Title: A Critical Week for Stocks: Your Next Move 7/13/26
Show: CNBC Halftime Report (Spotify podcast)
Host: Scott Wapner
Panel: Joe Terranova, Stephanie Link, Jim Lebenthal, Sarat Sethi
Date: 2026-07-13
URL: https://open.spotify.com/episode/7Ai7FPdAgfcM3KAUfchZiM
Length: 46 min
Note: Spotify audio transcript — NO timestamps (At-cells use a "listen ↗" link to the episode). Speaker labels from the auto-transcript are approximate and occasionally mis-assigned; names garbled by the transcriber ("Jim Leventhalster" = Jim Lebenthal, "ROTS 80"/"Surat" = Sarat Sethi, "Warsh"/"Walsh" = Kevin Warsh, "Johnny I/Ives/Hyde" = Jony Ive, "Ken View" = Kenvue). Verbatim otherwise.

Welcome to the halftime report.
I'm Scott Wapner front and center this hour.
This critical week for the markets, earnings are kicking off, semi's under more pressure.
Again, Apple trading at an all time high and there's much more going on too.
Joining me for the hour, Joe Terranova, Stephanie Link, Jim Leventhalster, ROTS 80.
I'll show you what we're doing on this Monday with the majors.
We are in the red number of headlines today.
As we said, Apple hitting a new all time high happened mid morning.
Oil moving higher on those Iran tensions.
SK Hynix is down sharply.
The Korean market was down as as well.
Chair Warsh is on the hill tomorrow.
Earnings are kicking off.
We got a big week and we really headlined it though with this Apple move.
You know, it's this new intraday high, the first since June.
It shows you the move that this thing has been on.
It's a little below that level now.
It got up to about 3:20, I think was the number 320.
Remember Josh last week said it's going to 400.
You, you, you own the name.
You've been.
It's probably, it's probably been at the top of your list for the the something that you've been focused on more than anything else and buying more recently than anything else too consistently.
Speaker 2 (Joe Terranova)
Yeah, it's it's a tactical trade and I've been buying the breakouts when I see them last doing so on Thursday somewhere around $310.
I I'm going to sit back here and not buy further.
I see the near term momentum is a little bit stretched that doesn't defeat where I think the long term target is where Apple continues to be one of the leaders.
As it relates to the Max Evan, I think Apple, NVIDIA is benefiting from a little internal rotation maybe away from memory and semiconductors.
I think that's what's unfolding right now and I think collectively the market continues to exhibit this game of rotation among sectors and sub industries to the benefit of the overall index itself.
But as it relates to Apple, steady as she goes moving forward, sit back, let it take a breath here because we've had very strong momentum.
And then after earnings I'd be interested in buying more.
Speaker 1 (Wapner)
Surat optimism continues to bloom in this name.
Target 365 at Citi.
I told you to Josh Brown, $400.00 of of last week.
[The OpenAI Lawsuit and Mega Cap Investment Strategies]
They sue open AI.
That news comes out Friday after the close.
What do you make of the run that this name has had?
You could pull the chart back.
Guys, look at it over.
Yeah, there it is.
Look at that.
Like, you know, year to date.
It just had a great move after so many wanted to criticize this company for being behind the the curve on on AI, which of course they were.
There's no saying that they were not.
But now a belief that they're going to get it right and it's going to lead to a really robust upgrade cycle along with some of the new products they have coming out, whether it's the foldable phone or otherwise, you're underpinned by a robust buyback even in a a period of CEO transition.
This stock has looked beyond that and it it has looked through any bit of uncertainty in ways that other companies might not have exhibited in the stock market.
You tell me that someone like Tim Cook is going to be leaving in his role as CEO and then the stock is going to hit new all time highs a few months later.
I think some people would have said, well, I'm not sure.
Speaker 3 (Sarat Sethi)
Yeah.
And add to that, that they've basically said we're raising prices, right?
I mean, companies said we're raising prices, demands going to be strong.
And I think Scott, one of the things that when you look at the Fab 7 or the other stocks, they're all spending money to grow and going to have negative cash flow.
While Apple's still got positive cash flow, we'll have support for the stock and the demand for their products is still increasing.
So this it's like a safe, you know, ship in a, in a storm right now where you can kind of spending.
Speaker 1
Storm.
Speaker 3
Yeah.
In a spending storm where they can actually say my, our shares are 200 valued, we'll buy them back or we'll actually do something to grow.
And I think investors are looking for that and, and also looking for all the, the, the lack of volatility when you can buy an Apple that's proven over cycles that they can innovate.
And I think as AI comes to them, as opposed to them going to AI, this is a stock that investors want to hold on to as opposed to kind of taking profits from the others.
Speaker 1
OK, so so how do we view the mega caps today?
This nice move.
They've had money coming out of semis.
It's found a place in in a lot of the mega caps, right?
Meta had this massive move last week.
It's down a little bit today.
Put NVIDIA in a separate category.
It's not, you know, thought of as the hyperscaler.
The hyperscalers are spending on NVIDIA.
Amazon's green.
Microsoft is green.
What?
Speaker 4 (Jim Lebenthal)
Do you think I'm going to I'm going to bring together two thoughts that we had last week, Scott. 1 is a lot of these mega cap tech stocks are frankly trading at value, value territory.
I could look at Meta, I could look at Microsoft as 2 examples of that.
And I think this is a time that you have to stay true to your knitting.
That's the second thought.
These rotations and Joe, you've been all over them for weeks and weeks.
These rotations have been coming fast and furious from semis to software, from large cap to small cap, from the market cap weighted ETFs to the equally weighted ETFs.
Pick your style of investing and stick with it.
And I do think this is a time when many styles can work.
So somebody who's more, I'm going to say price aware as opposed to price sensitive like myself, I can find plenty of bargains out there.
And the thing that I have to do though is I have to hold them through whatever the volatility is that on a day-to-day basis comes up in terms of the rotation.
So if just as an example, I've bought Micron over the past three weeks and today I'm not looking right at this second, but it was down about 5% earlier this morning.
I'm not thinking of getting out of that.
I'm not paying too much attention to today's downturn.
We got Taiwan semi coming up in terms of earnings at the end of the week.
That'll be the first look at near term earnings for the semi space.
And I think Micron's going to do fine over the intermediate to long term.
My style of investing is not to get too wrapped up in day-to-day.
Speaker 1
Rotation, no, you put your face right in the middle of the the volatility on that one, you know.
Speaker 2
What I'm saying?
Speaker 4
Kind of you ever you ever know me to shy away.
Speaker 1
No, yeah.
No, that's.
Speaker 4
What endears me to you?
I think.
Speaker 1
But really, rather than just sort of taking a back seat and saying, you know, this is this thing's gotten a little too volatile, the willingness if not ability to sort of double down on your position, which I think you basically did, I did even in the face of that volatility is noteworthy.
Speaker 4
Well, and, and also fundamental investors.
So one of the things I've said to you, Scott, I've said to our viewers is I think it's important that pretty soon there's going to be an anniversary of the Chips Act after which Micron can start to return capital to shareholders.
I like that.
That's something that I look for is in companies that I own.
So that's sort of fundamental bait, if you will, has me has me nibbling at it, although now it's about a 3% position.
So it's more than a nibble.
I do think that, look, if you're a momentum investor, Joe, you're fabulous at it.
Fine.
There are opportunities here.
And what you've done with Apple has been nothing short of genius.
Don't patronize.
Speaker 1
It, but go ahead what I said, don't patronize it.
Just go ahead, Jim.
Speaker 4
And my friends tell them what I think.
He's wrong.
No, but I'm going to go back to what I said.
Stick to your style of investing.
If you're a fundamental investor, if you're price aware, maybe a GARP investor, a value investor.
There's plenty of opportunities out there.
I'm looking at Stephanie, your Meta.
I mean, how could I not be looking at your meta?
Speaker 1
You should be looking at her for the NVIDIA which is the newest buy which was the the move that was note worth so noteworthy right last week for us.
Speaker 5 (Stephanie Link)
Yeah, because I've never owned it before.
So and I just think the valuation has gotten so attractive at 18 times forward estimates and the company is going to grow revenues something like 80% in mid 70s gross margins, free cash flow is going to double.
So I'm looking for opportunities where I either I have positions and I have more convictions because the valuations have come down.
To your point, Jimmy, I added to Amazon too.
The one I'm not adding to is Meta because it's a bit frustrating, but I'm not going to sell out of it completely.
I do recognize it's very cheap, but they have to show better monetization for that stock to really take off.
And I think they eventually will, Scott, but that's a timing kind of thing.
I think there's more upside in Amazon.
I think there is more upside in NVIDIA.
And I have a lot of other technology stocks that I like too.
Speaker 1
It was the NVIDIA stat that the valuation was like the cheapest it's been seven years.
Speaker 5
2019.
Speaker 1
Seven years or something like that.
Speaker 5
Right.
Yeah.
I mean, and this is a company that has 97% of the GPU market, OK, fine.
They're getting more competition, but that's not going to go to below 90.
And I think this company has proprietary software that actually also is really hard to replicate as well well.
So I think there's a lot of ways you can win with this one.
And I just think it's really out of favor right now.
And that is very interesting to me.
I know the chart looks horrible, but it's really interesting to me that it's kind of found its footing around these levels.
Speaker 1
It has it's up 3 1/2% month to date and it still is to your .12% off of its that's 52 week high.
It speaks to the this thing's kind of gone nowhere, yes, but it's had a nice little pick up with the other mega caps.
Speaker 2
So, so it's actually if, if you're looking at it just predicated on solely on price, we understand the strong fundamentals about the company.
But now you have what's known as a return to accumulation and you're seeing that after sitting sideways for a multi month period and the beginnings of the return to accumulation, accumulation rather are are unfolding.
I still think that Apple has the capability to be the All Star in 2026 and one of the reasons is, Scott, if we could show it again from last week, we showed that analyst chart just how low the expectations are and the 12 month average price target.
Speaker 1
Why are you asking me if we could show it?
Speaker 2
Again, the 12 month fast.
Speaker 4
Target for Apple.
Speaker 1
Fabulous production team in the control room.
Thank you for doing so.
Can we show that again please?
Speaker 2
So we are, we are sitting at now $320.00 for a 12 month price target for Apple relative to all the generous price targets that we see for the Amazon, the NVIDIA, the Alphabet and only a 61% buy rating.
So the analyst community has this embedded skepticism which is remarkable to me about Apple and their ability to actually embrace and execute on some form of tangible.
I think they're torn on the growth rate.
Speaker 1
Relative to now, what is a more expensive valuation?
It's.
Speaker 3
It's AP to growth rate for Apple that's we've had for the last many, many years.
And what does Apple do?
They'll come back and buy shares or they'll innovate.
Now they're raising prices, right?
The the negative on Apple was how much of the can you keep on raising prices?
Well, now they just said we're going to raise prices.
We're going to see what the elasticity of that is.
But to your point also the same thing with NVIDIA and Apple, it's having the same story.
People don't believe that they're going to keep on growing.
And to Stephanie's point, it has now shrunk to AP level that we will see.
Now what are they going to do in terms of execution of earnings because the PE will shrink even more if earnings keep on going higher, kind of like what happened to the semiconductor memory stocks.
The difference between an NVIDIA and an Apple and memory stocks is you get to reinvest and into R&D, which is you're forward-looking, right?
The the memory stocks as as we know and Jim and I are very familiar with cyclical stocks and you look at commodities, whether it's a Freeport or a, you know, a Micron is we know the supply is not catching up, right.
I mean, it's just, that's the story.
[Is Apple's OpenAI Lawsuit a Real Threat?]
Speaker 4
I do think we have to address the news from late Friday, the open AI lawsuit, and because there's two ways to look at it.
And the first is 1 that I don't agree with, which is that Apple is in some way fearful of open AI, in some way encroaching on the iPhone with whatever device product they may come up with.
That's something that's been put out there.
I've read that in the media over the past couple days.
I don't believe that at all.
I think this lawsuit is just routine protection of intellectual property.
If you're in business, you're not going to let somebody encroach in any way whatsoever.
But I don't think it's from a position to.
Speaker 1
Somebody, I mean that you, you realize who who left.
Speaker 4
I do realize and who product manager?
What is it?
Tam Tang is his name.
Speaker 1
No, I have talked about Johnny I.
Speaker 4
Yeah.
Speaker 1
But he's not just somebody or in anybody.
Speaker 4
I do realize that.
Speaker 1
He's the body.
Speaker 4
I got you, Scotty.
I got you.
But I'm going to.
I'm going to.
Speaker 1
What are you saying?
Speaker 4
What I'm saying is I don't think this is a position where Apple is in some way fearful because this was talked about.
I was reading this a lot over the weekend that people were comparing this to when Tim Cook went after Android models coming out of Samsung, because that was somehow a real threat that they perceived at the time to the iPhone.
That's the comparison that's being made here.
I'm saying I don't think that at all.
I don't think Apple's in any way afraid of open AI.
Speaker 1
You don't think Steve Jobs is protege If you want to put Johnny, I've as that characterized him as that going to open AI and then other people sort of following suit with rumors of a hardware product you don't think is a potential threat to what Tim Cook thinks is the foundation of his company as he's about to take a step aside.
This is almost a protect this house.
Speaker 4
But yeah, I so my my comment back to you is I don't think it's that dramatic.
Do I think it's a threat?
Of course it's a threat.
And anybody who's in business is always evaluating competitive threats.
But I don't think Apple woke up one day and say, Oh my God, what are we going to do about this?
I think this is just routine protection of intellectual property.
There's these stories about, hey, you know, they had interviews with candidates and they told them to bring a particular hardware to take a look at.
That seems like just business as usual in terms of interviewing in the Valley.
So I look, it makes for a splashy headline.
But what I'm saying is I don't think Apple's looking at that as an existential threat at all.
There's a long road to hoe to get to the position where iPhone is is reasonably threatened by another competition.
Speaker 1
I've I've made my case.
I'm I'm, I'm, I'm going to stop.
I'm going to stop arguing what I think is the obvious but.
Speaker 2
It is a is a critical almost founding member of the Apple franchise, Johnny Ives.
So that in itself, you have to say is somewhat disturbing.
I I agree with Jim from the standpoint of there have been others we're still waiting for.
Remember, I think it was in 2014 we were getting the Facebook phone that was coming.
So there are others that have said, OK, we are going to challenge Apple with some form of hardware.
But it is, it is relevant news for sure.
I don't think you could dismiss the news, Jimmy, because Johnny Hyde, that's just that is a a significant founding member of that franchise.
Speaker 4
I don't want to give you the wrong impression.
I'm not dismissing it.
I'm putting it in its place.
And you know what, It's also putting it in its place is the Apple share price today.
All right?
The Apple share price is saying we're not too worried about this.
[Massive CapEx Spending Fuels Semiconductor Growth]
Speaker 1
OK well let's move on because I didn't want to I didn't want to spend a whole lot of time discussing something that moved on Friday after the close that, you know, whatever the move in memory.
OK, see how you.
Speaker 4
Brush.
Speaker 1
That water real quick when I got them, you got them right, You might as well start drinking the next one because I'm on my way back.
The move in memory and and what's what's happened in semiconductors?
We, what do we do with this trade now?
What do?
What do we do with it?
Speaker 5
Well, I mean, you just.
Speaker 1
Sit in sidelines and say I'm going to let all this play out.
Speaker 5
Kind of.
I mean, I think you want to have exposure to semiconductors as obviously I just bought 1 and I own Marvel.
I have been trimming Marvel because it's up a whole lot, but I still like it very much.
Broadcom, I think they have $20 in earnings power.
So I think there are places within semis, but they kind of trade as a whole right now and it's every other day it's either semis are winning or software is winning.
It's crazy.
So I think you have to take a barbell approach and own both and, and have, you know, a lot of conviction in the ones that you own.
And then on these ugly days, maybe add to I will continue to add to NVIDIA if we still see, you know, the semi trade on one that's.
Speaker 1
Certainly not nearly as volatile as these others.
And the problem is, we've said multiple times too, is the idea of, well, if it dips, then add to it.
It's been, it's driven people crazy.
What's down is then up.
What's up is then down.
It's made you feel foolish for doing stuff at both ends of that spectrum.
Speaker 5
100%, but capacity is going up fourfold.
And so this story is not changing anytime soon like fourfold we're going to see between now and 2028.
And when we see that all of these hyperscalers and the CapEx keeps going higher for an inching higher, it's going to continue, Scott.
And I think, I think I'm on record saying this year we're going to see 800 billion from spend off from the hyperscalers.
I think next year it could be easily 1.6 trillion.
One analyst today went to 1.2.
Speaker 1
Yeah, they went, it was Morgan Stanley said they're, they're, they're going about 1.2 to 1.4 trillion and 27 and 28.
They're raising their CapEx expectations for both Meta and Amazon.
To your point, this spending is not going anywhere but up.
Speaker 5
No.
And last week we talked about how at Meta that there was a rumor that they are going to go spend 200 billion.
So now, now it's 250 billion.
I mean, the numbers are crazy and it kind of makes my head spin.
But at the end of the day, I know why they're spending.
And again, it's this capacity increase, it's the whole data center rollout and it's not going away.
And eventually these companies are going to see a return on their investments.
It's not going to be this year materially, which is why I haven't really been adding to Meta.
But I do think Amazon is in a much better position of strength with a lot of their various different businesses advertising, compute, retail, AWSI and the valuation makes a lot of sense to me.
So that's the one that I of the hyperscalers that I would be buying more of.
Speaker 1
Surat, we're not going to get hyperscaler earnings for a couple weeks, right?
[High Hopes for Bank Earnings and Sector Upgrades]
We're going to kick things off tomorrow with the banks.
We already know because we've said it so many times that earnings growth is going to be robust to say the least.
OK, 24 1/2 percent is what is predicted today.
Those estimates have been rising.
Ed Yardeni says great earnings, Great Expectations are going to lead to even greater stock prices.
Evercore today says 7750 by year end because they raised their earnings estimates.
Savita Subramanian, Bank of America says it's more than just a mega cap story.
Earnings momentum is likely to continue.
I think everybody is building their own bull case based on the same bit of information, earnings.
Speaker 3
Yeah.
And and we're going to get the earnings in the next week in terms of the financials.
And look, we're coming into this quarter stronger than we have in previous quarters.
So the question is going to be as expectations ahead or are we going to see the Morgan Stanley's, JP's and Goldman say things are steadily improving not just in capital markets, M&A, wealth management, but we're seeing our backlog improving.
And I think that will provide a floor and in fact could help the price appreciation as a lot of these financials.
Speaker 1
Most City upgrades the financials now to overweight sector by the way is in the top 2 performers over the over the last month.
Healthcare is the other one that's done quite well over a month. 5% 5.1% for healthcare, 4.8 for the banks.
That shows you what these stocks have.
Speaker 5
Done.
I think the banks are a buy and they always trade crummy around earnings and so you make your shopping list of which ones you want to buy because they are up a lot into the prints.
But net interest income is expected to grow 9%, loan growth of 7 to 8%, deposit 7% and then we get to fees, fees go lower and we're going to see 26% in investment banking with a plus.
I next to that, we also are going to see M&A at 9%.
You have global M&A is up 57% year to date.
So these companies are all going to benefit and you know Morgan and Goldman it's they're the obvious plays.
But I think you want, I'm looking at Wells Fargo.
I don't own it anymore, but I'm looking at that because that has lagged and if they can deliver tomorrow, I think that's certainly an interesting one because of the asset cap lift, this might be the worst quarter for NI this.
Speaker 1
Was at one point.
Honestly, this was your largest position if.
Speaker 5
I recall right.
Yes, it was.
Speaker 1
Now you don't even own it.
Any piece of it.
Speaker 5
Well, because the last two quarters were really disappointing and I think that you're coming to the end of that now.
The Nii think is probably bottoming in this quarter and then you go, you can actually see an acceleration and the asset cap lift is a very big deal that is going to lead to much better growth.
And the stock is down I think about 6% on the year.
So it's really lag.
So that's on my radar screen.
To add to what?
Speaker 1
Do you think?
Speaker 2
The concern that I have and I added JP Morgan over the last month, I added CBOE as well.
I'm a little concerned and Steph, you and I talked about this before the show that the expectations have gone very quickly in literally a 30 day period from low expectations to now high expectations for the financials.
Speaker 5
Not all of them.
Speaker 2
Well, there's select names as we discussed, like an Amex and a Capital One, yes.
Speaker 5
But I mean even like Bank of America.
Speaker 1
Both got upgraded today by the way.
Yeah, Cap 1 to buy at HSBC Underperformance looks overdone.
Amex upgraded at JP Morgan to overweight.
Speaker 5
Capital One is trading at 7 1/2 times earnings.
It's crazy.
It's been, it's down 17% on the year and this Discover transaction is going to be enormous for this company and they're going to see something like $2.6 billion in synergies, which is totally not appreciated in the stock price.
I don't own the Amex.
Do you own the?
Speaker 2
Amex, I own Amex.
Amex has had a little bit of of modest underperformance relative to the sector itself.
So maybe the expectations to your point stuff they are that are embedded are not so high.
So I think Amex continues to work in an environment where the we know the economy is really strong, we know that the affluent consumer is out there spending.
That's a name I think you can focus on.
I'm just saying there is a lot of embedded good news in the money centre banks and without question in the financial exchanges, David.
Speaker 1
Solomon, by the way, Faber's going to be with him tomorrow.
So you're going to hear from David Solomon in a CNBC exclusive in the noon Hour.
Wars is on the Hill, remember?
So we're going to get all of that kind of coinciding, but we're just perfect time to hear from David Solomon, right?
As you know, these earnings get underway this week.
They report on the 14th on Tuesday.
So it'll be nice to hear from him.
[Key Headlines: IRS, Tylenol, and Tech Billionaire Feuds]
Then.
We do have some breaking news out of Washington.
Megan Casella is at the White House with those headlines for us.
Hi, Megan.
Speaker 6 (Megan Casella)
Scott AUS judge in Florida says now they will be voiding the president's recent settlement with the IRS over the leaking of his tax returns.
They say now the case was a sham to win immunity for the president from tax audits and for using taxpayer dollars to fund, but was going to be that $1.8 billion anti weaponization fund.
Remember, all of this stems from that lawsuit the president filed against his own government, against the IRS for the leaking of his tax returns that initially was going to confer settlement on the president, his family and his businesses from all tax audits on any, any taxes filed before May of 2026 when the settlement was made.
But the judge saying today that in this case, there was never any adverseness between the parties.
There was never a question as to who would prevail.
And she goes on to say that this case, she says, was an attempt to use the court to provide some legitimacy to this settlement.
So this is happening now because after the case was settled, 35 retired federal judges wrote to the court, filed a motion saying that they thought this was a product of collusion and a manipulation of the judicial system.
The judge then agreeing to revisit the case, asking the president's lawyers to respond in kind.
As for what happens next, possibly some disciplinary action for the president's lawyers in this case, that includes Todd Blanche, now the acting attorney general.
It's not immediately clear whether this will lead to a full reopening of the case.
But for now, the settlement, at least, Scott is voided.
Speaker 1
And and no word from the president yet on this this news, correct?
Speaker 6
Not, not yet on this one.
This was just filed, I would say about 20 or 30 minutes ago, 56 pages here for us to read through.
So I'm guessing the president and his his team are reading through it as well.
Speaker 1
All right, Megan, thanks, Megan Casella.
Still ahead, the battle between Elon Musk and Sam Altman's eating up again are Kate Rooney following the latest in that feud.
So I'll have the details next.
Speaker 7 (Dominic Chu)
All right, we are back on the halftime report.
I'm Dominic Chu with the news alert right now on shares of Kenview.
Earlier this morning we told you about a federal appellate court's decision to revive some of the lawsuits against the Tylenol maker with regard to some cases being brought against it for the link or alleged link between autism, ADHD and the use of acetaminophen products.
We now have a response from Tylenol parent company Kenview that says the procedural ruling today does not change the fact that credible independent science shows no proven link between taking acetaminophen and autism or tension deficit hyperactivity disorder.
Science matters and we stand with the many public health and medical professionals who have reviewed the science on this topic and agree.
We now have another opportunity to show that the plaintiffs experts opinions are unreliable and should not be allowed in this case.
We stand behind the safety of our product and will continue to defend these cases.
So Scott, those shares of Ken View right now just checking down roughly 2% in your session lows.
That is the formal response from Ken View with regard to the US Appellates Court's decision on Tylenol.
I'll send things back over to you, Scott.
Speaker 1
All right, Domino, thanks.
That's Tom Chu.
Told you.
The feud between Elon Musk and Sam Altman ramping up again following Apple's lawsuit against Open AI 2 traded social media barbs over the weekend.
Kate Rooney's been tracking that and joins us now with more the story that doesn't end Kate.
Speaker (Kate Rooney)
That's right, Scott.
Yeah.
So Elon Musk did chime in on the news Friday that that Apple, I should say, is suing open AI for allegedly stealing trade secrets.
Last year, Altman paid about 6 1/2 billion dollars to acquire iPhone designer Johnny Ives startup and then a deep bench of former Apple executives to now build an AI device.
Apple does now say that team has been stealing intellectual property Open AI though telling us in part they're not interested in other companies trade secrets.
But Musk used that Apple headline to reprise a nickname he's used before scam Altman.
That got Altman's attention.
He responded saying homeboy you're the one selling public market investors on short term space data centers.
Musk was a Co founder of Open AI unsuccessfully sued Altman and the company accusing him of, quote, stealing a charity after Open AI moved away from its original nonprofit structure, Musk and Altman now do compete fiercely in AI.
Both companies rolled out new versions of their AI models last week.
And Altman says benchmarks now suggest that Open AI has the best model in the world right now.
But he tweeted this.
He said the most reliable way to tell that is Elon is obsessed with me again.
This Apple lawsuit is the latest legal headwind for Open AI as it does let you go public, Scott.
Speaker 1
OK, Kate Rooney, thank you.
We'll follow.
It doesn't seem like it's going to go away.
So we will have no choice but to do that.
[Waller's Rate Hike Warning and Oracle's Stock Woes]
That's Kate Rooney reporting.
I want to call your attention shares of Oracle.
Can we show those please, which are at the lows of the session turned lower.
This stocks has had a really rough go.
I just wanted to bring it up because if you, if you look at it, it's a it's a new 52 week low.
Everybody but Stephanie owns it in some form or fashion.
Joe, you have it in the in the tea.
So I don't I don't want to get your take on it first because you're you're sort of locked.
You're locked for the for the moment, but Surat you, you own it.
And I haven't heard from you on on this name in a while.
Why do you think this this chart continues to look the way it does?
And what leads you to believe that this story is going to look different anytime soon?
Speaker 3
So when Oracle announced the big news a year ago, stock kind of jumped, went radically up.
We sold about half our position.
We kept on it because we still feel that Oracle can make the transition and have earnings power, but they're doing what the fab 7X Apple are doing, is spending into the business and the transition's going to occur really when they show that.
But they don't get any credit for this at all.
So we like it still at these levels.
It's painful, but we're holding it.
Speaker 4
So I agree with Serrat on the fundamental picture here in terms of why is the stock down over the last several sessions, including today.
I think this has a lot to do with the Monmouth monumental debt offerings that have been coming from the likes of Amazon and SpaceX.
And if you think about SpaceX, whether that was two weeks ago, whenever it was that they did a $25 billion offering, the spreads on those offerings have been going wide, wide, wide.
I think the yield to worse is over 7% on one of the longer dated issuances.
And it's basically just the debt market is having a tough time digesting all this debt issuance, which includes Oracle, which has used a lot of debt financing on their data center build outs.
Speaker 1
OK, well, we have some breaking headlines from Fed Governor Chris Waller.
Steve Liesman, our senior economics reporter, has that.
What's he saying, Steve?
Speaker 8 (Steve Liesman)
I'm pretty hawkish concepts here from Fed Governor Chris Waller.
He said the Fed has to be ready to tighten monetary policy to avoid mistakes of 20/21/22.
With inflation above target.
He says the labor market's stable and near full employment.
Quote any serious policy rule calls for raising the policy rate.
Says the FOMC will need to consider tightening monetary policy in the near term if the CPI this week is hot and he's concerned about the elevated pace of core inflation.
Questions whether the Fed should even look through these one time price increases from energy and from tariffs.
Says we're past the point where we can attribute large prices increases to earlier tariff hikes if upward.
If the upward inflation trend continues, it'll be hard to push inflation back to 2% with the policy level at with policy at its current rate increases in core quote are quite broad.
He points out the nearly 70% of core service categories are up more than 3%.
There is another side to his his talk here, Scott, where he says there's still a credible case for inflation to declined to target at the current policy rate and there's a greater risk.
Now the tighter policy could drive up unemployment and risk recession.
But he also says it's an equally plausible case of the need for tighter monetary policy.
And I'll just leave you here, Scott, with one quote which I have here from this speech.
It's very, very hawkish speech where he says, and I'll just find that for you in a second here.
They have it in the back, but I'm but I'm where he said there it is.
No matter how you cut it or what measure you want to use, inflation is up this year.
Even accounting for the likely temporary direct effects of the oil price shock, it's running at levels inconsistent with the Fomc's 2% objective.
So there's a very important governor being very hawkish and talking about raising rates for you, Scott, and I'll just take go ahead, sorry.
And.
Speaker 1
I was going to say not not necessarily a surprise given where his his point of view has has seemingly moved over the last many months.
Like he was in favor of getting rid of the easing bias in the in the most recent statement.
So this is sort of doubling down on what the market had already assumed was a more hawkish view by Mr. Waller.
Speaker 8
I think doubling down and taking it another step, if you will, Scott, I mean this is a very explicit warning about the potential need to raise rates.
And I will tell you that I guess it was a last week sometime.
We're about a 63% probability of September rate hike.
Now it's 77, but maybe more interestingly now July is up to 47%.
So that's a that's on the table right now.
So there's the first cut and the second cut being priced in for December as well.
So the market definitely taking a message from this.
I think I saw a yields on the two in the 10 year, both inch a bit higher as well and maybe another leg down a little bit in the stock market on this.
Speaker 1
Yeah, I mean, at the 10 was at 461.
All of this, of course, the backdrop of fed fed chair wash on the hill this week, right?
Speaker 8
And, and I asked myself this question, Scott, was this speech run by Fed Chairman Walsh?
And did Kevin say, go ahead, Chris, do this, I want you to do this?
Or was it him saying, you know, what we don't know is who the intellectual pulling guard is for this new chairman, right?
It sometimes it was the vice chairman.
It may be Chris Waller.
He's one of the most respected economists on the FOMC board right now.
And does Kevin Walsh give another pile on to this tomorrow morning or does he walk it back a little bit?
But certainly this message from this Fed governor is one that says there's sort of an equal probability we're going to be raising rates sometime.
Very dependent though on tomorrow's speech at tomorrow CPI report and subsequent ones after that to show core inflation getting back under control at the current rate.
Speaker 1
Oh, you, you raised some really great points.
All the reason why tomorrow takes on a maybe a a bit more of a spicier turn.
Steve, thanks so much for that.
That's Steve Liesman.
Yeah.
I want to get a quick reaction here on this.
Speaker 2
461 for a 10 year approaching the high for the year.
I had said that rates, the high for rates are in for the year and I think I am representative of the financial services community that while they hear a hawkish tone, they really doubt in reality that we are going to see a rate hike this year.
I think the bond market is pushing up against that and telling you, wait a second, in fact, you might actually see in reality that rate hike.
And I think that's why equities are falling well.
Speaker 1
Especially the semis, right?
It's the longest, the longest of long duration assets.
If you look now like a lot of the semi names are at the lows of the session now.
I mean, they're already having a a weak day, obviously, but Marvell's down almost 8% now.
Micron's down 6 now, Intel's down 6 1/2 now.
So that that's what you're you're dealing with.
We'll do ETF Edge after the break.
[Why Small Cap Stocks Are Beating Large Caps]
Speaker (Pippa Stevens)
Back on Halftime, I'm Pippa Stevens with your CNBC NEWS UPDATE.
California's attorney general is leading a 12 state lawsuit to block Paramount's $110 billion deal for Warner Brothers Discovery.
The lawsuit says the merger would combine 2 of Hollywood's five major film distributors and her competition.
State officials warn it could mean higher prices, fewer choices and less content for movie and TV audiences.
At least 27 people are dead and more than two dozen are in critical condition after a fire tore through a Bangkok bar overnight.
Thai authorities say many of the victims were found trapped in windowless bathrooms near 1 of the exits, where they likely went to escape the flames.
The cause of the fire is still under investigation and U.S. officials say 3 unmanned surface vessels hit the Iranian port at Bandar Abbas Naval Base last night, marking the first US use of sea drones in combat.
CENTCOM says the strikes degraded Iran's ability to attack commercial shipping.
Scott, back to you.
Speaker 1
Pippa, thank you, Pippa Stevens Dom Chu has ETF edge.
Hey Dom, So.
Speaker 7
Scott, Small caps are outperforming in the ways they have in years.
So joining me now is Matt Bartolini, head of Spider America's research at State Streets.
Matt, an interesting point here, Scott and the committee were just talking about the rising interest rates during the to the course of what's happening in the for the past few months.
How exactly does the small cap trade react, knowing that interest rates might be going higher now for the more near to medium term at least?
Speaker 9 (Matt Bartolini, State Street)
Well, I mean, today we've seen small caps trade off just slightly, a little bit less, more or less so than large caps.
But if we zoom out and take a step back on why the Fed may be in in boil to raise rates is that it is due to some stronger economic growth.
And we look at small caps there is that macro momentum helping supporting their case right now.
If you look at manufacturing, it's been positive, consumption's been really positive, which has been driving some of that inflation.
So I think small caps can still weather through if the Fed does continue or actually decide to hike rates either in September or there on after.
Speaker 7
Have you seen flows support this?
Are people now buying into literally and figuratively into the into the small cap trade?
Are they putting their money where their mouth is?
Speaker 9
Yeah, there definitely has been a turn in sentiment.
So if you look over the last three months, we've seen 9 billion of inflows into small cap ETFs, which is basically 90% of all the flows they've gathered in 2026 because they only have about 10 billion of inflows.
So we've seen investors gravitate towards small caps, right, as they've had strong earnings momentum with earnings revisions being risen or raised for Q3Q4 and full year 2026, but also that relative price momentum too, where small caps are beating large caps.
And what I think is interesting is that all 11 of the gicks small cap sectors are beating the gicks large cap sectors and that hasn't been happened in over the last 30 years.
Speaker 7
And one quick point before we go are there specific places within small caps you like better than others?
Speaker 9
Well, I think it's interesting is a small cap tech is massively outperforming large cap tech.
And I think that speaks to this AI CapEx build up where the AI beneficiaries in that CapEx ecosystem are gaining that cash flow now and that's boosting their bottom lines.
So I think not so much what we like or don't like the broader small cap asset class.
I think it's favorable, but I think it just speaks to how there's opportunities further down the cap spectrum as this AI CapEx build out starts to really pick up steam over the next couple of months and years.
Speaker 7
All right, Matt, Matt Bartolini, thank you very much.
We're going to continue this conversation over at etfedge.cnbc.com.
Matt's going to be joined by Phil McGinnis, the Chief Investment Strategist over at Avantis Investors.
Scott, I'll send things back over to you guys.
Speaker 1
All right, Dom.
Good stuff.
Thanks, Dom Chu.
[Should Disney Exit Streaming? Analyzing Its Future]
Up next, full stream ahead, Wells Fargo making a bold call on Disney's business model.
They say it could lift shares by 40%.
We have owners of the name see what they think next.
All right, welcome back.
The call that we teased is from Wells Fargo, which asks a question, should Disney exit streaming?
They cut the price target to 125 from 146.
They lay out the case for Disney to return to its old business model of producing versus distributing.
We think it could add up to 40 or around 40% to the stock price by DE risking earnings and tightening management's focus to IP and experiences.
Farmer, Jim.
Speaker 4
I'm going to applaud the analysts for recognizing, as I do too, that something bold needs to happen at Disney.
I mean, the share price has been moribund.
I'm being charitable by using that word.
However, I don't think this is the move to make because if you get rid of streaming, then you've got the melting ice cube of linear TVI will give him credit that saying this now is a lot different than saying it two years ago when when the streaming business had barely turned profitable.
But I don't think this is what's holding the company back.
I think what's holding the company back over the last year is ongoing geopolitical concerns about what higher oil prices and conflict in the Middle East means for the theme parks, for the experiences.
Don't forget that Disney about a year ago announced that they are going to build a resort in Dubai that's obviously held in abeyance by what's been going on with Iran.
I think if you get geopolitical things to calm down, that's really what may put a little bit of lift to the stock.
I I wouldn't.
To me, the streaming business is more of a crown jewel at this point in time.
Speaker 2
Really, Crown jewel, I'm not sure I'd call it that, Jimmy.
The stock over the last five years is down 47%.
I think this note is a reaction to that.
To your point, I think everyone's just trying to figure out what this company ultimately could be in the future.
I think it has an identity crisis more than anything else.
I think if you and by the way, at the end of April, we bought it at one O 3 and I'm not happy that we bought it and it's in the Jyoti.
I think the balance sheet looks worse than it did five years ago.
They're spending way more money.
They're not really making any strides in streaming and we heard five years ago they were going for growth, right.
They were going for growth via streaming, but yet it seems as though they're just sitting and spinning their wheels in that regard.
So more than anything else, when you think about this company in the future, what is the identity of the company and why as a shareholder would you ever want to pay a premium for a company that's balance sheet looks worse?
Speaker 3
So I think there's a bigger thing here.
I mean, look, we talked about Disney, We got through the succession.
Nothing happened to the stock.
Right now, we're focused on the streaming.
But you look at streaming altogether, look at Netflix, look at what Comcast is doing with the NBC, the streaming that we thought Jodio .5 years ago and then we hit COVID was, you know, huge right now.
It's the quote is funflation, right?
How much can you really charge for all these things?
So I do think we need a catalyst there.
I don't know if this is the right one to to Jimmy's point, but I think there's a lot of value there.
And, and I think you could see consolidation.
I'm not sure which way it goes, but with theme parks, with streaming, with these assets that are really cash rich, but they're just not being utilized the right way in the.
Speaker 2
Last five years, the The biggest catalyst for the stock has been activism.
That's the big.
Speaker 3
Whether it goes up?
Speaker 2
Or Nelson Peltz that that was the catalyst and that's when the stock moved in both instances.
So I I look, I'd love to see it have the turn around story, but I just don't know what it is.
Speaker 1
So let me let me say this.
If Disney's problem stocks down 15% year to date is because of geopolitics are somehow hindering people from going to the theme parks, tell me why Marriott's stock price is up on the year.
Tell me why the airlines have done so well in the face of geopolitics and rising jet fuel prices?
Because there seems to be, at least in my mind, a disconnect from your explanation.
Speaker 4
Yeah.
Well, I, you know, to me the answer to that, Scott, is that the opportunity is there in Disney.
But I think that the price increases that we've seen, particularly at the theme parks have been even more than the price increases than we've seen that we've seen at Delta.
And I don't know Marriott that well.
So I've got to put that to the side.
Speaker 1
But I just use it as an example.
You're telling me that the the reason the stock hasn't done anything is because the geopolitics, It's all geopolitics.
Well, I gave you an example of a hotel name that's done well.
The airlines have done really well.
It seems like a specious excuse for why the stock is down, for lack of a better word.
Speaker 4
Yeah.
I mean, just just remember, Scott, before we had the war with Iran, when oil was at $60.00 a barrel and gasoline was wherever it was, $3 a gallon.
There was still concerns right then, before this conflict started about the inflation in theme park tickets and had Disney squeezed all of the juice out of the orange of the consumer, and now we've got even more pressure on the consumer from gasoline prices.
I do think that's what the distinction is.
I don't think we were having that same discussion about Delta.
And I can't, again, I can't talk about Marriott because I don't know it as well.
But certainly Delta, we weren't talking about the inflationary prices before the war with Iran built out.
Now, I will also say there's another aspect here and I don't think streaming is the problem.
I got to just go to that really quickly, All right, because that went from a money loser to probably earns about $2 billion over the next 12 months.
Like, let's not give that up.
What has been a problem in addition to this is the studio releases just haven't been that good.
I mean, and we need, you know, if you want to know where I'd like to see a little bit bit of oomp, it's getting better studio releases.
Speaker 1
OK, but now we've we've come to other things on the list.
You're not.
You don't love the studio releases, geopolitics, the streaming.
Speaker 2
How about ESPNI mean that was Dan, Loeb said.
Spin it off.
That's that's the crown jewel.
Where are we on ESPNI don't think they've been able to leverage that asset.
Speaker 4
At all.
I I will agree with you, unfortunately.
OK.
[Investment Committee Shares Their Last-Minute Trades]
Speaker 1
We'll take a break.
We'll do finals next.
All right, before we go, we have some moves from Surat.
Yeah.
So you bought Ferrari and you bought striker Ferrari.
Speaker 3
1st I did so high quality company that's down double digits this year.
They had a misstep, I think, with the EV, but they're going to do really well going forward because this is a car that you can't get enough of.
They are sold out for two more years and the stock price gives the.
Speaker 1
Opportunity Man owns what he obviously drives.
You bought Striker, you sold Zimmer, and you sold Zoetis.
Speaker 3
I did so close out the positions there.
Zoetis was a mistake.
They kept on misstepping and then if you look at Zimmer, I'd rather on Striker, higher quality company, much better management, team leader, robotics.
They're having an issue with cyber so this is the time to get into high quality company.
Speaker 1
You should have just listened to Steph when she sold.
Speaker 3
I should have, I told her I I did.
I ate it.
Speaker 1
What's your what's your final trade?
Speaker 3
Morgan Stanley, I think the catalyst could be the wealth managers business.
Speaker 1
Farmer, Jim.
Speaker 4
BlackRock, we see what happened to asset prices in the second quarter that will show up in earnings.
Speaker 1
Yeah, they and they report this week, I think it's Wednesday.
Speaker 5
Capital One at 7 1/2 times earnings.
Really too cheap.
Speaker 2
Take your pick on the refiner all.
Speaker 1
Right.
Well, we'll see what this market does.
I will see you for the final stretch on the closing bell, the exchanges now.
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