CNBC Halftime Report — The Market Bull Run Continues: The Committee's Next Move

Pascarello's four pillars, and Josh Brown's numbers (0:54)

• Goldman's Tony Pascarello, global head of hedge fund coverage: "the foundation of the market is solid. The economy's proven again to be very durable, running around trend; earnings growth has been superb; the flow of funds is still very favorable, particularly in the month of August; and we have a trillion dollars of AI CapEx working its way through the system."
• Brown adds the season's arithmetic. Through 80% of the S&P by market cap: "even if you pull tech out, you're looking at 28.3% earnings growth. If you add tech back, it's 32%. It's outrageous. The net income margin has been revised up during the course of this season to 15.6% from 15 — so margin is ahead of expectation. Then you look at sales growth and that's better, 15.2%, 300-plus basis points above what was expected as recently as two months ago. 10 out of 11 sectors were getting profit growth. So a lot of the narratives about it's all AI, or it's so narrow, it's concentrated — throw them all in the garbage. They're money-losing narratives."
• His valuation answer is a challenge to the historical anchor: "in that environment, is 20 times earnings cheap? No. But why would it be less? Why would the multiple on this particular crop of companies be 16 times earnings because it was in 1994? It makes no sense. These companies are the Michael Jordan of every sector." His character note on management: "look at what they've had thrown at them over the last five or so years — a record inflation spike, the pandemic and all the difficulty in hiring, then the tariff stuff. These are absolute warriors."
• Terranova's fifth pillar: resiliency — "we've really stress-tested this market, this bull market, this year," including the deleveraging into cleaner positioning, "which is frankly why elevated oil prices or yields that are still a bit elevated aren't enough to derail the market." His tracked indicator remains the S&P equal weight (plus the dollar): "we had a new high on the equal weight on Friday, and it's carrying forward today even with oil prices moving higher… you have to maintain your position, which is a bullish one, until you are greeted with some form of an indicator."
• Belsky's sixth: "the yeah-but bulls. People are still doubting this. Every time the market goes up you have an amount of people trying to guess when the next correction is. How about we sit back and really enjoy what's happening?" He cites Citadel's Scott Rubner — companies "are not simply beating elevated expectations, they're driving the steepest earnings revision path since at least 2000" — and his own long-run specialty: FY2 versus FY1 estimates continuing to rise, with return on equity and return on capital improving and debt-to-equity down dramatically across most sectors.

The return on being bearish (6:40)

• Sechan concedes the sentiment risk first: "when everybody gets on the same side of the boat, you're vulnerable to a surprise. But I don't think that's going to happen." His data: 15% revenue growth in Q2, "the fastest since '21"; an 88% beat rate, a record; and the P/E is down. The clincher: "institutional positioning is in the 37th percentile. It is not stretched, not even a bit, which is going to draw people in." Retail positioning, per Goldman's work, is a little more extended. "Markets tend to climb these walls of worry with the slow removal of negatives, and I think that's what's going to draw institutional positioning back in and maybe push us towards 8000, absent a bolt like hot inflation."
• Terranova then prices the bear case rather than arguing with it: "let's say inflation comes out much hotter than anticipated and you have to price in a rate hike — let's say it goes to 75–80% odds. Let's say they are right, we are all missing something. What do you think the return on that bearishness ultimately is going to be? 5%, 10% to the downside — and you're telling me I'm going to be fast enough to know when everyone's going to rush in and buy the dip?"
• He raises the multiple-hike scenario himself (Hammock among voting members saying one hike isn't enough) and still lands the same place: "to be bearish here, you have to believe the setup looks something like prior instances where the market goes down greater than 20% and stays there. And I don't see any fundamental evidence for that, even understanding that the Fed might start hiking."
• The tape: a wait-and-see session into tomorrow's CPI, yields a little lower, oil off the highs. A cool print takes the Fed off the hook; a hot one puts September in play, with Jackson Hole still to come.

The $500B NVIDIA consortium — socializing the compute risk (10:34)

• The deal: NVIDIA partners with financial firms to raise $500 billion of third-party capital, with MOUs signed with Goldman, Apollo, Blackstone, Brookfield, KKR and BlackRock, to help NVIDIA's customers finance the cost of compute. Terms undisclosed; the street is "more positive than not," with notes reiterating overweight on the grounds that revenue sharing alleviates circularity concerns — "it seems as though this has taken a little bit of the risk out of the equation."
• Brown narrates it from Jensen Huang's chair. The problem: best-performing stock of the prior decade, but "it goes nowhere for a year… why are we multiple contracting? Well, sir, there's talk on the other coast, in New York and Boston — they're worried about circular financing. They think you're Cisco, basically giving money to all the competitive local exchange carriers in 1999 to buy Cisco routers with your money, and then you get to book it as revenue." The response: "we also know the world is structurally short compute, and probably will be for at least the next five years. What if we can socialize that risk and that upside a little bit and bring in third-party people who just want to bet on the compute demand itself having a value?"
• Why the money is there: "we know there's trillions of dollars in dry powder between private credit, private equity — there's a whole wealth-management world of which I'm the avatar. Everybody's looking for new products to bring their clients that have a yield attached to them. Let's build a bridge between what Wall Street is looking for and what Silicon Valley needs, which is spreading out the risk a little bit and not having to have Amazon and Google do a debt offering every month. This is like the best of both worlds." His verdict: "I don't know that it takes the circular risk talk off the table, but it should at least push it back further from the conversation… the ecosystem might have another 10 million new check writers. I think it's brilliant."
• Sechan on de-risking: "they kept their own exposure at 25%. How does that not de-risk the name? In addition, they've kind of said to the market, compute is now an investable infrastructure asset." He acknowledges the critique — "many critics would say they're talking their own book" — but adds it "sets the table for a broadened customer base, with customers that might have had some financial concerns as it relates to financing their AI build-out. This is a win-win for both."
• Terranova: "for NVIDIA you no longer have to question if they are going to have to cut pricing on GPUs — that's no longer an issue. And for the consortium it's a home run: the compute is the collateral for the debt. Why wouldn't you want that?" His forecast: "in the next 5 years one of the largest futures markets in the world will be oil, and it will be compute." Wapner raises the obvious risk — a futures market implies commoditization and a falling price of compute — and Terranova takes the other side: "if you see a futures market and you have the transparency, that creates an even better environment for everyone, in particular the consortium themselves, which will have the hedging ability against the compute they are getting as collateral against the debt. Ultimately a good thing."

Apple: six sell ratings, and three ways to stay long (15:58)

• Apple is red again and pushing back on yesterday's downgrade, saying it still plans a glass-centric iPhone overhaul for the device's 20th anniversary. Loop trims its target to 340 from 350 but reiterates buy.
• Belsky: "this is a stock that's been underperforming for a while and all of a sudden it came back on again. I think this is clearly a dip action, and I don't think there's anything fundamentally wrong with this. They're going to kill it in the fourth quarter in terms of their new products, and it's one of our largest positions. You can't bet against Apple — you just absolutely cannot."
• Terranova quantifies the sentiment shift instead: "56% of the analyst community have a buy rating on it — that's very low relative to the other trillion-dollar companies. A $329 12-month price target. And now you have 6 actual sell ratings on Apple — the first time you've seen this since 2020." His conclusion is two-speed: "in the interim, this is sideways-to-lower trading action. But longer term the best positioning is to be long, because I think it moves towards Josh's 400 target. It's certainly tough to be underweight."
• Sechan's is the risk-management version: "we reduced it on the show in late July because it became such an outsized position because of the relative performance. This is healthy fundamentals being offset by a really rich valuation — they've re-rated a bit. I'm glad that we trimmed; however, we're still very long in the stock."

Alphabet in the penalty box — but one of five to own (17:52)

• Reiterated at Goldman with a 435 target, which flags the brain-drain reorg, the commentary around it, and capital raising in debt and equity as overhangs.
• Belsky: "we think they're in the penalty box here a little bit near term because of the reorg, because of where they're spending money. But we still believe that with respect to how they're going to monetize AI, they've proven they can monetize what they run inside the company, just like Microsoft. So this pullback is a great opportunity for longer-term investors to continue to buy the stock. We think it's one of the five stocks in the US you should absolutely, positively own."
• The diversification argument: "it's not just one business. They lead in cloud, they lead AI models, YouTube TV, Waymo. It is a diversified business."

Anthropic's IPO prep — and a leadership exit at OpenAI (18:53)

• Kate Rooney: Anthropic's IPO "could be as soon as October," with bank meetings under way. Per the Wall Street Journal, it has been offering assurances about its growth rate while fielding investor questions about growth and revenue run rate "amid some of the cheaper systems coming out of China — these open-source models." The run rate "last topped $47 billion." Anthropic declines comment but has publicly defended its more expensive models on cost-per-task value. It has filed confidentially; the S1 flips closer to listing.
• Sechan: "we tried to get some in the private markets. This is not one that we were able to participate in." His caution on the whole cohort: "these companies have had so much demand. However, the price traction has been you get a big buy-up and then they re-rate. Meta did that, SpaceX did that. A lot of these companies were large engineered IPOs with lockups that are unique, and markets take time to find price discovery."
• Later, a second Rooney alert: Brad Lightcap — former COO, one of OpenAI's longest-tenured employees (joined 2018), a close Altman confidant from Y Combinator — is leaving to start something new, staying a few weeks. It follows Fiji Simo's departure earlier this year. Her read: power consolidating under Altman and Greg Brockman, with "a more institutional group coming in from outside of tech, coming from software" (Sarah Friar, Denise Dresser as the profile) — "you see this with tech companies that mature and grow ahead of an IPO. Some of the original leadership isn't always the right group to take the company public."

SpaceX: what actually moves it from here (20:58)

• It got back above the $135 offering level yesterday and is below it again now; Morgan Stanley reiterates overweight. Sechan owns it from the private side and is locked up: "we haven't bought any since the IPO."
• His checklist for the stock to work: "Starlink growth, higher connectivity margins and a disciplined CapEx commentary. If you don't get a disciplined CapEx commentary… everybody knows this company can build rockets. They want to make sure they're spending in a way that they can return some profitability back on that spend — get a good ROI."

Belsky's two moves — Qualcomm out, Truist in; Fifth Third's victory lap (22:19)

• "We sold Qualcomm because from a dividend perspective — it's in our dividend growth portfolio — and we like financials a little bit more. So we did a one-for-one switch out of Qualcomm and into Truist." Financials over chips: "yes, we do. And we like the dividend growth in Truist in particular, and the yield relative to Qualcomm." He notes the dividend-aristocrat universe has plenty of good technology names, "but we want to be more concentrated in financials with the higher yield and better dividend growth."
• He also sold Fifth Third — purely on construction: "we're up 40% on the position… we're already 32% financials in our value portfolio, so I want to get a little bit bigger in certain names. We sold our Fifth Third, took a victory lap and added to a couple of others." Terranova disagrees on the name: "good trade, but I think you stay with Fifth Third — that's what we're doing. You're going to see the integration of Comerica in the second half of the year. I think that's going to be beneficial. Stock looks great."
• Brown's sector sweep, with financials going for an 11th consecutive week of gains, the longest since at least 1989: "I can't think of an area in financials I don't like other than payments, which got some weird PayPal-related — will there be consolidation or will there not? Away from that, I like the credit cards, the regional banks, the banking financials, anything even tangential to Wall Street, the asset managers, the money center banks, the brokers. We've been talking about Robinhood, we talked about Interactive Brokers on my best-stocks list, we talked about Citizens — I'm long CFG. It's a cornucopia of stocks where either profitability is increasing or the charts are running up, or in many cases both. Insurance, we talked about Berkshire. JP Morgan made record highs recently. Morgan Stanley looks amazing. This is one of the hallmarks of the 2026 bull market — how well almost every financial that matters has been acting, and how great the guidance looks."
• Private equity is "one of the strongest areas of the market today — Apollo's up 6%, but there's your Blackstones and your KKRs as well," partly on the consortium news and partly because "software is trading a lot better, [which] obviously helps this group."

On Holding's worst day ever — and a group Brown won't discuss (25:36)

• On Holding is down more than 19% to a new 52-week low on a revenue miss and a weak guide — its worst day ever — with Under Armour downgraded, Nike "a mess" and Dick's not trading well.
• Belsky owns it and defends the mix: "net sales were off big because the wholesale segment was very light… apparel is up 48%, direct-to-consumer up 26%. That's where they need to really focus. The problem is on the wholesaling side — they've got an expensive shoe, their average shoe is $150 and $180." He's owned it six years, bought just before COVID "originally for the shoes, but we're holding it still for the [apparel]… that's where they're really going to make the money in the margins, and they have a better product than those other companies." Pressed that sneakers are the bread and butter: "they are, but they're not getting the margin out of that, because they're not getting the sales there."
• Terranova supplies the structural read: "consumer discretionary is incredibly difficult to see long-term sustainable momentum trends in, and apparel is really the highlight of that because of the fickle nature in the buying intention. And you have seen strength in off-price — and strength in off-price is generally equating to a negative growth environment for apparel. Because now I'm going to off-price and I am getting your products." Belsky's answer: "that's why you always want to be with the better-priced product… they have the best product in that category, period. It's a way better product than Under Armour, way better than Nike. Nike's got other operational issues that are going to continue — it's too big. Under Armour's a failed company." On the other competitive set: "Vuori is not as athletic-intensive as On… more along the lines relative to Alo and Lulu — and Lulu is going to a complete reboot as well."
• Brown refuses the whole conversation: "you just don't have to be here. If you're a manager with a mandate to own a certain amount of retail or apparel stocks, that's one thing. 99% of our viewers have no such mandate. Every one of these charts looks worse than the last one that you showed. In a market environment like this, why are we even spending 10 seconds? Let's focus on what's working — and unless you know something the market doesn't, all of these companies have challenges and there are lots of companies firing on all cylinders away from this group. Let's come back to this group someday, not this day."

Expedia — the narrative violation and a textbook breakout (31:39)

• Brown's best stock in the market: first flagged almost a year ago at 221 (+47% since), again on 12/29 at 286 (+13%). "The story is very simple — a narrative violation. People looked at the stock this spring and said, yeah, what the hell, throw it in with the SaaS-pocalypse names. But it's not SaaS, it's travel. And travel is the very best slice of consumer spending."
• The fundamentals: Q2 revenue +14% to $4.3B on $34B of gross bookings, "breaking records everywhere you look," the B2B business in its 20th consecutive quarter of double-digit growth, full-year guidance raised across the board, and $900M of buybacks year to date under a $5B authorization — "so they're a float shrinker too."
• The trade plan is split by horizon: "this is a textbook breakout with a low-volume retest — I guess the retest ended yesterday, because today it's off to the races. Traders should use 290 as their pivot point; below that it's no longer in a short-term uptrend, you can walk away. Investors give it a little more space — 260, where the rising 50-day sits. Above those levels I think you want to be long."
• Belsky owns it: bought about a year ago in the small/midcap portfolio and again in March in the value portfolio, "and it was cheaper than Booking. We love this travel space. We've owned Hilton and Marriott for a long time as well. We think travel's where people are spending their money." Sentiment: 45% of analysts have a buy, 329 12-month target.
• Terranova sold it in the end-of-July rebalance and spends the segment auditing that decision on air — the earnings came August 6, and "you can make a really strong argument that maybe extending the rebalance another couple of weeks into the S&P earnings season would be beneficial, because this is a classic example." He works through the momentum windows (the high was in January, so there was deceleration from January through July; a 12-month momentum score changes the answer again) and concedes: "the stock looks great, and factoring in the last, let's call it 8 trading days, Josh is right — it's breaking out. I wish we still had it."

Santoli: a cleaner tape that re-risked immediately (36:20)

• "Everything that was going on in July, where it seemed like there was this very fragile push-pull below the surface — we know a lot of it was forced liquidation, these mechanical rotations. And I certainly was one of those out there saying this could actually knock something loose, this could be a little too erratic for the market's own good. That didn't come true. We got past it. Why? Hyperscalers rebound, and you managed to get the S&P to have this breakout." His level: "if you have a 2% pullback in the S&P and it stays above 7600, you've still preserved the breakout."
• On the cleaner-tape argument: "it was almost scripted — you had a major casualty, kind of a sacrifice to the market gods, in this hedge fund that blew up. That being said, this market does not take its time in re-risking. Look at the five-day put/call ratio — it is rock bottom. The tactical, fast-moving players have immediately put back on upside exposure. I don't think that means the whole world is now over-long; you have room for that to go higher. So I do think it's a better setup — we'll see if macro permits."

A $70 million options roll in RTX, and final trades (41:31)

• Renick: "something we don't see often — the single biggest options trade on the entire tape today is in the defense category, a $70 million call trade in RTX that looks like someone doubling down on an existing bullish position." About 30 minutes after the open, a trader sold just under 7,000 deep-in-the-money 125-strike calls expiring mid-December and bought the same number of the same strike expiring next February. "We can see from the open interest that the first trade was a clear closing trade and the second a clear opening position. This is someone using options as a stock replacement strategy that's likely quite profitable after RTX's rally, and they're rolling this out to get a fresh, clean long position on a stock that's up 20% on the year." RTX options volume: five times the daily average, all from that one trade.
• Terranova owns it: "significant, significant exposure in the defense industry. A $1.5 trillion defense budget on the table here — RTX benefiting, RTX [and] General Dynamics. They are the two strongest names in the defense industry that we still maintain exposure to."
• Final trades — Brown: Snowflake. Sechan: KLA. Belsky: Gilead. Terranova: Airbnb.