transcript

Speaker 1:
[00:00] This episode is brought to you by Schwab Market Update, an original podcast from Charles Schwab. Join host Keith Lansford for this information-packed daily market preview delivered in 10 minutes or less, including projected stock updates, monetary policy decisions, and key results and statistics that may impact your trading. Download the latest episode and subscribe at schwab.com or find Schwab Market Update wherever you get your podcasts.

Speaker 2:
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Speaker 3:
[00:59] 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.

Speaker 4:
[01:15] Thank you very much. Welcome to the Halftime Report. I am Frank Holland. In for the judge, Scott Wapner. Front and center at this hour, the rally in stocks. Markets coming back towards record highs. When a ceasefire extension with Iran, the Investment Committee is ready right here to debate the risk and the reward from here. Joining me for the hour, we have Joe Terranova, Anastasia Amoroso and Steve Weiss. But first, a very quick check on the markets. A lot of green on the board right now. The Dow up right now about three quarters of 1%. Same story for the S&P, the NASDAQ, very close to a new record or maybe there right now, up about one and a quarter percent. Russell up about a half a percent. But first, before we get this debate started, we want to take a quick look at the semis. They are trying for their 16th straight day of gains. That would be the longest win streak on record. We're talking about the SOXX ETF right now, up about one and a half percent. Month to date up over 30 percent as you can see. Joe, I want to turn over to you. What do you make of this trade? Getting another boost today from the GE Vernova results. A lot of talk about data centers in their business, giving more confidence to a lot of investors about that quote unquote AI trade chips the beneficiary.

Speaker 5:
[02:16] Okay, first let me share with you why the market is gravitating towards the semiconductor names because what are they? They are growth and right now the market wants growth. If you would put up, as I'm speaking please, the IVW and show the IVW relative to the IVE. We're comparing growth to value and today growth year to date has outperformed value and that's something that coming in to the month of April we couldn't think was possible. The month of April we've seen a performance mean reversion. Growth is outperformed by nearly nine and a half percent its value peer. So this is all about growth. The semiconductors have built the story around growth itself. The names that we own, monolithic power, micron, applied materials, NM research, I'm looking at them, they're all up ranging from 15 percent to nearly 40 percent month to date. And the common denominator for all of them is the revenue growth. And the market right now wants to reward where it believes it's going to get the deliverable and sustainable revenue growth. And that's why we've seen this paradigm shift in the market. It's away from value. It's back to growth. And I've argued that that's the recipe that you needed to have confidence that we're validating the recovery rebounds that's under way in the month of April.

Speaker 6:
[03:42] Can we see that chart for five years, the producers? Can they put that chart up five years, value and growth? All right.

Speaker 4:
[03:48] While we're waiting for that, Anastasia, I want to come over to you.

Speaker 6:
[03:51] There we go. So it's there. So more of the same, right?

Speaker 5:
[03:56] Story. The market is growth.

Speaker 6:
[03:58] The market's growth, the market's been growth. You go 10 years, you're going to see the same chart. We've seen periods of time where values come in and tries to rotate the value. It's always been short lived. So I think with the cohorts that you have investing in the market these days, they're growth focused. They're no longer, and that's also actually a function of, it's somewhat of a cycle, right? It's a function of what the largest smart cap companies are. So it's difficult to escape. That growth is always going to outperform.

Speaker 4:
[04:25] All right. So that's a long-term trend, but why is why we're just, you're kind of touching on that chart. Are you worried about chips being overbought? If you look at Goldman, they're saying the SMH and the SOXX, they're tracking for their largest combined monthly inflow ever of all time. And of course, we've seen a big run up when it comes to the broader market. Chips are no exception, a big run up there. Concerned about them being overbought, maybe too much money going into this area. It is a cyclical sector.

Speaker 6:
[04:47] So here's what I'd say. You'd have to be, you're in the wrong business if you don't worry. Things are going up with that kind of momentum for that period of time. So of course I'm worried.

Speaker 4:
[04:58] Exactly, what are you worried about? You and I have talked about Taiwan Semi. Great results. The stock still sells off. By the way, one of Joe's holdings has earnings later today. FTI, along with Clam Research. So we could see another situation where a company can have strong earnings and still pull back, because people feel like they're a bit overstretched.

Speaker 6:
[05:13] You can always have that. It's not unique to this market. Look at Vertiv today. Vertiv came out with a pretty good quarter, right? They didn't take down guidance. And you're looking at shares that are down 3%, right? You've got FTAI, which is down meaningfully two days in a row. I wouldn't be surprised to see them, you know, miss the quarter because, you know, insider trading is alive and well in this market. I've seen that repeatedly. But the answer to your question is, of course I'm worried. I'm worried about that. I'm worried about the market. This market, you know, goes up for any headline, positive or negative. And if trades down briefly on a negative headline, it recovers them, goes positive. So the question is, when is not just semis? And I think just looking at traditional semis names is too narrow. You know, when you have companies like Alphabet that are coming out with their own chips and picking up traction in those chips, right? Or Amazon or Meta, you have to include those in the semi bucket as well, even though they're a small part of what these companies do. So it's really, to Joe's point, it's really growth. It's not just semis, it's growth. With semis being one manifestation of that move into growth, which has been consistent, not just for April, not just for five months, but for, you know, ten years. So yeah, I'm worried. Does the market getting a little bit frothy? It could be, but at this point, you know, what's going to, what's going to upset it? We've got great earnings that are coming out. We know the market knows there's going to be no easing soon, right? We know we're in a war where there's no real strategy to exiting. So we're probably going to say we won. Like they've said, there's new regime change and there isn't, and we'll get out of it, but we'll still have the same worst problems. So it's going to come down to inflation, which people are willing to write it off right now as a short-term phenomenon, but that could be the canary in the coal mine going forward. Right now, we seem to be okay, unless we bombed their infrastructure and permanently disabled.

Speaker 4:
[07:10] I think we're all hoping that we don't see an escalation at all.

Speaker 6:
[07:12] Well, I think it's pretty clear you're not going to do it. When you get nothing in return for extending the ceasefire, it shows that it's taco all over again. This is what I said, but this is what I'm doing.

Speaker 4:
[07:23] Anastasia, we're talking a lot about growth. Do you think investors are overlooking some serious issues out there? I mean, weiss hit on one of them, the fact that we still have a conflict. I'm looking at oil right now. Oil is up about 3% last time I checked. There are some serious issues for this market that could hit this rally, but do you think, at least today, investors are like, hey, forget about all that. I want growth to Steve and also Joe's Point.

Speaker 7:
[07:42] Right. I don't think they're necessarily overlooking it. It's just that they don't know what to do about it because one moment we have a ceasefire, the next time it falls apart, the next moment they have a blockade, and you just don't know what to do about that, which is why, to Joe's Point and Steve's Point, investors have flocked and gravitated to what they do know, what they can observe and what they can't control, which is where the growth is happening. The growth is clearly happening in artificial intelligence and semiconductors and the power supporting is front and center. And look, if you look at the adoption rates, you've got adoption rates that are growing amongst consumers, 55% adoption rate for AI are probably higher at this point. If you look at enterprises, 35% or more of enterprises are embedding AI. In our case, for our portfolio companies, partners group, we're embedding AI in 90% of the companies. So the enterprise adoption is widening. I would say the total addressable market for AI is growing from conversational to agentic to physical AI. And so all of that means is the demand for semiconductors and demand for power is tangible and it's observable. And that's exactly what investors have gravitated to. Am I worried right here, right now, looking at the chart of semiconductors and looking at the chart of the S&P? Yes, probably some sort of near term pullback is very, very likely. But having said that, longer term, if you look at the consumer, despite feeling miserable, consumer is spending very nicely, despite higher gasoline prices. Corporates are having a stellar earning season. So amidst all of that, near term consolidation, yes, but longer term, the trend should still be up.

Speaker 5:
[09:12] It's interesting. You mentioned oil at 92, 96 as we speak, up 3.6%. What's interesting about that is number one, it's basically back to where it was coming to Friday morning when we got such positive announcements from the president regarding the negotiations with Iran. So the market has just kind of retreated back as we've kind of walked back some of that optimism surrounding the Middle East conflict. I think the market could live in an environment where oil is between 90 and $95. It proved that from 2011 through 2014, but it's back to chips because chips in terms of what their meaningfulness is to the economy, today is what oil was to the economy in the 70s and the 80s. The chip story is the economy story. And that's where you see the insatiable demand. What fundamentally changes very much about what we're going to hear in the upcoming earnings report for these chip companies that you'd say, okay, it's an inflection point. The story is over. You mentioned Texas Instrument. Texas Instrument is going to report tonight, looking for $1.38, $4.2 billion on the current quarter, guidance for the next quarter, $4.85, $3.68 billion on Anilike. But it's a free cash flow story. And it's a free cash flow story because they've diversified the business and they're participating in the AI investment thesis. And I think overall, there needs to be something fundamentally that so dramatically changes. Is it going to be President Trump and President Xi's summit in May? Do the chips at that point get greeted with some negativity? I don't know, I don't expect that it's going to be. But you're going to go through periods to Anastasia's part where you look at the chips and you go, okay, they look a little bit overextended. They look a little bit overbought. I get it. Good luck moving away from that story because you're going to find yourself three to six months later running right back to it because that's the dominant theme to Steve's point over the last five years.

Speaker 7:
[11:23] That's right. There's also another catalyst to the chips now. I think everybody knows the AI story and they're sticking with it, but there's also this cyclical part to it. We've seen a lot of cyclical acceleration across the economy, especially CapEx and manufacturing and some of the industrial complex that is really coming back to life. All of that also requires ships. I think maybe that's why just when you're ready to give up on chips, there's yet another catalyst that comes to the fore. Don't give up on chips.

Speaker 4:
[11:50] Sorry, Weiss, I don't want to interrupt you. You can't give up on chips. Can I ask you a question? Are you surprised that people are going into chips in the ETF as opposed to individual names? As my colleague Christina Presnevelis often points out, it's not a monolith. Different chip makers do different things. And why aren't people looking for GARP? I'm going to bring that acronym back. Growth at a reasonable price, like the memory stock story out today saying there would be a super cycle when it comes to memory names. And I'm just looking at a holding that Joe, you and Weiss both have. Micron, five and a half times forward earnings compared to an AMD, 35 times, NVIDIA, 22 times. Why isn't that where even more of the money is going? And by the way, I do want to point out, Micron's up over like 5% today. So it's not like it's lagging, but are you surprised that we aren't seeing even more money going there?

Speaker 7:
[12:31] Actually, I'm not surprised that people are now going into the ETF and the broad theme, because as I mentioned, it was initially about AI, and that's where you had to be really selective. You had to do NVIDIA, Broadcom, and some of the select other chips. But now we actually realize that memory has a big role to play in this as the total addressable market expands. And now you've got also the industrial sector that is coming online. So I think there are multiple engines that are driving this story, so I'm not surprised that investors broadly are sticking with ETFs. The other thing, Frank, I would say, given the macro-driven, geopolitical-driven environment over the last couple of months, people have flocked to ETFs, and only in the last week or two have you started to see more stock selection happen again. So not a surprise.

Speaker 5:
[13:10] So Mike runs up 140% in the last six months. For anyone that maintains a position there and doesn't understand or expect that you go in to experience extreme volatility in that environment, that you shouldn't be in the stock, you have to position size it accordingly. To Anastasia's point, right now we are in a cycle where memory pricing is really strong. What is it reflected in? It's reflected in the EWY, if you could show that chart. That's the South Korea ETF. Obviously memory, Korea, strong geographic region. It's the semi-equipment names that are benefiting when memory is really strong. Applied Material, KLA Corp, Lamb Research, another name which I have totally missed the story on. I don't know, Steve, if you're there, we used to talk about Teradyne quite a bit. Teradyne marching to a new all-time high. So you have to kind of understand the characteristic of what owning memory stocks ultimately is. You have to size the position accordingly. To be able to endure the elevated volatility that's imbedded in these large price returns. But right now, overall memory pricing, you're seeing triple-digit year-on-year gains. Until you see that begin to contract, you want to stay allocated in that direction.

Speaker 4:
[14:25] All right. I want to get to a new twist and turn. Weiss, you mentioned Alphabet. Alphabet is stepping up its fight for new Enterprise AI customers. Our Mackenzie Sagalos has all the details. Mack.

Speaker 8:
[14:35] So Frank, you got Google Cloud CEO Thomas Korean going after Anthropic and OpenAI's Enterprise business today, rolling out an aggressive new batch of offerings through Google Cloud, including agent tools on the software side and two new custom AI chips to power them. Now, shares edging higher this morning on those headlines. First, let's start with that Gemini Enterprise Agent platform. It helps companies create, deploy and manage fleets of AI agents with new features meant to help those bots remember past interactions, test their behavior before launch, and then report back on what they're doing. Some of them will be capable of spotting and repairing cyber flaws, a product that sounds a whole lot like Anthropic's mythos. Google also taking aim at NVIDIA, unveiling a new generation of its custom in-house TPU chips, one designed for training AI models, the other for inference or running them. Alphabet CEO Sundar Pichai is saying today that those new eighth generation TPU chips are designed to take on the most demanding agentic workloads. The broader pitch here, Frank, is that Google's arguing the next wave of enterprise AI spending will go to the company that can offer the full stack in one place. Chips, models, security, developer tools and workplace software, which is a direct shot at Microsoft and Amazon.

Speaker 4:
[15:58] Mac, thank you very much. I'm McKenzie Segalis, the very latest on Alphabet. Weiss, I want to come back over to you. You are an Alphabet shareholder. Your take on the news that Mac just had, and also we got to remember, this was just a couple of days ago when Alphabet was in talks with Marbelle about developing AI chips. So a lot of talk when it comes to Alphabet about developing chips to compete with NVIDIA potentially. That's really the goal of these TPUs, to be a lower priced alternative.

Speaker 6:
[16:21] And it's not just them, as I said before. It's also Meta. It's also Amazon developing their own chips. And what would you do? You're a very well funded company. You've got a great balance sheet. Yeah, you took on a little debt, but it's meaningless. It's a pinball. And you've got NVIDIA, which by themselves, they determine who gets what chips when, and they can price to a ridiculous level. So if you have the wherewithal, as Google does, as the others do, you're going to start developing your own chips, because they've created a pricing umbrella to compete with and a necessity for you to lower costs for those chips, because as computing power needs grow, you need more and more chips. So it's a natural evolution. It shouldn't be a surprise. Sure, today's announcements are new, but in terms of the strategy, there's absolutely nothing new that's been there for years already. So that's why I say you've got to classify these companies when you're talking about chips as well. But the winner of it all is going to come out to be Taiwan Semi because they make the chips for everybody. Intel is the only one that has their own fabs, and they're further down the food chain in terms of what the capability of their chips are.

Speaker 4:
[17:29] Taiwan Semi, one of your holdings up about 3 percent. Joe, really quick before we move on, you're also an alphabet shareholder. Price target raised to BMO today from 400 up to 410. They maintain it is outperform. I'm going to just summarize what they had to say. They say it's one of the best ways to own AI in their coverage universe, exposing investors to a leading player with a skilled business across every layer of the AI stack. What Mac was talking about, and Weiss was talking about, your view on this company, is it your top pick in the AI space right now?

Speaker 5:
[17:55] I think it's right there. Obviously, Gemini 3 is proving itself to be an incredibly useful tool. I've said over the last month I'm an active user of Anthropix Cloud. I believe that to be the most productive for what I'm attempting to do as it relates to just kind of looking at different strategies and what might or might not be working in the market. I do think Alphabet is one of the better Mag 7 names to own. I think what's interesting about the Mag 7 in totality is we have advanced to a new all time high for the S&P 500. Not one of those Mag 7 names has made a 52 week high as we have done that. Now that doesn't mean they are underperforming. They actually are in the month of April outperforming the S&P itself. They're performing really well. What I'm trying to infer is that ultimately when they do record those new 52 week highs, you're going to have a new powerful force that's going to gravitate in that direction. It's the systematic trend following funds that will begin to build even more positioning in those names as they record and achieve a new 52 week high. So I think that's something to look out for here on the other side of the Mag 7 earnings. But without a doubt, when you talk about Alphabet, you talk about the diversity of the model, whether it's YouTube, it's Gemini 3, it's the Tensor Processing Units, and by the way, don't forget the relationship that Broadcom has with Alphabet in the development of those TPUs, which have been there, Steve, really for the better part of nearly the last 15 years, they've been producing these chips. Broadcom benefits there as well.

Speaker 4:
[19:40] So Anastasia, I want to come over to you. Can we show that wall with the earnings that are coming up? We get the first of the Mag-7 earnings actually coming up today with Tesla. So that's somewhat of a read on the AI trade, but next week, a week from today, I'm just gonna coin it right now. It's gonna be super Wednesday. We get four of the Mag-7 names reporting. Alphabet's one of them. Meta, as Weiss already mentioned, is one of them as well. In between now and then, how do you expect AI to trade and what do you think has to come out of those earnings reports? Is a beat and a raise, is that good enough at this point?

Speaker 7:
[20:07] Look, whether it's gonna be good enough on the day or not, I'm not sure, but I think over time, what has to come out of those stocks is that they have to continue the CapEx pace, and I think that's important for the broader market ecosystem. And at the same time, they also have to show continued signs of modernization and probably additional customers that are coming their way for cloud. I think they will manage to do both of those things. The other thing I would say, what's interesting when looking at the likes of Alphabet, for example, is just how many things, or how many ways there are to play AI just within hyperscalers themselves. Whether it's the growth of cloud, which is actually the outcome of AI, whether it's some of the large language models being monetized in enterprise and consumer, that's another way. And there's also the semiconductor trade. So I think the diversity of how hyperscalers give you exposure over AI may actually be quite meaningful. The other thing, Frank, I would say from a macro perspective, what's interesting is the Mac 7 are expected to deliver 22% earnings growth, which is about double the rest of the S&P. But if you exclude NVIDIA from that, from Mac 7, you're actually looking at about a 6% earnings growth. So maybe all roads once again lead to semiconductors.

Speaker 4:
[21:20] So can I ask you more broadly just about the Mac 7, which we often use as kind of being emblematic of the AI trade. If you look from the March 30 bottom, Mac 7 is up just about 20%. The S&P is up about 12%. Has that run too far too fast when we're talking about those names?

Speaker 7:
[21:35] I don't think so. It's kind of how we started the conversation, which is what investors go to what they know. And what they knew back, I guess, at this point a couple of weeks ago, is the valuations have corrected for the S&P, but they've really corrected for the Mac 7 stocks as well. The Mac 7 stocks were trading 14% down on the year. And at the same time, as I just mentioned, that's where the earnings growth is likely to come through. You also have the defensiveness, you have the cash buffers. Even despite the capex spend that is happening, they're still not spending the entire cash flow. So given all of that, I think it does make sense why that's the first place to return.

Speaker 5:
[22:09] I like Amazon. I think Amazon is the one name that has the highest potential to achieve a new 52-week and all-time high. 52-week high, November 3rd, 258.60. It's very close to it now. Amazon strengthening the... I keep talking about strengthening the relationship with Anthropic. Zoom Communications has done it. We've seen the response and the recovery that it's had since earnings when it was trading in the mid-70s. Amazon announcing over the last several days, financially strengthening the relationship with Anthropic as well. Amazon would be one of the names that I would watch for. And remember, when you make that new 52-week high, there's a new catalyst that comes in. There's a flow of capital that comes in from the systematic trend following funds.

Speaker 4:
[22:54] All right. Another name. Sorry, Wes. I'm actually coming to you, though. Another Mac 7 name we're putting next week. It's Apple. We had the leadership change. You weren't here. We want to get your take on it. You've been a very outspoken person about Apple and the leadership.

Speaker 6:
[23:06] Yeah. So look, I think Tim Cook was obviously a good steward of capital. I think he missed a number of opportunities to grow the company. Going back years, I don't know if they would have sold, but you had Netflix training at enterprise value, about $50 billion, and that's no longer the case. So he hasn't been innovative. That's not been his forte. His forte has been, look, let's do what we can. Let's move the supply chain from China, India. Let me be good politically and make sure that we're not in the crosshairs of either China or the US. And he's done a good job on this. We really don't know about new leadership. We know that they're more focused on the technology and hardware side. We don't know where it's going to go. But to me, what's what continues to be the case here is that this is purely going to be a stock that you buy to express your market view. Because they haven't grown measurably. They've lagged meaningfully in growth, in revenue and in earnings versus the other Mag-7 stocks. So I look at it, I don't look at great, I got to buy these many Mag-7s. I'm completely bottoms up. And this is what I've missed. You know, I sense trading opportunities in the air, which turned out to be right, which I missed. But I only have so much room in my portfolio, and I don't want to keep playing the same theme over and over in individual stock. So my bottom line view is that, that you have the potential for a much more creative CEO right now, and that will help drive it, because they need to catch up.

Speaker 4:
[24:42] I mean, this seems a bit odd for you, but you seem a bit non-committal about the new CEO. Usually you're pretty, you have a lot of conviction behind it. I want to bounce something off you and also Joe.

Speaker 6:
[24:49] But how can you be, how can anybody be committal about the new CEO?

Speaker 4:
[24:52] Well, we know who he is. We know where he's been. He's been there for half of his life.

Speaker 6:
[24:55] What's your view on it?

Speaker 5:
[24:58] The phone, the iphone 6, 2014, best selling iphone, bigger phone, that's attributable to Ternus.

Speaker 6:
[25:04] Right. So you tell me what's your view on new CEO and justify it.

Speaker 4:
[25:08] I think the question is, is Apple going to be an AI company or is it going to remain a hardware company? I think almost everybody thinks it's going to be a hardware company. Don't you think Apple wants to be an AI company? Can I talk to you about that really quick? So I want to bounce something off you and Joe, who's also an Apple shareholder. Moffet and Atheisen, out with a note. They titled it, worrisome signs in the App Store. According to their research, US App Store revenue grew just 0.1 percent year over year. In calendar Q1 of this year, and they say the only reason it grew at all is AI and AI-focused apps, things like Anthropic and ChatGPT, etc. So is that worrisome the fact that they're kind of lagging in the opinion of many people when it comes to AI, and the new CEO is a hardware person? Is that worrisome to you?

Speaker 6:
[25:47] Well, the question is, and that's why I'm saying you don't know what he's going to do when he goes into the seat, right? He was given this mandate, it was a broad mandate, right, in a specific area, which is hardware. He was not the one that was creating AI application or fixing Siri, which they were trying to fix for what, five or ten years and a half. Apple also traditionally been at the lowest R&D budget as a percentage of revenue. It's a big budget, so you can argue that's enough, but that hasn't been the case. So, do you have somebody there now, that's going to, and you've got his number two, is going to be both engineering, hardware engineering, product engineering. So, there's hope, but that's what they've got to do. Otherwise, it's going to be a stock that gets left behind, people look for values like they did here, and they'll buy it to catch up when you've still got and keep them. What was the narrative like five years ago? Oh, you've got the app store, and you got the install base, and the app store is always going to grow at 20 to 30 percent. We're not there, right? So I think the company, I wouldn't say it's broken because people say, hey, you're an idiot, look at what's happened to the stock price.

Speaker 4:
[26:53] But clearly, it's not a technology. The answer is where the margin is. Often, it's been where the growth is as well. Joe, you're going to say something?

Speaker 5:
[27:00] Well, look, they've utilized the balance sheet and their cash to aggressively buy back stocks. Steve, do you believe that that usage of cash would have been better directed in R&D or growth through acquisitions?

Speaker 6:
[27:17] It depends what you value. Companies that go through financial engineering as opposed to growth vehicles, investing in growth, in my view, should sell a lower multiple. Then when you take into account, right, like would you look at a company that basically had one customer, what would you value that at? A much lower multiple than a diverse customer? They've got one customer. Now, it's three different telcos, but they subsidize it. What happens if these companies say, we're tired of not growing, we're tired of trading utilities and have the same share prices we've had the last five, ten years, we're going to cut back our subsidies of the phones, right? Because all we do is trade customers with one another. We can take them from $1,000 an iPhone to $500. That risk is nowhere in the share price, and it should be, because I believe at some point, and I think it's overdue, they get smart, the telcos, and they said, you know what, we're going to go to $500, and then T-Mobile is going to go to $500 eventually, subsidizing the iPhone. Why do we have to do that? So that's the risk that you don't assume when you're buying Apple.

Speaker 5:
[28:23] I'm not being argumentive, just pass or fail. Apple TV?

Speaker 6:
[28:29] I heard about it for 25 years.

Speaker 5:
[28:31] Apple Music? Siri?

Speaker 4:
[28:35] Siri? Pass. Okay, guys, we gotta leave the conversation there. Apple shares up just about 2.5% right now. The debate will continue. Again, Apple reports its earnings next week. Before we go to break, we're gonna head over to Brandon Gomez with the News Alert, Brandon.

Speaker 9:
[28:48] Hey, Frank, yeah, look at shares of pot stocks and ETFs tied to the cannabis industry popping right now. On a report from Axio citing administration officials familiar with the matter, saying that the Trump administration could move to reclassify cannabis as soon as today. This follows up on an executive order signed by the president previously to move the drug from a schedule one, which is in line with drugs like heroin, to a schedule three substance, which is more like Tylenol with codeine or steroids, would allow medical research as well as perhaps banking pathways for a lot of these companies, a tailwind that has been much anticipated and desired by the industry. You can see there, Amplify, Alternative Harvest, MJ up 15 percent, and the industry following in suit. Frank.

Speaker 4:
[29:30] Yeah, the administration taking on psychedelics and cannabis in the same week, potentially. Brandon Gomez, good to see you as always. Coming up, a sector spotlight on the financials, a number of calls on the group today. We're going to get the committee's playbook coming up next, Halftime's back in just two minutes.

Speaker 10:
[29:48] What made you confident that you could do something that hadn't been done before? I have no fear of failure.

Speaker 11:
[29:54] Trailblazing women changing the game.

Speaker 12:
[29:57] One of my favorite pieces of advice, think about what your boss's boss needs.

Speaker 8:
[30:02] Leadership can look in many, many different forms. It really does come down to just trusting yourself.

Speaker 11:
[30:06] Life is short and you just got to think big to accomplish big things. Julia Borsten hosts CNBC Changemakers and Power Players. New episodes every Tuesday wherever you get your podcasts.

Speaker 13:
[30:33] Welcome back to the Halftime Report. I'm Dominic Chu with your CNBC News Update. A report showing the efficacy of the COVID-19 vaccine has now been blocked for publication by the CDC. That's according to the Washington Post, which says the report showed the vaccine reduced ER visits and hospitalizations by about half among healthy adults this past winter. In a statement to the Post, an HHS spokesperson said the decision was based on concerns over methodology. The Associated Press projects that Virginia voters on Tuesday narrowly approved a measure temporarily redrawing the state's congressional maps, giving Democrats the chance to pick up four seats in the midterm elections. It's the latest state in a nationwide battle between Republicans and Democrats to redraw maps mid-decade in order to gain an advantage in the November elections. And blockchain billionaire Justin Sun is suing World Liberty Financial, that's the crypto venture founded by President Trump and his sons, alleging the company illegally froze his company holdings and secretly installed tools to prevent the sale of his tokens. The company has declined comment. Last month, the SEC settled a fraud lawsuit against Sun with a $10 million fine. Frank, I'll send things back over to you guys.

Speaker 4:
[31:49] Dom Chu with our headlines. Dom, thank you very much. Alright, turning now to financials. Wolfout with the note saying to be bullish on the sector, but that a near-term pullback is likely. Bank stocks like Citi, Morgan Stanley and Capital One all up double digits this month. Anastasia, I want to come over to you. What do you think about this thesis here? Bullish over the long term, but there could be a pullback. I want to kind of go a little bit deeper in the note. They say they've seen a cluster of breath thrust within the sector, eclipsing 60% of the names making one month highs on multiple days. Bullish, but history would imply a near-term pullback likely follows. Kind of looking at precedent here.

Speaker 7:
[32:21] Well, I will take a look at the charts. And actually, there has been a massive fullback in financials already since February. And I think part of that has to do because of the war in the Middle East. It had to do with the yield curve actually flattening. And also a big part of it had to do with the worries about private credit or private markets perhaps in general. But I will say we have to dispel some of those worries. And Frank, we could have a whole conversation about private credit, but for banks in particular, only 4% of their bank loan book are actually tied in some way to private credit. So it's not a systematic or systemic exposure. And so I think we're rebounding some from that. And what actually really encourages me about the financials backdrop, especially for the alternative managers, which I know report soon this week, what encourages me is there is the snapback in capital markets activity. And despite all of the headlines that we had so far year to date, you've got IPO volumes that are up very nicely. You've got M&A that is up about 28% year over year. So the capital markets are wide open, and that benefits, of course, the financials. It also benefits that alternative managers leave as well. Frank, one of the toughest parts to have been in private markets for the last couple of years has been that you've not seen an exit uplift. When you sell a company, the multiple that you get was not necessarily higher than the multiple that you held on your book. But that has changed. That has changed in the last couple of quarters. The exit uplift is back. And with that, we are seeing a return to that capital markets activity. So I think that is sustainable, and that's why I would say we've had the pullback, but I actually see a pretty strong catalyst ahead in capital markets.

Speaker 4:
[33:56] Point noted when it comes to private credit and the exposure there. However, we do have a number of financials, earnings movers today. One of them is Capital One. They had to boost their provisions for bad loans. It surged by 72 percent. And Joe, I got to come to you on this one. You own this one. Even as Anastasia is saying, it's not systematic. We continue to see these little things pop up where companies are basically having to raise their provisions or they're having issues with redemptions. I mean, these little things just keep coming up even though everybody says it's not systematic. Or systemic.

Speaker 5:
[34:24] And I'll continue to talk about sentiment and positioning being two critical indicators and catalysts for stock price movement. As it relates to Capital One, it's a classic example where bullish sentiment and bullish positioning was well entrenched coming into 2026. I'll raise my hand. Momentum Fund, financials, 29 financials out of 125 in the index. Overweight was our weighting towards it. That weighting is wrong. If I look at those 29 names, we would better serve to own 10 of it. So what do you do? You admit you're wrong, and you go out and you attempt to fix it, which I will. But Capital One is an example of where it has this universal bullish sentiment. This stock today, $200. Frank, 12-month price target on this stock, $259. Analyst community, 82% have a buy rating on it. People are just too bullish on Capital One, and I think a lot of financials are a classic example of that similar disposition.

Speaker 4:
[35:29] All right, Wyche, you on Goldman. I know you're bullish on this name. Yeah. Concerns at all about the financial space and near-term pullback and also, as you mentioned, a lot of unresolved things when it comes to the conflict in Iran, a lot of pressure on lower-income people, which doesn't really impact Goldman so much, but just some other economic issues that are out there lingering.

Speaker 6:
[35:46] Well, of course, it impacts Goldman quite a bit because they run a risk book. So they're subject to what happens in the Middle East, long-term, short-term issues, as anybody has, as every bank. JP Morgan, you name it, the money center banks. And there's a lot of folks in the show today on, are you concerned about pullbacks that have gone too far, too fast? 85 to 90 percent of my portfolio is long-term. So I'm not going to respond to what is a short-term pullback because what am I going to do? Maybe I sell calls against it, maybe it takes out some hedges overall. I'm really concerned about a blow up in the market, but generally I have some money losing consideration. So no, look, I monitor it, I follow it, but mostly what I look for are enduring trends, not short-term overbought or oversold. Having said that, if I were in trading positions, I'd have concern.

Speaker 4:
[36:43] With that said, Goldman Sachs up about three-quarters of one percent right now. Coming up, a call that the fears are overdone in one big committee name. We're going to debate that and much, much more in our Calls of the Day. That's coming up next.

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Speaker 4:
[38:38] And welcome back to Halftime. Let's hit some calls of the day. Wolfsticking with its Outperform rating on Netflix, calling for a 15% upside. Joe, you were just talking about ambitious price targets, and you own this one.

Speaker 5:
[38:49] So, Netflix is a name that personally, I moved to the sidelines to save the shareholders in America of Netflix in the mid-70s. I didn't know that we were gonna get the news that we got subsequent to that over the next couple of days. Now I'm getting an opportunity for the pullback, and I think I am part of a large component of people who feel as though they don't own the name and might have missed it on that run up back towards 100. So, in the next several days, once I get past the rebalance for JoT, you can expect that I will reestablish a position in Netflix, because that's the right thing to do when you think about the long term and their move into live entertainment.

Speaker 4:
[39:28] All right, Cher, as you can see, they're negative year to date, actually. All right, analysts also up in price targets of United Health today. The company's earnings beat yesterday. Steve, you own United Health.

Speaker 6:
[39:37] I do. So, yeah, it was a great quarter yesterday. Hemsley is really doing what he has to do. The MLR, Medical Loss Ratio, is actually pretty good in margin. So, they appear to have, while they're also responding to the market and doing away with really long and challenging approvals. So, I think they're sort of hitting here on all cylinders. And keep in mind, this is a unique asset, it's the largest healthcare player in the world. I still think it's got some upside, but there will be bumps along the way for sure, because healthcare is very politically charged. So, I'm staying with it. I haven't sold any, I'm staying with it. It's been a great, great trade or investment from the lows.

Speaker 4:
[40:21] Shares up just about 3%. Morgan Stanley out with his set up on cyber stocks that have earnings, saying CloudFlare and Fortinet are positioned for earnings beats. Anastasia, what's your broader take on the cyberspace?

Speaker 7:
[40:31] I mean, clearly a very important one, right? If you have data, you got to store it somewhere, you got to secure it somehow. And I do think it's a long-term theme, but at the same time in public markets in particular, it is quite crowded. There is a lot of competition and also some of that is prime for AI disruption. So if you can't identify companies in the cybersecurity space that are embedding AI or are AI proof, maybe that's the right way to play it. We are focused on the theme in private markets, but again, it's been a crowded space and the earnings momentum has slowed down quite a bit. So selectively, yes.

Speaker 4:
[41:04] Coming up next, we got Mike Santoli joining us with his midday word. We are back right after this. Stay with us. I'm senior markets commentator and overtime co-anchor Mike Santoli joining us with his midday word. So Mike, earlier we were talking about has this market potentially just gone too far, too fast? We were also talking about chips with the SOXX on pace for its longest win streak ever, all time, 16 days.

Speaker 5:
[41:28] All these superlatives keep piling up. Now, I don't think the broad market looks like it's gone so far, so fast that it can't sustain these levels. In fact, the S&P 500 has really been spending this entire week so far below Friday's high, just kind of chopping around the record levels and digesting that big gain. Now, what I do see, of course, is these certain channels running through the market that do seem like they're getting a little bit kind of overheated and maybe starting to shake under the stress. I'm talking more like meme stock type things that have really revived. Obviously, G-Evernover is an amazing story, but everything adjacent to it in the AI power area is starting to go vertical. The meme ETF itself is starting to go vertical. So you're looking at those types of things and saying, maybe it's time for a little bit of a stop and look around type thing, and we're maybe going to test the market's ability to shrug off a 3% pop in crude oil in a given day. So far, it's fine. We're staying within the range. But I think you want to be alert for all that while recognizing that the market has told you it's trying to move on to other things. Mike, what's the message? How are you thinking about the April sprint by growth to now overtake value? Yeah, I mean, I think it represents the money chasing the themes where the highest conviction and the least connection to global oil and shipping disruptions can be found. And that really, I mean, look, I think mythos came at the exact moment when the market was ready to say we've probably discounted a decent probability of a resolution in Iran. And that has just given the afterburner effect to that part of the market. Doesn't mean value overgrowth as a trend is over because if you look at it on like a six month basis, it still looks okay.

Speaker 4:
[43:17] All right, Mike, we're going to see you in overtime. Thank you very much for your midday word. Coming up, we are going global with the big opportunities outside the US as international stocks outperform. Stay with us. And welcome back to Halftime. International stocks are still outperforming despite the sharp rebound of US stocks this month, with the EEM ETF more than tripling the S&P's gains year to date. I have some international exposure here. Joe, you got some. You have the Israel ETF. That's where you're putting some of your money.

Speaker 5:
[43:46] Yes, Israel ETF. That, I've used, that ETF, rather, I've used that over the last several years to allocate as a derivative off the technology story that's in play here in the United States. In addition to that, other places you could look. I already expressed South Korea earlier in the show. And then if you're looking for the exposure to the oil story, it's Brazil, it's Mexico and Norway, each one of those three geographic regions, oil exporters having strong year to date performance.

Speaker 4:
[44:15] By the way, I talked to some trading desks, a lot of money going into Brazil and South Korea, as you just mentioned over the last week and a half. Why is she have some international exposure? And there's a big event, the summit between Trump and she, that may impact one of your holdings, which is Alibaba.

Speaker 6:
[44:28] I don't see it impacting it at all.

Speaker 4:
[44:30] At all?

Speaker 6:
[44:30] At all.

Speaker 4:
[44:31] Wow.

Speaker 6:
[44:33] Look, I think, Bob, as I mentioned, I bought it in 150s, then I did a lot of repair buying down in the 120s, so it was sold off with the markets. I think it's still a great play here. I expect to go back through the 150 level. They mentioned potentially investing in DeepSeek, so they are the cloud. They are the mag one in China, so I think you have to take advantage of it.

Speaker 4:
[44:55] Really quick, because we had to go. The oil blockade, Lindsey Graham posting, saying that he believes it's going to be extended for a while. Oil prices rising on that news a bit. Oil prices and some of that, does that impact Alibaba at all in your mind?

Speaker 6:
[45:06] Look, it impacts it because it's a consumer company in part, right? It's got multiple parts, like Amazon. There's cloud and they've got consumer. So, could it be an impact? We're not really seeing the impact here on Amazon.

Speaker 4:
[45:19] Okay.

Speaker 6:
[45:19] So, I think you look through it.

Speaker 4:
[45:20] Wait and see. We got to leave it there. Alibaba up almost 1%. Stay with us. Final Trades. They're coming up on Halftime. Back with Final Trades. Steve Weiss, you're up first.

Speaker 6:
[45:32] Yes, I am up first. I'm going with Virta. Look, you take a look and see what's happening with GE, Vinova, and that's moving today. So, needs are alive and well. I think this sold off for no reason other than it's, it's a high valuation, but if you want to play the trade, now's the time to get in.

Speaker 4:
[45:48] Anastasia, we got Steve out of the way.

Speaker 7:
[45:50] Security of energy supply, oil and gas is really front and center for investors. So, owning natural gas, oil pipelines is top of mind for us. We own Asensia, but MLP, ETF is a way to go in public markets.

Speaker 5:
[46:01] Northern Trust, a little bit of a pullback today. Take the other side of it. Good earnings, best performing financial sector name we own.

Speaker 4:
[46:07] All right, that's going to do it for Halftime. We have the Exchange starting right now.

Speaker 3:
[46:13] You've been listening to Cnbc's Halftime Report, the podcast. You can always catch us live weekdays at 12 Eastern, only on CNBC.

Speaker 11:
[46:24] All opinions expressed by the Halftime Report participants are solely their opinions and do not reflect the opinions of CNBC or its parent company or affiliates, and may have been previously disseminated by them on television, radio, internet or another medium. You should not treat any opinion expressed on this podcast as a specific inducement to make a particular investment or follow a particular strategy, but only as an expression of opinion. Such opinions are based upon information the Halftime Report participants consider reliable, but neither CNBC nor its affiliates and or subsidiaries warrant its completeness or accuracy, and it should not be relied upon as such. To view the full Halftime Report disclaimer, please visit cnbc.com/halftimereportdisclaimer.

Speaker 10:
[46:58] What made you confident that you could do something that hadn't been done before? I have no fear of failure.

Speaker 11:
[47:05] Trailblazing women changing the game.

Speaker 12:
[47:07] One of my favorite pieces of advice, think about what your boss's boss needs.

Speaker 8:
[47:12] Leadership can look in many, many different forms. It really does come down to just trusting yourself.

Speaker 11:
[47:17] Life is short and you just got to think big to accomplish big things. Julia Boorstin hosts CNBC Changemakers and Power Players. New episodes every Tuesday wherever you get your podcasts.