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tv   Fast Money Halftime Report  CNBC  August 16, 2022 12:00pm-1:00pm EDT

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going forward, lots to talk about as we did during the show. with apple near all-time highs can the rally keep going >> let's hope so bring me back on, and maybe i'm good luck. >> there you go. we'll see. we have lowe's, target to report and retail will be a catalyst for the market in the near future the nasdaq clearly underperforming while the nasdaq is higher on the walmart and depot results. let's get to "the half." >> thank you very much, deirdre bosa i'm dominic chu in for scott walker today the slow meltup in stocks is picking up steam is this the start for a new cycle for the market or just maybe another bear market rally? plus, retail, sky-high inflation and the state of the consumer. what the latest earnings report from walmart and home depot are possibly signaling our investment committee today is jason snipe, jim labor that
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will and stephanie link and, of course, josh brown at session highs, the dow up for a fifth day, and the nasdaq is almost, just a hair, five basis points away from being in positive territory, but it's just off the lows of the session right now. we're moving higher, and the dow industrials are up about 255 points let's start with our folks in studio stephanie link, is this exciting is this something that the bulls should hang their hats on? are we all in the clear? the lows are real in the rear view mirror at this point? >> well, it's exciting to be here with you, dom there's that but in terms of the markets, i think we're going to shop around maybe between now and the end of the month we can continue to rally because we're getting through earnings, and we don't get any inflation data, but then you have september that comes, and do you have a lot more inflation, and then you have the fed meeting. i am encouraged that the economic data is not falling apart which is a good thing, right? i mean, if you look at industrial production today, it was double expectation and
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capacity utilization was up over 80 for the fourth straight month so that's good manufacturing seems to be holding up it's housing that's not, right, and it's inflation on top of that, so as long as we have inflation and high inflation, we're going to have to deal with the fed and so i think september kind of gets dicey >> so, josh, mean valuation-wise, we've made this kind of case before that valuations were a concern. they don't appear to be as much of a concern anymore now they can say that earnings expectations are doing better than they have, right? we have seen earnings come in better is this then a sign that maybe the fundamentals do justify a market that can continue to head higher? >> really, it's a great question, dom. i really don't think fundamentals are the problem, and i don't think -- excuse me, valuations are the problem, and i don't think valuation really has been an everyone ufor most of the market. we had a fee pockets of the market where valuations a year ago were ridiculous, but most of
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that cured itself, so the bigger issue i think right now, if you think about the things that have driven the rally off the lows, the bigger issue is how many of those things are sustainable or will stick around long enough to support the values that or the levels of the market that we have right now what are those things? the stock market very much likes falling oil, falling gas prices, falling gasoline prices, most importantly, and we've had that. we've had like 60 days of declining prices at the pump very notable decline, too. not just a little bit off the highs, but very much off the highs, and, in fact, you see wti crude today down another 3%. 86 and change. that is the lowest that we've seen since january that pre-dates the invasion of ukraine. that's been important. the second thing, falling interest rates for some bizarre reason the fed is dropping 75 basis-point rate hikes like it's going out of
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style, and financial conditions are actually easing. i would argue this works against the fed's larger goal and is not a great thing in the intermediate term, but it's been helpful in the short term. the street likes lower rates that's why you see this rally being led by the high multiple, high growth crowd, and then the last thing that we've had is still a lot of liquidity and a lot of support even though we've had rate hikes, we've had a lot of -- we've had a lot of liquidity in the fixed income markets in september that part of the story changes, and i've been talking about this, and i don't think enough people are talking about this we're going to have a ratcheting up of quantitative tightening, regardless of what's began on with the ten-year, regard rees of what's gone on wednesday is or anything of that, and i don't know that this market can handle that big of a change in financial conditions coming from the fed itself, so we're going to have to say, but i think you've got to continue to give the benefit of the doubt for the bulls in the very short term, but september is right around
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the corner. >> so jason snipe, it's interesting, by the way, we'll have a lot more of that energy and oil trade later on in the show because we want to dive into whether or not that's driving a lot of the market activity that we've been seeing. jason, it's interesting. we've been talking about all of this and this market rally on a day when retail earnings really are kicking off in earnest, and we got a decent look from two of the arguably best belle wwethern the retail business and that's walmart and home depot i wonder, jason, if either of those reports have done anything to change your view of the markets overall. do we think this is still constructive given the outlook we got from both of those retail giants this morning? >> that's a great question, dom, obviously, you know, josh and steph have cited a lot of the macro data that's been supportive of the market we look at inflation, ppi and cpi coming in a little lower than expected. i think what the important point that josh just mentioned is qt
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is starting in eastern nest september, but to your question, dom, on retail earnings, you know, obviously walmart cut their guide a couple weeks back. the numbers were solid, i mean, it's just retracing the number previously that they had cut from it's really where they arrived at, you know revenue growth was up about 8.5% which is solid, and i think home depot, i mean, we've talked about the housing trade a lot, the housing and adjacent trade home depot i mean was solid. revenue beat, eps beat, you know, the pro numbers are pretty solid, you know, so i think the consumer is -- is in a decent place. i don't think they are doing great, but i don't think they are doing as poorly as we've all talked about over the last couple of months, so i think this is a good read-through. we'll see. we have more -- we have target tomorrow and more retail names coming up later this week, so it's going to be really important to -- and then we also have retail sales which is really important to see where we
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are in the state of the consumer as you alluded to earlier. >> jim lebenthal, with all of that in mind, if there's something to be taken away from the walmart discussion this morning and the home depot discussion this morning, it's what in your mind? is it that the u.s. consumer really is going to still continue to be that big engine of growth for these consumer-based companies >> dom, i don't think that's what you can draw as far as a conclusion from today's reports. i think today's reports actually don't give you that much insight into the consumer and i hate to punt on the question it's looking backwards to begin with i think what's going to matter to the consumer is looking forward what's going on in the world. now, everybody so far has pointed out that september is traditionally a tricky month, and it's likely to be a trick month this year as well. we've got a lot going on, whether it's elections, the inflation, the fed or russia versus ukraine, but i think you should expect that choppiness in september, but you should also expect when you look forward
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four months from now, just four months from now, here are the things that are likely to be completed. this is the bull case. not necessarily definitely going to happen. four months from now the fed is likely to have raised another 400 basis points and be done, likely to be done. yes, as josh pointed out quantitative easing is going on, but that can be stopped up by the fact that there's a lot of supply coming from the treasury. also what's likely to be done is inflation is likely to be meaningfully on the way down josh referred to gasoline prices at the persian gulf. futures are down much more than gasoline prices at the pump indicating that there's more decline to come at the pump. you're also likely, you should be downstream of the mid-term elections meaning four months from now a lot of garbage, a lot of debris is going to be in the rear view mirror, and you've then got to look forward to a less aggressive fed, inflation coming down, and all that supply chain nshoring promoting economic activity next year so
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september definitely tricky. today's report tells us nothing about september being more benign or less benign than traditional, so i will just say choppy, but i also think that by the end of the year, whether it's consumer, capital expenditures, the fed, a lot of the dirty work is going to be done, and we'll have pleasant days to look forward to. >> hey, james, it's josh thanks for joining us today. i want to ask you about the very big difference between gasoline prices which, of course, we love to see down and rent which, a, is not coming down, and, b, is a much larger factor in the way we calculate inflation. don't you see that as the type of headwind that could continue to maybe not surprise to the upside in these coming inflation reports but keep the overall headline number stubbornly higher than where the fed would want it? ing. >> yes, joshua, since you called me james, i'll go by your formal name of joshua i think you made a fine point. i don't have a counter to that
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nothing is ever completely rosy, and nothing is ever completely rain-soaked. you make a very good point it's one that i don't have a solution to, but it's one that's ameliorated by the declines, not only in energy, by the way, but also in freight costs, things that work their way through to goods prices, so, you know, in a mixed bag, as i've been saying all year, i think the negatives have until july been far outweighing the positives, and now you're seeing the positives outweigh the negatives, yeah, there's always some negatives there. >> i think you can look at the pending home sale numbers, jim, and be encouraged because that's a leading indicator. single families homes fell 12% rents are high and they follow home prices, but if pending home prices are coming down then eventually home prices will have to come down i think we have a long ways to go before rents come down, but watch the housing market in general because that's going to be your tell down the road
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>> yeah. stephanie, also, whether it's housing for purchase or housing for rent, i mean, the other thing we have to pay attention to here, we all know this, is how much job destruction is going to go on is it going to be enough job destruction that is kind of sopped up by the job vacancies out there, and i know there's some question about how many job vacancies are really out there, but there are more job openings than unemployed right now, so the question is with the fed doing what it's going to do, is it going to do more job destruction to the point where the consumer is really impacted from a consumption point of view be it represent the, gasoline, demand or anything, or are they going to stick the proverbial soft landing, and with economic date a that we've had over the past few weeks, the chances of an economic soft land having increased in my opinion. >> all right so that's huge we heard the same thing from professor jeremy segal on "squawk box" this morning. i was watching the segment, and he basically said i think june
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will be a bottom, and i think the second half of the year will be quite good. i'm becoming more optimistic about a soft landing at the same time, bank of america's fun survey basically said that they saw clients net buyers of u.s. equities for the seventh consecutive week, so you put all of those kind of tea leaves together, and is that an early cycle trend perhaps that this thing has legs to the upside because everyone is becoming a little less pessimistic about the outlook, and then you've got the retail stuff coming out from walmart and home depot this morning. >> that's why i mentioned the economy swelling and the inflation numbers are holding up look at the comp numbers target last quarter when they disappointed they had strong comps. it was a gross margin, a mix issue. they had the wrong stuff they had too much inventory of the wrong thing so it takes a couple of quarters to move that down, so i do think the consumer -- well, i've always
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said don't bet against the u.s. consumer because we're -- we consume, right that's what we do, and it's -- it's 75% of the u.s. economy, so i think the consumer is getting pinched on inflation, but they are still buying the economy is a soft landing right now. i don't know if the fed, if they get more aggressive what they are going to do and what it's going to mean for the overall economy, but for now that's why i say between now and end of august you can see the markets continue to drift higher, but we still have a lot to overcome with the fed. >> so, you know, jason, the other thing i wanted to bring up was jpmorgan's marko colanovic who is often featured on this show says tileneds have been diminishing post-consumer price data and sent sminlt proving for risk assets and there are signs
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that a peak in inflation is behind and that a soft landing is increasingly likely so there's more and more people, not because i'm bullish on things, but a lot of the experts that watch these markets including our committee members are becoming more constructive are you more constructive on the markets given what jpmorgan is saying >> yeah, dorms on the margin, i'm a bit more constructive. i think, you know, the inflationary data last week was encouraging, and, you know, i think it's potentially a series, a start of a series of lower inflationary prints as we've been citing earlier today. i mean, commodity prices have been coming down, oil futures are coming down. this is affecting the headline number, but, you know, when i think about wages and shelter costs which is a lot what have core represents, that's where my concern is i think shelters costs are going to be slow to come down, even if i look at the jolt numbers, the jolt numbers have moderately come down so i don't see -- i don't see real labor destruction
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and wages starting to meaningfully slow, so with all that being said, you know, i still think as we look at the headline number and pay attention there, i do think that's supportive of the markets, you know, which has made me a little more constructive, you know, from an investment perspective, and we've been more bearish, you know, to start this year off, so, yeah, i think -- i think equities can still do well i see the headwinds. i think they make a lot of accepts but they can still move higher in the second half. >> stephanie, i wonder, i understand that there are a lot of reasons to be constructive and bullish, but i also like being balanced because i like knowing what the risks are. >> right. >> there's got to be something out there or a slew of things that make you say, you know what, there could be another leg lower, but what are those things what in your mind could say, hey, you know, this wholething gets re-day-old? >> the fed is unsuccessful, right, and they are too aggressive based on what we know we know that inflation has peaked it's going to stay high.
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do they see -- are they comfortable with it staying high i'm looking at the core pce number it's at 4.8%, they want it to be 2, so to the extent that they are really aggressive in september and hawkish in their commentary and overstay their welcome, that is warning point they do not have a good track record, dom, of a soft landing, right, and they don't, and the economy is slowing, not a recession. maybe it's 2%, 3% kind of growth that's good, that's good enough for earnings, and if inflation comes down maybe the margin story, i don't worry as much about the margin story so i can craft a very positive picture if we didn't have the elephant in the room and the fed kind of just continuing to do -- going down one path without kind of seeing the bigger picture. >> josh is laughing right now. why? >> recession in europe the most inverted yield curve most people investing right now have ever seen in their life or in their investing life. it's screaming, so the hour glass has been turned over so it's not imminent recession tomorrow, but that is the direction. >> it's not -- there's a lag
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impact of the fed. >> i agree. >> it's like nine months so 2023, a totally different story, but between now and end of year. >> so for every marko colanovic i'll see you michael and raise you a mike wilson. b of a thinks it's a tactical bear market route. i can throw experts at you also. big picture, now you have a vix sub 20 once again. throughout the course of the year, if you got very aggressively excited because stocks were up and started buying heavily at vix sub 20, you've had your head handed to you repeatedly g.look back in april. thought it was all good, like the market had recovered from the shock of russian aggression and a little -- a little bit of concern about the fed and then we were back and off to the races, yet a vix 20 in may, in june, they crushed you i don't think we want to look at a nice rally off the lows for some of the best run companies
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in america like apple which is now actually getting bigger relative to the s&p. it's the only one of the faang names that if you do a ratio chart, it's actually growing in importance to the s&p. you look at that you look at financial conditions easing which is the exact opposite what have we should want if we want the fed to be done or to have a lower terminal fed funds rate or whatever these things seem like they are going in the right direction, but in reality i think they are prolonging the inevitable and nothing would make me happier than for this to be a soft landing. i just think it's premature, and to look at stock prices and use that as like our -- you see, the market -- the market gets it that is not historically been a successful investing strategy. >> so, jim, okay to kind of cite what josh was just referring to. the b of a august global fund manager says sentiment remains bearish but no longer adopt
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limitically bearish as hopes of an end in inflationary rates, the b of a bullish indicator stays at max bearish right now cash drops, but it's still very high wolf research says the u.s. equity market is now priced for perfection in our view with consensus expecting the fed to pause in december, inflation to decelerate quickly and valuations to remain steady and recession avoided and eps estimates will come down modestly so there does seem to be caution out there. is that reasonable to say that there could be caution out there and we should be a little more a hence sniff. >> of course it's reasonable what josh just said is reasonable and accurate, and, you know, things like the yield curve inversion need to be paid attention to first off, let's be clear. i don't think anyone here is saying that they definitively know that a soft landing is in the cards, and i don't think anybody here is definitively saying that they know this is a bear market rally, at least on this table
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what we're doing is exploring potential outcomes for me, this is me thesis, okay, that this really hinges on inflation. josh makes the compelling point as well that the fed doesn't want financial conditions to ease right now, and the reason it doesn't want that is because it wants to combat inflation, so the what if that i give at large, not just to josh, what if inflation is coming down what if inflation is coming down as measured not just by commodity prices, not just by freight costs which we see coming down but also by layoffs which we see increasing, and which, again, i've said may increase past the level where demand destruction occurs or may not, but what if inflation comes down such that then the fed can shift to its dual mandate which is to keep maximum employment. were not there yet that's not what i'm sayings, okay what i'm saying is there is a very reasonable outcome that we've reached that point where inflation ebbs to the point that the fed doesn't have to be as hawkish as everybody fears and
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can focus on maximum employment which is part of its mandate i'm not saying that's definitely what's going to happen i'm saying it's reasonable, as is what josh said. >> all right jim, i would also point out that in the last few minutes or so the russell 2000 small-cap index just ticked towards positive territory, so we're kind of seeing the same thing today that we saw yesterdayish in some ways with a small selloff accelerating to the upside and melting up, if you will, so we'll keep an eye on that. hedge funds out with their latest holdings and some interesting themes are developing on the so-called 13fs including one on the tech trade. we're following the money. that's coming up "halftime" is coming back in two minutes. as
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♪ welcome back to "the halftime report. and as you can see there markets are at session highs right now how did some of wall street's biggest investors position their portfolios during the second quarter and the associated volatility leslie picker is following the money and following the whales, whale-watching so to speak leslie, what are you seeing? >> seeing a lot of whales out there but the theme of the quarter was managers off-loaded risk with some sporadic pretty
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small opportunistic buying it really does make sense, dom, considering the s&p dropped 18% in the three months through june which is the time frame covered by these filings many major investors sold off some of their tech everyone power you're in particular they lowered risk in amazon and microsoft and a louisa's trimmed their earnings in many of their tech names to stem losses in performance. michael bure knowing for calling the subprime mortgage crisis sold out of all 11 equity positions. we're talking meta, alphabet, warner brothers, discovery just to name a few. he added one $3 million bet to geeo group, a private prison operator other managers added to some of more their value-oriented plays. berkshire hathaway's warn busted
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up chevron and viking global doubled stakes in meta, block, take two and dollar general so clearly, you know, not everyone was totally deterred by what was going on in the market, but a reminder that these positions are as of the end of june, they have likely changed in the six weeks since then dom? >> leslie, picker, thanks very much for the update on that. i think the thing that sticks out to me is the two-way traffic on some of the biggest tech names and some of the beaten-up ones that's the thematic link stephanie, you're saying it's skeptical on some and not on others what were the good buys then and what were the ones you want to stay away from >> no, look, think if you add in technology and com service together, it's 35% of the s&p 500 so i'm underweight i've been underweight maybe 20%. i'm still 20% of my portfolio so i think can you pick and choose in terms of what you want to oh. you have to have a barbell that's at least my strategy, kind of some value, some growth
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so i like ibm, for example, right -- on the value side and broadcom is a fairly new position because it, too, dropped and i thought it was pretty interesting at the valuation it was trading at. i owned ford and didn't have a great quarter, i bought more there. accenture, they have a great job delivering on top line, bottom line, every day they are making acquisitions to grow their business and that's a hidden cloud play with a hidden relationship with i don't want to traffic where everybody tends to be trafficking in that's the faang names i own meta, that's the dog but that's the only one i'm playing. >> jason snipe, the big tech trade is something a lot of folks have been following because it's been the leadership for the past decade and a half every time there's been a dip in the market, there's a recent dip in the market and they are leading once again are you sold on the tech comeback that we're witnessing right now? >> so, dom, obviously these
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names have run a lot as you mentioned over the last decade and since this bear market rally has begun, so i think what i would say about mega cap tech is price really matters, you know you look at a microsoft or an apple both trading at basically 20 times forward the market is trading about 18 times with a fed that's truly engaged and also qt, you know, starting in september like i mentioned in the earlier block you have to be selective as steph said you can't buy in a broad stroke, but there are some names that still have nice earnings growth, but i think you really have to be selective i like cyber security as well. i like qualcomm and some of the semis here, you know, and then apple and microsoft are names that have been mainstays in our portfolio, but that's our read on the tech sector as it stands right here. >> it always seems to be apple and microsoft and alphabet and maybe to a certain degrees meta though it's had some problems. jim lebenthal, if that's the trade, do you sort of go with
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the same names in technology, or do you say maybe it's more chip-focussed this time around versus just say apple and microsoft or alphabet? >> well, first off, i want to thank jason for bringing up qualcomm he knows that's one of my favorites as well, but i'm answering your question, you know what i'm doing with tech first off i'm slightly underweight to the market weighting as per the s&p 500 what that means though is i'm still about 23% in tech, so it's a meaningful portion of my portfolio. i'm in the what i consider the value-oriented portion so that's qualcomm, that's cisco systems and then i have some faang names well underweight the market weight i've got microsoft, alphabet and apple, but my overall underweighting is a way of saying, yeah, i think tech is going to be just fine. it's not where i expect a market-leading performance for that i expect cyclicals, and that's why i'm overweight in things like energy, materials, industrials and financials if you disagree with me, obviously don't be overweight there, but i have a thesis that
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economic expansion is set to pick up in 2023. one of the things though, dom, that i want to point out that i find telling in the hedge fund reports is you don't see any of these hedge funds loading up on utilities or consumer staples, and, i mean, real consumer staples like a kimberly clark. you don't see them hunkering down for some huge recession that they see in the offing that to mesa pretty positive sign yes, i understand that large-cap tech faang is looked at as today's defensives, but if you really thought were you going into a recession, if these hedge funds thought this, they would be in utility and staples, that's not what we're seeing. >> josh, what do you think, this idea that you don't see a lot of these funds wholesale going into the straight-up defensive plays? utilities may not have been the play in the past but consumer staples have been at points in history when you're trying to avoid a recession. is there anything that you're seeing that makes you think it's a defensive tilt in any way, shape or snowstorm. >> i think what large hedge
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funds get defensive they are not going lung utilities, they are shorting stuff or putting on options trade. they don't have to hide out in staples or utilities i don't think that that's -- i think that's a non-sector. what i want to talk about, what i thought was most interesting, dan lobe getting involved in disney dan very successfully took on sewn, very similar situation had a lot of non-core assets that were not helping the cause. that stock is now 100% higher than where he had initially gotten involved with the company, and so i'm really going to watch that one closely. i think it's good for disney to feel a little bit of the heat even if they don't respond directly, but i also think in my portfolio crowdstrike, this is an unsung hero for me. it's a large tech, let's call it a mid-cap technology stock this is one of the best performers i have. it's now flat on year which is miraculous for a software company. i think cyber security is one of the biggest challenges over the next ten years no matter what the fed does it's not related to global
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growth it's going to continue to be very important for companies to spend more money on every year crowd strike acts very well and we just found out that .72 brought about 800 now shares last quarter according to the filing, so that's almost the whole position that they have was just purchased, so crowdstrike for me is the mid to large-cap tech that i'm most excited about that i'm currently invested in. >> all right by the way, mentioned before energy, right, that trade, the energy is the worst performer this month but still the best performer so far this year jason snipe is making some moves in that industry, so we'll have jason's trade on "the halftime report" coming up after this with directv i can get live tv and on demand together: football, housewives, football, housewives, football, housewives... whoops. oh no... the housewives are on the field. i repeat, the housewives are on the field. i just want to talk!
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that is not a toy! or skip the in-laws. sell and buy your house with confidence with opendoor. move when you're ready. that's it. indeed. when life's doors open, we'll handle the house. good afternoon i'm frank holland. here's our cnbc news update for this hour. former trumpors cfo alan weaselberg is expected to plead guilty on thursday to criminal charges tied to the d.a. maeptan's organizations of former donald trump's businesses two people familiar with the matter says he's expected to be sentenced to five months in jail as part of a plea. hearing aid are being made
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available for consumers without a prescription or medical exam the devices will be available for people 18 and older with mild to moderate hearing louse loss. and the decision to euthanize their 17-year-old walrus they were concerned about her welfare and the risk to spectators this sparked concern over how scandinavian treats their wildlife. >> it's opposite of a free willy. >> i don't like it thanks very much, frank holland forks that soil sliding again now down 10% just so far in august and we're not even done with it. the energy sector has moved into positive territory today but it's still a negative sector overall. jason snipe, we talked about it before the break you are adding to your
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positions, specifically the spdr xle which tilts towards the sector take us through the reasons why. >> obviously, xle, the energy sector has underperformed as you just stated, but for us, you know, and i look at oil as a proxy, part of a proxy to oil -- to energy names and what they have done, but when i looked at earnings this quarter, energy has really been the outperformer you look at chevron, had really great numbers which is another name that i open, but we decided to add to xle here i think with sbr coming off the docket in october you know, hurricane season which we're in, you know, i do think there's a lot of tailwinds for the energy trade as it pulled back this month, look at it as an opportunity and we did so. >> all right jason snipe with the trade on energy there thanks very much coming up, trade on some of the big analyst stock calls of the day and today it's all about the
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financials among the best performers since the june low we've got the debate on the financial coming up on "the halftime report. you're seeing the s&p financial sector up nearly 1% on the day so far (vo) what can a nationwide 5g network from t-mobile for business do for your business? unlock new insights and efficiency-right now. allow monitoring of productivity at remote job sites, with next-generation bandwidth. enable ai cameras that spot factory issues in real time, using next-generation speed. and deliver ultra-capacity 5g coverage that's years ahead of the competition. t-mobile for business has 5g that's ready right now. dad, we got this.
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welcome back to "the halftime report. now for the calls of the day we're tracking the payments and financials space first up, you've got paypal getting a rare upgrade to outperform today it's been a big underperformer the analysts over at daiwa say that there are a number of positive catalysts falling into place for paypal, though shares have been crushed over the last year, but they are up nearly 40% since last month, and jason, paypal is a name that you own. do you agree is paypal one of those reasons -- is one of the reasons why this catalyst, and by the way they specifically mentioned the increased stake by activist investor elliott management in paypal as well >> yeah, no doubt about it, dom. obviously paypal has really struggled this year, down 46% as you mentioned year to date, but i think the elliott play is a real nice play the street likes it. they got a really good reputation in the space. i think on the cost reduction piece, i think they will really help there
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i think also the buyback $50 billion buyback and also an investor day that they are going to, have and i think also, you know, when you're looking at the management team, they are hired a new fco which i think would be a positive and catalyst for the stock. i like it here it's gotten really beaten up the multiple comes dramatically trading 26 times forward. >> an analyst over at daiwa is downgrading both vice area and mastercard citing reduced earnings upside for the credit card processing companies. jim, visa is a name that you own, so this visa call something that you're worried about in. >> not particularly worried about this part of the call. i'm on other side of the fence here because we see that international travel is picking up over the past few months as travel restrictions have eased, and the biggest element of growth for visa and mastercard over the next year is likely to be cotts border transactions that's what's frankly held them
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back in the year and a half up until now, so i -- i'm on the other side of the fence here >> all right so that's a visa trade our next call on the financials comes from a more traditional up it's wells fargo deutsche bank reiterates it as a top pick and says that it's better capitalized than its banking peers. it's cutting costs more lever to rising interest rates. stephanie, this is a name that you own. >> i totally agree with this call and he's also saying that the asset cap is going to get lifted sometime in the spring of 2023 that would be a huge positive. i have no insight about the asset cap, but i'm hopeful he's right. it's a turnaround story, a cost-cutting story, a new ceo who is not each new anymore. been that there three years. it takes a long time for these stocks to work themselves and one times book, 1.5 times traditional book, that's good. >> are financials a place you want to be, jim, a
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value-oriented trade that's yet to really come to fruition >> i think the banks could be okay look, if -- if you're going to have a soft landing and you're going to eventually get a steep anything of the yield curve or athlete a de-inversion of the yield curve, these stocks will immediately feel the effects the market will get ahead of the fundamentals, and they will run these things up, so i think in that scenario it's okay. however, there are other scenarios that could play out, and i don't think that these stocks are as cheap as they used to be. they have had a depots couple of years relative to the market and in absolute terms. there are probably some special situations like wells fargo that have their own individual catalyst, but just to blanket say i want to be long financials or ninth yes, i'm not sure that i can get excited about that particular idea. >> before we let you go, just really quickly is it if you're going to go into the bank, is it the money center banks, b of a, jpmorgan, citi,
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or is it more of the banks as a play steepingning the yield curve? >> if you think the consumer, particularly the bottom half of consumers are very susceptible right now which i do, then have you to believe that the larger banks, the money center banks are going to better weather the storm. they have bigger dividends and can buy back more stock than reasonable falls they should have a little bit more investor support if the market gets rocky so my answer would be yes i own jorg aenchlt i think it's the bank to own if things get tough, and the charm and ceo of the bank thinks that things can get tough here so they are already preparing for it. >> thanks the financials trade stick with us here on "the halftime report. "mike santoli's midday word is comingft t aerhe break we'll be back right after this ♪ ♪ ♪ ♪
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awarded best driver appeal by j.d. power. welcome back to the show senior markets commentator mike santoli, sorry, we were just having a chat about our prior lives at one point mike santoli you're at the nyse with the midday word it feels like it's yesterday 2.0. i'm channeling my yogi berra for baseball guys like you it's deja vu all over again. with deexpect this meltup to keep going higher? >> a little bit. the market, dom, acts as if continued to be the case that large investors follow that they are not exposed enough to this rally. we are at that point in this comeback, up 17% over two
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months, where if you look at prior kind of v-bottoms of various descriptions like 2011, 2018, where you got to this point, there was a feeling out there of it's gotten a little too far too fast right now s&p is like 9% above its 50-day average the last time we were there, september 2020, that was the point at which the market did chop around and come in a little bit. it was not a major top i do think it makes sense to continue to focus on the fact that the most bullish folks out there are the ones that look at the kind of vapor trail of this rally, the momentum, the breadth indicators, the stuff that's sort of trying toib infer the message about the markets about the possibility for a soft landing. i grant you in 2019 and in 2012 the fed wasn't hiking rates. all the differences between the scenario now and the scenario then, but the market is behaving in a roughly similar way, so i think right now it's -- it's in the process of earning back the benefit of the doubt for the bulls. >> a composite that you can see there on your screen up 24% from
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the lows that we've seen so maybe arguably a bull market for some people out there. thanks, mike santoli. industrials among the top performers this quarter so far so will the industrialses run continue how the investment community is how the investment community is playing that particula hi, i'm ladonna. i invest in invesco qqq, a fund that gives me access to the nasdaq-100 innovations, like real time cgi. okay... yeah... oh. don't worry i got it! become an agent of innovation with invesco qqq
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welcome back to the halftime report time for this month's feature sector taking a look at
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industrials which so far this year as you can see has out performed the s&p down roughly 5% compared to the s&p's 10% drop within that sector there are some opportunities for investors looking to get some consistent dividend income in the form of that particular payment. we brought a screen that identifies names trading higher on a year-to-date basis, positive performance with a dividend yield greater than 2% for comparison the s&p 500 has an average yield of just around shy of 1.5% and the industrial sector overall an average yield of 1% as well. the top plays in industrials based on those parameters are a mix. leading the way with 2.7% in terms of yield, positive performance. also tools and equipment maker snap-on yield of roughly 2.6% and several defense and aerospace names. rath on, general dynamics. you see those with yields between 2% and 3%. so this is the dividend play for
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industrials that had some kind of relative strength so to speak. you are adding to industrials but not necessarily for the defense names. >> no, not any of those names, unfortunately. but union pacific i've owned for a while but they had a really good quarter and beat on the bottom and top lines and got hit with service issues. the numbers today suggest to me anyway things are starting to loosen up. they have pricing power. that is going to help margins as well very easy comparisons. i made it a much bigger position this morning. >> jim, how about you? are the industrials worth owning right now? some have been pretty beaten up. i can think of boeing as one and i know you traffic in that name. >> yeah, traffic in it yes, i traffic in boeing, dom. no, i think boeing is a good point to make here that the industrials is a very wide swath of industries. and most of them have a story that is specific to them so boeing is a recovery in that particular company and in the
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airline industry and then you have companies like deere which reports on friday totally separate metrics and movements to it. this is a play on the need to have plantings around the world particularly with ukraine and the destruction of their farmland there all these industrials have their own mode of forces behind them. >> jason, aerospace and defense is something you like in terms of exposure that you have. take us through the honeywell trade. >> absolutely. that is primarily why we like honeywell. i mean, they have really nice exposure to the aerospace and defense and also construction, commercial construction. you know, 2.2% dividend yield. it is down about 3% year to date trading about 23 times forward we really like these names they have about, you know, low single digit, double digit i should say, low double digit earnings growth going forward. this is our favorite name in the space. >> honeywell, union pacific, boeing, some of the names to focus on there keep it right here on "halftime
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report" with final trades up next
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you know what that means the clock says time for final
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trades >> activ, a name i've owned in the past i don't right now but i am looking at it. they've cut guidance conservatively and pretty conservative for the second half of the year and out growing the market by a mile versus their competition. so this is definitely on my short list. >> josh brown? >> crowdstrike great relative strength looking at other technology names. this one is hanging in there better than most this year. >> jason >> i like goldman sachs. obviously the space has struggled but as we head into more volatile times seasonally value will be up i like goldman >> all right jim, finally to you. >> paramount global. i don't think there is anyone in the world left to down grade this it has weathered about two months of continual down grades pretty well frankly. now the positive news flow not just the earnings from a couple weeks ago but warren buffet probably not him probably ted
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wexler or mr. combsen ceasing berkshire's share of the company as well as a disagreement with walmart should put a lift to the shares. >> one final check on the markets right now again floating toward session highs right now as you can see there the dow industrials up 235 points, s&p up 9 nasdaq composite about one quarter of 1% to the down side "the exchange" begins right now. thank you, dom hi everybody inflation coming off the boil. the consumer holding up okay the market has been rallying all good news right? maybe not. we'll look at why and where to find value in case this isn't the start of a new bull market plus, china's challenges the country trying to revive its economy and jump-start population growth but neil ferguson warning growth at all costs may come at a big cost to china. he joins us live more cracks on our housing front. we'll tell you what they are and
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