Title: Stocks Extend Record Highs: The Investment Committee's Strategy 8/5/26
Show: CNBC Halftime Report (podcast of the live noon ET show)
Host: Scott Wapner + Investment Committee (members named in the transcript intro)
Date: 2026-08-05 (Wednesday)
URL: https://open.spotify.com/episode/4IWuxqL2PFvlx19jWSX0aN
Length: ~44:05
Note: Spotify auto-generated transcript (accuracy may vary); (mm:ss) cues from Spotify transcript sections.

(0:00) I'm Scott Wapner, and you're listening to CNBC's Halftime Report, the podcast the most profitable
(0:06) hour of the trading day.
(0:08) We record this live weekdays at 12 Eastern.
(0:11) Listen in, Carl.
(0:15) Thanks.
(0:15) Welcome to the halftime Report.
(0:16) I'm Scott Wapner front and center.
(0:18) This hour, the record run for stocks, whether 8000 is the next stop for the S&P.
(0:23) We'll debate that with the investment committee.
(0:25) Joining me for the hour today, Joe Terranova, Liz Thomas, Jason Snipe Farmer, Jim Leventhal.
(0:31) Let's check the markets here.
(0:32) We, we are losing a little bit of steam.
(0:34) Dow is still green, though we're red.
(0:36) Otherwise, we are extending record highs for the most part.
(0:40) And there's a fair amount of bullish commentary that I want to lead our show off with today, not
(0:46) just from our very own Josh Brown yesterday on halftime, who said this was one of the healthiest
(0:50) tapes that we've ever had.
(0:52) Wolf research today is the next stop 8000.
(0:56) Ed Yardeni yesterday on closing bell with me 8250.
(0:59) He said that might look too conservative thanks to strong earnings.
(1:03) And here's Goldman's president, John Waldron with Andrew Ross Sorkin today in Aspen.
(1:09) Pretty positive as well.
(1:12) I would say the most important factor right now is earnings, earnings growth.
(1:16) You know, earnings growth continues to be really strong.
(1:19) We're going to have the second quarter was the 7th consecutive quarter and the S&P of double digit
(1:24) earnings growth.
(1:25) So we've had very consistent and significant earnings growth which is propelling markets.
(1:29) That's ultimately the most important fundamental driver and I would say recently it's broadening.
(1:35) OK.
(1:36) So it's strong, it's broadening.
(1:39) And until that changes, you want to get negative, no.
(1:42) I don't think you want to get negative at all.
(1:44) I think you want to understand where capital is flowing to and then understand what the potential
(1:48) risk is accordingly.
(1:50) We've seen in the last several days a return of the momentum factor in particular isolating memory,
(1:56) semiconductor and even the MAG 7 itself, really strong day today from NVIDIA kind of coming out of
(2:02) nowhere.
(2:02) So where is the risk in all of that?
(2:05) Over the last several days, you are seeing the S&P market cap weighted outperform the S&P equal
(2:11) weight by 4%.
(2:13) So I would believe the risk as you move through the entirety of the summer is you lose the
(2:18) broadening narrative if the market Scott gets concentrated again, you do not want a concentrated
(2:24) market.
(2:24) That's a marketplace where portfolio managers like myself will underperform.
(2:29) It's a very challenging marketplace and it pushes all the chips in a very isolated direction.
(2:34) That's the risk in the market.
(2:36) That mean, but what's the realistic risk?
(2:38) Because if you listen to Waldron and others, if the earnings story itself is broadening, so, so and
(2:45) it and it's strong outside of tech, there's not an indication that your biggest risk is going to
(2:54) happen.
(2:54) So no, no, no, no, no.
(2:55) So what I what I you're always sitting there saying to yourself, what can go wrong?
(2:59) So I'm sitting here today, my strategy Joe TETF all time high.
(3:03) I'm sitting here saying to myself, OK, what can possibly go wrong?
(3:06) Where does that begin to reverse itself?
(3:08) What if, What if we?
(3:09) What if we're though entering a market where you need to start thinking about what else can go right
(3:14) in terms of if you're getting a broadening earnings on Jimmy shaking his head, he's smiling.
(3:18) If you're getting broadening earnings growth like Waldron's talking about and others are obviously
(3:22) focused on to why stocks can, can continue to go, go up from here, maybe that's the more apropos
(3:28) question today.
(3:30) Well, and I feel like we, you and I had this conversation maybe 2 weeks ago.
(3:33) Remember the other 493 versus Mag Sevens on earnings growth.
(3:37) And as we look in the second-half, we're going to see that other 493 companies, their earnings
(3:41) growth probably surpassed that of the MAG 7.
(3:45) But you're also, you're seeing it in the stock price reaction.
(3:47) I mean, let's consider things like Delta Airlines or the airlines in general, just kind of pulling
(3:52) that out of thin air.
(3:54) But when you have a good economy, when you have broadening profit growth, a company like Delta is
(3:59) going to be approaching new highs as it is right now.
(4:01) And not just new highs, but a re rating of the multiple or Joe, as you and I spoke about yesterday,
(4:06) you know, financials, if we weren't having this tear the cover off the ball rally and semis, we'd be
(4:12) talking about the rally and.
(4:14) We're going to be we're going to be talking about that because they have made a nice move and
(4:19) there's some kind of stealthy moves that have happened within the private equity prism.
(4:24) I'll get to all that in a minute.
(4:25) I do have some news that I do want to get to Mackenzie Sagalis.
(4:28) It's regarding alphabet.
(4:29) What is that?
(4:31) Scott, we're seeing Google shares down around 3 1/2% now, the company reshuffling the leadership of
(4:36) Deep Mind as Demis Sasabas moves into a new chairman role that's going to be focused on frontier
(4:41) research and then the broader implications of AGI.
(4:44) Sasabas will remain active, but with more time now devoted to AI safety and policies, scientific
(4:49) research and medicine, including a bigger role at isomorphic Labs.
(4:53) That's the drug discovery side of the company that he launched after Deepmind's alpha fold
(4:58) breakthrough.
(4:58) Now also as part of this reorg, you have Karai Kabukogu, who will take over day-to-day leadership as
(5:03) the new head of Google DeepMind.
(5:06) He has already been running much of the labs model research since becoming Google's chief AI
(5:11) architect last year.
(5:12) So the company is framing this as a natural transition after getting Gemini back on track.
(5:17) And then separately, we're also seeing some departures long time Google Chief Scientist Jeff Dean is
(5:22) leaving after nearly 3 decades to start a new company with several other employees.
(5:27) Google plans to invest in that startup, which will also partner with Google Cloud.
(5:32) So the department, this departure rather is said to be amicable and Google doesn't plan to replace
(5:37) Dean as chief scientist.
(5:38) That position was really created for him specifically to report into Sundar Pichai.
(5:43) What I will say though, Scott, and perhaps why we're seeing shares move lower is that this comes
(5:47) after a series of departures from Google D Mon, including John Jumper, Anthropic, Noam Shazir to
(5:52) open AI.
(5:53) Before he left, Shazir was working on Gemini.
(5:56) So that's how.
(5:57) Investors are doing this.
(5:59) Yeah, appreciate that, Mack.
(6:00) Thank you.
(6:00) OK, that's Mackenzie Segal.
(6:01) So we'll watch that obviously with shares down a little more than 3%.
(6:04) I want to get back to to our conversation though on where this this market, Liz is going to go 8250
(6:11) conservative potentially according to Yardeni because of the earnings story.
(6:15) It's not, it's not, it's no longer FOMO, it's FEMO.
(6:19) It's the earnings momentum that this market has.
(6:22) And that's what he has been hanging his hat on.
(6:25) And as you heard John Waldron suggest too, we're in a broadening earnings story.
(6:28) It's don't just tell me about what tech is doing.
(6:31) I get that the numbers are enormous in terms of the earnings growth, but if you're talking about 12%
(6:36) for other areas of the market, that's pretty darn good too.
(6:39) I think it's very difficult to get pessimistic about this market.
(6:42) You've got internal strength, so 73% of the S and BS and P above its 200 day moving average.
(6:49) We've had this huge rebound after momentum washout momentum that Joe is the expert in here.
(6:55) But I think the risk on on this momentum rebound is that it is just that a really swift rebound and
(7:01) you could see it come back off of this strong momentum right now.
(7:05) There's really talk about that today.
(7:06) Too, by the way.
(7:07) And that usually happens, right?
(7:09) I mean, semies went down almost 30% in that washout.
(7:12) So momentum died for a while, and I'm sure was very frustrating for Joe in some of that, but you
(7:17) usually do get a swift bounce.
(7:19) This is actually one of the swiftest, swiftest bounces we've ever seen.
(7:23) So yeah.
(7:24) Right, you had one of the you had one of the fastest declines and then one of the fastest bounce
(7:28) backs that we that we've ever seen also.
(7:30) So the risk is that it cools off, right, that it came back a little bit too strong.
(7:34) But there are a lot of other things to be positive about.
(7:37) Financials are still strong.
(7:38) I always look at financials as confirmation of a rally and confirmation of cyclicality.
(7:43) We've got almost 90% of financials above their 200 day moving average.
(7:47) That's huge.
(7:49) So I do think that for the rest of the year we see a return to large caps.
(7:53) I don't see small caps outperforming large caps for the rest of.
(7:56) The year small caps Speaking of are the Brussels, up 22% year to date.
(8:00) Right.
(8:01) And and that's a good performance year to date.
(8:04) I think that in the second-half of the year we see a return to large caps because I do expect a
(8:08) volatility, but I also do expect this market to continue moving higher.
(8:12) I mean 8000 is only 3 1/2.
(8:14) Yeah, I know it's funny asking is 8000 the next stop?
(8:16) It's like now, okay, it's literally around the corner.
(8:19) It looks like it's almost a, dare you say, a formality at this point.
(8:23) But if the earnings continue to live up to the hype, why wouldn't you get there?
(8:27) Then you have to start asking the your Denny question. 8250, whether Jason Snipe, that's a little
(8:32) too conservative and and maybe part of that hinges on where the momentum trade does go from here.
(8:38) I think Liz made some really great points that are being talked about elsewhere on the street today.
(8:42) Jonathan Krinsky says the reflex continues, but shades of 2000 continue to pop up.
(8:48) How quickly things change.
(8:49) He says a week ago semis were in a 30% around 30% drawdown.
(8:54) We call time on the momentum unwind.
(8:55) Fast forward to today, we've seen the largest four day rally for the Sox since COVID.
(9:02) The S&P has surged 5% over the last four trading days into a 52 week high.
(9:06) In the last 30 years that's only happened three other times, including March 21st of 2000 which was
(9:13) dead highsofthe.com bubble.
(9:15) Jeff Degraff of Renaissance Macro, he's going to be on closing bell with me today, says time and
(9:21) drift are typically momentum's enemy from here.
(9:26) Yeah.
(9:26) No, I mean, it's been a very interesting last few days.
(9:28) And I think the setup has been interesting to me in the sense that July was a down month.
(9:33) There was a lot of churn, violent churn, right.
(9:35) You talk about the the drawdown in semis and when we look at the map, obviously the impact on the
(9:40) market from that perspective.
(9:42) But when I think about what earnings growth is, and I know this has been the theme, this is what
(9:46) we've been talking about all week, 29% earnings growth, 65% rate have reported so far an 85% beat
(9:53) rate.
(9:53) I mean, these are very significant in numbers.
(9:56) And to Liz's point, there are other sectors participating.
(10:00) Financials Healthcare has took a little bit of a step back in these last few days, but they have
(10:04) been participating.
(10:05) Can you get to 8250, Sorry to interrupt you.
(10:07) Can you get to the the Yardeni number if momentum does sort of roll over again because then it's a
(10:13) heavier lift.
(10:15) Even if you get some of the the bigger financial names to participate more, it's going to be much
(10:20) harder, isn't it?
(10:21) There's no doubt and I think because of the math, I think momentum has to play a significant factor
(10:26) and that's getting to 8250.
(10:28) And I think that story continues because of the earnings growth that we've seen thus far and the
(10:33) guidance right, it's not like the spending is slowing down.
(10:37) The spending is only increasing.
(10:38) We're seeing profitability in the cloud numbers, you know, from the hyperscalers and the downstream
(10:43) effects into other sectors.
(10:44) So I'm I'm very interested to see how this continues to play out, but I'm I'm I'm tired about what
(10:48) I've seen thus far.
(10:49) Krinsky goes further.
(10:50) He says the bigger issue we see is the market's been playing musical chairs as money is sloshed from
(10:54) momentum to value and now back to momentum.
(10:57) At some point, the music stops and participants might not be able to find a chair.
(11:01) All right, here we go.
(11:01) Let me explain this.
(11:02) The market does not need catalyst to continue to move higher.
(11:06) We know what the catalysts are.
(11:08) I remember clearly back in the late 90s sitting on a trading desk, sitting there quizzing other
(11:14) traders and everyone was giving you the bullish conditions.
(11:17) We know them tell me what can go wrong, and I am not saying by bringing forth what can go wrong, it
(11:24) happens, but it's the momentum factor.
(11:26) Where is momentum right now, today, the first week in August?
(11:30) Is it in memory?
(11:32) Is it in semiconductors?
(11:33) Is it in the AI infrastructure?
(11:35) No.
(11:36) It rotated into the 493, Jimmy.
(11:39) It went into energy, it went into industrials, it went into other areas of the market.
(11:45) So where the narrative falls apart is if the 493 and the broadening out falls apart as we move
(11:53) forward, shouldn't happen.
(11:55) Shouldn't happen.
(11:56) It shouldn't happen.
(11:57) I'm with you on that.
(11:57) I'm telling you how it falls apart if the market concentrates back to NVIDIA, If the market
(12:03) concentrates back to Micron and Marvel in Corning, the momentum factor is not there.
(12:10) That's where the market has a challenge.
(12:11) Let me say 2 real quick things.
(12:12) The macro economist on the desk will point out that the ISM numbers that we've gotten today and on
(12:18) Monday, services and manufacturing, are really, really high.
(12:21) I'm.
(12:22) Just wondering the same thing.
(12:23) It's not.
(12:24) Big Is there an invisible?
(12:25) Person here is.
(12:25) Playing that role.
(12:27) Honestly, I, I mean, I thought it was Liz, but I didn't want to.
(12:31) I didn't want to.
(12:32) I didn't want to exclude everybody else.
(12:35) He's like a chief.
(12:36) He's like a chief strategist for.
(12:38) So you need to read the bio today.
(12:41) You need to read the BIOS.
(12:43) OK.
(12:44) I'll.
(12:45) Play What does she actually think that you're a farmer?
(12:47) Even though I call I mean.
(12:51) I think I might yodel to you.
(12:52) You're so far away.
(12:53) I feel like by.
(12:54) Design if I get further.
(12:56) Jimmy, if you keep going down this road.
(12:58) Number one, my eyes just meet you immediately.
(13:00) I have to keep my eye on you at full time, full show every day.
(13:04) I know because I could go off the rails, not right now though.
(13:07) The ISM surveys, there's a very strong correlation, particularly the ISM manufacturing when it's as
(13:13) high as it is right now that earnings broaden and continue to grow.
(13:17) But the second point I want to make is your question, Scott, of can this get to 40, 250 if momentum
(13:23) bows out of the equation?
(13:24) I'm sorry, 8250 if momentum bows out of the equation, the simple math says that's not likely to
(13:29) happen.
(13:30) We're about 5% away from that 8250.
(13:33) Now, if you look at the top ten stocks in the S&P 500, most of which are momentum, if those stocks
(13:39) went 5% higher, most of them would not hit an all time high.
(13:42) NVIDIA 5% higher from here is not an all time high.
(13:45) Microsoft 5% from here is not an all time high.
(13:48) Same with Apple, same with many of these stocks.
(13:51) I'm simply pointing out that the math is very favorable.
(13:54) I don't think Momentum is going to swoon again, but you you don't need much from Momentum for those
(13:59) records to be hit.
(14:00) Let's throw up Google Alphabet intraday because we had the news of, you know, around departures
(14:09) related to deep mind stocks at the lows of the day down 5%.
(14:13) So that that's a significant move.
(14:15) How are we thinking about that as we're trying to assess company by company, who's who's got it and
(14:22) who doesn't or who's going to be a winner and who may not be what, you know, certain companies that
(14:29) were deemed to be in leadership roles at certain periods of time have then had their roles
(14:35) questioned.
(14:35) I wonder what you all who are, who's in this name?
(14:38) What do you think about?
(14:40) What do you think about this?
(14:40) I think Google.
(14:41) Cloud revenue growth 82%, I think revenue growth 24%.
(14:46) That's what's important to me.
(14:47) I think this is a knee jerk reaction.
(14:49) I think the market is reacting to a little bit of a shifting in intellectual capital.
(14:54) That's normal.
(14:55) It's normal in an environment where the stock has had a really strong rally off of earnings.
(15:00) But I don't think this is anything more than a near term.
(15:03) Reaction.
(15:03) I mean, the chief scientist is leaving after 27 years, OK?
(15:09) And I'm sure that there is.
(15:11) I know you play in the other side, but there is a very strong team that's in place.
(15:15) And I don't think that means the cloud revenue growth is going to slowly deteriorate because we're
(15:21) seeing an executive leave the company.
(15:24) I think this move to the downside is an overreaction again.
(15:28) And Joe, you said that I'm surprised by it.
(15:31) I think that there is a lot more talent in the overall AI industry than just one or two or three
(15:36) individuals.
(15:37) Clearly these are important individuals nonetheless.
(15:40) I mean, Gemini has now gone through many versions.
(15:43) This is not a one man show or even a three man show.
(15:45) I am surprised by this.
(15:47) Joe, you pointed out the web services.
(15:49) I would also point out the chips at Google.
(15:52) I would point out search, I would point out YouTube.
(15:55) I would point out way most this is this is an overreaction.
(15:59) Yeah, I mean, we're talking about one of the architects of the the AI strategy.
(16:02) This this is this is not, you know, a a desk filler I.
(16:06) Know.
(16:07) There's no doubt and I think continuity at at this level of leadership is extremely important as we
(16:12) kind of fight through this AI race and there's obviously some other significant players.
(16:16) But to to Joe's point, I mean we and this is what I said earlier in terms of visibility and profits
(16:22) with all the CapEx that we've seen 82% cloud growth last quarter was 60 plus.
(16:27) I mean this is significant runway.
(16:29) I know the stock traded down because of negative free cash flow, but it retraced back.
(16:34) This, to me, is a viable opportunity.
(16:37) The deputies taking over, so it's someone that's sitting right there alongside of an executive that
(16:42) has led the AI architecture.
(16:44) Strategy.
(16:45) OK, let's look at SpaceX.
(16:47) It is a another big story today for obvious reasons.
(16:50) On the other side of the earnings report, stocks down about 9%.
(16:54) It's was down more than 10, I think.
(16:56) So it's a little bit off of that level.
(16:59) Their AI costs are soaring.
(17:00) I don't know if anybody is actually surprised, you know, by that.
(17:04) The, the conversation I think going in in part was, you know, how is this company going to be
(17:09) defined by those internally and how are investors going to define it on the on the outside?
(17:15) Are they going to be more viewed as a hyper scaler type business investing heavily into, you know,
(17:23) the the AI future?
(17:24) Well, their AI costs are soaring and I guess the market's not happy about that.
(17:28) But you also have the lock up, which comes tomorrow.
(17:31) And then you have a stair step as well, which is going to be significant in terms of the supply
(17:35) coming on the market after that.
(17:37) You do have a number of target raises and lowers today, which is interesting.
(17:42) The battle on the street over where this company, at least in the near term, is going.
(17:46) Kevin Simpson's been a shareholder.
(17:48) He joins us now.
(17:48) We wanted to get his take to hear from somebody who's got some skin in the game on this.
(17:52) So what what's your what's your feeling after the report knowing the lock up is coming?
(17:58) I've got 3 targets that are lowered today and then a couple that are going up.
(18:02) So what?
(18:03) Where would you come down on it?
(18:06) Yeah.
(18:06) I mean, I think that there's a good reason to be oscillating back and forth in terms of price
(18:11) targets, Scott.
(18:12) But if we break it down, just looking at the operating report, I thought it was fantastic.
(18:18) Now the stock reaction was a completely different story.
(18:20) These things are not moving in lock step.
(18:23) And I think that makes sense because my enthusiasm for this business hasn't waned at all.
(18:28) But it's far different than my enthusiasm in the stock.
(18:31) In large part, Scott, because of the lock up that you mentioned, the first of which we're going to
(18:36) see tomorrow hit the street.
(18:38) I want to wait and see how this stock trades as we see how these shares are absorbed into the float.
(18:44) But if we look at it just as the headline, the report was good.
(18:48) I mean, revenue grew 92% to 7.8 billion.
(18:53) Star link revenue was up 66 billion.
(18:56) AI revenue grew 247%, but it's that $18.4 billion of CapEx that causes the problem for the Street.
(19:06) And they're just like all of the other hyperscalers, Microsoft, Meta, Amazon, Alphabet, Now SpaceX.
(19:12) If you're going to spend this kind of money, you need to show the shareholder that there's some path
(19:16) to a return on investment.
(19:18) And I'm not sure that that's a story for the next quarter or two.
(19:21) But I think as an investor, if you're 234 years into the future, this is an incredible business.
(19:27) We're going to own it.
(19:28) But interestingly, we have not added to it.
(19:31) We put a half a percent position in the Q Devo Growth ETF at 160 because it was included in the ETF
(19:38) and we've watched it come down patiently.
(19:40) And just because a stock pulls back doesn't mean you need to add to it.
(19:44) I imagine that we will, but I want to see how it trades with these new shares as part of the
(19:48) marketplace.
(19:49) How much of the lock up do you think is already in the in the stock?
(19:54) You know, it's come down obviously a tremendous amount from the IPOA.
(19:57) Lot.
(19:58) I'm not going to.
(19:59) I mean, I'll be surprised if this thing sells off a lot tomorrow because of it.
(20:03) You're talking about a stock, Scott, that's down 100 bucks, almost 50% from the highs, going from
(20:07) the low 2 hundreds down to the low one hundreds.
(20:10) A lot of this has embedded into this price action.
(20:13) This is no surprise.
(20:14) I mean it is the talking point.
(20:16) I think you even LED with it in the introduction here to the name.
(20:19) This is a 24 year old business.
(20:20) It was an inaugural report.
(20:22) It was really, really good on one hand, but that CapEx is a big deal.
(20:27) This lock up is a big deal.
(20:28) And I'm sure the Jimmy sweating from a valuation standpoint saying, you know, I can't value this
(20:33) stock.
(20:33) And I don't disagree with them, but I feel like this is such a revolutionary generational change in
(20:39) business.
(20:39) If it works down the road, we know about Starlink, we know about the AI investment, can they
(20:45) monetize it and it can make Starship a reality.
(20:48) The Sky's the limit.
(20:49) Yeah, we'll have to wait and see on that.
(20:51) We know that, Kevin.
(20:52) Thanks.
(20:53) Kevin Simpson joining us with his commentary around that.
(20:56) Nvidia's up today.
(20:57) It is the only of the mega cap tech names that actually is green now.
(21:02) And it's nearly a 4% move, we think in part because Elon Musk gave the company an endorsement as
(21:08) part of the SpaceX earnings call, said they have the best AI computer.
(21:13) That's that's a quote.
(21:15) So Nvidia's up on that.
(21:17) Melius is talking about they love the endorsement.
(21:20) How could you not given what he said?
(21:22) What do?
(21:23) What do you think?
(21:24) About NVIDIA or SpaceX?
(21:25) I.
(21:26) Mean NVIDIA I I think this you can buy it right here, just to cut to the chase.
(21:31) NVIDIA right here.
(21:32) Yeah, I do.
(21:33) New money that comes into accounts at our firm, we're putting in NVIDIA, we're not hesitating.
(21:38) By the way, it's about 5:00, about sixish, 7:00-ish percent away from an all time high.
(21:42) I think it will get there, may not be in August when we get this light liquidity, but news like we
(21:48) get where Elon Musk is endorsing it just continues to show that NVIDIA will have more demand that it
(21:54) than it can supply for the foreseeable future.
(21:57) And it's multiple, roughly 19 * 20 times forward earnings is to me attractive given you the earnings
(22:04) per share growth rate that is around 3035%.
(22:07) OK.
(22:07) The other semiconductor name that I want to look at is AMD, because I see it down almost 6% despite
(22:14) what was a good earnings report.
(22:15) I don't know what you could pick AT and not like.
(22:19) What do you think?
(22:20) I think Elon Musk spoke at length about Vera Rubin chips and the relationship with SpaceX and
(22:26) NVIDIA.
(22:27) We didn't hear very much about AMD.
(22:29) Now AMD has relations with Meta, Open AI and Anthropic, but in return there are warrants on 160
(22:36) million shares there much different relationship.
(22:39) You could also look at NVIDIA relative to AMD by the way.
(22:42) Nothing like you said, Scott.
(22:44) Nothing wrong with AMD's earnings except what we heard last night from Elon Musk.
(22:50) If it was happening on another day, you'd get a better reaction out of AMD.
(22:53) But it does remind people when you look at the forward multiple, you're looking at AMD mid 40s,
(22:59) you're looking at NVIDIA at somewhere around 19 1/2.
(23:02) And I agree with Jimmy, NVIDIA it is.
(23:04) It is literally a hanging curveball down the middle.
(23:07) I bought it at 199.
(23:09) I got stopped out at 193 while you're on vacation.
(23:12) I said it's the next Apple 100% right in what I saw and I handled the position wrong.
(23:17) It's going to new all time high.
(23:19) OK, now away from tech Disney, let's take a look.
(23:23) That's a nice winner today.
(23:25) What was what was that was that?
(23:27) Now you love it.
(23:27) It's.
(23:27) The share price The share price is.
(23:29) Right again, nuts.
(23:30) The share what?
(23:31) You love it again.
(23:32) I don't love it.
(23:33) No, I don't hate it.
(23:35) Here's here's where my conundrum is, is the operating results from the company in my opinion are
(23:41) pretty darn good.
(23:42) I don't care if you look at entertainment, theme parks, streaming, and I think there's great
(23:47) potential by the way, in the studios.
(23:49) I mean, we've seen what Spider Man has done in terms of its box office.
(23:53) Now that's part Sony, that's part Disney, but nonetheless, the box office in general as an industry
(23:59) is coming back.
(24:00) And yet what are we up 2% stock trades?
(24:03) I'm not going to look right this minute, but about 14 times forward earning you.
(24:07) Think it should be up more, Is that what you're suggesting?
(24:09) I do.
(24:10) Here's my conundrum.
(24:11) Here's my conundrum.
(24:12) I think the company itself is doing really well, but the stock just isn't and it leaves me where I
(24:18) was yesterday.
(24:18) Considering how much of a mistake am I making here?
(24:21) Am I being patient or am I being stubborn?
(24:24) Now I'm not selling it today, but clearly in my language, to answer your original question, no, I
(24:29) don't love it because I don't love what the share price is doing.
(24:32) You you think it should be up to 100%?
(24:35) And it has nothing to do with earnings.
(24:36) This is a market that wants to get behind the underdog.
(24:40) This is a market that wants to get behind the underperformance.
(24:43) Look at what happened in Microsoft.
(24:45) Look at what happened in Palantir.
(24:47) Now you see Disney today and it's only up 1.9%.
(24:51) The stock is down double digits on the year, double digits over the last 52 weeks.
(24:57) This is a good earnings report, Jimmy.
(24:58) I'll take your word for it.
(24:59) Good earnings report it absolutely so.
(25:01) So where are all the buyers rushing in to buy?
(25:03) The underperformance tells you everything you need to know about.
(25:05) You know, I, I think we have to expand the discussion and I'm going to bring Netflix in not because
(25:10) I want to make myself feel better, but I think we have to look at the industry, streaming and
(25:15) broadcast overall and say that maybe there's going to be more M&A.
(25:18) Maybe that's what's holding this stock back.
(25:21) We know there are obviously some cable channels, including our fine company that have spun out
(25:25) recently and will be spinning out.
(25:27) And maybe the markets worried that Disney is going to enter that scrum, if you will, and pay too
(25:33) much for something they did with FOX 5-6 years ago, whenever that was.
(25:37) So maybe that's what's holding it.
(25:38) We have some news crossing about Shake Shack.
(25:41) Brandon Gomez has those details for us.
(25:44) What are we learning here, Brandon?
(25:45) Hey, Scott.
(25:45) Yeah, that's right.
(25:46) Star birds.
(25:46) Jeff Smith on Bloomberg just now saying he's taking a stake in Shake Shack, calling it quote, too
(25:51) cheap.
(25:52) I said it's a several $100 million stake and that they may now be the largest shareholder not yet
(25:58) confirmed.
(25:59) We know as of Q1, they didn't hold the stock.
(26:01) We'll get 13 FS next Friday.
(26:03) More details possibly then that will indicate timing of the stake that he's taken.
(26:06) But you can see shares now popping about 8%.
(26:09) Company also had earnings this morning, but right now?
(26:11) Reacting to that news, OK, we appreciate that stocks getting a big jump.
(26:16) We're making a call to Josh Brown as we speak, for obvious reasons.
(26:20) He might be a chase pack probably if he's.
(26:23) Watching right now, he's feeling pretty good and I'm sure he would agree with Jeff Smith, who who
(26:29) thinks it's too cheap.
(26:30) We'll, we'll see if we can get him on the line, see what he has to say about that.
(26:34) Let's do quickly.
(26:35) I mentioned financials having this, this move over a month.
(26:38) Private equity has been great too.
(26:40) So shake shacks up almost 10%.
(26:41) We'll try to get Josh on the horn and see what happens.
(26:44) Apollo reiterated overweight today.
(26:45) Jason, you want, you want to take that.
(26:47) This been a nice move for private equity.
(26:49) Yeah, Yeah, it has.
(26:50) And I think as it relates to Apollo, Apollo is still down around 10%.
(26:55) Fee related earnings are up to 7700 and 85 million up 25%, which is a record quarter for them.
(27:01) Insurance spread income has really drove some of these results and private equity has been
(27:06) performing better.
(27:08) But I think for me, you know, I need to see those monetizations continue to pick up to see the stock
(27:14) move.
(27:15) Further, I think one of the reasons why private equity is trading better is because software is
(27:20) trading better.
(27:20) And I think there's a very strong correlation between the two.
(27:24) We identified that previously.
(27:26) I think that's important.
(27:27) I also think it's benefiting from this environment where the market loves the underdog and the
(27:31) underperformance and private equity certainly characterizes itself as.
(27:35) Such that that that's probably a good observation.
(27:37) Let's take a break.
(27:38) We come back Booking Holdings on the move.
(27:41) We just had a bunch of rebalance travel related moves in in Joe's ETF.
(27:47) So we need to discuss that relative to what Booking Holdings is doing today.
(27:50) Some calls of the day related to the consumer as well.
(27:52) We're back right after this.
(28:10) Josh Brown's on the phone.
(28:11) We wanted to get his take on this news from Jeff Smith of Starboard.
(28:16) A new position in Shake Shack calls it too cheap.
(28:18) Company had earnings today.
(28:19) Stocks up now almost 11 1/2 percent.
(28:22) Josh, what's your take on learning of this news?
(28:26) Look, as a long term shareholder, it's very clear that this is a company that has a stated
(28:32) trajectory of getting to 1500 stores.
(28:35) They're going to open 65 stores this year.
(28:38) They have a great royalty business internationally.
(28:41) They have an unbelievable product and a loyal customer base.
(28:45) What's missing?
(28:46) It's a $2 billion market cap.
(28:49) So clearly the potential does not match the progress in the share price.
(28:55) And when you think about Starboard and some of the success they've had, whether it's Papa John's or
(29:00) Darden, just in this specific field, their track record is unimpeachable.
(29:05) And I can't imagine this being a negative.
(29:08) So I don't have any more details than what's out there, but I would tell you I think this may be
(29:14) exactly what the doctor ordered.
(29:16) What what I mean, if, if this was going to be, which certainly at times it has been obviously with
(29:23) with Jeff Smith, if it if it turns out to be an activist related play, what are some potential moves
(29:32) that you think would be wise for this company to to perhaps do?
(29:38) And I don't know, frankly, I don't have enough information to know if you know, this is, you know, a
(29:44) pure activist role.
(29:45) If it's a more passive position that he just thinks the stock is cheap, I'm not exactly sure, but
(29:51) have you thought about bigger picture if an activist was to get in this name?
(29:55) And let's look at a longer term chart, by the way, as we we answer this question just to see what
(30:00) the stock has done, let's say over we can move to a longer chart, guys, please.
(30:04) So like, I don't know, three years.
(30:06) Give me as you answer that question, Josh.
(30:10) Yeah, so we know what needs fixing and what doesn't.
(30:13) What does?
(30:14) Let's start with what doesn't need fixing.
(30:16) I I'm sure Starboard looks at this and says, OK, they have prime locations everywhere that you would
(30:22) want them.
(30:23) They're in every major shopping district, they're in the airports, they're in every major city at
(30:28) this point.
(30:30) They're near ballparks, they're in places with heavy consumer foot traffic and they've done a great
(30:35) job picking site locations.
(30:37) I would give them an AI, give them AB on getting the drive throughs opened, getting enough users on
(30:43) the app and and just building that digital future.
(30:46) But it's a work in progress.
(30:48) I wouldn't say it's an A, but it's not AC.
(30:51) They're succeeding there.
(30:52) What are you doing wrong?
(30:53) What could Starboard do?
(30:55) The first thing to understand is why did the stock come down from 130 to to the 50s?
(31:01) They shocked the street last quarter with a surprise loss.
(31:05) Why did they have a surprise loss?
(31:07) They claim that the price of paper goods surprise them to the upside and the price of red meat.
(31:15) I think they were paying 675 a pound at one point this winter.
(31:19) Now, some of that is just the whole Daisy chain of events because of Iraq, excuse me, Iran, and the
(31:25) military action and the price of crude oil and blah, blah, blah, blah, blah.
(31:28) But in the end, you should not have a business this mature that shocks Wall Street to this extent
(31:35) where they go from a profit to a loss.
(31:37) There's obviously operational things that could be improved and I would bet they're not buying
(31:44) several $100 million worth of stock to just sit back and hope things get better.
(31:49) I would bet that there are constructive conversations taking place already and that those
(31:54) conversations could end up with a board seat.
(31:56) And I think if you're a shareholder, you this is exactly what you would like to see.
(32:02) Every company needs help from time to time.
(32:04) This business has huge potential and anyone that wants to come in here on the equity side and help
(32:10) them reach that potential should be welcomed with open arms.
(32:13) It's not, it's not the first rodeo either for, for an activist engaged.
(32:18) I've got Joe I'm going to bring into the conversation.
(32:20) I mean, engaged was here few years ago, about 3 years ago and was pushing for the same sort of
(32:28) operational improvements that Josh suggests are still needed.
(32:33) Maybe something's not resonating, I don't know.
(32:38) I don't know enough about sort of what sort of operational improvements they were pushing for and
(32:43) what may still have to happen if there's some kind of disconnect over what some investors think
(32:49) needs to happen and what hasn't.
(32:51) And that's why the chart looks the way it does.
(32:53) I think it's at 35% year to date, but over the longer period of time of the chart that we had thrown
(32:59) up, it's you know, you draw a line straight across from where you were to where you are.
(33:04) Yeah, this is a paradigm shift though.
(33:05) This is important because Jeff Smith and the Starboard team have excelled in quick serve restaurant
(33:12) activism.
(33:13) You go back to 2014 with Darden.
(33:15) They replaced the entire 12 member board.
(33:19) In the five subsequent years to their activism, Darden went up 143% and Jeff and his team, Scott,
(33:26) they are very engaged.
(33:27) I'm not being comical.
(33:28) I remember this distinctly from 10 years ago as it related to Olive Garden.
(33:33) This is how how active Jeff and the team gets.
(33:36) They changed Olive Garden's cook strategy.
(33:40) And as an Italian, I know this.
(33:42) Boiling the pasta, they weren't using salt.
(33:45) They weren't using salt in the pasta.
(33:47) Jeff and Starboard made them boil the water, the pasta water with salt.
(33:52) That's how engaged they were.
(33:54) He did this at Papa John's were.
(33:56) They doing it al dente or no?
(33:58) I'm sure after Jeff got involved, they were, but Jeff did the turn around as well at Papa John's.
(34:03) He was the executive chairman after COVID and he was able to turn that around.
(34:08) He will be active here, he will be engaged and I would imagine he's going to be on board.
(34:13) Josh, I'll give you the last word.
(34:14) Then I got to bounce.
(34:16) All right, the last word is I'm just picturing Joe in the joint slicing the garlic with a razor
(34:21) blade.
(34:28) All right, that's it.
(34:29) That's all I got.
(34:30) All right, we'll leave it.
(34:31) I appreciate you calling in.
(34:32) We, we just had to get your take.
(34:33) Obviously stocks up 11%.
(34:35) Seema's got the NEWS UPDATE for us.
(34:37) Hi there.
(34:37) Hey, Scott, here are the stories we're watching at this hour.
(34:40) The FAA says its preliminary review found a momentary loss of separation between the president's
(34:45) helicopter and a commercial aircraft near Reagan National.
(34:49) Now controllers were communicating with the both pilots as the aircraft moved apart.
(34:53) The agency says President Trump was never in danger and is reviewing possible corrective actions.
(34:59) The Vatican says Pope Leo the 14th will make his first trip to Latin America in November, visiting
(35:04) Uruguay, Argentina and Peru.
(35:06) The first US born Pope spent decades in Peru as a missionary and Bishop and holds Peruvian
(35:11) citizenship.
(35:12) And live Golf says it has secured an outside investor to keep the circuit operating beyond the
(35:16) season.
(35:17) CEO Scott O'Neill did not identify the investor or the amount.
(35:20) The league is seeking 250 to $300 million after Saudi Arabia's sovereign wealth fund stopped
(35:26) financing it and plans to make golfers majority equity holders.
(35:30) Scott, that's the latest.
(35:30) Back to you.
(35:31) Seem to.
(35:31) Thanks so much, Seema Moni.
(35:33) Up next, we'll talk about some movers.
(35:34) Again, I mentioned booking holdings up a bunch on the earnings and how Joe just got rid of a bunch
(35:39) of names in that group.
(35:41) There's other ownership on the desk.
(35:42) We'll do it coming up.
(36:00) All right.
(36:00) Let's get to that booking holding story that we were talking about before the Shake Shack news
(36:05) crossed up 6% is booking on earnings.
(36:09) And it just made us think of the moves that you made in your ETF in which you got rid of Expedia LVS
(36:16) Royal Caribbean Expedia is a record high today.
(36:19) So talk to me.
(36:20) Yeah.
(36:21) The one that's painful is Royal Caribbean because as I've mentioned on this show over the last
(36:25) several years, the one area, the one sector in which I don't think momentum is very successful is
(36:31) consumer discretionary.
(36:32) It's a lot of fits, it's a lot of starts, it's a lot of quick entry into positions in a couple of
(36:37) quarters later you're out of it.
(36:39) A Royal Caribbean is a name we have had in the portfolio for the better part of the last two years
(36:43) and done really well with it.
(36:45) So I'm disappointed to see this move to the sidelines.
(36:48) It is moving to the sidelines specifically on price performance in the near term, A lot of that
(36:54) attributable to what's going on in the Middle East.
(36:56) So that could reverse itself very quickly.
(36:59) Las Vegas Sands, that's price momentum.
(37:02) And then Expedia is the interesting one because if you pull up Expedia and pull up a one year chart,
(37:05) Scott, you're going to be like, well, what are you talking about?
(37:08) There's great momentum for Expedia.
(37:10) Look at that.
(37:11) The problem is one of the metrics that we're using to for quality is debt to equity.
(37:17) Debt to equity could be distorted by a company that does significant buybacks.
(37:21) As you know, Jimmy, the debt to equity ratio for Expedia just got uncomfortably high.
(37:27) It's up sitting right now at 500%.
(37:30) So that disqualified it and that's the reason why we sold it.
(37:33) You look at it from a momentum perspective, it looks.
(37:35) Was that a a a quality metric by choice?
(37:41) So when the rules were created by myself before we introduce the strategy in November of 2020, I
(37:48) selected three quality criteria, revenue growth, return on equity and debt to equity.
(37:54) Let me just say this in this, in this, in this business, the market is always teaching and you're
(38:01) always learning.
(38:02) So you're always learning something about what you've done with the rules and you're willing to
(38:07) pivot accordingly.
(38:08) And I think when I look at debt to equity, there might be something there in the future we'd have to
(38:13) pivot on.
(38:14) Can I just make a suggestion on this?
(38:16) You say high, high debt for share buybacks.
(38:18) I hate it.
(38:19) However, high debt for doing productive investments that are going to generate free cash flow,
(38:24) That's where you might look and see, is there a way to distinguish?
(38:27) Great example of the catapult.
(38:29) All right, Oliver Renick's coming up next.
(38:31) He's flagging a rare event that's happening within this record setting rally.
(38:35) He's playing options action next.
(38:56) Let's play some options action with Oliver Rennick at the SIBO Global Markets in Chicago.
(39:00) What do you see from there?
(39:03) Hey Scott, we're watching VIX, which is sometimes called a fear gauge.
(39:07) This week is a perfect example of why that term is a generalization.
(39:11) The VIX rallied a full point during yesterday's breakout 2% rally in the S&P and extended gains in
(39:16) the first hour of trading today as stocks tried to rally.
(39:20) Now with equities flirting with red, the VIX is 2.
(39:23) That's because about 20% of the time Vicks and S&P move In Sync.
(39:28) Right now it's because of huge call buying more than 4.
(39:31) Million SPX calls traded here at SIBO yesterday, a new all time record and at the NASDAQ the price.
(39:37) Of 1 standard deviation out of the money, calls on queues jumped 40%, the biggest single day move in
(39:45) five years.
(39:46) Here's what this means, one Bulls.
(39:48) Clearly have a new found conviction in this market.
(39:51) But two, usually when the price of something goes up 40% overnight, it's probably not a great deal
(39:57) at this moment.
(39:59) Which creates the risk of leakage in call prices, which is precisely how I describe what we're
(40:04) seeing today, Scott.
(40:05) OK, Oliver, I appreciate that very much.
(40:07) That's Oliver Renick.
(40:08) You can get a quick thought on that.
(40:09) Vick's up, stock's up.
(40:12) Yeah.
(40:13) I think a lot of it is attributable to the activity that we're seeing with high frequency trading
(40:18) algorithms, things of that nature.
(40:21) I think it's more of a short term dynamic than anything else.
(40:23) Now we're down, obviously.
(40:24) Yeah, I don't think it extrapolates anything about the future.
(40:26) I think it's more a short term mechanic of the market.
(40:29) Well, you're talking about the market wanting underdogs right now.
(40:32) The NASDAQ has been an underdog.
(40:33) At some point, if momentum keeps moving in this direction, there's no underdogs left and then the
(40:37) market has to sort of slow down and come off of that.
(40:40) All right, we'll talk about Uber next.
(40:42) It is moving on the other side of earnings to have ownership on this desk.
(40:46) We discuss, we debate, we do it next.
(40:53) The stocks of Uber, the stock is lower by near 7%.
(40:56) They did have a weaker than expected bookings which is what's what's your read because I just pulled
(41:03) up an analyst report with that moved that that moved at 12:40.
(41:07) So not that long ago at all from Truest.
(41:10) The results in the guide reflect very healthy demand for mobility and delivery and the autonomous
(41:16) vehicle rollouts are going to accelerate.
(41:18) So what what's your take relative to the stock move and then that kind of commentary?
(41:24) Yeah.
(41:24) So it was a revenue miss clearly, right.
(41:26) EPS was was in line.
(41:28) You know revenue was around was up around 12%.
(41:30) I think the Street was expecting 14.
(41:32) I think when I'm looking at this stock and again, they have free cash flow of $10 billion, are going
(41:37) to continue to invest in the AV market, but there's there's no real catalyst to move this stock
(41:42) forward.
(41:43) I think that's really what my concern is, You know, so for me this is kind of like in the wait and
(41:48) see it's off 7%, it's down 17 for the year.
(41:51) But I think that's that's kind of what my focus is like what is the next?
(41:54) Catalyst for the stock.
(41:56) Do you have an answer to that?
(41:57) I don't and it's the reason why I'm not in the stock and I want to be in the stock because I believe
(42:02) in the long term business model, but it hasn't proven itself and if you're focused on price, you're
(42:07) going to be out.
(42:08) OK, double step away.
(42:09) We'll come back and we'll do finals.
(42:19) All right, I'll see you at closing bell, 3:00 Eastern Time.
(42:21) If we can extend these record highs with Chris Harvey, Abby Yoder, Courtney Garcia, Jeff Degraff.
(42:27) I mentioned one of his notes on momentum earlier, so we'll dive a little bit deeper into that.
(42:32) The former US Soccer star Alex Morgan is going to join us as well.
(42:36) She's teaming up with JPM today at an event and we'll hear from her live, couple of World Cups to
(42:42) her name and one of the best female soccer players ever for that matter.
(42:46) So we're happy to have her on our show today and hope you'll join us.
(42:49) What is your final trade?
(42:52) Farmer, Jim.
(42:53) Wynn Resorts good earnings last night so, and I'm sorry, you're going to win with Wynn.
(42:58) OK.
(43:00) I hate myself.
(43:03) I won't even make another comment, Jason Snipe.
(43:08) Microsoft Azure was strong copilot starting to show some life.
(43:13) Liz, I'll go next as the macro economist on the desk today.
(43:17) Commodities has inflation.
(43:19) What you got?
(43:19) Arrested Network.
(43:20) All right, Kelly, take it away.
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