Title: The Return of the "Magnificent Seven:" The Investment Committee's Strategy 9/4/26 Show: CNBC Halftime Report (podcast of the live noon ET show) Host: Scott Wapner + Investment Committee -- Jim Lebenthal, Kevin Simpson, Rob Sechan, Steve Weiss Guest: Bill Baruch (by phone, consumer trades); Mike Santoli (senior markets commentator, midday word); Oliver Renick (Options Action, from Cboe Global Markets, Chicago); Frank Holland (CNBC News Update). Date: 2026-09-04 (Friday) URL: https://open.spotify.com/episode/0sSnYydcCVMhNuZQmwMb5x Length: 43:26 Note: Spotify auto-generated transcript (accuracy may vary); this is an AUDIO podcast -- the Spotify panel carries NO (mm:ss) cues, so there are no timestamps anywhere in this file and the analysis page's "At" cells are plain "listen" links to the episode. 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Fillers ("you know", "I mean" where contentless) and stutters removed; obvious ASR name mangles corrected: "Rob Cechin"->Rob Sechan; "Andrew Jassi"->Andy Jassy; "Saturday partners house view"->Cerity Partners house view; "Kevin Ward"->Kevin Warsh; "Nitsa"->NHTSA; "G for Nova"->GE Vernova; "Max 7"->Mag 7; "Amber Sports"->Amer Sports; "our Tarics"/"Arc, Terex"->Arc'teryx; "Solomon"->Salomon; "Miramax"->Marmaxx; "SIBO Global Markets"->Cboe Global Markets; "Oliver Rennick"->Oliver Renick; "Fortnet"->Fortinet; "Amazon score business"->Amazon's core business; "the AI booth"->the AI boom; "weakening breath"->breadth; "pilled back"->pulled back; "medals in general"->metals in general; "AK Consumer or AK economy"->a K consumer or a K economy; "go ahead, wife"->go ahead, Weiss; "the postage challenge"->the poster child; "We own both CFX and AEM"->FCX and AEM (the segment is explicitly about Freeport and Agnico Eagle). Three garbled NUMBERS are restored from their own context and flagged here: the iPhone price "$13119"/"Thirteen 19,099" -> $1,319 for the 18 Pro against $1,099 for the 17 Pro (Wapner then says "1300 for the base configuration"); and the Costco target "$11144 from $11194.00" -> $1,144 from $1,194 (Wapner immediately calls it "50 points lower" and Simpson "$50 on an $1,100 stock"). Genuinely ambiguous garbles are LEFT AS SPOKEN and are NOT turned into tickers -- notably Renick's comparison set "stocks like Apple Oven or Builders first source" (only Apple and Builders FirstSource are legible; the middle name is not recoverable and no ticker was created for it), Lebenthal's "the ATC brands too", Sechan's "not tourniqueted", and Meta's model name "Muse Spark 3.1" (rendered as heard). One material omission by the ASR is flagged on the analysis page: Weiss's "which I own is the poster child... it got down to 184" loses the company's name entirely; the analysis page reads it as FTAI on the strength of his own final trade in the same episode ("FTAI, data center debate is misplaced with this stock") and flags the reading as inferred. Wording otherwise verbatim. == Big Tech's Return: Mag 7 Reasserts Market Leadership == [Scott Wapner] I'm Scott Wapner, and you're listening to CNBC Halftime Report, the podcast, the most profitable hour of the trading day. We record this live weekdays at 12 Eastern. Listen in. All right, guys, thanks so much. Welcome to the Halftime Report. I'm Scott Wapner, front and center. This hour, the return of the MAG 7, Big Tech taking back its leadership role lately. We will discuss. We will debate and we will talk about everything moving today with the investment committee. Joining me for the hour, Jim Lebenthal, Kevin Simpson, Rob Sechan, Steve Weiss. Take you to the markets. We do have a mixed picture if you include the Russell being green, but everything else is red. You did have a better than expected jobs report. The problem with that is the bond market reacting to it, so the short end is up. Yields are long and down. So we'll keep watching that. There's the ten year treasury, but we're watching that as we have been really every single day. I did mention our top story and that's where we really want to begin today. It is Big Tech's big move. I thought this point that Mike Santoli made earlier this morning was a great one for us to jump off on. This is a six month look, MAG 7 versus the S&P 500, and you can see at the very end to the right that the MAG 7 has started to outperform again. Look at between June and July, from July to August, you did have underperformance from the MAG 7 versus the S&P 500. Market felt a little dicey at times during that stretch. But as Mike also said, maybe it was earnings from these big technology companies that restarted this outperformance trend. I thought we'd jump off there because I think it's meaningful to the market. [Jim Lebenthal] I think it is too. And you know where I look in the Mag 7, Scott, is particularly at NVIDIA. I really think to me that's where the turnaround in the Mag Seven came. Now we talked last week about how good Nvidia's earnings were. We liked the stock response, but that it hadn't flowed through, at least last week. It didn't flow through immediately to the rest of tech space. I think that was just a delayed reaction. And I'm also happy to say that it's not just chips. In fact it's things like Microsoft, it's things like Meta. So to me, it was really NVIDIA, the clearing event -- that was the term that we used -- that tells us that the AI CapEx is going to continue, that it's profitable, which by the way, to Mike's points about earnings, that's what we heard in the earnings season, is that all of this CapEx is profitable. Andy Jassy, CEO of Amazon, saying things like it takes less than three years to recoup the cost of a new data center; Alphabet growing its web services at 80%, Microsoft Azure at 40%. There are fundamental earnings based reasons why the MAG 7 is performing. And on top of that, the valuations are not too hard to justify. [Scott Wapner] And Nvidia's up seven -- well, now it's 6%. It's pulled back a little bit off of where it was when we started it. It was up as much as 7 1/2% this week. They did the Hugging Face deal. Their investments are growing. I'm wondering how you see -- I just think that what Mike took a look at, as he usually does, he has really just great insight into what's really happening underneath the surface. If this is going to be the case, if the Mag 7 has now reasserted itself, what does that mean for where we go from here in a month that has historically been unkind? [Kevin Simpson] So I'm less concerned about the timeliness of the market. This being September, one month has to be the worst month, Scott. It just happens to fall in September. So I tend not to trade around the tarot cards or the Farmers Almanac. But what I liked about the opening from both of you is you didn't talk about the MAG 7 as an acronym. You both talked about NVIDIA. So what we're doing is we're isolating the winners within the MAG 7. But the reason that they're performing well collectively is exactly what you said, it has to do with earnings. And to me, more importantly, it had to do with the guidance. So we're looking at companies that are improving returns. Yes, they're spending a lot, but we're starting to see a return on that investment. And most importantly to me, we're seeing the valuations from the fundamentals, from the PE ratios -- we're seeing them stay within range. So the stocks are moving higher, but in essence, they're getting a little bit cheaper. [Scott Wapner] Not lost on us is Microsoft maybe playing the biggest role in this resurgence, if you want to call it that. Let's look at that chart that we've been showing everybody, from earnings day until today. Thank you guys. There it is, 27%. This stock got a reboot after I think a bit of a squirrely price action. Rob, in this market, everybody owns that name. I'm wondering what you make of the things that Mike has looked at, but also that maybe this is the one -- it doesn't get the headlines that the NVIDIA does. And we're going to talk about Meta in a second because it's had a week for sure. But this is as important to this trade as anything, maybe more emblematic than anything else, to that comeback. [Rob Sechan] Certainly, because of its weight in the index as well. It's a significant contributor. It's been kind of a laggard over the last year. It's basically been a flatliner over the last year. It's up a little bit year to date. PEs come in quite a bit on Microsoft. I still think it's one of the highest quality tech, broad based tech names in the world. Their strength was on full display in their latest earnings report. [Scott Wapner] Let's show the six month now, guys. Go ahead. Go ahead, Rob. [Rob Sechan] Yeah. And I just think as we get into this period of weak seasonality, tougher, coming into a period of possibly tougher comps, you're seeing concentration and weakening breadth in the market. And why is that happening? Because these are the highest quality names in the world. They've actually delivered. [Scott Wapner] See how that trends to exactly what we looked at as the Mag 7 as a group -- that period June, July, when you had a swoon in this name, hadn't really done anything, did a little bit of a sideways trade. They come out with earnings and boom. And NVIDIA, right, that thing hadn't traded all that well, they come out with earnings, then boom. Apple, you're less than a week away now from their big event. I said Meta -- Weiss, over the last couple days it's had some great moves. It's had a week in its own right. But what about this note? What do you think it does mean if this is going to be now something to bank on, that big tech's really, really back from a stock performance standpoint? == Selective AI Investments and Looming Market Headwinds == [Steve Weiss] Yeah. Look, I think what it means is that the AI trade is still something to focus on and that people believe in the AI trade, but now they're being more selective. So they're going to the companies that have shown that they can generate revenue and ROI, return on investment. And that was Microsoft. Meta came out and it didn't do so well post quarter. But then they talked about -- part of that, by the way, was because everybody thought they're going to the cloud business. Those were the rumors, but they came out and they said something different, that we're going to now be in the AI model business, we're going to offer those opportunities. So I think that's had a lot to do with Meta showing they're still smart, that Zuckerberg can still navigate virtually any troubled waters as far as AI. And also it's the comfort that you get in these names. So despite that they've taken on debt, their debt costs are very, very low relative to what we're seeing otherwise with other companies. So you've got safety in these companies still. You've also got the known factor of these companies and you've got valuations. Jim points out that's attractive pretty much across the board. So that's why the concentration is occurring here. And you take a look at others like Cat. Cat goes here and there, but still it's well off its highs. GE Vernova, well off its highs, making a comeback, but they really are much more volatile than these names, than Mag 7. [Scott Wapner] Well, because those are the kinds of names that are squarely in the center of the data center debate. And you would expect charts to look like that as backlash. I wish you could put a chart, data center backlash versus AI power names like a Vernova, for example, because you'd see one going like this and the other one going like this. So that's very much been a story too. [Steve Weiss] Which I own, is the poster child that you take a look at. They've had great news and the stock is hanging around here. Yesterday it had a good day, but it got down to 184. On what? On just what you're talking about, data center debate. [Scott Wapner] Yeah, so I think Meta is one of the best stories of the week. Rob, it's up about 6%. So they announced the release of their latest model, Muse Spark 3.1. That was on Wednesday. Julia Boorstin was giving us a rundown last night on Closing Bell for all the reasons why the stock had this nice takeoff. B of A liked what they had to say -- 810 is the target. They reiterate that as a buy: quote, AI progress gaining visibility across models and chips. So that's a positive note there for a stock that's looking pretty good. [Rob Sechan] And this week it's up almost 6%. It's the cheapest hyperscaler of the bunch, trades at 18.1 times I think. I think we're already overweight this stock, but you can be a buyer into the weakness. I think that has historically paid big dividends. AI development at Meta has been absolutely encouraging and I think you can continue to be patient with this name and have a long term view. Even though it's re-rated by 20% over the last year. These are the type of positions you want to build right now when you're starting to see that turn, and that's what you saw in late 22 frankly. Ask Jimmy about that. [Scott Wapner] Let me put you this way. If the MAG 7 is back, quotes, and it's going to start outperforming, then historical analogs of September doing this, that and the other thing don't really mean anything, right? How are you going to have a very disappointing September at the same time that the MAG 7 may be reasserting? [Kevin Simpson] Itself. It's impossible. So maybe this puts some of those old wives' tales to bed in the future and we can worry about October next year or something like that. But I'm expecting September to be strong for these names for the reasons we discussed. I want to add one thing that you said, Rob, about Meta, because it's not just the AI. They're going to have agents next. And what's really cool about Meta is that they've got billions of users who can distribute this. So when you look deeper into the Bank of America note, $810 -- that's almost 200 bucks from here. It's a stretch beyond what I thought it would do, but man, I hope it does. [Rob Sechan] I think we could see though in September your typical seasonal weakness. Your stellar earnings are in the rearview mirror. You have a lot of macro news that's going to drive markets, weakening breadth. Yeah, there's a lot of potential negative macro news. And I'm not saying I'm negative. I think I would be a buyer into that with the economic strength we're seeing. But I don't think this means it's all clear for what is typically one of the weakest months of the year. [Jim Lebenthal] I'm tempted to go with what you suggested, Scott, that this does give us room to say September will not be what it usually is. I'll tell you what's actually worrying me. We only briefly mentioned it. I do think the Fed is going to raise rates. Now I have to point out this is not the Cerity Partners house view. We have a team. We're looking at this together. When this -- [Scott Wapner] Month? [Jim Lebenthal] Yeah, that's what I personally think. [Rob Sechan] That might be the best thing that could happen. [Jim Lebenthal] At 25 -- I don't think this market is priced for it. I really don't. People that -- we're having a discussion right now. You raised your eyebrows just now at me when I said that. And that's not unusual. Many people still think they won't, because what's a rate hike going to do to open the Strait of Hormuz, or how's that going to affect tariffs? I get it. My comments though come from really listening to what Kevin Warsh said. [Scott Wapner] The roof will blow off 1600 Pennsylvania Ave. if that happens, well, I'll tell you that right now. [Jim Lebenthal] That's a great point. Which also means if they're going to go, they need to go in September, because if they do it just before the midterms, the roof is going to blow off and get vaporized in the size of the explosion that's going to -- [Scott Wapner] Don't forget, I bring that up only because the president himself was suggesting this morning after the jobs report that the Fed should cut rates. So no big surprise there. I don't think anybody -- [Jim Lebenthal] It'll come down to CPI next week. [Scott Wapner] Right. So CPI is looming too. And that's interesting as well. How about this other stat that we saw from OpCo about the Mag Seven, that for the first time ever, the Mag 7 is now negatively correlated with momentum? OK, now is that a -- maybe that's not a surprise. If it's reasserted itself with a little more stability, it's not as volatile now. So maybe then it would be less correlated with how the momentum trade has gone. What does that mean to you? If I say, for the first time ever, it's now negatively correlated with momentum. [Rob Sechan] It certainly does. It doesn't feel that way necessarily to me, because in times that have been tougher historically, you've seen people hide out in these names. Now, I can't point to the statistics that you're talking about, but I will tell you just anecdotally, you focus on quality and right now it's tough to find a higher quality sector than the technology sector to be defensive, frankly. And they've rated down to their pre-liberation day lows. So you have these incredibly high quality businesses. There's a lot of questions around the durability of the earnings, the durability of the spend, the continued ability for markets to finance that. However, I think that is getting done. We have very healthy capital markets and ultimately they're the safest house on the block. [Scott Wapner] Let me ask you this, the stock -- since you talk about the safest house on the block -- the safest literal house on the block for a long time has been deemed to be Apple, for a variety of reasons. == Apple's iPhone Pricing Power and Software Sector Challenges == [Scott Wapner] Not taking out the buyback part of that story too, that is playing a large role there. But how about this? So you're less than a week away from the big iPhone event. There's a report today that they're going to unveil their most expensive iPhone ever because of what's happening with memory prices. OK, that's from the South China Morning Post -- $1,319 for the 18 Pro. I don't know if that report has anything to do with the stock being down 2%, but I wonder how the market's going to react if John Ternus gets on that stage in his first big event and they unveil this amazing looking phone and then the price comes out and you're like, 1300 for the base configuration. To put that into comparison, with the 17 Pro, it was 1099. Thirteen nineteen, ten ninety-nine. [Jim Lebenthal] So the question the market wrestles with, Scott, is this is obviously an attempt to defend margin with memory chip pricing. Obviously that's a raw material that goes into the iPhone going up. So can they defend margin without killing the customer, without showing the elasticity of demand that comes with a price hike? The market's not sure. Now, by the way, prior to today, there was a nice little uptrend developing in Apple. Remember, it sold off meaningfully after the last earnings report, but it's gained most of that sell off back. Where I come out with this is that history shows that the consumer has consumed regardless of what Apple does with price hikes, and I think this time will be no different. Yes, it matters that the telecoms are still subsidizing this. I know that's been a hot button issue, but they do continue to subsidize it. So I think they'll get through with this price hike and they'll defend their margins and that'll be good for the stock. [Rob Sechan] They control the customer. When you think about the application layer in using AI, it's kind of similar to the spectrum back in the telecom days. Companies like Apple that controlled the customer were the largest beneficiaries. The commodity businesses, the Ciscos of the world that had the network infrastructure, did not have the same experience, ended up not doing as well. And I think that's why you're seeing a premium multiple on Apple right now, because people believe they will monetize that AI with their customers. [Scott Wapner] Weiss, maybe you can make the argument that this will be the greatest test that this company has ever faced in terms of the pricing power that it thinks it has. Because while at the same time you're offering the most expensive phone that they ever have, they still haven't fully delivered on what is allegedly going to make that phone even greater. And that's their AI and new version of Siri, which plays into the whole story. That raises the bar for Ternus and company. [Steve Weiss] Yeah, for sure. But I think the reason the stock's down -- B of A was out with a note, I haven't seen it, but I've heard about it, talking about negative revenue growth in the App Store. So we've seen App Store revenues and growth declining -- well, not revenue declined, but the growth factor declining. So that could be a big reason why the stock's down today. In terms of the appetite to buy the phones, that's purely going to be a decision that's made by the telcos. Are they willing to continue to subsidize the growth in the Apple phones, new phones? And I think that's going to be a chapter, given what's happening with their business. So when they launch the phone next week, they're going to have to show really, really good progress with Siri and that's what all eyes are on. So if they do show that, if they do exhibit that, then I think the launch will be successful. If they don't, then I think it's going to be problematic. [Scott Wapner] Let's talk about some software names. The IGV has had an amazing comeback. I think most people would agree to that. Down 4% this week, as even some of the names that had pretty good earnings didn't trade all that well. Zscaler is the latest name I guess I would put in that category. They had a beat, guidance was upbeat, stock down. Palo Alto down about 10% this week. It's not like their report was bad. Fortinet down. Adobe is down, and they actually had news that Jim was looking out for, a new CEO. They announced an internal person that they picked. Let's take a look at that, on Adobe, guys, please, because the stock reaction to me is telling. Why is the stock down 6%? [Jim Lebenthal] The market wanted an outsider. It's just that simple. [Scott Wapner] That's what I thought. [Jim Lebenthal] I wanted an outsider too. Now this doesn't mean that it's a sell, OK. And we do have earnings coming up next week. What we talked about two days ago, Scott, was using the CEO change, or the announcement of who the CEO would be, as a catalyst. What a catalyst does is it speeds up a reaction. In this case, the reaction that I'm talking about is the recognition by the market that this stock is truly undervalued. That is clearly not going to happen with the selection of an insider. It might have happened with the selection of an outsider, but we're downstream of that. Where this is going to have to come from is good earnings, that frankly, in my opinion, the earnings have been good all along. The stock has been sold regardless of the earnings. So we'll see if that continues next week. But as I look at a company that not only has grown net income nicely, it's grown free cash flow very nicely. And they use that to buy back shares, shrinking the share count down 15% -- excuse me, 10% -- over the last year and a half. I expect that to continue, buying back shares at 10 times forward earnings. I'm going to take it. This is a meaningful concentration of the earnings power in the shares that I retain. [Scott Wapner] But that's the financial engineering move largely, that doesn't deal with the fundamental questions around the name. [Jim Lebenthal] OK, so let me take -- [Scott Wapner] Is that true? [Jim Lebenthal] Well, I don't see it that way. I don't see that share buybacks equals financial engineering. Financial engineering to me is a negative statement. Now if they were doing that on the back of, say, issuing debt to buy back shares, I'd say, hey, we have a problem. What they're doing is they're using free cash flow. And Scott, at the same time, that free cash flow, which has been growing at over 10% for the last few years and is projected to grow again over 10% in the coming year, also has gone into R&D. So when you talk about financial engineering, you talk about, are they juicing the earnings per share at the expense of some other intrinsically fundamental valuable part of their business? But that's not happening. [Scott Wapner] I look at it as -- go ahead, Weiss. [Steve Weiss] That's not accurate. Financial engineering is not necessarily negative, but you're shrinking the share base, so you're retiring shares, which drives your earnings growth, and you just say by 10% in this case. So the question is what is the growth about that? Also they did cast a very wide net looking for a CEO. So the question has to be, was there no CEO -- [Scott Wapner] That thought -- [Steve Weiss] -- that thought a better opportunity at Adobe than they did at their present role? So that's a real question. Could they not attract an outsider they thought was better than the insider, because they didn't want the job? So the questions for Adobe just haven't been answered. And still, it's in the crosshairs of the AI boom. [Jim Lebenthal] It could be, Steve, that there wasn't. I thought about this too, because the point that maybe no outsider wanted the job, that could be the case. There's no way you and I are going to know. However, to the point of financial engineering, the facts are that they've grown net income at 15%, net income 15% over the last three years annualized. That's what they're projected to do over the coming year. So I hear you. What I'm trying to make a distinction on here is that when one says financial engineering, there's a negative, at least that I perceive, in that. And what I'm saying is that negative is not necessarily justified if they're doing it from free cash flow that's coming from net income growth. I agree with you, however, if it were coming from, hey, we're robbing Peter to pay Paul, we're cutting back on R&D, we're cutting back on sales, then I would agree with you. That's not what's happening here. [Scott Wapner] B of A reiterates their underperform on the name, Citi reiterates neutral, while JP Morgan, they remain overweight: in aggregate, we believe the announcement -- this is of course talking about the new CEO -- is a positive in relation to addressing the uncertainty that has plagued new investor interest in the shares. That's an interesting take. OK. Yes, it does address one bit of uncertainty in terms of a corner office and a backside in the seat. But I don't think, and I think you would admit, it doesn't do anything to address the broader concerns that have circled around this company and have led to a stock chart that has looked the way it does. That test has yet to be taken. [Jim Lebenthal] Yes. And so just to put the bull thesis into the full context here, my opinion is that the stock is trading as if there's an existential threat to Adobe, right? That AI is going to come in and just decimate their business. I submit to you that the numbers that we've seen, and that I think we're going to see next week -- I may have to change my tune if the numbers don't come in as expected -- but the numbers over the last four years since ChatGPT was introduced are actually quite good. All of that stock chart is on the supposition of what's to come, but which has not yet come. [Scott Wapner] Talk Tesla before we take a quick break. == Tesla's Cyber Cab and Kevin Simpson's Latest Portfolio Moves == [Scott Wapner] So they had their Cyber Cab event. I think the narrative, the takeaway, was that it failed to impress. Stock's down 6 1/2%. I think reflecting that, the safety regulator NHTSA, they're evaluating the rollout as well. You own the name. What do you think? [Kevin Simpson] Yeah, I think there was a lot of hype and it turned out to be a big fizzle yesterday. [Scott Wapner] So you think that too, as a shareholder? [Kevin Simpson] With respect to the Cyber Cab event, absolutely, yeah. [Scott Wapner] For sure. What else would be with respect to -- well -- [Kevin Simpson] When you're thinking about this name, cyber cabs are a really big deal, because you're betting on robotics, you're betting on autonomous driving, you're betting on Cyber Cab. So it would have been nice to see something that was a little bit more impressive. All this does is delay the reality of that coming to fruition, if it ever does. Remember, the technology that they use is different than what we see with Waymo. So at some point you're going to want to see these things out there with paying customers. Yesterday wasn't quite the day we were hoping for. [Scott Wapner] We're going to take a break. As I said, when we come back, Kevin Simpson's got a couple moves to tell you about. So we'll do that and much more ahead. All right, welcome back. Let's talk about these moves from Kevin Simpson. Gather yourself. We're coming over to you. You bought more Freeport and Agnico Eagle. [Kevin Simpson] Yeah, I think this is really consistent with our theme, Scott. We began it last week adding CF Industries, really looking at hard commodities, nitrogen fertilizer. We own both FCX and AEM. These are positions, but there's been a pullback in the metals. I really think that's an opportunity to add to them. I like the Citi note being bullish on gold, but here's where I could go wrong. If Jim's right about rate hikes, if we get a rate hike in September, October, December, then forget the gold trade. I mean, I'm completely off base with this. So we'll see how it plays out, but I think long term there's a lot of value here. They're inexpensive and I feel like anytime you get a pullback here, it makes sense to add to them. [Rob Sechan] What if that uncertainty is not tourniqueted but persists? Just the uncertain point. You don't get it, but the uncertainty around it persists. [Kevin Simpson] Well, I think that's why it's down already. [Steve Weiss] Yeah. [Scott Wapner] The Citi note you referenced, that they're bullish on both gold and silver into year end, metals in general, but those two specifically relatively resilient, they think, to rising energy price scenarios from here -- more gold and silver than copper and aluminum. [Kevin Simpson] It also backfires if you get higher interest rates too. So there's a case for the metal, but why I like copper maybe even a little bit more than gold in these two trades is that you've got an application for them with respect to electrification, if you believe in the data center buildout. We talked about Tesla a minute ago -- someday electric vehicles kind of coming back into vogue. So I think that there's application with copper, and I think gold is just something that you can absolutely lean into for the long term. [Scott Wapner] OK, Bitcoin's had a great month last month anyway, better than 23%. There's a correlation maybe with -- let's take a look at Bitcoin first and let's look over the last month, and then put it against Robinhood, maybe see what happens with that. The target goes to 136 from 115. Deutsche likes it. Kev, you own that, and Robinhood was up a bunch yesterday alone. [Kevin Simpson] Yeah, I'd be careful chasing it here, Scott. I really love the name. I've been talking about the company for years. They're doing things now with tokenization. There were some things on Twitter yesterday, and X, about some of the things that they're doing overseas with tokenization, specifically with AMC, that made the news. Also not a reason to buy the stock, but this is a maturing financial company that's a fintech that's well beyond the crypto, well beyond the Bitcoin trade. [Scott Wapner] Is it, because that would suggest reasonably tight correlation still between the two? [Kevin Simpson] If you stretch that chart out, it's going to continue to look like that. I'm thinking in terms of the longer trend moving forward, because when it started, it traded in lockstep with Bitcoin. Over this short period of time, we're seeing the same thing. But I think there's so much more under the surface with Robinhood as an application. We could be 10 years into the future, what, Bitcoin doesn't exist? Robinhood will. [Scott Wapner] So Morgan Stanley's out today talking about energy, which obviously has had a great year. They see value in Exxon, Suncor and Chevron. Oil has been back towards 100 bucks. Take a look at WTI, please, because that's where they're sort of looking at, as they continue to like these names. You own Exxon, you own Chevron, you own Suncor. So how about that? You first, Jim. [Jim Lebenthal] Exxon -- I've said this many times, I'll say it again. If you're going to own anything in the energy patch, if you're starting to build your energy portfolio, I think you've got to start with ExxonMobil. And the reason why is because it does everything. It does exploration and production, it does distribution, it does refining, it does chemicals, it does retail, and it makes a lot of money doing all of those things. It's been a great stock, by the way, not just this year, but over the last six years. It's outperformed the S&P 500 by twice what the S&P 500 has returned. [Kevin Simpson] Chevron's production was up 20% last quarter. They've captured about $1.5 billion of Hess's synergy. I like Exxon and I like Chevron a little bit better. [Scott Wapner] Nice suit, by the way, dude. [Kevin Simpson] Thanks Scott. [Scott Wapner] Like that. Nice. Notice. [Rob Sechan] I didn't know this. [Scott Wapner] Guy's got a whole new repertoire. [Rob Sechan] He's got it going on. He's got the haircut. Everything. He's changed it. [Scott Wapner] We're going to keep -- [Kevin Simpson] Embarrassing next to you? [Scott Wapner] Suncor. Quickly. [Rob Sechan] Yeah, Suncor, listen, energy has been the bright spot. Suncor has been particularly the bright spot, once again proving that owning in this space is a hedge against rising rates. There's been an incredible correlation there. I would personally be inclined to start to take some chips off the table here because I think we've run quite a bit. [Scott Wapner] OK, we'll take a break. We're going to come back. Bill Baruch is going to join us. He's got a flurry of moves that we'll document for you next. Welcome back to HALFTIME REPORT. == CNBC News Update and Bill Baruch's Consumer Stock Trades == [Frank Holland] I am Frank Holland with your CNBC NEWS UPDATE. The judge in the Lindsay Clancy murder trial in Massachusetts says he plans to declare a mistrial after jurors remained deadlocked on a verdict following seven days of deliberations. However, he gave the defense an hour to request an emergency stay on that decision from a higher court. He made the announcement after jurors sent a note saying that, quote, with a heavy heart, they were unable to reach a verdict on whether Clancy should be held criminally responsible for killing her three young children. Romanian prosecutors indicted social media personality Andrew Tate today on charges of trafficking minors, sex with a minor and money laundering. Tate and his brother Tristan are currently in the US fighting extradition to Britain on similar charges. They have denied wrongdoing. And a judge ruled that two players are eligible to play for coach Lane Kiffin at LSU despite signing pro contracts and spending most of August in NFL training camps. The NCAA and Southeastern Conference, they strongly oppose that move. SEC lawyers say they plan to appeal. Scott, back over to you. [Scott Wapner] That's a big story. Haven't heard the last of that, that's for sure. Frank, thank you. That's Frank. Thank you. Bill Baruch. I said he's making some new moves in the consumer space. He joins us now. He's on the phone. So it's good to have you. So you're out of Amer Sports. Done. Goodbye. Why? [Bill Baruch] Out of it -- well, we like the name a lot. The brands that it holds, we see secular bull trends: Wilson for pickleball and golf and tennis, Arc'teryx, Salomon both on the ski and hiking for consumers. But the problem is this stock took off. We were long at $19.00 and we saw the consumer in China continuing to grow and being targeted by the government with stimulus targeted at consumption. That was a big tailwind for the stock. A lot of that has been eaten away from tariffs, which has also compressed margins. And you look at broadly the retail space itself is struggling. I think there's an undertow in there. The stock had been consolidating nicely above 30 bucks and it has really started to break down. We're going to step aside on Amer Sports and just take the win that we've had over a long term. [Scott Wapner] You were showing the one year, down 20%. It's down 20 in six months, 15 in three months, 18 1/2 in a month. I forget that you owned it from 19, so you made some money. What's surprising to me, you just talked about the consumer being weak, but a lot of their marquee brands play at the top end of the K, don't they? Arc'teryx, Salomon, Wilson. You're selling $300 tennis rackets to somebody. [Bill Baruch] Absolutely. It's at the high end, but look at the margin story, and the big tailwind that took this stock above 20 and through 30 was thematic. But it was also with the China stimulus in the back half of 2024. And though it started to play out, it did not play through with the tariffs in 2025. The stock continued to do well and we wanted to get through the most recent earnings report. We saw it as a really good earnings report and the stock responded favorably. But in the aftermath of that earnings report, over the last week and a half, two weeks, the stock has gone lower. And we see, looking across the space from all angles of high end to low end, you look at Nike and Lululemon and other names, they've struggled. And I don't want to hold on to Amer Sports and see that continue to deteriorate. I'm going to step aside here. I love the name. I love the portfolio of brands. It just may not be the right time to hold this name. [Scott Wapner] Well, why is it the right time to buy Walmart, which you did? Maybe you did with the proceeds from this. That stock hasn't been trading all that well either. So what's up here? [Bill Baruch] Well, we do see it as a trade down for the consumer and I think that's a great thing in our portfolio. We're underweight consumer staples. We really don't have a true consumer staple name. Walmart's down about 25% from its highs. I see technical support here. If you look back from the pre-tariffs 2025 high, a lot of volume traded at this $100 level. So if you want to buy Walmart, this is the place to step in. But listen to some of these stats: that they're reaching 94% of the US population in a three hour window; 30% of the same day orders pay an elevated fee and that helps margin expansion. And I think the unknown, or unsaid enough, is that they're eating into Amazon's core business largely unnoticed. And Sam's Club is a legit competitor to Costco with same day delivery at a better multiple. So I think there's a lot here with Walmart, that if you like Walmart, this is the time to be a buyer. And then here's an interesting thing from a technical standpoint, the 200 week moving average. This is a high quality name. The 200 week moving average is at 80 bucks. It's a ways away, but if I'm buying here, worst case scenario, I don't think it's going to go to 80. I think it can hold 100, but if something happens I would be going heavy into Walmart at 80 bucks. [Scott Wapner] Good. Good stuff. Thanks for joining. Appreciate that. That's Bill Baruch. It's interesting. So if we pair the conversation as he did, Walmart, Sam's Club, versus let's say Costco, which you own -- the Costco target today gets cut to $1,144 from $1,194. So we're talking about 50 points lower, $50, outperform though still, but people look at the valuation of Costco, have a problem with it. What do you think? [Kevin Simpson] I think you have to be used to paying a very high multiple for Costco, similarly to Walmart. If I had to pick one of the two, I would go with Walmart. At the moment we have a larger allocation to Walmart than we do with Costco. But even with that note, when you look at it, a $50 price drop -- the stock's still got $100 to go from where it is now, and I think 50 dollars on an $1,100 stock is somewhat meaningless. But for me, if you're going to pick a name in here, I would definitely go with Walmart over Costco at the moment. [Scott Wapner] Where are my buyers of Lulu today? Crickets. Nobody interested. Take a look at that strike. [Jim Lebenthal] Right up there with Nike, because they want to talk. [Rob Sechan] I made that mistake. [Scott Wapner] And your On Holding? [Jim Lebenthal] Done with, right? Look, something's going on with the space. [Scott Wapner] Yes, you sold it in April. [Jim Lebenthal] Yeah. Something's going on with the space, where what used to be a strong, stable business has become very fickle. I know with Lulu, there's talk about changing fashion trends. This used to be different from, say, an Abercrombie and a Fitch or a Gap stores or something like that, where if white T-shirts were in, then hey, the stock went up. Now there seems to be a secular decline in these businesses that they can't get out of the way of. Is it competition internationally? And remember, there was, for a lot of these stocks, there was China was going to be the next great market. Now there's up and coming brands in China that are taking a -- [Rob Sechan] Lot of the ATC brands too. [Jim Lebenthal] Whether it's the business or the stock, these are no touch. [Scott Wapner] Let's touch one more before we go. You trim TJX. Why'd you do that? [Kevin Simpson] It hurts me to do it because it's one of my favorite stocks. We've owned it for a really long time. I was on with you when we had earnings and we had covered the position, worried a little bit about what the numbers might look like, and they beat on the top line, they beat on the bottom line. At a cursory look, I thought, man, this stock's behaving completely wrong. It should be moving higher -- until you look at the core business, which is Marmaxx, TJ Maxx, Marshalls. They were up 1% on the quarter versus a 6% previous quarter. Now there can be some seasonality with these things. And if there is a K consumer or a K economy, both sides of the K go to TJ Maxx, both go to Home Goods, both go to Marshalls. We still have a 3% position. The stock's breaking down. I'm going to have to react to that and respond. [Scott Wapner] All right. Break, and then Mike Santoli with his midday word. == Midday Market Word, SpaceX Options, and Final Thoughts == [Scott Wapner] Welcome back, senior markets commentator and Overtime co-anchor Michael Santoli here at the end of our desk, post 9. It's good to have you back. What do you think of this market today reacting to the jobs report? [Mike Santoli] Yeah, it's a little bit fatigued. It doesn't really seem like it's a real assertive reaction. In other words, reacting to anything in particular aside from, perhaps, we did hold up pretty well throughout the week in the face of what was going on with yields and oils, and maybe there's a little wear and tear. There we are. I guess you can't escape it, going into a Fed meeting at coin flip odds. I don't know if it's make or break if they hike, they don't hike, but that is the reality that we are there. The data put us there. I think it's probably a net positive thing, if you might get a hike, to have the labor market in good shape as it seems to be today. But yeah, beyond that, it's hard to necessarily isolate what's happening. Except we have been just sort of oscillating in this range. We've kept it pretty much on the rails this week in terms of not going down below those levels that would have broken the range, and really not getting a lot of momentum on the upside either. So, VIX below 14. I think a lot of people are saying, we know that when people come back, often you have a little bit of bumpiness in September, and maybe hedging is cheap. We'll see if anyone takes the market up on that. [Scott Wapner] CPI takes even greater meaning now, for sure. [Mike Santoli] CPI and PPI, as people say, because it feeds into PCE. [Rob Sechan] I thought it was interesting that the probability spiked this morning, fed funds futures went to 70% chance and then came right back in. [Mike Santoli] Yeah. The wage growth isn't there, the unemployment rate's unchanged really. And that's the Fed's, I think, beacon when it comes to the labor market. [Scott Wapner] See you at three. Yeah. All right, good stuff. Options Action next. Let's go to Chicago, Cboe Global Markets. Oliver Renick, play an Options Action for us. What's the name today? [Oliver Renick] SpaceX, Scott. It looks a bit like a caged animal right now. Hundreds of thousands of options contracts are trading on a daily basis with hundreds of millions of dollars at stake. But the stock's been trapped in a 10 point range for almost a month, compressing options prices down to what we see in stocks like Apple Oven or Builders First Source. I'm not convinced that's right. When SpaceX breaks out of its range, it will likely do so with noise. Right now there's 11 put contracts open for every 10 calls, and working in bears' favor is that there's not a lot of hedging below $142, which means if it slips through that level, it could get ugly fast. But almost all the puts out there are for strikes below 150, which is right where we're at right now. That means bears need to sell off faster than bulls need a rally. [Scott Wapner] All right, that's a good setup for a trade on the desk, Oliver. See you at 3. Thanks so much. Oliver Renick. What do you make of what the options market is suggesting? [Kevin Simpson] I think it's too much too soon. I think this is a great investment long term. We do own this in the growth portfolio, Scott. We love the Starlink, the Starship, even the AI component to it. If it trades up, that's great. But I think this is something we're looking years into the future, not weeks or hours. [Scott Wapner] You own it privately, right? And you have for a long time in the private markets. [Rob Sechan] And that, and now publicly, and we're taking advantage of the price move we've seen when we have episodic windows to get liquidity. But I still think the stock's going through price discovery. But let's remember, there's an evangelical level of support for this stock. And I can very easily see that if there's incremental positive news, it's going to generate huge price movement. [Jim Lebenthal] For sure. I'll just point out, Rob, what you know, which is that evangelical support at times withers -- and look at Tesla over the last week or so. [Scott Wapner] All right. Thank you for that comment. We're back with finals. Closing Bell, see how the week finishes. The professor, Jeremy Siegel, is going to join me, Walter Isaacson as well, on Big Tech's role in the data center debate. We'll kick all that around. Weiss, what's your final? [Steve Weiss] FTAI. Data center debate is misplaced with this stock. It's very cheap. [Scott Wapner] Robbie. [Rob Sechan] KLA, still off 30% since the June peak. [Kevin Simpson] NVIDIA. We like the Hugging Face acquisition. [Jim Lebenthal] Oracle's got good momentum. [Scott Wapner] Good weekend, everybody. I'll see you on the Bell, the Exchanges. Now you've been listening to CNBC's Halftime Report, the podcast. You can always catch us live weekdays at 12 Eastern only on CNBC. All opinions expressed by the Halftime Report participants are solely their opinions and do not reflect the opinions of CNBC or its parent company or affiliates, and may have been previously disseminated by them on television, radio, Internet, or another medium. 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