airlines, I'm not happy about that because...
If I had the discretion, I would never buy an airline, but there's nothing I could do. It's rules-based. 40%- Yeah, but you run it. You can override the rules. Can't do that. 40% of its flights are international. That's going to be an even bigger challenge for United. So let's turn the page and talk about interactive brokers where there's clearly more excitement. You hope this goes lower because if it goes lower, you could buy it. Trading revenue is going to remain strong. Trading activity is going to remain strong. Net interest income should be good.
How active is an actively managed ETF if you can't be active because of the rules? Rebalances and reconstitutes on a quarterly basis. April 30th is the next. I like putting you in the hot seat. All right, we'll do finals next. All right, Adam Parker, Ankur Crawford, Jordan Jackson, Mike Rode, Matt Brown, all joining me today. Closing bell. I hope you will be, too. We'll have another eventful last hour. Josh Brown, your final trades, what? Netflix, defensive tech.
Thank you. Shen? Developed ex-U.S. equities were positive on Europe. The Linkster. Schwab. Cash deposits improving. Joe T. Spotify. Netflix replaced by the rules. I'll see you on the closing bell. The exchange begins right 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.
or follow a particular strategy, but only as an expression of an opinion. Such opinions are based upon information the Halftime Report participants consider reliable, but neither CNBC nor its affiliates and or subsidiaries warrant its completeness or accuracy, and it should not be relied upon as such. To view the full Halftime Report disclaimer, please visit cnbc.com forward slash Halftime Report disclaimer.
The U.S. and China are competing for global leadership. The country who wins will define the world we live in. U.S. international assistance is vital to our national security. It helps prevent terrorism and avoid costly wars. It fights diseases and saves lives. It helps keep America as the number one economy in the world.
U.S. international assistance protects our interests at home and abroad. If America doesn't lead, China will.