Momentum’s Miserable Week 2/21/25
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I'm Scott Wapner and you're listening to CNBC's Halftime Report, the podcast, the most profitable hour of the trading day. We record this live weekdays at 12 Eastern. Listen in. All right, Q, thanks so much. Welcome to the Halftime Report. I'm Scott Wapner. Front and center this hour, the week that momentum cracked from Palantir to Robinhood, Walmart and so many other stocks. We will debate what that means for the bull markets next leg.

Joining me for the hour today, Steve Weiss, Jenny Harrington, Jim Laventhal, Bryn Talkington. We will check the markets here. We are red across the board, as you see.

Yes, UnitedHealth is a huge story. We'll get to that. There are many stories that we will get to. I do want to start, though, Bryn, with Momentum's miserable week because we've really been focused on the run-up in these stocks and how, in many respects, it carried the bull market. And we have had a considerable rollover in some of these names, including Palantir. Hadn't heard from you yet on that stock, down 10% this week. There are others, the Cyber ETF,

is having its worst week since mid-December. You've got some names in there. So how are you thinking about the Palantirs of the world, momentum as a factor? A lot of investors got into those names. What do they do? Let's start with momentum as a factor. I think that investors need to understand that gravity

is immutable. That law is immutable and it applies to stocks as well. And when you see Palantir, HIMSS, Grab, Robinhood way over even their 20-day moving average, which think about that, it's a very short-term indicator.

It just shows you it's so overstretched. And like we experienced gravity on Earth, these stocks needed to come down at least to this 20-day moving average, which across the board, that's what they've done. And I think where investors with Palantir specifically, you know, I bought this stock last year. I haven't even held it for a year. And the stock is up 350%. I think that

It's really dangerous to chase these names because with Palantir, I bought it really specifically three quarters ago when Alex Karp was saying, we are pivoting, pivoting,

We are rebuilding this company to focus on commercial. They already have a big government building business, but it was lumpy. And I think people didn't believe that it would actually monetize. And it is. But with a company with, what's the market cap? $250 billion market cap. And maybe they do $4 billion in sales. I think at this point, there's so much priced into the name. And now this name, I think over the next, probably this year, is going to trade off headlines.

So I won't be adding to the position. I told you, you know, I sold a big chunk of it in December. I have calls on it right now, the 120 calls. And so I think investors need to understand gravity exists. Don't chase these names and let them come in. But I do think they're different. Like, I'll be a buyer of Robinhood if it gets into the 40s. But Palantir to me, you'll be a buyer of Robinhood because I want to ask you about that, too. It's on the list. I mean, it's down 14 percent this week. What's the differentiation for you?

Well, one of them is trading at, let's say, I'm not a big fan of PE, but I know that a lot of people look at it. One of them maybe has a 500 PE and one has a 47. And so I think Robinhood, I can make the case that there's so much not priced in. I feel like with their growing options, they're growing crypto, they're growing trading. And what Vlad and his team have been doing are really matured.

I feel like these are early days for this company. They crushed earnings. And so I just think that this company will continue to have a lot of momentum and stickiness as they're, you know, they're paying what two to 3%, if you move over your IRA, they're doing a lot more education. And so to me,

I'll be a buyer in this name. 46 is the 50 day. And that's where I would step in to buy more of the position. And there's also some nice call premium on this. So as an investor, if it feels expensive to you, you can also buy it and sell some calls and get, you know, five or six percent for just a couple of months. Weiss, a B of A calls the momentum unwind painful, says if retail investors don't step back in as dip buyers, we could see continued weakness.

in that as a factor. I mean, the market has obviously had a little bit of trouble since these stocks started to roll. We can take you back to the wall and show you the Palantirs, the Robinhoods, the Applovens down 15% this week.

The Walmart, by the way, which is in the MTUM, had a great run down 8% this week. Vertiv, your stock, down 7% this week. Concerned about this rollover and some of these names? I'm concerned about the rollover. I think it's actually symptomatic of a

bigger malaise that's affecting the market. Look, these stocks all went up based upon momentum in fundamentals and not based upon momentum in earnings. Now, there was positive earnings growth, that's undeniable, but it was also multiple expansion that really drove it. And multiple expansion really only happens in very friendly, low-risk

low interest rate environments. So we stayed over our, you know, stayed past our welcome. Now, there are certain things you can't, I'm not doing here while I didn't think a 20-day run in meta was deserved because there's really no news on it. Same time, my gains are so significant that for me, it's a question of timing. So I got, the stock got ahead of itself on the timing. It'll recoup that loss over time and I think it'll be fine.

In terms of others where the emperor had no clothes, or the clothes were a skimpy thong instead of a full outfit, those are more troubling because I don't think those come back. I can't unsee that now. Go ahead. Interesting analogy. I'm going to divert you away from that as quickly as I possibly can. Would you buy more avertive clothes?

Not here. Not here. Berger is not one of my large positions, but it's a sizable, I'd say, mid-level position. And I'm not buying it here. I'm not putting any money to work in the U.S. market. We'll talk about other things later. Because you don't know what the rules of the road are. So you don't know who's going to succeed. We're 30 days into the Trump presidency, and we're supposed to be the golden age of investing in a new dawn for companies with deregulation and stimulus and all that. That's turned just the opposite.

opposite as a stock. It's not political. That's looking at the stock performance now. So until that clears up and that's not clearing up anytime soon, I'd rather hoard cash and stay there because the risk is much too great. I echo what Ken Griffith said, and I'm very concerned about the market. All right. Well, since you since you referenced that Citadel's Ken Griffith has been speaking out

a bunch lately in the appearances that he has had on a big stage, both figuratively and literally at events. And he did it again down at FII in Miami, where he talked about the defensive nature of investing right now because tariff talk is taking a toll. The geopolitical tensions between the Trump administration, Europe and Ukraine is taking a toll, all of it leading to uncertainty. Listen.

It's a very difficult time to invest because of the policy uncertainty that goes with this transformation. And one of the most difficult areas that we're all trying to navigate is not just the status of tariffs around the world, but who will be an important ally to America going forward and with whom are we breaking down long-standing relationships.

Okay, so that's Ken Griffin in Miami. The question, Jenny, is do you listen to what Mr. Griffin had to say and say some of this uncertainty, whether it's talk about tariffs,

whether we're breaking decades-long alliances with certain partners of ours, is starting to weigh on the consumer to some degree. Walmart this week, I mean, there are many themes this week. The Momo sort of rollovers won. Walmart's guidance has us thinking about the consumer. Griffin talking about tariffs, alliances, and things like that, which are sort of throwing the global order out of whack. Consumer sentiment today, 15-month low.

Restaurants like Texas Roadhouse have talked about a slow start to the year. By the way, the CEO is on Mad Money tonight with Jim. You'll hear more from him there. January retail sales was weak. Consumer discretionary is the worst sector of the year. It is not just from a market cap level of the Amazons and the Teslas. It's a bunch of other stocks, too.

Put all that together for me. I would be happy to. So I've had two kind of formative things in the last two days leading up to this that really helped me answer it. On Wednesday night, I taught a behavioral investing class at Baruch, and I was asked kind of that same question. Like, how do you invest in this environment? How do you go forward? And then yesterday, I worked with a client who has a new portfolio. It's like $6 million sitting in cash. What do you do?

And what my partner Greg and I say when we're in these times of like massive disruption, you really don't know what's it, what end is up. Steve, you phrased it really well. You said you don't know the rules of the road. And so what Greg and I do in these time periods is very simple. We follow the process and the process is twofold. One is to look at every company.

and see how that company fares. And the other is to keep marching forward. And so I'll tell you exactly what we decided to do with this all-cash portfolio that came in. So what we're doing with that is we put a normal asset allocation in place, some US, some international, a little bit of small, a little bit of mid. And what we're doing to accommodate this dislocated, weird environment is not changing the asset allocation that we would choose.

because that's very long term. But instead, what we're going to do is play around a little bit with the pace of timing. So rather than getting it invested maybe over three to six months, maybe it gets invested over six to 18 months. And I think about that and I think about everything you just said, Scott, and how consumer spending was terrible and retail is not so great, blah, blah, blah. Yet here we have the market hitting all time highs. Yeah, resilient. The market's been resilient in the face of pretty much everything.

But why? And then this is what kind of I keep coming back to. Well, the reality is, is earnings on balance are still coming in well, earnings are still growing, interest rates are still predisposed to heading in a downward direction. If you go back to first principles and look at each individual company, most of the individual companies in our portfolios, and I'm gonna guess in yours too,

don't really get terribly impacted by the incredible amount of noise that's out there. And right now I'm thinking to myself, as my job as a portfolio manager, I almost think of myself like a sieve, right? And there's all this noise coming in and the noise is the Middle East and the noise is tariffs and the noise is taxes. And then it's my job to shake that sieve and see the few pieces that actually impact our portfolio. And one of the things is tariffs. But we did a really deep study on that going into year end.

our guess is that the worst case on tariffs, the most likely worst cases, it carves out half a percent of GDP. And then you can pick and choose companies around that that aren't terribly impacted. Let's also, as Wells Fargo, their investment institute is talking about today,

Why has the market remained resilient in the face of everything that we've talked about and all the things that you as investors are worried about? Because they suggest that deregulation and tax cuts are going to outweigh tariffs. And there is a belief that the bull market is still intact as a result of that, that deregulation isn't priced in, as Bank of America suggested earlier this week, and

and that the trend is still up. That's the prevailing thought from investors. So deregulation, Scott, leads to higher earnings. And this is what Jenny was just talking about. Earnings growth, by the way, for this year, 2025, is projected to be 13% year over year. And if that happens, that is enough to support this market, get it going a little bit higher. I don't think we'll have another 25% year, but still a positive year from here.

that deregulation is real. We can talk about the societal impact on a different channel from an economic and market point of view. When we talk about the CPFB getting disbanded, that is good for profits in the financial sector. Again, not talking about the societal aspects of it. And you think about deregulation further occurring in things like energy. This is good for profits and is at least a counterbalance to the tariffs that we're talking about. There is all

Also, one other thing that we should talk about, it's a little bit esoteric, but it actually matters a lot, and that is liquidity coming into the markets right now as the Treasury is forced to spend down its Treasury general account at the Federal Reserve. It can't issue any more debt securities right now. Is anybody wondering why the 10-year is at 4.45% after the inflation reports we had?

last week the answer is because the supply of treasuries is down right now as the Treasury cannot issue any more securities and the commercial banking system is getting more deposits as the Treasury spends down its TGA Dan Clifton at Strategas has done a lot of work on this it's excellent I have to give him credit I'm telling you this sounds esoteric it really matters the other thing to consider too is sort of if there's money coming into the market lately where that money has been going right and it's been going to you know

more bond sensitive names and staples. Staples are up 6% in the past month. Healthcare is the third best performing sector of the past month, up 3%. The Bank of America flows that they track tell this very story. They talk about tailwinds of a wealth effect and job growth tailing off. That inflation is nagging consumer confidence like we just discussed. The government heading into recession

slowdown starting to be flagged by outperformance of bond-sensitive and defensive stocks. So you do have a little bit more of a defensive posture of what is still a bull market and one that just this week

hit new closing highs in the face of all the noise. Right. So let me impact that one by one. First of all, as to the bond market, it's not all attributable to a lack of supply. It's also attributable that you still have a nice yield there. And if you want to wait out what's going on in policy, why not pick up two years or pick up a year or pick up

five-year or ten-year bonds. So it's a flight to safety, number one. Number two, for others, it's looking at, okay,

Rates will come down, but they may come down because of a recession. So you never know what, just like with stocks, you never know what the cause is. That was a great shout out, Jim. In terms of health care, right now, you know, being part of investing in some private companies, the FDA has a moratorium on meetings. They've canceled their meeting schedules. So if you're owning health care and you've seen a shrinking of the research teams,

of the approval teams, you know, putting it very quaintly, it's going to be a while. The backup, which already existed, into new drugs coming on the market is existing. So regulation, you know, is

It's an interesting debate because as Trump consolidates power, as we're seeing with the FCC, with the SEC, and with other agencies that affect some of the things you're talking about, then who knows what he's going to do? It's not like he gives a lot of thought to it. So the cuts that have been made, there's been no strategy. When I was at Lehman running a fairly sizable department or at Salomon doing the same, and budgets got cut,

They came to us and said, pick who you want to cut, who's least important to your business. They didn't say, we're cutting these people for you, because they had no idea. And that's what's happening. So we don't know the damage that's going to be done. So that's why I say the best place to be is either in cash, maintaining your portfolio, and even a meta can be impactful.

If the economy does go down, does go lower, we'll see ad spending decline. Well, you're taking some more health care positioning. You bought more UnitedHealth this morning, which is certainly...

the big stock story of the day. It's our chart of the day. As the Journal reports, the DOJ is investigating the company's Medicare billing practices. So I'd like to get your thought process on it and show you what the hedge fund manager Bill Ackman posted on X within the last few hours. It says, quote, my psychological short here is paying off and I would avoid this stock.

When you find two cockroaches, it is almost a certainty that there will be many more. And a half a trillion market cap for a health insurer makes no sense. In the context of this story and all of the activity around this name over the last three or four months, you continue to buy more. Why?

Well, first of all, Bill's obviously a brilliant investor, but take that for what it's worth. It's worth a tweet that is reactionary, and if he truly had conviction, it wouldn't be a psychological short. It'd be a short in his books because he has a hedge fund. No, no, no, I know, but...

But the point is, in fairness, though, before you say that, I mean, he has accurate. He has. Well, no, not necessarily. Why could he? Well, because his strategy has evolved and he has said that straight up that he doesn't short stocks. I don't believe he changes documents. He can say what he wants. But trust me, if something comes out that's why I mean, his actions speak louder than words. Hang on, Jenny. Go ahead. But but the point is, is that it's not necessarily true what he's saying now. Why I did it. Well, there's a lot of risk around this name.

I think you've taken out a lot of the risk right now. Your turn. Stock traded down over 60 bucks earlier. I bought it down about, you know, I guess about 55 or so. It's been a great trade so far, hurting from the position I had on. But this is a permanent compounder. This is the leading healthcare company in the world. That's why it's at half a trillion dollars. Number one. Number two.

I mean, if you take a look at what's going on here and just here's here's a 30 second summary. The government, Medicaid and Medicare are pushing to value based care. So that means they don't want to own the risk. So they're pushing that risk to practitioners and they say the practitioners and they figure out with them. Tell me what this patient will cost you to keep in good health. And that's going to drive better outcomes. It's been proven to do that.

in studies that have been done. And to the extent that you are right in how you're applying care and the medical loss ratio is lower, can't go below 75%, typically run mid 80s, you can keep the difference. To the extent it goes above that 100%, then you pay that out of your pocket. So that's what's behind it. So you've incentivized stocks

to go ahead and operate this way. It's been a failed experiment with a lot, like Kano went out of business because of it. But the overall point here is that you've got this arms race in terms of coding, how you code these, and that's still very early days. So will there be offenses in coding? Yes. Do I think that this is an endemic issue that

The board came out and said to the management team, find ways to rip off the government. Absolutely not. Are there bad players who are incentivized in terms of the individual practices that Optum owns? Sure. No different than what you'd see a regional manager in a bank, in an auto company, anywhere else. So to say this company is just evil to its core is really, really asinine. So that's my view. All right.

Here's a quick one thing on it real quick. Okay. I want to get behind Bill's psychological short because that's where I sit too, you know, and I can't short and I don't run a hedge fund. But as I've mentioned before on UNH, I frequently inherit portfolios with a large, low cost basis, UNH position. And the first thing I do is cut it back. And that's been for years because for years I've said at,

At some point, this is going to come into the government's crosshairs. Everyone I know hates--everyone I know who uses it, like, hates UNH. Whether they should or shouldn't, they do. And it trades at too rich a multiple, I think, for what its future growth rates really are. It's an above-market multiple. It's decent growth, but it's not extraordinary.

And I think it's always been in those crosshairs. It's not above market multiple anymore. Just factually, it's 15 times this year's earnings. It's cheap. It's very cheap. Okay, sorry on that one. Historically, it's been above market multiple. Coca-Cola, their growth is very slow. Pepsi, they're very slow. You know, you take some of those other consumer companies. They trade at a multiple that's a premium to the market for perennially slow growth. And they're not dominant as they were. I think until our

Until RFK came in for HHS, I don't think that Coke and Pepsi have been in what I've seen for a long time as like right for government crosshairs of like, of looking at the regulations. That's why you don't invest in healthcare because you don't know what our, you don't invest in any pocket of healthcare because of him and because of Trump. I disagree with that completely. Where are you safe investing? It's been for years. Where are you safe investing in healthcare? Where are you going? Like Organon, okay, which is a spinoff from Merck, which is long legacy, legacy.

What am I saying? Like off patent drugs and like women's health care. OK, you can be there. You got an 8% yield. It's trading at three times earnings. It says three times earnings? OK, but let's not go here now. I'm specifically telling you guys for years, every time I get a new portfolio and it has a big UNH position, one of the first things I do is cut it down to size or sell it. That's all I'm saying. So all I'm saying is I hear Bill's psychological short. Let me just ask a question. When you say you cut it back, is it because it's an oversized position in the portfolio? Both.

Both. If it's super big and the capital gains are too big, then I cut it back. If I can punt the whole position, I've punted the whole position. Why would you punt the whole position, given what you think? Because I've always thought that there's government risk in it, that there's political risk in that stock. I'm glad you mentioned Coca-Cola because it's a good segue to the person who is arguably the most famous Coca-Cola investor of all time. Who's that?

Warren Buffett. Warren Buffett, okay. Same Warren. And Berkshire reports on Saturday. So here's a question, okay? It brings it to full circle where we started the program. Momentum's rolling. Is the consumer rolling? Is this still a really strong bull market? If it is, why is Berkshire sitting on so much cash? $300 billion in the third quarter, the highest percentage of the firm's assets going at least back to 1998.

Why? He's worried. He's waiting for an elephant. Maybe he's worried. I mean, he has been selling for over a year, whether it's Apple or Bank of America. Maybe he's worried, but I think it's more he just doesn't like the prices. Now, look, I don't know. I don't have the hotline to him. Steve, I don't think you do either. Maybe you do.

But he's not coming out and saying, hey, I think there's a real problem in the economy. I think there's a real problem in the market. He has said with the amount of cash that he has, there are very few targets that he can functionally, mathematically invest in. And if he looks at the prices of those companies, he's not likely to be too appetized. So I think he just waits for a good washout, a correction in the markets and puts things to work. I mean, he sold a lot of Apple. He sold a lot of Bank of America.

It's never a great idea to speculate too hard on what Berkshire is doing, but it is peculiar that he has been sitting on a mountain of cash

for a long time you know what people are a lot of my second is because we know that over the last year year-and-a-half he's invested in various Japanese trading companies we also know that Europe has been very cheap for a long time we see the remarkable recovery this year in Europe and in the banks in particular which is something that war knows about

I wonder if he's taken a position, maybe even a toehold in European banks. I am not saying for one second that European is out of the desert that it's been in for quite some time, but it has gotten so ridiculously cheap and the sizes of the companies in Europe may be something that he's taking a nibble at. Two points. First of all, Europe is pranially cheap to the U.S. market and there's lots of reasons for that. I'm not getting invested in it. Number two, the Europe market has recovered, but

But the countries, the member nations of the EU and those that aren't, like the UK, have not had that recovery. So it's only the stocks. And that's because it's looking for a home from the U.S. In terms of Buffett, why does nobody say this? The guy's in his mid-90s. You've said it before. He's had some health scares, and I'm the only one. Maybe he's...

giving all of his wealth to charities and to foundations. Maybe he knows that when he passes that all the shorts can be targeting his companies and saying they're going to have to sell these major positions. I don't think so. And he wants to, Matt, of course, you're in top view. Let me finish. Let me finish. And he wants to give these foundations, these nonprofits,

their choice as to what they want to do with the capital rather than continue to own the stocks and have to sell them at lower levels. Can I tell you, I don't think so. You gave good advice. Give me a quick second on this. Because you gave good advice that it's too hard to speculate. You might be right. Who knows? Exactly. I honestly look at this exercise. I don't know if I'm right. I look at this exercise as finding shapes in the cloud. You want to see the shape you see. You want to see the shape I see. You can do whatever you want because he's not talking about it. What's undeniable, though, he has lightened up.

For a long time. And whatever the reason is, he has lightened up, and he's been the market oracle for a reason.

The reason I don't think that's why is because I think he's always run it for the shareholders, not for himself. And I think I'll give him a lot of credit for setting his own interests aside and running that for the shareholders. Okay. All right. Good. I'm sorry. I got to cut you off because we got to go. We're overboard. And we're going to sink if we don't. So we're going to come back after this quick break. I have several moves that I have to get to. Everybody up here on the desk has something going on in their portfolios that we need to tell you about. We'll do it next.

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the presses. I just sent the write-up to my clients on this. So, this is a business development company, a BDC. What it is, is basically a private credit company, and they've packaged it up for individual investors to buy in the BDC TSLX form. It's got an 8% dividend yield. They generally pay a supplemental dividend on top of that, so your yield will probably be higher. They've grown that dividend at an annualized rate of 3.4% over the last four years. And this was an interesting process for us. We really started with the whole

BDC universe, everything out there. And quickly two rose to the top for us as potentials for us. It was Aries and TSLX. We already own Hercules and so as we looked at them we're like, okay, TSLX, the way their portfolio is structured, the kinds of loans they offer is very complimentary, not overlapping anything else we do. One of the other things was whether we spoke to research analysts,

Competitors, everyone kept saying, this is the best management team out there. And by being the best management team out there, they have access to some of the best deals. You can look back, the dividends uninterrupted during terrible times like the pandemic, like 2018. 8% yield. 8%, probably more. 52-week high today, by the way, too. I know. That's a good point, though. Don't expect a lot of capital appreciation. Don't buy this. Well, it's a higher 52-week high now. I know. I know.

But don't buy it for the capital appreciation. Buy it for the dividend yield. And you can hold this hopefully for, I don't know, 10 years, 20 years. It's one of those kinds of stocks if you just want the income. Give me this Paris trade that you have in real estate. We'll get to a tech thing in a minute. So you sold the NNN REIT and you bought Realty Income. Right. Why? As many of you know, I've owned Triple N for years, almost decades at this point. And it is a great company. But what

But what they do is they lend to all sorts of like 7-Eleven, sorry, they don't lend. They have real estate for all sorts of things like 7-Eleven, as does Realty Income. The difference is Realty Income only holds properties or only rents properties to credit, what am I saying, like companies that have a credit rating, right? So historically, because it's a bigger market cap, a $50 billion market cap, because their tenants are higher on the credit spectrum, they've always traded with a discount at a premium amount

valuation and a discounted yield. So I really don't know why. There's no good reason. But REITs have gotten shaken up. And these two stocks are trading at parity. So for the first time in decades, I've had the opportunity to actually improve the quality of the portfolio. Now I have a bigger company, a higher quality portfolio. They both have a 5.6% yield. So I swapped them out and just used it as the portfolio.

portfolio management opportunity. - Okay, out of triple N into O. - To letter O. Sorry, triple N. - And the other one is you sold Skyworks. - Right, and I was on last week, or maybe it was the week before, after they had that terrible earnings report. I said, "We're gonna catch our breath. "We're gonna see what we can do. "We're gonna watch to see if the stock bounces a little bit, "see if there's any redemption," but there wasn't. We came away saying, "No, the growth thesis on this "is completely broken," and tossed it out. - All right, Jimmy, let's go through some things here. You bought more Exxon and you bought more Wynn.

Yes. So companies that I believe in that maybe haven't performed as well as other sectors of the market or other names in my portfolio, but I still very much believe in them. This is routine housekeeping. This is if a stock is in your portfolio, you believe in it, but the rest of the portfolio grows bigger around it, then you've got to add to it. That's what I believe very strongly in ExxonMobil and Wynn. Wynn had great results a week ago and it responded. The stock was down at 80. Now it's at $92 a share. Scott, if I may, I'd like to talk about where I sourced it.

of the funds for the only element to keep you went into that you trim city yes which is kind of surprising to me yes it's been a bad week for the banks but this is the bank that you've liked the most and i feel very strongly in yeah jane frazier

more than almost any other financial CEO, 'cause this is the stock that you bet the house on. - Yeah, and everything you just said still stands, is still applicable. So if you think about Citi, and Scott, you know this, the timing on this has been far from perfect. It has languished for many years.

But during that time frame, apropos of what I was just saying about when an ExxonMobil, I have added to it over the years as it has not done well versus the rest of the portfolio. You get to a point where now it's up 52 percent over the last year and it was a very big position a year ago. It's simply too large. So this is portfolio management. If you take what I just said about Citi and I still very much believe in it, but I still believe in ExxonMobil.

and win just as strongly then what I'm doing with those two names is what I was doing with Citigroup a year, two, three years ago. - Trimmed BlackRock as well to raise some funds too. Let me get to one more before we take a break. Alibaba, the shares are up huge this week. 15%, a new 52 week high. They're gonna spend aggressively in AI. I think we sort of, that was the story of the week. At least it relates to that name. You're a believer now in these Chinese internet names. You bought the KWeb.

And you bought PDD. I talked a lot in the last couple of weeks about, you know, sort of Tepper doubling down on his belief that these stocks are a place to be. His 13F revealed the fact that he increased the holdings of all of the Chinese names that he had owned. PDD included, JD, Alibaba. I think it was Baidu was the other. What's your thesis here? Yeah, I talked to Dave as he was getting out of his hot tub last night.

Palm Beach. So he was in a good mood. Look, it's kind of strange that I view adding money to China to be a safer investment than the U.S. But it is right now. So there's no reason to believe it. It's safer in China than the U.S. These stocks are. These stocks are, absolutely.

These stocks are safer to invest at this time than in the U.S. broadly. And the reason for that is because there there's no uncertainty in terms of what the economic outlook is as the government sees it. And when I take a look at these names, and China's not a safe place to invest. Don't misunderstand me. I'm just saying very specifically a law intermediate to maybe longer-term trade in these names. I won't be there forever.

is attractive. PDD is at 10 times earnings.

So that makes it very cheap. There's no reason to believe that you won't see the same momentum in the AI-related stocks in China as you see here. It will never get the multiples, number one. Number two, as the U.S. has cut off, as they should have, our technology to China, it's necessity to some other invention. They weren't going to stop and say, okay, we're not going to advance technology. They'll do it themselves. So that's what they've done. So I think those are all good shades.

All cheap, very cheap stocks now. All right. Let's get the headlines now with Angelica Peebles. Hi, Angelica.

Hey, Scott. The National Science Foundation reclassified hundreds of employees from permanent to probationary status in response to President Trump's directive to reduce the federal workforce. According to Democratic Representative Don Baier, who represents the Virginia district where the NSF is located, the agency's move violated labor contracts. A spokesperson for the foundation said 170 people were fired on Tuesday, 86 of whom were classified as probationary.

Pope Francis, who is being treated for double pneumonia, is not out of danger yet. But his medical team said today that his condition is not life-threatening. The pontiff will remain at the hospital at least through the end of next week. And Ford is recalling more than 240,000 vehicles in the U.S.

potential issues with the seatbelts. The recall affects certain models of the Ford Explorer and Lincoln Aviator from 2020 and 2021. The seatbelt buckle anchor bolts may be improperly secured. Ford dealers will inspect the bolts and replace them if necessary. Back to you, Scott. All right, Angelica. Thank you very much for that. That is Angelica Peebles. I've got more moves coming up as well from Jim Laventhal. I think Steve Weiss may have something else we need to do. And we're back with more trades next.

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So if you're looking for a gift for the food lover in your life, head to goldbelly.com and get 20% off your first order with promo code GIFT. Welcome back. We're down 500 on the Dow. Call of the day today for us is William Blair downgrading the defense stocks. In the news a lot this week.

As all of you know, Booz Allen, CACI, General Dynamics, Leidos, which Weiss has been trimming of late, Parsons is on that list. Everything gets a downgrade here. I'm wondering how you guys think about these defense names now. Northrop?

Jenny? Yeah, so this has been a really, really long-term holding in our discipline growth strategy. And this kind of goes back to the top of the show when I say you stay on track and you stay on plan. And so, while there's near-term noise, near-term we don't know the rules of the road, I think in the long term what's going to come out of this is that all these countries need to rearm. What we're finding out is everybody has no stockpiles or low stockpiles.

And I think there probably is like strength, what is it, peace through strength? I think there probably is peace through strength. - Yeah, but if we're gonna cut the budget,

20% a year for each of the next five years. Well, I thought it was 8% a year for the next five years, but there were all these exemptions to that too. And also, who the heck knows if that's even going to be real, right? Who knows if it sticks? Who knows what happens to Congress in two years? Why would they continue those budget cuts in two years if there's a problem? So I'm not adjusting the portfolio right now for things like that.

because the landscape keeps changing. Jimmy, you have Lockheed. Yeah, Europe's going to pick up the slack. It's that simple. Yeah, there are going to be budget cuts. I'm not so sure on these budget cuts that the F-35, which is the backbone of Lockheed Martin, is actually going to get cut. I know Elon Musk threw that grenade over his shoulder on one day. The F-35 is a very capable platform. And to the extent that the U.S. Air Force cuts back,

European air forces are absolutely going to pick up the slack they've been waiting for these planes for quite some time. And then there's missiles, too, that unfortunately the world is still going to need. Europe's going to pick up any slack in the U.S. So these are part of the industrial complex in which Jeff DeGraff calls vulnerable today, which leads me to another move from you. We've been busy with moves today. You sold Deere.

which you've owned for almost three years yeah why'd you bounce that uh deer has also languished mostly through 2024 and 2023 on poor share crop prices now share crop prices are projected to start recovering and with it farmer incomes that they can start buying deer tractors

That recovery is, in my opinion, more than priced in the shares. They're up something like 40% in the last year. Frankly, it's been a good investment over the last three years, up 14%. I'm not going to pat myself on the back. That 14% per annum is a little less than the S&P 500. But I'm looking at it right now. I see it at fair value. I think the company has done a very good job of navigating through this downturn, controlling inventories and thus branded pricing. But the recovery is all priced in, in my opinion. All right. Another break. We got to talk

crypto as well, which has stalled out of late. It is still below 100K. I know Bryn has thoughts on that. We'll talk about that on the other side.

Market Flash to get to with Mackenzie Segalis. Hey, Mackenzie. Hey, Scott. So you got shares of Block that have plunged more than 15 percent today, marking the company's sharpest single day drop in five years. The sell off followed a fourth quarter earnings report after the bell on Thursday that missed expectations on both revenue and earnings. Now, 2025 guidance also failed to provide the upside that investors were hoping for.

Two key concerns are flatline cash app user growth and a less than robust acceleration in Square's seller business. Square is also continuing to lose market share to Toast, Clover and Shift4, all of which have been gaining traction in that SMB payment space. And while block shares have climbed 10 percent over the past year, today's sharp decline suggests that investors are growing increasingly impatient with the company's execution.

Back to you, Scott. All right, Mackenzie, appreciate that. Thank you. It makes me think a little bit about Bitcoin. You talk about companies like this. Bryn, what do you make of the way Bitcoin's traded over the last month? It seems to have stalled out after a nice move. You own the IBIT, that's the Bitcoin Trust. There's some Coinbase news today as well.

So Bitcoin's up around 70% over the last year. Feels like, you know, with these cryptos, especially Bitcoin, you get these big rushes of moves. And so I don't think there's anything to read into Bitcoin

It's like up 4% for the year. I think what's interesting is, you know, gold is up 12. And so from a trader perspective, I think gold's been getting a lot more shine than Bitcoin. I think longer term, this is a crypto that people absolutely buy the dip. So I think if we got any type of meaningful sell-off,

people are going to step back in and buy it. Like I bought Ethereum right when it was down 20% the other day. It's still down about 20%. But I think this is definitely a buy the dip asset that people will continue to invest in long term. The whites, you think that too? I mean, you own the same thing.

No, look, I bought it. I don't believe in it at all. I don't think it's got any utility. I think that'll continue to be the case even on the administration. Although I've heard that the Trump family has hired a salesperson, true story, and guarantees a White House visit if you invest $5 million or more in his crypto business. But here's what I'd say.

No utility for it whatsoever. Purely momentum trade. Bryn's right. The momentum goes, and then it just pauses even corrects. So I did sell about 20%. I'm holding on to it because I've got no other place for money. But it is a risk asset, as you can see today. All right. A quick break, and then obviously NVIDIA reports next week. And on that note, we have some tech moves to get to from Jim next. Let's do these moves that you have in tech. We're obviously looking ahead to NVIDIA next week, talking some hyperscalers.

Amazon and Google you trimmed, why? - They have just had great runs. I've been in Amazon a little less than a year and it's done fabulously. Google I've been in much longer and it's done fabulously as well. But basically this is rebalancing again. I needed some funds to add to the ones that I want that have been down.

AMAT, Applied Materials, and Adobe, two companies I strongly believe in. Applied Materials, we're building semiconductor plants all over the world. Their equipment is needed. Adobe, we all know the product. I think there's a messaging issue from the CEO's office, but these fears of competition, I think, are way overblown. Both stocks are way down. I want to add to them, just like I did with Citi and Wynn. I need funds, and that comes from the winners, Amazon and Alphabet. Okay.

Adobe is down 17% over the last year. You can't tell me that that's because of messaging from the CEO. I actually think the results have been very good. The thing is, and I compare this, as does some of the analysts on my team, to when you see Mark Benioff get on the air in an earnings call and talk about agents and all that sort of stuff, stocks go through the roof. The CEO here just doesn't do as vibrant a job. They haven't been as big of a player in where everybody else is. I...

Acrobat is still... They're also contrived. Wait, wait, wait. Acrobat is very important. It has very good AI capabilities. I think that gets lost in the shuffle. And again, this is where I go to the messaging. The fact that I'm the one who has to be saying this and that it's controversial, it shouldn't be me. It should be the CEO who's making this point again and again and again. The fact that you're saying it is indeed troubling. But I would say that

Adobe is one of those that can be disintermediated very quickly. That's a thought whether it's true or not. That's why it's down. I think that's wrong. I'm sorry. You continue in the break. We'll be back with finals. 3 o'clock Eastern, closing bell. Cameron Dawson, Malcolm Etheridge, Rick Heitzman, Stephanie Link, and J.P. Morgan, Private Bank's Global Head of Alternatives, Kristen Galergis-Roland. So I hope you join me then. Let's do some finals. Bryn, what do you got?

Uber. Stock's been in a downtrend, now firmly in an uptrend. 170 million subscribers over 70 countries. Uber One is growing exponentially. I think this name, once again, has a nine handled sometime this year. We'll see you soon. Thanks for that, Farmer Jim. MP Corporation, this is a strategic asset. Reported earnings last night. It's well on its way, continuing to not only mine, but also refine rare earth elements and create magnets from them.

Conagra, as money rotates out of momentum into staples, it's a great play. You get a 5.5% dividend yield. UnitedHealth, even if I'm wrong on the justice case, it's going to do quite well. It's going to take forever to determine. All right, I'll see you on the bell. 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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