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cover of episode Trading the Final Stretch 12/23/24

Trading the Final Stretch 12/23/24

2024/12/23
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J
Jim Lebenthal
知名投资分析师和评论员,常客于CNBC的金融节目。
J
Joe Terranova
知名华尔街分析师和投资策略师,现任 Virtus Investment Partners 首席市场策略师。
R
Robert Seacham
Topics
Robert Seacham: 年底科技股将继续上涨,但2025年初市场格局可能转变。将减少科技股超配,增加价值型周期性股票配置,以应对科技股可能放缓的增长。 价值型股票存在技术性反弹机会,但需观察第四季度收益重置后的情况才能确定其长期表现。 当前利率水平下,投资者应考虑配置固定收益资产,以应对潜在的增长风险。 对苹果股票持中性评级,因其盈利能力和现金储备使其风险较低。 看好Broadcom股票,因其基本面良好且增长潜力巨大。 认为科技领域存在一些价格具有吸引力的投资机会,例如Alphabet和Meta。 建议对Palantir股票设置止损点,以应对潜在的波动性。 认为比特币在85000美元附近存在支撑位,投资者可根据自身情况调整策略。 看好网络安全领域,但需根据波动性调整仓位。 认为Vertex制药股票下跌是暂时的,看好医疗保健行业在明年的表现。 对Vistra Energy股票持乐观态度,因其在人工智能领域的应用前景广阔。 看好eBay股票,因其估值较低且受益于消费需求和人工智能发展。 对Adobe股票保持耐心,认为其盈利能力强劲,并能找到人工智能的盈利模式。 看好阿里巴巴股票,因其估值较低且看好中国市场复苏。 建议在新年减持科技股,增持价值型股票,看好IWD的投资表现。 Jim Lebenthal: 市场正处于传统意义上的回调早期阶段,预计会有部分投资者在1月初抛售股票。 市场对美联储政策和特朗普政策的不确定性导致科技股再次走强,2025年市场存在较大不确定性。 市场情绪已从乐观转向谨慎,这对价值型股票的投资至关重要。 如果2025年基本面没有如预期般改善,当前市场对大型科技股的偏好可能会在年初加剧。 2025年最大的风险是盈利增长,市场对盈利的预期过高。 看好Qualcomm股票,因其估值合理且股息率较高。 认为Nvidia和Broadcom在人工智能领域的市场份额占据主导地位,其他公司难以追赶。 减持Visa股票是为了筹集资金购买Qualcomm股票,对Visa股票的长期前景并不悲观。 看好洛克希德·马丁公司股票。 Joe Terranova: 价值型股票的投资表现并非必须依赖于市场回调,其表现可能与市场回调无关。 可以通过基本面分析在价值领域找到具有吸引力的投资机会,例如能源和商品领域的一些公司,其市盈率仅为自由现金流的个位数倍数。 航空股的涨势可能还有持续时间,因为市场对销售额的预期过低。 看好Zoom股票在2025年的表现。

Deep Dive

Key Insights

Why are the markets expected to see momentum in the tech trade during the year-end?

Momentum is expected to continue in the tech trade due to the setup for 2025, which may see a different market environment. However, the pace of outperformance in tech cannot continue indefinitely, leading to a potential broadening of the market.

What is the Investment Committee's strategy for the tech sector in 2025?

The committee is trimming their overweight position in technology and adding value and cyclical value stocks, expecting a broadening in the market. They believe the outperformance of tech at this pace cannot continue and are positioning for a shift in momentum.

Why does the Investment Committee believe value stocks might outperform in 2025?

Value stocks are seen as oversold, creating a technical bounce-back opportunity. The committee believes that if fourth-quarter earnings reset positively, value stocks could outperform. However, this depends on earnings expectations and the Fed's rate policy.

What risks does the Investment Committee see for the market in 2025?

The biggest risk is earnings growth, with the S&P 500's annualized earnings growth rate over the last 10 years at 8%, while consensus for 2025 is around 14.8%. Additionally, there is uncertainty around Fed policy, tariffs, immigration, and other potential economic impacts.

Why did the Investment Committee trim their position in Broadcom?

Broadcom's stock had risen significantly, and the committee trimmed their position to manage risk and maintain exposure to the tech sector. They still consider Broadcom a core holding due to its strong fundamentals and growth in AI.

What is the committee's view on Netflix's push into live sports streaming?

The committee views Netflix's move into live sports as expensive and risky, with potential technical issues and high rights costs. They believe the stock's price may already reflect optimistic expectations, and they are cautious about further investment.

What is the committee's biggest winner for the year, and why?

Vistra Energy is the biggest winner, up 263%, due to its role as a derivative AI play, powering data centers. The stock is still not considered expensive relative to its growth potential, though it has become an oversized position.

What is the committee's outlook for Adobe in 2025?

The committee remains patient with Adobe, believing the disruption to its core franchise is overdone. They see potential for Adobe to monetize AI and consider the stock undervalued at a 30% discount to its 10-year average.

Chapters
The Investment Committee discusses their market outlook for the remaining trading days of 2024 and beyond. A major topic is the possibility of a market correction, with differing opinions on its timing and severity. The discussion also covers the potential outperformance of value stocks versus growth stocks and the impact of interest rates and earnings expectations.
  • Momentum continues in the year-end tech trade, but a shift to value and cyclical value is anticipated for 2025.
  • Concerns exist about the sustainability of tech's outperformance and the potential for a correction.
  • The possibility of two rate cuts instead of four or elevated rates is discussed in relation to the value outperformance and market broadening.

Shownotes Transcript

Translations:
中文

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Before investing, consider the funds, investment objectives, risks, charges, and expenses. Visit ssga.com for perspectives containing this and other information. Read it carefully. DIA is subject to risks similar to those of stocks. All ATS are subject to risk, including possible loss of principal. Alps Distributors, Inc. Distributor. 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. Welcome to the Halftime Report. I am Scott Wapner, front and center of this hour. The final stretch, just six trading days left in 2024. We will discuss with the investment committee today as one member makes a major move on the markets. Joining me for the hour, Joe Terranova, Jim Laventhal, Rob Seacham. We're all here post nine as we check the markets. It is a Nasdaq winner today. S&P is higher as well. Some of the mega caps giving both.

A lift? All right. Big question, Robert. What are the markets going to do over the remainder of the year and beyond? Tom Lee says there was a tactical bottom last week. There was an overreaction to the Fed. There was a tantrum on Wednesday afternoon and all was seemingly made right on Friday. Where do we go?

So you asked the question, what do we think is going to happen in the year end? I think momentum continues in the year end in the tech trade. I think the setup, though, for 2025 is going to be a little bit different.

at least early on. And from a macro standpoint, I don't want to freak everybody out because we run both micro portfolios at a stock level and macro portfolios as well. But from a macro standpoint, we're trimming our overweight to technology and we're adding value, cyclical value. And that's on the notion that this outperformance at this pace

cannot continue that now we reserve the right if earnings disappoint to unwind that but that's the tactic but i mean this is a big move though right it is it's a big deal i mean you're you're taking your your tech holding tactically underweight and you're leaning in expecting a broadening in the market correct the tech has outperformed by a lot as we know i mean this underscores in and of itself the outperformance of growth versus value of

of cap weight versus equal weight, right? - Yeah, and I think the challenge is do we see a 22 where value earnings actually can deliver or do we see another environment where they maybe continue to disappoint? And it's all based on earnings expectations. You have this framework that's set up for the rest of the 493 to really deliver

In the midst, this is on the growth side, of the MAG7 decelerating quite meaningfully from 55% earnings growth this year to 20% next year. Now, that's a part of the market that we're obviously invested in in our individual holdings. However, if you want to drive alpha, we think there is an opportunity. We'll know if short pivots to long. In value, right now, it is oversold. Value, small cap, international, we can't.

Forget the international right now, but we're definitely guiding towards U.S. exceptionalism still. You must agree with this. You know, I do. I just want to say, like, we're up in makeup. You could have said something then, but okay, okay. Look, I do agree with it. You were out there for a half hour.

I was only up there for five minutes. All right, that's on me. You walked into that. You earned that one. Here's the thing. I want to say this to you, Rob. I obviously agree with you. Wait a minute, you went to make it? Go ahead, keep going. I obviously agree with the call, but here's what I think is going to happen. All right, I think the volatility that we're experiencing in the market right now is just the early phases of a good old-fashioned correction. All right, I'm going to go out and say that. Now, you don't try to time corrections. I'm not suggesting that either, but I do think there will be some pent-up

selling from people who didn't want to take capital gains early in January. And here's my comment to you. Stick with it, because when the selling happens, I mean, here history will say that value is not going to look good when the selling happens. People are going to say just go to the defensive growth of tech names. That's where you're safe. So you don't agree. You don't agree with Tom Lee. When he says there was a tactical bottom last week, you don't think so? Well,

I don't. I think you got further to go. And I just want to say this. Some may look at the August drawdown. We were down roughly 9% from peak to bottom, and they say, well, that was a correction. No, it wasn't, because it was over in a month. We were right back to where we started in a month. And it was only 4%. And look, I want to make this disclaimer, okay? The fact that I'm saying we're due for a correction doesn't mean that I'm right. But

But this you didn't say we're due. You said we're going to have one. You said we're in the early stages. I'm not mincing my words. I think we're in the early stages of one. Please. I know that's why I think we're in the early stages of one. Now, I don't I'm not recommending to people like, oh, Labenthal thinks the market's going down 8 percent. Let's sell all our stocks. That's stupid. That's a way to get really hurt.

But if you are seeing as we're one week away from the new year that, hey, maybe I might trim something and look for some better buying opportunities, raising 10% cash in an all equity portfolio is not stupid right now. Joe, can I ask you two gentlemen a question? Owning value.

Is it a requirement that you have to have a correction? Because that seems like the only time that value really works. No, and it might not work here. It might not work here. I mean, investors are trained that when markets go down, we go to not what's defensive, not consumer staples, but we go to defensive growth, which is mega cap tech.

You have to be willing to actually do fundamental analysis and look at companies and look in the value space, Rob. And this is why I agree with you. I can find companies, particularly in energy and in the commodity space right now that are selling it single digit multiples of free cash flow. I can find I can find help. Let me continue. That doesn't mean they're good buys. I can find a lot of stuff that's trading really cheap. That's suck this year. Yeah.

Okay, that's factually true. Like energy and health care, since you mentioned it. Yeah, but I think you're making my point for me, which is to say if those cash flows are there, if you're doing your fundamental analysis and you're willing to take a few punches along the way, there is the potential for multi-times returns you're investing. Joe, can I answer your question? I think we're willing to take the punches for a bit because the fundamentals have been there for a while.

OK, on the value story. I think what's compelling right now is the technical side, because you have this external factor where the index, the S&P 500, is not oversold yet. Yet a bunch of the names within the index are oversold, creating a technical bounce back opportunity. So to validate whether we are going to continue

continue to see value outperform. You have to look at what happens with the reset in fourth quarter earnings, which we're not going to know till late January. So I think you get a technical reset and we'll see if it's fundamental follow through from that. So then you don't mind or you don't think it's an issue if we get two rate cuts instead of four or if rates remain elevated next year, because you can't, I would assume,

think that rates have the risk of going even higher and think that the broadening is going to work because i don't see how that does it depends on where i think you're absolutely right within small cap because small caps a prerequisite to that continuing is you have to see the fed continue continue to cut in almost anything cap but mega cap right like how does that how if the fed um

at most cuts twice. But there are some projections like Torsten Slocke at Apollo today gave his list of 12 risks to the rally in 25 and the percentage chance probability that each might happen. U.S. 10-year interest rates move above 5% before mid-year. He suggests there's a 40% chance that happens. He also thinks there's a 40% chance that the Fed raises rates. Now, he's a bit of an

outlier to say the least on that call but the point is bigger the point is that rates remain either where they are or consistently move higher and thinking that you're going to get a broadening out trade in that environment. Totally agree that those risks are still persistent but when you look at rents when you look at wages

I mean, maybe if we had some type of oil shock, you could see an inflationary scare that pushes rates higher. But arguably, I think in these levels, you're going to want to start to broaden out into some fixed income going into 25, because if you see any scare to growth, fixed income is absolutely going to work. So I disagree with I disagree with Torsten that we're going to see those things.

Given what we see today, it would take some type of event to be a catalyzer for that to happen. Are we going to have more certainty in 25 or uncertainty as we enter the year? Let me finish. Let me just finish where I'm going to. Because why has tech started to distance itself again? Well, because we've introduced a little bit more uncertainty on Fed policy, on Trump policy. We're thinking about tariffs and immigration and deportation and all these other things that

that could certainly play an impact towards where we go not only in the markets but the economy at least in the early part of 25 I think we proclaim to know a lot about 2025 in reality we don't know very much about it I think there's there's both sides of it you could look at

the concern surrounding the punitive effect on markets for tariffs for immigration and you could see a potential correction occurring you could look at the other side and you could say well that's an overreaction because we have a loosening in regulation that's coming we have a pro-growth business friendly administration that's coming so i just i think we greet the year with a tremendous amount of uncertainty i think what we have done

from the Federal Reserve meeting is we have recalibrated sentiment in the market, I think, dramatically. And I think this was a market that was optimistic, bordering on euphoria, that has recalibrated to an optimistic market that's now actually bordering on skepticism. And I think that's incredibly important on your points on the fact that you want to own value, because I will tell this

Momentum is still favoring equal weighted strategies. Momentum is still favoring financials. Momentum is still favoring industrials. So if you come into the new year and in fact you don't get the fundamentals that you're talking about that align with the broadening out, I think

positioning has a big problem. And I think where we are today, where we're favoring mega caps, I think that gets exacerbated at the beginning of the year tremendously. And I don't want to go to the Russell. I don't want to go to value in that environment. Momentum is still favoring financials, which is down almost 5%.

in a moment but Scott you know they're still in an uptrend to Joe's and the the momentum funds don't move that fast you know we rebalance quarterly we are prop arguably one of the shortest rebalancing period funds out there but that doesn't mean that you're right by the time you read I don't know absolutely not to what has already been a move I absolutely your you're making my point so a lot of people still haven't really even made the turn so you've got people

that could be you have funds rather that could be rebalancing at the beginning of the year and rebalancing into the trough rebalancing into the bottoming of where financials experience their correction but that still creates a dislocation in terms of position by that's coming on the list from uh from torsten is one of the risks to the rally again that nvidia nvidia earnings disappoint inflated expectations he says there's a 90 chance

that that happens that expectations have gotten so grand that they're bound to disappoint and that's an overall market risk i mean the stock has not traded well at all okay uh in the last couple of months so i mean what if i tell you that at 31 times forward earnings perhaps nvidia has already priced that in um by the way what did he say a 90 percent yes

it's price nvidia's priced in a disappointment the stock's up 178 year to date i got it and as you just mentioned it's off and as i just also mentioned it's 31 times forward earnings he might be right but the trajectory here matters a lot do we really think that the next quarter the quarter we're in right now nvidia is going to disappoint with everything we're hearing about demand for the chips i don't however

If he's saying by the end of the year there might be disappointment, that's a long time. And perhaps, I think the 90% is too high. But I'll say this, just to make sure I'm super clear, I don't think this quarter or the next quarter we're looking at a rational reason for a disappointment in NVIDIA earnings.

biggest risk in 2025 is earnings growth. If you look at the annualized earnings growth rate of the S&P the last 10 years, it's 8%. What's consensus for 2025? Is it like 15? 13. 14.8% this morning is where we are. That's a high ceiling that you have to kind of achieve. So I think that's the biggest risk is earnings. With the MAG-7 decelerating from 55 to 20. Some of the MAG-7 decelerating. If you look at them as a unit, that's the number. Okay, that's fair.

Let's look at a couple of things real quick. You're Palantir, okay? New record high today, joins the NASDAQ 100. It was obviously leading up and the stock had a nice bid going into that. It's a marginal winner. Today, you have a stop point that you're flagging on here. Scott, I don't think you reach for it here.

I just don't. I mean, now it's gotten to the point if you don't own the stock, I don't think you're reaching for the stock here because I think at some point you're going to realize an opportunity to buy it lower. I also think if you're long and you're worried about your position, that automatically suggests to me that you need to have a stop in place to reduce the positioning and to make you more comfortable so you could allow for the volatility that I think will occur with the stock. I think 66 is a critical time.

price point. If you go back and look on the charts, that acts as a swing area. It was previous resistance. It's now support. Gets below there. Maybe you just want to trim a little below there to give you some comfort and allow you to ride out the volatility. The volatility is not going away in this stock. Qualcomm. They defeated Arm in court. You bought more. Jimmy.

Look, I did buy more. And frankly, if you're looking at value, Rob, within the technology space, this is a good name. 14 times forward earnings, 2.3 percent dividend yield. I do think that this lawsuit with Arm, which pertains to an acquisition that Qualcomm made and whether the terms that Arm had made with that acquisition target were still going to be in place. I do think that was an overhang. Now it's resolved clearly in Qualcomm's favor.

There was strong momentum in this name in the first half of the year, along with the rest of the semi space. It gave it up. However, the business fundamentals are intact in terms of edge computing, AI applications that only Qualcomm can serve. I like this name for the long run here. Apple. Oh, sorry. It's funny. And I might get in trouble for saying this, but the investment team this morning said

On our call was talking about adding Qualcomm for a lot of the reasons that Jim just talked about. We do not own it yet, but thanks for pushing up the price. What did you say? Did you say, heck no? No, I didn't say heck no. I was about to make that joke at my expense, but you beat me to it.

You certainly have a lot of semiconductors that have gone on sale and have a much lower value. It's not the case for NVIDIA. It's not the case for Broadcom. But you look at KLA Corp. You look at Applied Materials. You look at Manpower. You look at AMD. All these stocks on the chart don't look good right now. Look at my old favorite, NXP. I don't own it anymore, but maybe I should get back into that. Rob, you own Broadcom, though.

Right. If you're talking about semis that have ripped. We do. Maybe to frothy like levels, but they've ripped. Broadcom's up like 40 percent in a couple of days. And we trimmed it this year and it's still our second largest holding at the firm. It's been it's been an amazing, an amazing security to own. Obviously, they have terrific fundamentals, 38 percent free cash flow margins, 64 percent operating margins. It's a it's a key core holding for us.

And they're right in the midst of this secular growth opportunity in AI, 100%. And by the way, this is why it pays to pay attention to price when you're getting into these names.

NVIDIA, we bought when it dropped to 29 times, 99 bucks, 96 bucks. Broadcom, we bought when the fundamentals recalibrated. There are cheap things in tech that make sense right now. You look at Google, look at it re-rating. The market is starting to pay attention to what is a little cheaper. You think Google's cheap?

It's cheap relative to the other names. You look at, I think it's like 21, 22 times. Meta is still cheap relative to some of the others. But Alphabet and Meta have always been cheap relative to the others. But not as cheap as they were. And you're starting to see people look outside of a large cap mega tech to find out where they can place those bets.

and not have the same downside risk because there's a margin of safety in price and those tailwinds still exist. - Sure, but the problem is, is a lot of those names over the last month to our point that we started at, the top heaviness of the market again, right?

Meta's up almost 15 in a month. Alphabet's over 17 percent in a month. That really doesn't matter to me, the price move. What matters to me is the corresponding earnings move with that price so that it's supportive of valuation relative to its historical averages. Microsoft expensive relative to that. It has underperformed. That's the part of the point that Joe is making, though. Yeah, and I agree with that. You have, you know,

elevated earnings expectations and to some degree slowing earnings growth because the growth has been meteoric related to AI, that now because of these moves and the movement of investors back into these names to the degree they've moved,

Now you can't have any slip ups at all. Right. So I totally agree. My point is, if I'm trimming somewhere and want to maintain my exposure within that universe, that community of stocks, I'm going to trim where it's more expensive relative to its history. That's just the way we do it. What about Apple? Where does Apple fall? So Apple, we're neutrally rated. Here's here's a great story.

We wanted to go underweight, Apple. We didn't. Okay? We didn't go underweight. We went to neutral. We're benchmark weighted. And why are we benchmark weighted? A, we have enormous embedded gains in the position.

B, we think it's very dangerous to go against a company that has that type of discipline and has that type of cash balance and can buy back stock to deliver on earnings. So the reality of it is we didn't. And boy, in the last couple of months, I'm glad we're not underweight Apple. Well, of course, I mean, record high again today. Excuse me. We're knocking closer to the door.

of $4 trillion in market cap. I think we're around $3.75 trillion, maybe a little bit more than that because the stock has been on a huge tear. This proves the point. These are companies that have the earnings growth. And back for a second, like,

There's a critical decision that a large swath of the marketplace, the speculative marketplace, is going to make surrounding semiconductors here as you move into the beginning of the year. Because you mentioned NVIDIA, you mentioned Broadcom. I know Jimmy likes some other names there, and I'm there as well. But NVIDIA and Broadcom, they have a monopoly on the AI story. They do. These other stocks do not have the market share that those two behemoths have in the semiconductors.

And just because price looks attractive, I want to know what's your exposure to the AI story? Well, Joe, I would argue that owning Meta this year was not necessarily a bad decision. Stay on Semis. What I'm saying is...

staying with the semiconductor industry right now you are right whether it would be cda there's haves and have-nots in legacy chips face more problems than others between these two winners and everyone else is growing so wide i don't know how they are able to catch up the rest of the field relative to nvidia relative

to Broadcom. If you want to put AMD in that conversation, okay, fine, but it's not performing. So from big winners to, at least last week, big losers. I want to go through a few of these names. Coinbase was down 12% last week. Bitcoin's obviously come off the boil. It's still at a nice, healthy simmer. But

nonetheless. Like what about this trade? So we put the trade on October 31st. On December 6th, we were up 91% today. We're up 48%. That's the volatility of cryptocurrencies. I've looked back at Bitcoin itself.

you always want to identify an area and this is for people that have the flexibility and aren't beholden to a rebalance like i am you have the flexibility to take action ahead of a rebalance what's the level you're looking at a crypto so in bitcoin 85 000 is a huge area that you support area if you don't own bitcoin you want to buy against 85 that's fine if it breaks below 85 and your long bitcoin you probably want to take some off there but it's a highly volatile asset class

at the end of the year where liquidity and volume is beginning to diminish and that leads to a more elevated environment and an environment which you can't dismiss 10-year yields moving back towards close to their high for the year i think they're 457 as we're talking right now palo alto was down eight percent last week by the way you own that both personally and in the t fortinet

CyberAuth, CrowdStrike, I still believe in the cyber thesis. I would say Fortinet right now, look, I own CrowdStrike personally. I own Palo Alto personally. We own Fortinet in the ETF.

Fortinet has more of a reasonable valuation relative to CrowdStrike and to Palo Alto, but CrowdStrike is gaining significant market share. They've made a dramatic recovery from where they were in the summer. They've done all the right things to repair

some of the negative effects of the headlines in the summer. And I believe in the cyber story. So if you believe in the cyber story, you're going to have to position size accordingly because there's gonna be volatility. - Robert, Vertex Pharma down 15% last week. Both you and Jimmy got that.

You know, to me, this is just a matter of timing. This is one of the few stocks that is down for the year. I think there's a lot of investors out there, you know, essentially tax loss selling against some of the large gains that everybody has had this year. So we are not worried about that. I think there's a nice setup for health care going into next year if earnings can deliver. Remember, health care had 20 percent earnings growth expectation coming into this year. It delivered plus three. So

People are right to be nervous around that, and I think you have to be selective. I just think this is window dressing. All right, let's take a quick break. We'll bounce for a couple. When we come back, we'll talk about a bounce back. For two of Rob's beaten down pharma plays, we've got a bullish call on one sector that's flying high this quarter as well. We'll do it next.

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Got a lot of names on the move today for the committee. We do have another move, though, we'll top this block with. It's Jimmy, and it is trimming letter V. Yep. Like Visa. Beloved Visa. I needed some funds. I wanted to keep my equity exposure intact, so I needed some funds to raise for Qualcomm. I'm not overly negative on Visa. Stock's done really well, so we can qualify this as selling high to buy low. You know, at the same time, I will say, how much more can we put on the back of the consumer, which is really what Visa's all about? But

I still own shares of Visa even after I've trimmed it. All right, Eli Lilly securing approval for Zepbound to treat sleep apnea. Joe T.?

in an awkward place for me to talk about, but I will. Okay, Rob, you want to do it? Yeah, sure. I mean, listen, we trimmed this back in May based on valuations. It's re-rated. We still own it. Overweight position for us. Broader distribution of Zepbound and use of these GLP-1 drugs to treat other things like addiction and heart disease are optional.

Obviously a positive for the business. I mean, it's up 33 percent year to day. It was up in the mid 50s for a while. Sure was. And again, one reason why you want to pay attention to valuation and sell a little at the tops. Right. Trim. What about Novo, which is rebounding? It had a volatile week last week. Obviously, you own it as well.

Same bet internationally. Obviously, it looks like it's behind relative to Lilly in the space.

It's re-rated over the last several months, but this is a company that still has 24% projected revenue growth next year and 60% returns on invested capital. So if they can get right-footed in this space, I think it's probably a good time to be a buyer. Let's hit Salesforce, which Monash Crespi and Hart says, quote, remain on the sidelines. You agree or disagree with this call? Disagree with that. They say they're well-positioned to capitalize on the digital transformation industry.

with a strong cloud portfolio and new gen ai capabilities however competition's dynamic software is in transition and the macro environment they say is fragile i think they're okay on on the competition front they're proving themselves in these earnings reports that they're remaining resilient to any type of

competition. They clearly are engaged as it relates to what the AI strategy is. And you know, there have been many who have been critical over the last several years about their M&A strategy, myself included. I thought over the last several years, maybe they spent a little bit too much going out, whether it was MuleSoft, Tableau or Slack. But now you're seeing that these businesses are creative.

to the model and i think it's diversified salesforce so i view this company as reasonably valued and a longer term holding so airlines barons go ahead sorry i was going to say if you believe in dan ives broadening out from ai to software monetization

This is one of the most influential software companies in the world who is benefiting from the monetization of AI. It did get cheaper earlier in the year where we bought it. This is a name that I agree with Joe that you can own here. So you have an outperform rating on Ives, is that what you're saying? No, no, no. I love Dan Ives. Love Dan. Well, I was obvious in the way you answered the question, Rob. Thank you. All right, airlines. Barron says holiday travel surge is great for airline stocks. Why the sector can fly higher in 25? I mean...

They've flown high. I mean, United is a massive winner this year, up 138%. Joe, you own that. And Delta's been good, too. It's up 51%. Do we think that there's a lot more left to go here? Look, I...

Yeah, I'm just going to credit GSA. Jimmy does the fundamental analysis on these stocks. And kudos to him because he's been on these names for a while. We're chasing price here. That's what we've been doing. You've seen both first in the case of Delta, secondarily in the case of United. You saw the momentum begin to build. We were captured by that. We took positions. We've been rewarded accordingly. I've been skeptical of the fundamentals, Jimmy, as you know. But look. Yeah.

I'll turn to you because you've been good on it. Thank you. And there was a period this summer where we were looking at the fundables. And I remember having this conversation with you, Scott, and you were saying, what does it take to get these things to work? It was a legit question, and the answer is just time. And I think there is still time left to run on this trade. Here's why I say that. I think the estimates are too long. I'm looking at Delta's

sales estimates right now for next year, not earnings per share sales. They basically have not budged for next year in the last nine months, completely flat. That makes no sense when you look at the volume, yes, through TSA of the passengers, and you look at the price increases for tickets, which we get from CPI all the time, and then you combine that with where oil slash jet fuel prices are. There's no way that the sales figures right now are properly estimated. And what I just said about

margins implied by jet fuel implies that the earnings are going to go higher than what's priced in right now. Rob Decker's new high on Friday. We've talked about it so much. When you look at the chart of, let's say, that relative to a Nike, for example, or Jimmy's On,

which he's been hot on too. What do you see here from Decker's? It's a name that our team added on May 1st. It's up 52% since we've added it and 90% year-to-date. It's still not that expensive. They dominate DTC.

Trends still look favorable over the holiday season. So, you know, it's a name we continue to own and like and probably wouldn't exit until at least May of next year. OK, thank you. The headlines now with Seema Modi. Hi, Seema. Hey, Scott. Ukrainian President Zelensky says more than 3,000 North Korean soldiers have been killed and wounded in the Kursk region in a post on X.

Zelensky warned North Korea could send additional troops and military equipment to the Russian army. Ukrainian and U.S. officials estimate North Korea has sent already about 10,000 soldiers to Russia.

Starbucks union workers expanded their strike to New York, New Jersey, Philadelphia and St. Louis over the weekend. The five-day strike began last Friday in Los Angeles, Chicago and Seattle. Talks between Starbucks and the union have stalled over unresolved issues regarding wages, staffing, scheduling. The union warns the strike could reach hundreds of stores by Christmas Eve.

And President-elect Trump says it's, quote, an absolute necessity for the U.S. to own Greenland. Trump had floated the idea of buying the island, which is part of Denmark, during his first term in the White House. Greenland's prime minister has already rejected President-elect's remarks, saying Greenland will never be for sale. Scott, back to you. All right, Seema, thank you. Seema Modi still ahead. Our halftime year-end report card. We'll take a look at the committee's winners and losers for the year. Rob has yet to be graded.

We'll do it. He'll come to the front of the class coming up after Mike Santoli joins us next.

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Welcome back to our Senior Markets Commentator. Mike Santoli joins us now. You're really looking at whether the squall, as you call it, has truly passed this month because it felt a little windy on Wednesday.

on Wednesday. Yeah, to a fairly unexpected degree, Scott, I think the deepening of the sell-off into Wednesday reaction to the Fed did probably, or at least plausibly, clear the way for that to have brought forward some of the selling pressure. I think a lot of people might have expected to come after the first of the year. We did finally register some pretty good, you know, washout oversold readings, responded to it on Friday. Now, we did have negative breath again today, although it's improved throughout the week.

the morning into the afternoon. So I think it's time for this market to prove that the seasonal tailwinds are going to have some effect and have a bit of upward drift and maybe sort of reset things a bit here. So I don't think you can say that the challenges that were presented and caused some of the pressure in the first three weeks of December have totally gone away. But you can say that we've sort of

surface them a little bit. We've observed them and now we've started to contend with them. We'll see if that has to be a battle we fight in January.

This market breadth that's been negative for we had that, what, 14 days in a row? Yeah. I think it was finally broken on Friday. It was. But one day's performance doesn't mask underlying weakness. No, it doesn't. And it's the pressure from rates on some of the cyclical areas of the market, rates going up when economic surprises have waned a little bit. I've talked about that to a fair degree. Also, you have to imagine whatever tax loss selling in the year-to-date laggards shifts.

should be pretty much through right now and start to dry up. That's why I think you have a lot of the makings for at least a little bit of a migration higher. But, you know, got to see. It's hard to extrapolate too much from the action of the last few days of the year, but that doesn't stop people from trying.

Certainly not. I'll see you in a little bit. Mike, thanks. That's Mike Zantoli, Senior Markets Commentator. His last word, of course, coming up in a bit on Closing Bell. Coming up here, the streaming sports blitz. Netflix running two NFL Christmas games, but will it be a touchdown or a turnover? We're shares already near record highs. The Investment Committee breaking it down next. Are you following the Halftime Report podcast? What are you waiting for? Look for us in your favorite podcasting app. Follow the Halftime Podcast now.

All right, Netflix ramping up its push into live sports this week, getting set to stream the NFL's two Christmas Day matchups. Julia Boorstin looking now at what is really at stake here. Julia. Well, Scott, the two NFL games streaming Christmas Day are Netflix's first live stream of a major league sporting event. And the stakes are high for these two games that Netflix paid a reported $150 million to the NFL more. Netflix investing more in a Mariah Carey opening show and a Beyonce halftime performance.

These Christmas Day games are seen as a key way for the NFL to expand its dominance over the holiday season at a time when NBA ratings are down nearly 20 percent this season. And live NFL games are a key way for Netflix to build its advertising business. They also come as Netflix is increasingly betting on sports, just announcing that it secured exclusive streaming rights to the next two FIFA Women's World Cups.

Now, after Netflix struggled with technical issues streaming its biggest ever live event, the Mike Tyson-Jake Paul fight, the pressure is on for Netflix to pull off the live streams without a glitch. And the upside could be huge. Antenna reports that that Mike Tyson fight sparked the addition of 1.4 million new Netflix subscribers. But with Netflix shares up 87 percent in the past year, Barron's flagging today, that

the move into live sports is an expensive one for the streamer. Scott? All right, Julia, thank you. Julia Boorstin is giving us a setup here for a conversation. So yes, they say it's expensive.

They say why this talk about Netflix, quote, why it might fumble at the live sports push. Investors should stay on the sidelines because it won. Rights are expensive. The Tyson Paul fight, which obviously draw a lot of interest, was riddled with tech issues. The stock's pricey and they're unlikely to move aggressively into sports when rights are this expensive. What do you think? I mean, the stocks had a tremendous run. Look at the chart. Look at the chart. This this is a difficult one.

Obviously, it's in the ETF, but I own this personally. And I owned Netflix before it was ever added to the ETF. I've owned this now for the better part of the last 24 months. I've done remarkably well. Why is it so difficult? You sound like you're about to break down and cry. If you don't own Netflix, I think you have to wait. I think you have to wait. And let me tell you the reasons why.

First of all, what Netflix has done in '24 has seen an acceleration in revenue growth beyond what analysts expected. They did 6% revenue growth in '23, 15% revenue growth in '24. You're going to reach the cliff.

where that revenue growth is going to go from being stagnant to actually falling off. So as we move into 25, I actually think I have to reach a moment where I need to ring the register personally and sell out of this name. And that's one of the reasons why I'm telling you. So that's why your voice was cracking a little bit. One of the reasons why I'm telling you.

that if you don't own the stock, I wouldn't buy it. The one thing that's keeping me anchored though in holding the position, both personally and the ETF, is the analyst community's not there just yet. The 12-month price target on this is $850. Do you know there's three analysts that actually have a sell rating and a $550 price target on Netflix? So I kind of wish the analyst community would come around

and represent some enthusiasm in their price targets. And probably at that point, that's when I exit personally. So as we were talking earlier about- He just, by the way, he wants to just say something about- No, I don't need to. I mean, was it just me? It wasn't just me. No, no, it was very palpable. You looked like you were going to-

Anyway, moving on. Yeah. Torsten Slocke, earlier we were talking, has a 90% chance that NVIDIA disappoints. I'd say there's a 90% chance that Netflix disappoints. And this is not me crying sour grapes because I don't own it. You know, these sports rights are expensive. Now, granted, this is not the main thrust of their business. But we're kind of well into the advertising. We're well into the password sharing crackdown. This is agreeing with you on the point that the analyst community may be pricing in far more good things than can actually happen here.

Jimmy, the only thing that I'd be crying about this week is if they don't put the sweet sausage in my lasagna for Christmas. Okay, I hope that doesn't happen, Joe. I hope it doesn't either. I'll cry for you if it does. Okay. Coming up, the report card for Rob Seachin next. We are back. Our year-end report cards continue Rob Seachin. Make your way to the front of the class, please. Sit down. Ready.

Vistra Energy, your biggest winner, one of the biggest winners of the year for anybody, 263%. We know why, because it's become a sort of derivative AI play, powering data centers and the like. What happens now?

with that stock. Do you trim any of that? We have not. We have not. Why isn't it? Why? You trim some of the other stuff. It's still not that expensive. Maybe expensive for a utility, but it trades at a 20 times...

forward PE and given the demand that's required for reliable energy to fuel the AI trade, we don't think it's going to. Now, it's gotten pretty big, so we may kind of going in. Let me ask you this, because I truly don't know the answer. And if you don't, I'm sorry.

You say what, Trey, is it what, 20 something? - 20 forward P. - Okay, what's like an average PE for a utility stock? I'm thinking like, what are they, like single, low double digits? - But I don't think anybody has the leverage to this kind of community the way that this company has, and it's why it's done what it's done, obviously. I don't think, just being honest, I don't think when we added this, we thought that, we did think that something like this could be possible.

I don't know that we saw this price performance. And as such, it's become an oversized position. We own Constellation. You know what the answer to that question is? We own Constellation. It trades at 26 times. Oh, okay. So a lot of the larger market cap utilities have grown in valuation. Is that too expensive?

It's a little expensive, yes. Relative to its 10-year average, yes. I think its 10-year average is in the mid-teens. Hey, Scotty, I do have a question for you. I know when you look at that report card, you see the punches that I landed, or we, my team landed on that page. You'd say that if it was Tyson throwing those, he would have won that. There is no I in team, Rob. No, I said we. I said we. Because there is me, though. There is a me, as Kobe Bryant said. That's right. Famously. Okay.

Okay, Nvidia, huge winner. Everybody knows that. Broadcom up almost a double. Everybody knows that. eBay, eBay up 45%. Talk to me.

Yeah, and it still only trades at 12 times earnings. As Cameron Dawson said to me and Jay Peters on the investment team, there will always be eBay and there will always be leverage to the consumer and a lot of leverage to potential AI developments there as well. So we've seen a huge divergence between software and chips. Some software stocks have done really poorly, like Adobe.

which had a problem most recently with its earnings. Down 25% year to date. What do you do?

We continue to be patient with Adobe. We do think that this disruption story to their core franchise is maybe overdone. This is a company that has incredible profitability. It trades at a 30 percent discount to its 10 year average. And we think they are going to figure out how to monetize AI. You get this signed and you bring it back to my office tomorrow. OK, no, you got no forging either.

My parents will approve. Okay. All right. Up next, two big winners and two big losers in today's session. We will document those next.

all right winners and losers today let's focus on alibaba for a minute it's on pace to snap a three-day losing streak stock's up near three percent rob you own that name we do this is a name that we bought right right time kind of around the same time that david tepper was talking about the resurgence in china we saw this as a very inexpensive way to play that and one that provided us with a little margin of safety obviously we've round tripped it we wrote it up came

I think it's still a name you can own as we reach kind of peak pessimism around some of these types of trades. - Joey, Carnival, Norwegian, Royal Caribbean are all lower today. You own RCL. - We do. It's been a strong performer. It feeds into the travel theme, which has been a surprising theme here in 2024, represented by the airlines and obviously represented rather by the cruise ships. And more recently, Jimmy,

Buy the casinos. Like when? Yes. When? Performing well. Las Vegas Sands. Dinosaurs in the desert. Performing well. Caesar's not so good, though. Jurassic Parks in the desert is what you meant. We'll do finals next. All right. It's a great lasagna debate taking place during the commercial. Thankfully, not during closing bell at three o'clock when Chris Harvey, Bryn Talkington, Malcolm Etheridge do join me at three o'clock Eastern time. Thank you.

All right, final trades. Why don't you give me one? Zoom. Beyond sweet sausage. What do you got? Zoom. Bought it last week. This is one of my favorite stocks going into 25. Okay, thank you very much. Farmer Jim. Lockheed Martin. We are far more likely to buy Greenland than we are to kill the F-35 program. Okay. Rob Seachin.

I'm going to go with where we began, which is selling tech but buying value, IWD, into the new year. IWD, big value player. Okay. We shall see. I'll see all of you, of course, at 3 o'clock Eastern time for Closing Bell. We'll follow the final hour of trade. S&P is now positive. I'll see you then. 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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Stripe helps many of the world's most influential companies grow their revenue and build a more profitable business. Whether it's Hertz making checkout a smooth ride for their customers, OpenAI answering unprecedented demand, or PGA chipping away at back office inefficiency, Stripe's financial infrastructure platform helps companies achieve ambitious goals. No matter what success looks like for your business, Stripe helps ensure the complexity of financial systems doesn't get in your way. Learn more at stripe.com.