Threats to the Momentum Rally 2/19/25
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All right, Carl, thanks so much. Welcome to the Halftime Report. I'm Scott Wapner, front and center this hour. The rally's momentum, whether it is starting to fade or not, we'll discuss and debate that with the investment committee. Joining me for the hour today, Kerry Firestone, Jason Snipe, Steve Weiss, Joe Terranova on his way here. He will join us momentarily. We'll check the markets. Carl told you, new closing high on the S&P. That's where we are. So we started pretty uneven today, Kerry, but we picked up a little bit of momentum as we come on the air today. Thank you, tech.

Some of the big names continue to work. But we do have a bit of uneven trade. How would you answer that question? Is the rally's momentum starting to fade? Yes or no? Yes. To be simple, it's fading, even though we...

are at a new high, right? So we are at a new high. So it's not fading a lot, obviously. - Feels like it's fading and then you turn around and you're positive and at a new high again. 'Cause it's resilient at the same time. - Correct. - This market is. - So what we've had is some pockets of real strength. Even if you look at a name like Meta, an enormous year so far. And financials as a sector have been extremely, extremely heavy on the market, really moving higher most days.

On the other hand, the exuberance generally is definitely weaker. We had euphoria.

After the election, there's an awful lot of optimism about lower taxes, a better business environment, less regulations, a lot of reasons that the market was enthusiastic. And now we're running into a reality where investors are questioning what is going to work and who is it going to work for. It's just not clear that all of the market and all

industry sectors can possibly benefit from as much change as we're seeing every day. There's a new piece of change, whether it's the FAA or the FTC or the FDA or everything that begins with an F. I mean, agencies, that is. It means that people are worried and concerned about what might happen, and that's weighing on stocks. Jay, to that point,

You got the continued threat of tariffs. The president talking about 25% tariffs on auto chips, pharmaceuticals. Threats not in practice yet. So the market can sort of look past that. A new Reuters Ipsos poll today says the share of Americans who think the economy is on the wrong track rose to 53% in the latest poll. That's up from 43% in late January. Bank of America today talks about individual investors'

and the wall of worry being alive and well. Tactically bullish technical patterns remain in place. It's like what we've been talking about. The market still feels like it wants to go up. Many international equity market indices also have positive setups. But sentiment suggests that individual investors are non-believers and that the wall of worry is alive and well. Can we continue to climb it?

is the question. Yeah. And I think we can. I think you make a great point, Scott, earlier, you know, just in terms of the resiliency we have seen in the market, right? Yes, breath has slowed down some over the last couple of weeks, but generally speaking, it has expanded this year. You know, when I think about the tariff talk, lots of little detail, the

delayed implementation. So we know these are negotiatory tools. That's been the playbook that we've seen thus far. But broadly speaking, when I think about what has transpired already, we talk about earnings. We've been talking about that over the last couple of weeks. You know, 16% earnings growth for the market. You know, we had expected to be around 12%. So we're upside

5%, which is significant, 77% beat rate in terms of earnings. So led by financials, consumer services, consumer discretionary, all having really, really strong years. So I also look back to the warmer inflationary prints we had last week, which the market has easily digested. So it's a mixed bag right now, but I'm generally more bullish than I am bearish. Why is it?

Kerry sort of made the point, and we've been talking about it the last several days, a lot of people came into this year thinking that good returns were going to be a layup. You had all this good feeling about what was going to be ahead. You've had a bit of uneven market action. It's still a resilient tape. We continue to hit new highs. I thought interesting from you today played into this whole thing. You're trimming your Bitcoin holding.

And maybe that is a sign of where overall sentiment and momentum can be viewed within the market. The fact that Bitcoin is kind of stalled, you know, it's stalled out a bit. So it's down eight and a half percent in a month. Yeah. So, you know, I said when I went into it and when I was in it that when the momentum dies, then I'm going to start getting out of it. So I only got out about 20% of it. It's still been a positive trade.

But look, it peaked at 105 roughly after Trump was elected. And now it's going down. And I think that's the story in the market, frankly, is that the expectations, as Carrie pointed out, was that, look, this is going to be the golden age for business. It's going to be the golden age for the markets, for investment. And none of that's proven true.

You also had when you nominated people like Kennedy and, you know, Tulsi Gabb and Hegseth. He said there's no chance they're getting through. And guess what? They got through. So the point is- Yeah, we all woke up the next morning too and everything was okay. You know what I'm saying? Well, hold on. I'm just saying we all woke up the next morning. The market woke up the next morning and we hit new highs on the S&Ps. That's the difference. You're living in the minute. I'm looking in the future.

and Bobby Kennedy just took office. So what did you expect to accomplish? But that's not the point. The point is, is that things that we viewed were completely uncertain, that weren't going to happen, have happened. So now we look at tariffs and we keep saying 25% is a negotiating tool.

Sure it is, but are we going to come out at 10%? Who's going to be the trading partners that are going to be blessed, right? We used to look at Ukraine as an ally. Now Putin's not the dictator. It's Zelensky. So the point is there's great instability. Now, the FDA, you saw major headcount cuts there.

The government's bloated, unquestionably. Every agency is severely bloated. But CEOs would feel much better if there were a communicated strategy as to why they're making the cuts, how they're going to make cuts. Because it's just like anybody who lived in New York who could afford to be mobile. So the richest moved, and you're left with those that are depleting your tax base.

So it's the same thing. Employees in the government thought they had security or mission driven. What does this have to do with the market? It's got everything to do with the market because there's instability. It's not good for CEOs. CEOs aren't saying it, but we had a former governor of the Fed when the question was put to him today.

If you were a CEO, would you be making any investments in your business now? You know what he said? They'd be crazy to. So that's what I do with the market. So right now, I'm not a major seller. I'm a trimmer. But I'm not putting new capital in either. So the IBIT proceeds are not going into it until I see a clear...

path regulation that's not going away we've seen no moves there as a matter of fact vance has doubled down in saying that hey you know big cap tech is too big so the point of it is scott and it all has to do with the market if there's not investment coming from the corporate i'm not

If there's not investment coming to the corporate, it's the same market. I'm not ridiculing anything you're saying. I'm simply literally thinking, I hear all you're saying. I mean, there are plenty of people who are on your side of the point of view, and there are plenty of people who are on the opposite point of view. And the market somehow has been resilient enough to look through a lot of what it has deemed to be noise and achieve this. So how does it play out, is your question?

Here's how it plays out. Who knows? Right now. Who knows? Earnings, you know how it plays out? It plays out that earnings were up 15%. And that's why the market is where it is. Because it cares more about that today than it does anything else. They cared about it, but it's not still going up. That's hitting a new high on very low volume on a vacation week.

So money's not coming in off the sidelines. B of A flow show aside, which is useless in terms of allocating that to the market and what you do there,

Money's going to stay on the sideline. It's not going to start selling stocks because it's going to wait it out to see what it actually takes. But in the meantime, you'll see an atrophy. And that's what you're seeing right now. I think that will continue. This is not a political statement. Nobody can sit here, whether you're arch-conservative, Republican, Democrat, or liberal, of course, and I'm none of those, right? I'm a moderate, and say there's stability. I know where the economy's going. You heard what you said, the poll, 53%.

said we don't like the direction what do you think c_e_o_'s saying private equity bankers are spoke to mall they're all plummets they don't know where to go great tire you not see in the day and you haven't seen welcome good to see you thank you for your life so i don't know what about the idea of whether the momentum of the rallies fading yes every time you want to suggest not you but the greater you want to suggest it might be

This market says, no, I'm still really resilient. I've got my eye on the prize and the prize is earnings are going to continue to remain robust. AI is the and remains the most dominant story within the economy. And you can see that through the news of the day.

Microsoft, new quantum computing chip. Apple, new product today. Yes, we've been talking about meta, the winning streak ending, but it ended after 20 straight up days. So that's where the money continues to go. You look at the flow show from, as Weiss was talking about with Bank of America, tech led the inflows. Biggest inflow since December.

So I guess the way I think about it, and we talked about this yesterday, is we've had three instances so far this year, and they were all on Mondays. Elevated volatility, market drops. Why? On headlines, consistent to what Stephen is talking about. We reversed the positive momentum of late yesterday, which was really interesting, by the way, how we rallied into the end of the day. We reversed that overnight. We reversed that again on the conversation surrounding tariffs. I think at a certain point,

If you're bearish, and Steve, please don't think that's not what I'm saying. I know you're invested. But if you're bearish, you're frustrated right now, right? You're frustrated because you're getting the headlines that you need to really shake out a market that, from a sentiment and position standpoint towards the end of 2024, was rather bullish, for sure. You're getting those headlines, and you're not getting the actual negative response. So to your point, there's something underneath this market

that is really acting as a very strong foundation. And it's the reason why you have this resiliency. It's called earnings. It's called the disinflationary trend. It's called the Federal Reserve that, yes, while they're pausing, yes, they're on pause, they still have intended that they want their next move to be another rate cut. And you have...

If the rest of the world should be viewed so poorly in terms of investing, I don't want to invest in Brazil, I don't want to invest in Mexico, I don't want to invest in China or Europe. Why, year to date, are they performing so well and they are clearly the targets of these tariffs? That's telling you something about the overall environment. It doesn't mean that we're in an environment where we're going up 20, 25%.

like we did in 24 or in 23, but it's an environment where you can chase alpha, not look towards the beta. Weiss's perspective feels to me like it's only a matter of time before things roll over because of the uneven policymaking, the poll of, you know, are people feeling worse off about the direction of the economy? Well, maybe they are today. I mean, egg prices obviously have a lot to do with that, right? People trying to put food on the table, that makes you feel negative about the economy when you're spending 10 bucks for a dozen of eggs. Okay. And it's...

If in fact that's the case, I think we will get a very clear understanding about how that traces out. The market will display the type of price reversal

that we've experienced three times already in 2025, and it will not have the immediate resiliency. It won't have the V-shaped recovery. Over the next several days, you will see a deleveraging process. And I think what's critical is how do you respond to that? Because that's generally where people lose the most money. I love when the bears come out and say,

As the market's rallying, we're bearish, we're bearish, we're bearish. The minute the market rolls over and it rolls over for about a week or two, they take the other side and say, I caught it. And now they're trapped onto a deeper decline. I think you will have plenty of opportunity when this market begins to find its inflection point in the subsequent days, in the subsequent weeks to pare back your positioning. That's the right moment to do it from my perspective. I agree.

The second that's gotten really hit has been defense, right? That's right there. It's in the spending. And you take a look at, and I'm talking about, you know, the defense areas that are high tech.

like Booz Allen, like Leidos. I mean, take a look at the chart in Booz Allen. I mean, you know, I thought they reported a good quarter, but they were one of the few to talk about the uncertainty. Leidos reported a good quarter with no talks of uncertainty. So the market is looking through to some that are highly regulated. Do you really want to be a biotech investor over the next, you know, who knows, six months here? We know the FDA has been cut.

So one of the companies we're involved in, they were told, look, it's going to be at least two months. And we thought we'd get approval two weeks ago. But after the news came out over Friday and Saturday about the cuts and furthermore, you don't know what's going to go there. So why should biotech be where it is? To me, that's a source of funds. But don't you think we've got a big inflection point coming next week when NVIDIA reports?

No, I think that's a couple of days. We know what they're going to say. No, we don't. I don't know. We don't know. We really don't know the magnitude of what a expected beat or miss. Well, I mean, it'd be a shocker probably if they missed, but the degree of the guide is going to be a pretty big determining factor. Speaking of, you have a new charitable trust, right? And you bought NVIDIA, right?

You added two stocks to it. We'll talk about one later. But NVIDIA, welcome to the NVIDIA investing game. Well, I think welcome to 6% weight in the S&P 500. I think that that's a factor that should be important generally. We've made a decision not to own NVIDIA. We own Broadcom and have added to it at the firm. But for the trust, we thought a 6% weight in the S&P 500

Being naked, that stock is really a commitment and that's a statement that we didn't feel we wanted to make right now. And so we added, and we also think that the stock has been in a decline. It's recently come back, but it was an opportunity to take advantage of it.

at a price that was off the high. And there's no question that with everybody spending $100 billion, we just heard in the last few weeks on artificial intelligence, a lot of that goes towards their chips, which are dominant and will remain dominant. What about the non-Mag7 AI names that have gone up a lot?

UBS talks about that rally and says there is more to go despite strong performance. So it's not just the NVIDIAs.

It's not just the metas. It's Palantir is over the last year is up 409%. Vistra is up 273. Carries Broadcom's up 83. Joe, you got that too. Vertiv, Oracle, Aristadel. Those are all up at minimum 40% over the last year, with most of them up a lot more than that. Do I think that there's a lot more to go?

despite, Joe, the strong performance that we've already seen? Some people might not like this, but you're relying on price. You're relying on price until you come into an earnings report and you're greeted by an earnings report like you got today from Arister Networks. Look exactly what was reported. Steve mentioned

The guidance, the guidance overall so far for the S&P earnings season, Scott, has not been good and it can't be good because how are you really going to guide with a degree of clarity and confidence when you're unsure what the effect of tariffs ultimately is going to be?

So the guide came in a little bit short here for Arister Networks and the street didn't like that. The street was expecting 15 to 17 percent revenue growth. All right. Arister Networks says we're going to give you 17 percent revenue growth. Right. That's not good enough. Right. Maybe kudos to David Tepper because he he got out of this stock a while back. So what has that done?

Technically, the stock is breaking down. Now it's below its 100-day moving average. You want to look towards the low on that Monday, January 27th, the deep-seek low. I think it was like 97, 68.

Does it hold above that level? That would be critical support. But clearly, the momentum has reversed. And as I said, in a lot of these names, you're relying on price until the earnings kind of smack you in the face and say, wait a second. OK, all the good news is priced in. And at that moment, it's incumbent upon you to have a risk management strategy to reply. Jason, you own a net.

Yeah, and I think, you know, to Joe's point, you know, the guide wasn't high enough. I mean, that's a little bit of the perspective. But let me say this. You know, there's softness on Meta, right? So Meta was 20% of their business just a quarter ago. It's now 15. But Microsoft has slowly ticked up from 18% to 20%. So when I think about... Oracle as well. Oracle as well. So broadly, when I think about, hey, most of their business is with the hyperscalers, right? So they're not...

terribly outside of that mix. Yes, when you think about the uncertainty around these names, it does impact names like Arista. And I think that's what the industry is saying today. There's some other tech names that are in the news I wanted to get to. Calls on Salesforce initiated a buy. Top pick at Redburn, which has made calls on a number of stocks today.

Jason, I mean, ServiceNow, they initiate a buy. That's you. Joe, you have Salesforce and ServiceNow. Adobe is really the only one that they're kind of lukewarm on. Kerry, which is yours, they seem to be on the outside looking in to this whole AI revolution. At least that's how the market, Joe, has judged it to this point, don't you think? Look, the stock is down, what, 15% over the last year. I'm of the belief, and we moved out of this thing, I'm of the belief that

While it does offer an interesting value proposition, I don't think you can ignore the fact that AI is cannibalizing a lot of the existing products. And that's just my view that that's being priced in and one of the reasons why the stock is underperforming relative to names like you're talking about ServiceNow and Salesforce. So Salesforce is $400 the price target.

And ServiceNow, as I said, was also initiated with a buy. I believe Salesforce reports at the end of the month. I think that you could expect here a very strong quarter based on AI. It's really a second derivative in that AI halo story, rather. And let's remember, I mean, they've made a series of acquisitions that are now becoming accretive. So I

I look at Salesforce, I think Salesforce is in a good place. You're looking to trim Salesforce, aren't you? Yeah, I think that Salesforce is a name that having had a really great performance over the last few months, you know, often you think about this company as moving with momentum and then, you know, they can hit a little bit of a hard patch, the stock, because there's an awful lot of, I'd say, promotion that comes with the CEO who's great, he's fantastic,

but it's very sort of exuberant and excitement, and then they have to perform, and then you don't know if there's gonna be an acquisition. So sometimes the best strategy with Salesforce is to trim when the stock is outperformed over a period of years. - You know, Salesforce and ServiceNow can much better display what AI will do for them than what Adobe can. So I think that's part of the issue in the relative performance, number one. And number two,

Adobe has, I'm not gonna say it's a limited product, it's got big products, but it's also ripe, frankly, for disruption with AI and with other software makers. - Couple other names, CrowdStrike, Target up again. At Morgan Stanley, which their base case target seems to be 429, but they suggest despite the recent run, and the recovery's been remarkable in this stock, they see further upside to their $550 bull case.

given positive revisions and potential reacceleration in one to two years. Joe? It's really the cyber trade. And it's been CrowdStrike, Fortinet, Palo Alto. Yes, we exited Palo Alto. We're still fine. We have Fortinet. We have CrowdStrike. But it's

It's been the secular tailwind surrounding that thematic investment philosophy. And you could apply that, obviously, to places like GLP-1 and the artificial intelligence and generative AI halo. But cybersecurity is real. And it's being represented in the performance and really the resiliency of each of these three stocks. Josh talked about it yesterday. That is one remarkable thing.

comeback that CrowdStrike has had since the summer. And credit Stephanie Link. I remember Stephanie was buying in the middle of the summer when that stock was in free fall. Anybody else you want to praise on the show today? Just you. Can I get to you? Oh my gosh. Think of some more people, all right? Okay. Applovin, you want to talk about that one? Does anyone have Applovin? Price target raised to $600 at Citi.

So we're at or to Tepper, Link, who else has made great wishes in other names? Well, I mean, on this one, I should pat myself on the back. Well, you will, but just talk about it first before you get to that point. It was a remarkable quarter. I mean, and this company is out of nowhere really reporting the type of earnings growth that you can't find in a lot of areas of the market, the revenue growth and the acceleration in the revenue growth.

is being rewarded through price. And I said yesterday- 600 bucks seemed like a reasonable price to you, as Citi says? Scott, how high is high? I really don't think anyone knows the answer to that question. It seems high to me. It seems high to me. I thought the reaction the other day off of earnings, it looked like the stock got a little bit tired, but I-

I'm not going to be the one to say, OK, this is the moment where the stock reaches a peak. This has been a remarkable story. It's been a remarkable story from well below underneath 100. You're seeing the continued revenue growth. You're seeing the affection in terms of it being accumulated in growth funds on the institutional side.

And I'm not going to be the one that say, OK, that's going to reverse. Why would it reverse at this point? The only reason it would reverse would be on exhaustion of price because the earnings last week were certainly good enough. Weiss, a move before we take a break. You're out of GXO after a long time. It's been a very long time. Why did you bounce this now?

The quarter was not good. The growth is really slowed dramatically. They're essentially without a CEO. Malcolm is retiring. And I do think it's a good acquisition candidate.

But I just can't own a stock because I think it's going to be acquired. Well, I'm not sure that the evidence for regaining that growth is apparent. So it's been dead money to negative money for an extended period of time. And at some point, you just got to reassess. So I thought, get out. Let me see if they get things fixed and then I'll go back in. Okay.

We'll take a break. When we come back, the builder blues. Home builders are selling off today. We'll find out how the committee is playing the names they own in that space. Plus, we have the trade on today's top stock in the S&P 500 hitting a record high today. We'll talk about it. We'll reveal it. We'll trade it next. Let's say your small business has a problem. Like maybe...

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Are you still quoting 30-year-old movies? Have you said cool beans in the past 90 days? Do you think Discover isn't widely accepted? If this sounds like you, you're stuck in the past. Discover is accepted at 99% of places that take credit cards nationwide. And every time you make a purchase with your card, you automatically earn cash back. Welcome to the now. It pays to discover. Learn more at discover.com slash credit card based on the February 2024 Nelson Report.

All right, we're back. Housing starts were just flat ugly today. The biggest decline since March of 24. So obviously you look at the builders like D.R. Horton, Jason Snipe, which is yours. Yep. Yours. Excuse me. What do you do with this number? What does it mean? I mean, housing is already dicey. You know that given where rates are. Fed Chair Powell talks about it.

every five minutes when he has a chance to talk about the housing market. It just can't get out of its own way. - Yeah, no, there's no doubt about it. And I think obviously, you know, 30 year, it's plus seven is absolutely an overhang for the sector. You know, for D.R. Horton, they're in the first time home buyer market. 69% of their homes are sold for less than 400,000. So I think there is some concern around there. They're obviously providing some incentives and giveaways for folks to draw folks in, but that's hurting margins.

So, you know, it's a kind of wait and see moment for us here. We'll kind of see through the buying season in the next couple of quarters what we like to do with this stock, but it's definitely under review for us. Yeah. Joe T., you own NVR. That's a 52-week low. You sold DR and Pulte and Lenar in the recent rebalance, but is it...

a good spot to be in any of these housing stocks these days? So the home builders over the last 18 months, the correlation has really been, number one, you had the earnings acceleration, you had the revenue growth acceleration, and

And that was despite what was beginning to build, which was the incentives. And if you were fundamentally analyzing the home builders, you were seeing those incentives and saying, okay, we're going to see a deterioration in that revenue growth and that earnings growth. And that's exactly what happened.

I would say that the kind of the last leg that kept the home builders elevated last summer was the fact that the 10 year was continuing to decline below 4%. I think it got to 3.59 the day before the FOMC meeting in September. Well, guess what? Look at the charts. That's the actual top.

in all of these names that we're talking about, like Lennar, like D.R. Horton, like Pulte, and like NVR. So where do you go from here? I don't think they're going to step back on the incentives. I don't see a fundamental improvement there. I think it really has to come in the form of a critical reversal in where the tenure is. I think you need 50 to 75 basis points lower to say, okay, you can restart the positive momentum. Let's talk about CarMax, Kerry. Oppenheimer took it off its top ideas list.

we can look at the stock. What's your take on this name?

Well, the stock has had a rough time over the last couple of years. And if you look at the chart, it's really been up and down and up and down. The last quarter for CarMax was the first time where sales really started to pick up. They've invested a lot in their online platform, which is the best in the industry. And we really think we're starting to see some momentum that we're going to build on in the current quarter and over the next few. So we like the way the stock's acting. You don't you don't regret buying it?

Well, we wish we hadn't owned it for the period when it's underperformed, for sure. But now we think it's an attractive name. Yes. So the worst is behind it. Correct. OK. Visa, top pick at Morgan Stanley. That's a record high today. You want to talk about that one? You own that one. Yeah. Well, Visa just keeps hitting new highs.

And it's been in the right place for these past 10 years. We've owned it most of our history at Oreos. It's 20 years of Visa, and the stock's not even 20 years old. But it has taken over a greater share because more and more purchasing goes on cards. And they're the best technology company in the business. And they will continue to maintain that dominance, which grows as spending grows. And look, we're not going to have any pennies soon. People are going to use credit cards more.

Capital One, speaking of upgraded at B of A, that's to buy from neutral. The target goes to 235, Joe. There you go. 206 is where it is now. They had 207, so they had to bump it up if they're still bullish, which they are as they upgrade it. Shareholders approve the merger between Capital One and Discover. This creates the largest credit card company in the United States. This

This benefits Capital One. They could focus on debit and credit. The street's rewarding it. Capital One's balance sheet is in a strong position. I think both of those names work well until the merger is complete. All right, let's get the headlines now with Silvana. Hi, Silvana. Hey, Scott. Good afternoon. The United States has declared the Sinaloa cartel, Tren de Aragua, and other drug cartels as global terrorist organizations. According to a notice issued today by Secretary of State Marco Rubio,

The groups are a risk to U.S. national security, foreign policy and economic interests. The move comes as President Trump has ramped up immigration enforcement against alleged gang members in the country.

The U.S. aviation sector is calling on Congress to disperse emergency funding for air traffic control technology and staffing following a series of crashes that has raised questions about air safety. In a letter to Congress today, the sector's industry groups wrote that the FAA needed new technology and about 3,500 additional air traffic controllers.

And the top U.S. prosecutor in Washington has launched an investigation into threats against workers at the Department of Government Efficiency and has named Senate Minority Leader Chuck Schumer as a target of the probe.

the probe. In an email seen by Reuters interim U.S. attorney Ed Martin said the probe was inspired by a phone call with a Doge staffer that Senator Schumer has yet to respond. Scott, I'll send it back to you. All right, Silvana, thank you very much for that. Silvana, and now coming up, looking for growth outside the U.S., where you can find the best opportunities right now. Big story. A lot of people are talking about that, including Bob Pisani today in ETF Edge, which is next. If your small business has a problem,

You could say, Ugh, just my luck. But you should say, Like a good neighbor, State Farm is there. And we'll help get you back in business. Like a good neighbor, State Farm is there.

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All right, welcome back. Europe and Asia have been outperforming the U.S. since President Trump took office again. European banks are doing better than U.S. banks and China Tech outperforming the Q's. For more on this global rally with Bob Pisani and today's ETF Edge, we bring him in. Bob, we've been talking a lot about this this week, that the bullish calls for investing outside the U.S. have really picked up.

Yeah, it's very interesting to watch. And one of the issues here is how do you invest overseas in the midst of potential trade wars? So I want to talk here with Perth Toll. She's the founder and CEO of Life and Liberty Index. And she runs the Freedom 100 emerging market ETF. They use personal economic freedom metrics to invest in countries like Taiwan and Chile, South Korea, Mexico, Poland, Brazil and others. Perth, you heard Scott there. There is a sudden spate of interest in investing overseas. Europe and China have outperformed

the U.S. in the last few months. Your freedom ETF is up 10% this year. It's outperforming the U.S. And emerging markets, look here, like Poland, South Africa, Mexico, they're all acting better. Why is this happening? Just give us an overview of why global is suddenly in. Yeah, thanks, Bob. Yeah, this is cyclical, you know. Sometimes U.S. performs better. Sometimes international performs better. Emerging markets coming back.

this year after not having a great year last year. And the U.S. had a fantastic year last year. So this is why we diversify. And emerging markets can be scary, but we try to make it less scary by being in the places that are more free, that have better rule of law and have better protections. Well, I want to get into that because there's a theory behind what you're having. It's just not buy overseas. Your ETF invests in emerging market

countries with high freedom indices. Here's Taiwan, Chile, South Korea, Poland, Brazil. What are these freedom metrics that you're using and how do they help countries get ahead? You say they make a difference, these metrics. - Yeah, absolutely. Emerging markets are full of autocracies, countries just coming out of autocracies.

Sometimes investors want that growth from the emerging market space, but don't want to be funding the things that go on in some of these countries. So we try to make it easier for investors, a safer way to invest in emerging markets by freedom weighting instead of market capitalization weighting. So instead of having a large weight to countries like China, before the war, Russia, Saudi Arabia, these types of countries, we have higher weightings to the freer countries like Taiwan, South Korea, Chile, and Poland. And that has given us a lot of...

exposure to the freer countries which have better growth going forward and have more sustainable returns, better recoveries from drawdowns, more resiliency, more efficiency in their use of capital. So we use both personal and economic freedom metrics from the Cato Institute and the Fraser Institute that have things like terrorism, trafficking, torture, as well as things like business regulations, rule of law, and so forth.

Now, I want to hit the issue of tariffs here because that's coming up in a lot of this. On the tariffs, there are some countries like Chile and Poland, they have very low tariffs. And some countries like India do not. They have very high tariffs. Where do you stand on this? Do tariffs help or hurt a country's economy and stock market? What's the right way to look at that?

Yeah, so free trade is such a huge important piece of economic freedom, which is a huge important piece of our strategy. So we're absolutely pro-free trade and tariffs are a constraint on that. So we do not think that tariffs are helpful to the economy that's imposing them. India has a low allocation in our fund. It's included, but it has a low allocation largely because of their protectionist policies.

I mean, they have the highest tariffs out of all these countries. So, yeah, absolutely. The tariffs are – our view is that it would hurt the countries that are imposing them. All right. We're going to have a lot more coming up on international investing on ETF Edge. It's 1.10 p.m. Eastern Time. We're going to discuss all of this, the impact of tariffs on overseas investing, which countries have tariffs and non-tariff trade barriers, and which have pro-fair trade practices here. Perth's going to be joined by ETF industry investor Tom Leiden, former head of Vetify. That's ETF Edge.

Scott, back to you. Okay, Bob, thanks for that. That's Bob Zani. Straight ahead, we have more committee moves. Kerry has a new buy to tell us about as well. We'll tell you about it next. All right, let's talk about another move. Once again, it is related to your charitable trust, which you recently set up.

And you bought Bristol-Myers, which has been down over a bunch of metrics, month to date, over three months. Is that why you bought it now? Well, no. Bought it because this is a stock and part of an industry that has underperformed for many years. Bristol had a great portfolio of names like Eloquist, Octivo, Yervo, great drugs that have all come off path.

So they're suffering through a couple of years where drugs are going to be declining in revenues, but they're bringing on new drugs that are being added to the growth portfolio. And it's under nine times earnings, 4.6% yield. If any industry can benefit from AI, it's drug discovery. And they've done that already with some of their new introductions. Their schizophrenia drug had help from AI in its targeting and synthesizing.

And we believe that there are many other drugs in cancer and in autoimmune diseases that Bristol will bring on the market over the next few years. - And you don't own that many names in the healthcare space. - No. - For the history you have in covering it and owning a lot of these stocks. So it's meaningful even more so when you choose one over theoretically

everything else. Yeah, I mean, this might be, you know, an early name start, but that's been a good decision not to own these drug sites. They have not performed well for 10 years, and it may be time that things are starting to improve on different levels for them. Okay, let's stay with healthcare for a minute because Silicon Valley is chasing the AI potential in this space as well. Kate Rooney following the money with some exclusive new reporting for us today. Hi, Kate.

Hey there, Scott. So startup Open Evidence is raising a fresh round of capital from Sequoia at a $1 billion valuation. It is the latest major financing we're seeing in AI and health tech and a slice of the market that's catching a lot of attention here in Silicon Valley. It's also seen as an antidote to some of the fear around the more nefarious uses and the downside around this technology. Optimists think that AI could help cure diseases.

and at least make burnt-out doctors more productive. Open Evidence is working on that burnout problem with a chatbot for doctors. The company claims it's already being used by a quarter of U.S. physicians out there. Founder Daniel Nadler pointed to how much higher the bar is for AI accuracy if you're going to be in a clinical setting. Their model was trained on only peer-reviewed medical journals, so it wasn't connected to the Internet when it was trained, which he says helps the trust factor. And then Sequoia partner Pat Grady

led this round. He told me the opportunity is massive in healthcare at the clinical side, back office, for example, but investors need to be picky. There are a lot of great ideas in healthcare, but it is such a complex system. It's really, really hard to cut through layer upon layer upon layer of sort of barnacles that have been become encrusted upon the boat of the healthcare system over the last several decades.

Health tech overall brought in $3.3 billion across about 250 deals last year. That's according to PitchBook. While med tech brought in roughly $2.2 billion. And then AI funding is still massive out here, accounting for roughly one in four venture deals last year, Scott. Okay, thanks. That's Kay Rooney with that exclusive new reporting. Healthcare, guys, has done pretty well.

Up 5% plus. Joe, you have a lot of exposure here. Yes, and there's two names that I would focus on when you're thinking about tech, the combination of healthcare and tech. Intuitive Surgical, which has worked phenomenally well the last five years. I think it's one of the best performing S&P healthcare stocks today.

One more recently, we don't own it in Jyoti, I don't own it personally, but it has very strong momentum and it's participating in that tech healthcare story. That's Quest Diagnostics, ticker symbol DGX, performing relatively well. Edwards Life Sciences, I'd like to own it. I think it should be working. It hasn't worked really well. I would just put that on your watch list. Jason, your best name between AbbVie, you do have the IBB. Yep. United Health and Stryker.

So I think I like Stryker the most. I think the medical device and when I think about the aging demographic and elective surgeries and those coming back online, COVID is long over. And I think that's the most profitable piece of the health care business. All right. Up next, Santoli with his midday word. We're back with senior markets commentator Mike Santoli for his midday word.

Fair to say, tired but resilient. Is that an accurate way to describe this market in your mind? Yeah, I guess tired on one level or maybe just essentially in no hurry. I mean, because it's not as if it's been on a sprint and all of a sudden it used up all this energy. It's been much more of a march than –

then really a headlong run to this high. And as we get to a perch, a new record high, it got there almost grudgingly. But if you go down the checklist of, okay, should I be concerned about anything about the manner in which we got here? You don't come up with too much. Yes, it's a very selective market. Market breadth is again negative today, but the index is able to kind of hang flat there thanks to a couple of names to the upside like Tesla. But in terms of credit being okay,

Really, the overall trend, I mean, sentiment has come off the boil. I think there is a window for greater volatility. We roll off out of these expirations this week, latter part of February. But when you're up this much in the middle of February, if you make a new high in February, really the rest of the year historically says nothing terribly nasty happens in terms of lasting downside. So I guess we can lean on that. Well, because the back half of February has tended not to be so great.

No, it hasn't. Maybe we're going to buck that a little bit. Again, we're above the closing high on the S&P despite any bit of negativity that anybody wants to point out. Yeah, I mean, seasonals have obviously, it's really just the atmospheric conditions. It doesn't mean something's going to actually make the weather bad. And I think that, you know, we're in this zone where even if it does, I think you'd consider it a pretty routine pullback if it does, you know, get a little bit of a hold on the indexes unless you, you know, you're down 3% to 5% from pullback.

All right, I'll see you on Closing Bell. Mike, thanks. That's Mike Zantoli. We'll do finals next. A little setup before final trades. Walmart is tomorrow morning. Joe, record high on Friday. Which you own? I would expect a measured outlook as it relates to the guidance. You have the uncertainty surrounding interest rates and tariffs. Strong Q4, but the guidance is the key. What about BABA? That's tomorrow, too. We've been talking a lot about that.

Lately, obviously, another stock you own. We sure have. I took a recent position in it. Obviously, I'm either going to look like a hero or a fool tomorrow morning. Baidu wasn't so hot last week. We'll see if AI is really acting as a significant catalyst for BABA. All right. I'll see you on Closing Bell, of course, 3 o'clock Eastern. Dan Greenhouse will be with me. J.P. Morgan's Elise Asenbach. Morgan Stanley, Sherry Paul, and the venture capitalist, Rashawn Williams, will be here post-9. So we're looking forward to that. What's your final trade? Garmin.

40% revenue growth. Okay. Thank you for that. There's a nice look at that stock, Weiss. Alphabet. It seems to have stabilized and is on the move back up, I believe. Jay. ServiceNow. They're monetizing their AI tools. Carrie. CNX. Natural gas producer. Small cap stock. Okay. We are above a new closing high on the S&P yet again. We'll see how this day develops into the close. The exchange is down.

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