CNBC Halftime Report — Trading Ahead of the iPhone Event & the CPI Report

Nvidia makes the chips that AI systems run on. Lebenthal's point is not that the story is new but that the price is close to breaking out: the stock is "within a hair's breadth" of its record, and in his experience a stock that clears a record high does not usually turn around and fall back through it.

The numbers he leans on are unusual for a company this size — about 19 times next year's earnings, with the company itself guiding to 70% revenue growth, and that growth figure is limited by how many chips it can physically make rather than by how many customers want them. If the supply bottleneck eases, the number could be higher, not lower.

Belski uses Nvidia for a different argument. Bubbles usually show up as expensive multiples on the biggest stocks; in 1999-2000 the whole index was on 30 to 35 times earnings. The largest company in the market today trades at roughly 17.5 times. Wapner's fair objection is that the index as a whole is dearer than that, so the single stock is not proof of anything about the market.

Microsoft sells business software and rents out computing power through its Azure cloud. A few months ago the market lumped it in with the ordinary subscription-software companies that were being sold off — Lebenthal's phrase is that it was "tossed into the heap of the SaaS names" — and worried it might get left behind by AI rather than benefit from it.

His argument is that sentiment, not the business, has turned. The valuation is "very forgiving" for a company of this quality, the stock was under $400 not long ago, and the people who wrote it off will look wrong. Note what he is not claiming: no new product, no new number. This is a re-rating call — the same earnings, valued more generously as the fear recedes.

Oracle sells database and business software — a steady, cash-generating business — and is spending very heavily to build AI data centres, which is not steady at all. The market's worry is how it pays for that: the software profits do not cover it, so the company borrows the difference.

Belski owns it and thinks the worry has already done its damage: the stock was sold off with the rest of the software complex, the selling has stopped, and it is one of the few genuinely cheap ways to own technology. He expects this week's results to explain the funding plan more clearly.

Lebenthal's contribution is a checklist you can score on Thursday without any opinion at all. First, the company should not raise its roughly $70 billion capital-spending plan — more spending means more borrowing. Second, watch its credit default swaps, which are insurance contracts against the company defaulting; they are already above 200 basis points, meaning insuring the debt costs more than 2% a year, and rising would be a warning. Third, revenue for the year to May should grow 33%; hit that and the margin questions can wait.

Qualcomm designs the chips inside smartphones. That has been a problem, because its largest customer, Apple, is steadily replacing Qualcomm parts with its own — a shrinking business the company does not control. The news today is a deal with Amazon's cloud arm, AWS, which puts Qualcomm silicon into data centres instead of handsets.

Belski calls that a structural change rather than a good quarter: the company is finally getting paid in a market it had been losing. Terranova is less impressed by the size of the move, pointing out that every cloud provider is signing deals like this one to tie up suppliers.

Lebenthal's position is the most instructive because he separates the analysis from the trade. He likes the chart, the price and the direction, and he is still not buying today — partly because he expects a difficult September, and partly for tax: he sold half his holding at around $230, so he needs to buy back below $196 to leave his taxable clients whole. The stock is at $176, which is why he says he is "tempted."

AstraZeneca reported the full results of a late-stage trial for a biologic drug — a treatment made from living cells rather than chemicals — for COPD, a progressive lung disease mostly caused by smoking.

Two things make it commercially interesting rather than merely successful. It worked across a broad group of current and former smokers, and it worked in patients who are not eligible for the biologics already on the market — which is new demand rather than market share taken from a competitor. The company's chief executive told CNBC he expects the drug to reach more than $5 billion a year at its peak.

AbbVie is a large drugmaker that used to have one glaring weakness: nearly all its profit came from a single medicine, so a patent expiry or a trial failure would have been catastrophic. It has since built two large replacement products, Skyrizi and Rinvoq, so the risk is spread.

Lebenthal's case is deliberately unexciting — a mid-teens multiple, a roughly 3% dividend, and a management team that is good enough at both in-house research and buying assets to keep refilling the pipeline. His way of putting the standard is that nobody "bats 1000"; what matters is that no single failure can take the company down.

Belski's argument here is about money moving rather than about the drugs themselves. Investors who wanted healthcare exposure used to own the traditional big pharma names — Pfizer, Merck, Johnson & Johnson. When those disappointed, that money went looking for growth and landed in biotech, and the three names it landed on were Amgen, Gilead and AbbVie.

What keeps Gilead there, in his view, is the combination of new drugs reaching the market, a pipeline behind them, and a strong balance sheet — meaning it can fund its own research and buy assets without needing anyone's permission.

Johnson & Johnson is the name Belski picks first out of the three legacy pharmaceutical giants. His reason is diversification: after the reputational and business problems around vaccines, the company deliberately widened its product range instead of defending the old one, so no single franchise carries the company.

Goldman Sachs has it in a basket of healthcare names it thinks are best placed into the end of the year, which is corroboration rather than the argument. Belski's own summary is the useful line: of the big three, growth is at Johnson & Johnson and Merck, and Pfizer is something else — a cheap stock hoping for a turnaround.

Merck is the second of Belski's two growth names in legacy pharma, and he is careful about why. It is not that the stock is cheap — he notes it "has been up so much." It is that the recovery is grounded in the pipeline: the set of drugs in development that will produce revenue in future years.

That distinction matters because a drug company's current earnings tell you about products already sold. The pipeline is the only thing that tells you whether those earnings survive the next patent expiry — which is exactly the pressure the day's Novartis news put on that company.

Starbucks is in the middle of an operational turnaround under Brian Niccol, who ran Chipotle before joining. Belski's view is that this is not a cheap-stock story but a company-getting-better story — the operations themselves have been "completely reshaped."

The interesting evidence is what he did with it inside his own firm. He moved the stock out of the value portfolio and into the tactical portfolio a month ago. A value portfolio holds things because they are cheap; a tactical one holds things because something is changing. Moving it says, in his own accounting, that he no longer thinks the reason to own it is the price.

Shake Shack got a fresh Outperform rating from RBC with an $89 target. Belski, who owns it, buys it as a demographic bet rather than a restaurant: it is to Gen Z what Chipotle was to millennials — the brand a generation adopts as its default.

On the numbers, the obvious problem is beef, which has been expensive. His answer is that the company is offsetting the ingredient cost with higher-margin ways of taking the order — self-service kiosks and drive-throughs, which cost less to staff per sale. Combined with a stock down 30% in a couple of months, he thinks the low is in.

Worth holding alongside his own general warning in the same breath: restaurants are hard businesses and hard stocks to own. He is making an exception, not a rule.

Airbnb was upgraded today with a $200 target, but the more interesting fact is the order of events: Terranova's rules-based ETF bought it on 7 August because of price momentum, before the analyst call and before it appeared on Josh Brown's best-stocks list.

The fundamentals he cites afterwards are the kind that suggest the momentum was not noise. The company raised its own revenue forecast for the second time this year, the share price reaction to earnings was the strongest since 2020, and the underlying reason is that travellers have simply not cut back, in Europe or the United States, with the World Cup adding a one-off boost.

ExxonMobil is an integrated oil company: it pumps crude, refines it into fuels, and sells the products. That structure is the whole point of Lebenthal's answer when Belski asks why he owns no pure refiner. He does own one — it is inside Exxon, which is the world's third-largest refiner, wrapped in a business that also produces the oil.

His economics are simple and worth writing down. Even if crude falls, he does not expect it below $70, and above that level there is money to be made at every stage between the wellhead and the pump. That is a bet on the spread between crude and finished fuels, not on the oil price itself.

The options market agreed on the day: the busiest contract was a call — a bet the shares rise — struck 6% above the price and expiring at the end of the week, which is an unusually aggressive way to be bullish.

Bloom Energy makes fuel cells — units that generate electricity on site from natural gas or hydrogen, which is why the name keeps appearing near data-centre power discussions. The stock rose 11% on the day.

Renick's observation is about the options market rather than the business. Roughly $350 million of options changed hands in a single session, with half again as many calls (bets on a rise) bought as puts, and that total was larger than the options traded on SpaceX. For a company of Bloom's size, that is an enormous amount of speculative attention.

Nobody on the committee owns it or defends it, so treat this as a flow observation, not a recommendation — the kind of activity that tends to amplify moves in both directions.

Freeport-McMoRan is one of the largest copper miners in the world, so its shares track the copper price with leverage — a modest move in the metal produces a larger move in the stock, because mining costs are broadly fixed.

Terranova's final trade is Freeport "to move into the 80s," and the reasoning sits in the energy segment rather than the pick itself: copper is moving toward its highs, agricultural prices are rising, and in his words the commodity trade is arguably the strongest trade in the market right now. Notably he excludes gold from that, saying it has "come back a little bit" — so this is a call on the industrial metals, not on hard assets in general.

Cheniere liquefies natural gas and ships it overseas under long-term contracts, which makes it more like a toll operator than a commodity producer.

Lebenthal's final trade is unusually bare: the stock is down "on a technical factor," and that is the opportunity. In plain terms, he is saying the fall was caused by something mechanical — index changes, forced selling, a flow — rather than by news about the business. No fundamental case is offered on air, so the honest description is that this is a dip-buy on a name he already likes, made more striking by the fact that everything else in energy printed highs the same day.

Pinnacle is a regional bank in the American Southeast — Belski's shorthand is "bank of the Southeast" — and it is the single-stock version of an argument he makes twice earlier in the hour.

That argument: banks report first in October, and he expects them to beat. His reason is specific and not widely discussed. In the second quarter the banks talked mostly about deal-making fees; what was not discussed was wealth management, which he believes had a very strong third quarter, alongside a decent commercial-lending cycle. If he is right, the surprise comes from a business line the market is not watching.

He is candid that the sector's recent share-price behaviour has been poor, which is what makes this a forecast rather than a description.

Eli Lilly makes GLP-1 weight-loss and diabetes drugs. It enters this episode only as the control experiment in Terranova's argument about restaurants.

His claim is that these drugs may be quietly reducing how much people eat out — which would explain why fast-food shares have de-rated for years regardless of how well individual companies are run. Belski's counter is that restaurants are simply difficult businesses. Wapner then asks the question that would settle it: what does the Lilly chart look like against those names? The implied answer is that it runs the other way, which is what you would expect if the money is moving from the food to the drug.

Nobody makes a valuation case for Lilly here — it appears as evidence, not as a pick.

The disagreement is the whole point, and both sides are coherent.

Terranova is buying an option on a new product category. His evidence is behavioural: when Samsung and Huawei launched foldable phones in 2019, Tim Cook went to look, and Apple's historic pattern is to arrive second at a category and execute it better. If a foldable iPhone works, a foldable iPad follows — but he explicitly says you will not know within September, so this is a multi-year argument, not an event trade.

Lebenthal is arguing about price, not product. He thinks the stock was "priced for perfection" going into the summer's earnings, the results could not clear that bar, and nothing about tomorrow's launch is unknown — so it is already in the price. The only genuinely unpriced event is the next earnings report, which will cover the holiday quarter. He trimmed at $330 and is in no hurry.

The statistic hanging over both: BTIG finds Apple has fallen in seven of the last ten Septembers, averaging −3.15%, the only month with a negative average return — consistent with the event itself being a "sell the news."

Amgen fell about 10% without reporting any news of its own. The trigger was Novartis: its drug for a muscle-wasting disorder failed, and Amgen makes a rival treatment. Ordinarily a competitor's failure helps you; here the market read it as evidence that the whole approach may not work, so both fell.

Because Amgen is a heavy weight in the Dow, that single move accounted for much of the index's weakness on the day — which is why Terranova opens the show with it.

Neither panellist wants to sell. Belski calls the company a cash "juggernaut" with the balance sheet and pipeline to keep competing, while cheerfully endorsing his old firm BMO's downgrade of it that morning. Terranova expects a period of going nowhere, and notes that Amgen only just clears his own healthcare screen: revenue growth around 10%, where he wants double digits.

Stryker makes surgical implants and medical equipment. Terranova excludes it, and the whole medical-device group, for one reason he applies mechanically: the revenue is not growing fast enough.

His rule for healthcare in this market is that a company must deliver double-digit revenue growth — of the fifteen healthcare names in his ETF, only three fall short. Devices, in his words, "are trading awful" precisely because they do not clear that bar. It is worth noticing that this is a screen, not a judgement about the businesses; a device maker could be excellent and still fail the test.

Baxter makes hospital products — infusion pumps, IV fluids, dialysis equipment. It is named alongside Stryker and Intuitive Surgical as part of the medical-device group Terranova will not own.

The reasoning is the same single screen: in a market that is paying for growth, a healthcare company has to show it in the revenue line, and this group does not. His advice to anyone rotating into healthcare is worth separating from the names — be in the sector, but check the growth before you buy.

Intuitive Surgical makes the da Vinci robotic surgery systems. It is the third name in Terranova's medical-device exclusion, and the one where the screen is most clearly doing the work: this is a high-quality franchise with an installed base of robots and recurring instrument sales, and it still fails his test because revenue growth has slowed.

The takeaway is about method rather than the company. A rule applied consistently will sometimes exclude good businesses; the discipline is in not making exceptions.

Novartis had one of the worst days in its history, and it was the second failure in four days. On Friday its cholesterol drug missed its main goal — it lowered cholesterol but did not meaningfully reduce heart attacks and strokes, which is what regulators and payers actually buy. Today its drug for a muscle-wasting disorder also missed.

The second failure is the expensive one. That drug was the reason Novartis paid roughly $12 billion for Avidity Biosciences last year, so the acquisition's central asset is now in doubt.

The reason this matters beyond the two trials is timing: Novartis has blockbuster drugs coming off patent, and the standard defence against that is a pipeline of replacements. Two late-stage failures in a week make the replacement plan look thinner just as it is needed.

Chipotle appears twice and comes off badly both times. It is the benchmark for what Shake Shack might become for a younger generation — a comparison that only works because Chipotle's own best years are behind it — and it is one of the two-year charts used to show the fast-food group de-rating.

Belski's explanation is company-specific: repeated negative headlines and problems stemming from leadership. There is an irony he does not draw out, which is that the leader in question, Brian Niccol, is the same executive whose arrival he credits for the Starbucks recovery.

Wendy's is one of the names Terranova lists to make a statistical point rather than a company one. If McDonald's, Shake Shack, Wendy's, Domino's and Chipotle have all traded badly for years, the explanation probably is not five separate management problems.

His candidate explanation is that GLP-1 weight-loss drugs have reduced how much fast food people buy — a change in demand that no individual chain can fix by operating better. It is a hypothesis, and he says plainly that he has not heard anyone else make it.

Domino's is Terranova's fourth exhibit: pull up a two-year chart and it looks like the others. Belski's answer is that Domino's has had its own operational problems — which is exactly the kind of individual explanation Terranova's list is designed to rule out.

The disagreement is a good template. One person explains each weak stock separately; the other notices they are all weak together and looks for a shared cause. When a whole group moves as one, the shared cause is usually the better bet.

Mondelez makes snacks and confectionery — Oreo, Cadbury. Belski brings it up to try to defeat the GLP-1 argument by extending it: if appetite-suppressing drugs explain fast food, then they must explain packaged snacks too, "because at the end of the day, people are not eating those names."

The trouble with the reductio is that it does not embarrass anyone. Lebenthal simply agrees — "consumer staples has been nauseous" — and the group has in fact de-rated. Sometimes the absurd conclusion turns out to be the observed one.

Coca-Cola is named in the same list, for the same reason. It is a defensive, dividend-paying business that would normally be a safe place to sit while the market worries about rates — and it has not behaved like one.

The useful thing here is not the stance, which is thin, but the question the exchange leaves unanswered: whether a structural fall in calorie consumption is a permanent headwind for the staples group, or whether the de-rating is about something more ordinary like bond yields making dividend stocks less attractive. Nobody on the desk tests it.

General Mills, the packaged-food maker, is the third staples name in Belski's list and the point at which he concedes the argument is unresolved: "I haven't put a lot of thought in terms of what that means."

Wapner closes it with the test that would settle the question — put the Eli Lilly chart against these — and the implied answer is that it runs the other way. That is the shape of a real thesis: money moving out of the calories and into the drug that removes the appetite for them. Nobody on the desk has yet done the work.