Title: Trading Ahead of the Apple iPhone Event & the CPI Report 9/8/26 Show: CNBC Halftime Report (podcast of the live noon ET show) Host: Scott Wapner + Investment Committee -- Joe Terranova, Jim Lebenthal, Brian Belski Guest: Annika Kim Constantino (CNBC pharma reporter, Novartis/AstraZeneca); Frank Holland (CNBC News Update); Mike Santoli (senior markets commentator, midday word); Oliver Renick (Options Action, from Cboe Global Markets, Chicago). Date: 2026-09-08 (Tuesday) URL: https://open.spotify.com/episode/13lrWZdJ4XPGtJ8AcPNon2 Length: 43:25 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. CAPTURE METHOD: the transcript tab panel held the COMPLETE episode in the DOM at once (824 child nodes; 46,876 characters of textContent), but Spotify virtualizes it with CSS `content-visibility: auto`, so only ~67 characters were "rendered" and innerText returned essentially nothing. The fix was a single injected stylesheet forcing `content-visibility: visible; contain: none` on every transcript child; the panel's innerText then measured 47,699 characters and the WHOLE episode was captured in ONE get_page_text call -- from the cold open ("Carl, thank you. Welcome to the halftime report. I'm Scott Wapner, front and center.") to the closing disclaimer ("Please visit cnbc.com/halftime report Disclaimer."). Because it was one pull there are no slice joins. Completeness was verified after the fact against the live DOM in a second, independently created tab: the capture contains exactly 824 lines for the panel's 824 child nodes (a 1:1 match), and ten child nodes spread across the panel were spot-checked at indices 50 / 150 / 250 / 350 / 450 / 550 / 650 / 700 / 780 / 823 ("To cut.", "That tells a lot.", "And I think it's, it sounds obnoxious to e...", "Speaker 2", "Hey, Scott.", "McDonald's is is a steady Eddy value play ...", "Say the the brand.", "Santoli's next.", "Be some hedging against oil prices at $939...", "Disclaim Please visit cnbc.com/halftime re...") -- every one is present here at the expected position, and all TEN Spotify chapter headings are present in order. Coverage is CONTINUOUS; there are NO GAPS; NOTHING WAS INVENTED. Speaker diarization was numeric only ("Speaker N") and was relabelled from context: 1 = Scott Wapner, 2 = Joe Terranova, 3 = Brian Belski, 4 = Jim Lebenthal. (Anchors: Speaker 3 says "I like the term that Joe said about holding serve" and later "It's a great call by BMO. We love the BMO" -- Belski is BMO's chief investment strategist; Speaker 2 says "We own 15 names in the Joe T ETF"; Speaker 2 calls Speaker 4 "Jimmy" and Wapner says "282 on AbbVie at B of A, which Jimmy--" / Speaker 4: "you own"; Wapner also says "a good point that Brian brings up" right after a Speaker 3 turn.) Spotify reuses the numbers for remote guests and reporters, so those blocks are relabelled from content, not number: the Novartis/AstraZeneca report ("Hey, Scott. Let's start out with Novartis") is Annika Kim Constantino, not Terranova, despite carrying "Speaker 2"/"Speaker 1"; the news update is Frank Holland throughout (the diarizer supplies no labels there at all); the midday-word block ("So this is, I guess, the formal official launch weekly newsletter") is Mike Santoli, not Terranova, despite carrying "Speaker 2", and the "Be the new mode of things" turn inside it carries "Speaker 4" but is Santoli continuing; the options block ("Despite the move in crude oil and energy stocks") is Oliver Renick, not Terranova, despite carrying "Speaker 2". The diarizer also splits single speakers mid-sentence and lags the label by a phrase; those are corrected here -- most consequentially in the Exxon exchange, where "Because I've got it in." / "Exxon." / "Mobil, ExxonMobil is the world's third largest refiner" are three fragments of ONE Lebenthal answer, and in the final trades, where the label falls after the pick rather than before it. The closing disclaimer voiceover is not a panelist and is left unlabelled. Spotify chapter headings are kept as == section == markers. Fillers ("you know", "I mean" where contentless) and stutters removed; obvious ASR name mangles corrected: "Jim Leventhal"->Jim Lebenthal; "Brian Felski"/"Belsky"->Brian Belski; "we're read across the board"->red; "the revival of the May 7"->the Mag 7; "IN992000"->in '99-2000; "John Turnus"->John Ternus; "Selva news"->sell-the-news; "Btig's"->BTIG's; "the SAS"/"SAS pocalypse"->SaaS/SaaSpocalypse; "the Abilene TX 1"->the Abilene, TX one; "Yard, Denny's"->Yardeni's; "A7 handle"->a 7 handle; "Amgen Gents is lower"->Amgen is lower; "cardio."+"Vascular outcomes"->cardiovascular outcomes; "Astrazeneca"->AstraZeneca; "Abby"->AbbVie; "Joe T ETF"/"Joe TETF"->JOET ETF; "Brian Nickel"->Brian Niccol; "GOP ones"/"the GLP"->GLP-1s; "Consumer stable"->Consumer staples; "the Lily"->Lilly; "Shaq"->Shack; "Gen. ZI think to Shake Shack is Gen. Z what Chipotle"->"I think Shake Shack is to Gen Z what Chipotle"; "SIBO Global Markets"->Cboe Global Markets; "USOETF"->USO ETF; "Conoco Phillips"->ConocoPhillips; "Golds come back"->Gold's come back; "megacad"->mega-cap; "I like Freeport Mac."+"Brand"->Freeport-McMoRan; "the 170 strike call ... as the"->is the. Three garbled NUMBERS are restored from their own context and flagged here: Lebenthal's Apple trim "I trimmed it at 3:30" -> $330 (he has just agreed the stock was at an all-time high "at a mid 30s multiple" and Terranova says the all-time high "is what, 334?"); his Qualcomm trim "I think that was around 2:30" -> ~$230 (he then names $196 and $176 as live levels); and Renick's "oil prices at $9394.00" -> $93-94 (Terranova has just called crude "mid 90s"). Genuinely ambiguous garbles are LEFT AS SPOKEN and are NOT turned into tickers or facts -- notably Terranova's Apple unit line "the potential to go sell 10710 million phones somewhere in there"; Belski's Amgen line "Well, the Maritimes in stage 3"; the Qualcomm move "it's up right now, 445 percent, let's call it" (Wapner immediately says "more than 5%"); the Amgen downgrade "to hold from buy 450 BMO"; the Airbnb banter "Kate Belski" and "Humulus Capital"; and the 3 p.m. guest list read ("Oswat the Motor and Karen Murphy") which is a lineup tease, not market content. Wording otherwise verbatim. This transcript was generated automatically. Its accuracy may vary. == Navigating Inflation, Fed Hikes, Oil, and Earnings == [Scott Wapner] Carl, thank you. Welcome to the Halftime Report. I'm Scott Wapner, front and center. This hour, the big week for stocks and key inflation data is looming. Apple's iPhone event is taking place tomorrow. We discuss and debate the markets with the investment committee. Joining me for the hour, Joe Terranova, Jim Lebenthal, Brian Belski. We're red across the board. You know the story by now. Oil's up, WTI highest since June. The global energy ETF is at an all time high. Goldman's talking about $120.00 a barrel if things intensify in the Middle East. Labor Day talk dominated by a record high for gasoline above 4 bucks. Yields are up, CPI is looming. We'll get to Apple in a moment. 60% chance in the market of a 25 basis point hike. So that's kind of the stuff that's going to be in your face this week, right? [Joe Terranova] Pushing up against very strong, very strong tailwinds. And those are the earnings, right? The earnings really have been spectacular. I feel pretty good today. The momentum factor, which we identified last week, is kind of being washed out. It's actually rebounding today. I've got the semis up. I have optical up. I've got the infrastructure higher. The weakness today, to me, it's attributable to Amgen. Amgen's 5% of the Dow, Amgen's down 9%. We'll get into the reasoning behind that later. But I feel pretty good about the fact that momentum seems to have found a little bit of a temporary bottom. And if the market wants to rotate here, wants to move away from where we kind of held serve, and financials and healthcare, and go back into that momentum AI trade, I think the market will be comfortable with that. [Scott Wapner] Comfortable unless oil gets away from you, unless yields get away from you. 10 days from the Fed meeting, unless that sort of gets away from you. And what is a 60% chance in the market? I don't know that people really believe that it's that high. I'm sure you probably don't, nor does probably anybody sitting on this desk today. But that's going to be dominating the narrative as we figure out what to do from here to there and see what happens in the markets, Middle East and everywhere else. [Brian Belski] I like the term that Joe said about holding serve, not just because of the US Open, but it really makes a lot of sense because we're in this vacuum of no news from a fundamental perspective. Earnings clearly are the key. We don't know what the Fed's going to do, but we kind of know what the Fed's going to do. Fed's not going to cut and we'll see what happens. We're not going to-- [Scott Wapner] Definitely not going-- [Brian Belski] To cut. We're not going to cut. Thank you. They're not going to hike. [Scott Wapner] You're wrong, but you're right. [Brian Belski] They're wrong. Perfect. But you know what's really interesting, you take 2 steps back and you look at all the macro stuff thrown your way, you get higher oil prices, you get higher bond yields. Why are small caps still doing so well? You would have never thought that. Well, I think it's because of fundamentals, because of earnings. They were really the first earnings driver and the price-to-free-cash-flow driver that has really been the fundamental backing of these small caps. And now the revival of the Mag 7, and we're going into Apple tomorrow. It's set up perfectly to again outperform, and so we're very positive on the market near term. [Scott Wapner] That's a good point that Brian brings up, what we were discussing last week quite heavily, the resurgence of the Mag 7. We'll show you the chart again over the last six months to make the point that Mike Santoli was making on Friday morning, which set up our entire conversation. Jump off the fact that the Mag Seven had underperformed the S&P by a fairly good amount over June and July, and you can see the blue line dip low, right, and the orange line is the S&P 500. That gap narrowing and then to the point where they're basically even. Mag 7 doesn't have to outperform the S&P 500 to make this point. It's merely the fact it was a very uneven trade for a good period of time, has corrected itself and these stocks have come back, the biggest in the market. We'll get to Apple in a minute, but that's been a trend worth watching. [Jim Lebenthal] Absolutely. And the valuations are frankly supportive. I think we've just gone through a consolidation phase in these names, Scott. Whether it's Alphabet, whether it's NVIDIA in particular, which out of the seven is the one that I look to most for leadership. Now I realize it's down today. It did start the morning up. It's within a hair's breadth of an all time high. I think it's very likely that it takes that out, and once it does, we're going to be talking about that. It's not going to look back and go down from an all time high. It's likely to go further higher on around roughly 19 times forward earnings. We know what they said two weeks ago about revenue growth rate in the coming year, 70%, which by the way is supply constrained. So it could be higher if things on the supply chain become a little bit unstuck. All this is not to say that the other stocks don't have something going for them. We've talked about Microsoft a lot. Very forgiving valuation. And most importantly, Joe, maybe you'll back me up on this. The sentiment is coming back to Microsoft. This was a stock under $400.00 just a few months ago, and people were looking at it, actually tossing it into the heap of the SaaS names and thinking that it might somehow become disenfranchised. I think that will be looked back on. The point being is each of these names has their own idiosyncratic reasons for going higher, and the valuations give support. [Scott Wapner] Before we go heavy into the Mag 7 idea, on the general market idea that OK, you have what feels like a new degree of risk introduced by rising oil, rising yields, rising Fed risk, at least as the market's concerned. And if you put all of that onto one side of a scale, and then on the other side of the scale, all you have is earnings. But the weight of earnings is so substantial, so substantial, that it at minimum balances out the risks that I put on the other side, if not outweighs them, in terms of why the market would continue to go higher in the face of the risks that we put on the other side. Is that fair? Does it still exist? And if it does, then essentially what's on this side is all noise until it becomes something more. [Joe Terranova] Accurately stated, that's exactly how I look upon all of it. The strength of earnings for me outweighs the rise in oil prices and the rise in yields. My perspective is I think for the Federal Reserve to respond with a 25 basis point rate hike will literally do nothing as it relates to inflation. And the only thing it will do, it'll further freeze this residential housing recession that we're in. You're just going to damage housing more. Why would you do that? I think a lot of people look at the price of oil in somewhat of disbelief to see it where it is here in the mid 90s and think that by Election Day in November, you're going to be looking more at a 7 handle on the price of oil, and I'm kind of in one of those. So I think you look at everything in totality right now. And to your point, until you tell me that there's earnings degradation, I think you still have to weigh the tailwind of earnings over everything else. [Scott Wapner] That's why HSBC today goes to 8100 on earnings. Mike Wilson talks about earnings and the momentum that is still behind this market. Deutsche Bank sentiment has turned bullish again for the first time in seven weeks. That's how they are reporting things. UBS market outlook still bullish, growth not fully priced in. [Jim Lebenthal] Look, I get that as far as when we're in the fourth quarter of the year, but I'm going to slightly take the other side of what you were just-- [Scott Wapner] Saying what do you mean in the fourth quarter of the year? Isn't that where we are now? Not in the fourth quarter, but everything that these people are talking about is the here and now, that earnings continue. [Jim Lebenthal] So in the here and now for the month of September, I'm not as convinced, and here's why. You're talking about oil, Joe, but I think you agree, and I'm sure Brian probably will too, that it's not oil, it's diesel, which is at a record and shows no sign of abating. There's no inventories to fall back on. There's no China cutting demand in diesel. Diesel factors into everything. It's truck shipping, it's farms, it's crop prices, things like that. And so to the extent that we're hoping if the Fed does nothing this meeting, and that they won't -- hopefully, but one week before the election, hopefully they won't -- but that diesel price is going to factor its way through into inflation. And I think we're going to be talking about inflation and the Fed for the rest of the month. And we don't have earnings, Scott, to your point, we don't have earnings to talk about this month. It won't really start until a month from now. So I think it leaves us in a sort of no man's land for the month of September with the trend to the downside as inflation figures continue to disappoint. [Scott Wapner] You do have an air pocket of not much going on other than all these macro events, which do have the ability to push the market around, though volumes are probably going to pick up. People are back now, right? [Brian Belski] People are back typically, and historically when you have a good August, you have a better September, and more aptly, if you have a more negative August, the difference happens. We know historically that September is the worst month of the year. We know that, like I said in the very beginning, we have no earnings news. However, I think the key is rates, the key is rates for sure. And so if the Fed signals that they want to be more dovish and says something different, yields are going to rally, yields are going to go up, and that's going to spook the market I think more than people are anticipating. That's kind of number one. But just listening to the talk, you think about technology. Remember how many times on this set we sat here and talked about 30 to 35 times multiple in the S&P 500 is where everything peaked in '99-2000. You have NVIDIA at 17 1/2 times, the largest stock in the market. That tells a lot. We're not talking about valuation, really. [Scott Wapner] But you're nitpicking or cherry picking on one name. [Brian Belski] I'm just saying. [Scott Wapner] The S&P's multiple is higher than 17 times at a time when yields are rising. [Brian Belski] Look at the weight of that stock. That's why you have the Mag 7 matching the performance of the S&P 500. It's got a big weight in that. But what's also rallying are the earnings numbers of the other 493 stocks. And I don't underestimate how strong the cash flow is in the earnings revisions of the rest of the 493 stocks, including areas within, let's say, financials and communication services. I think you're going to have very strong revisions the last part of the year. [Scott Wapner] I get it. But if yields remain elevated, if not continuing to back up, you do have to question the multiple of the market relative to that. [Brian Belski] Well, that's the risk over the next three to four weeks. I think that's the risk before we start hearing about earnings the first week in October, which will be crushed by the financials, they're going to kill it. Then the next three to four weeks, we have a little bit of a vacuum. [Scott Wapner] Why do you think they're going to kill it, by the way? The financials, they haven't traded very well lately, have they? [Brian Belski] Well, when we hear about the deal flow, more importantly when we hear about how strong wealth management was in the third quarter, because in the second quarter they didn't really talk about wealth management across the board relative to what they usually do, that was really all about deal flow. We've got a decent commercial banking cycle and a very strong wealth management cycle in the third quarter. I think that's not being told in the financials. Going back to what I was going to say in terms of the next three to four weeks, there's a healthy amount of skepticism still, Scott. Nobody believes this rally. We talk about Deutsche Bank and all this kind of stuff. [Scott Wapner] But you don't think that's true. [Brian Belski] The skepticism, oh, I think it's true. When you talk to institutional clients, they're still not fully invested. They're still worried. They're worried about the election. They're overweighting the midterms. They're overweighting the bond market. And so there's still a fair amount of money on the sidelines waiting to go. [Scott Wapner] I think the conventional thought has become -- as you see targets, how many days on the show did we see targets just continuously go higher? The whole reason we start having a conversation about, well, the market hasn't cared about higher oil. It hasn't really cared that much about the Fed. It's dealt with the idea that yields have backed up. Why? Because people are so bulled up on the earnings story, I feel like a lot of people now are on the same side of the positive boat. Only as we entered September and they looked at the calendar and said, oh, I'm supposed to be bearish now. [Joe Terranova] Yeah, so seasonality is the reason to be bearish. Brian, I disagree respectfully. I don't think the skepticism is out there. I think there's a lot of people, to Scott's point, that are incredibly bullish built upon the earnings. I think what's interesting is if you're going to be concerned about something and look for the month of September, I couldn't tell you up or down the next 50 handles for the S&P 500. I really don't know where we go this month. To your point, it's a very clean window with a lack of significant catalyst. You have the blackout period, so you lose the buybacks. But if you're going to be troubled by something, are you more troubled by oil rising or yields? I think it's actually yields. And that's why I think it's such a mistake for the Federal Reserve to raise interest rates and to position themselves overtly hawkish. Why? Yields rise. Because if yields begin to rise, that's when you get the earnings degradation. And in addition to that, that's when you get the technology and the hyperscalers begin to pull back on issuing the debt. Now you could say, OK, maybe that's a good thing. No, it's not, because that affects the entire AI universe. There's a price sensitivity. There's a point at which you're not going to issue debt because the yield becomes unattractive to the buyer, and those hyperscalers are going to step back. I think that's the biggest risk. [Scott Wapner] Yardeni's talking about a Fed hike being in play still. So I don't know. We'll see. Like I said, we're 10 days away from all of that. As the Wall Street Journal today says, the stock market's breezy. Summer's over. Investors beware. Maybe that gives them, the Fed, a reason to beware. We're going to have to wait and see. We get a wait and see until tomorrow for Apple. == Debating Apple's Stock Ahead of the iPhone Launch == [Scott Wapner] I want to talk about that now. Let's take a look at the stock because they have their big iPhone event, big for many reasons. You're going to get that new phone. It's going to be a pricey phone. It's going to be John Ternus's debut on the stage where sort of all the marbles are going to land in his bucket now, right? That's kind of where we are. How are you feeling about this stock? Forget the event. We'll see what happens. We know what's going to happen in terms of phone. But the stock is going to, according to many, be a sell-the-news on this event, because that's what it has typically done according to those who typically watch this name. What do you think? [Joe Terranova] I think it sounds obnoxious to embrace a product that's going to have a price point somewhere between, call it 2100 and up to $3000. This is going to be significantly more than other Apple products. But I actually think there's a possibility that this gets some traction. Tim Cook, when he went to China in 2020, he observed what Samsung was doing. He observed what Huawei was doing. You had in 2019 the Galaxy foldable phone. He went back and said we have to have a foldable phone. And that is ultimately what's going to be delivered. If they're able to execute on that and this product gets traction, then not only do you have a foldable iPhone, you have a foldable iPad at some point, which I would be interested in myself. So I don't think you want to be very quick to dismiss this as not being a product that could gain some traction, because if there was one thing that Apple has proven, they have a really strong ability to take existing technology and improve on it further, deliver it to the consumer and have the consumer break. [Scott Wapner] BTIG is sort of making the September point of what I was suggesting. In the last 10 years, according to BTIG's work, Apple's been negative in September 7 times for an average return of -3.15%. It's the only month with a negative return, and they say it's perhaps sell the news after the seasonal iPhone launch. Remember, the event always happens in September. Stock traditionally doesn't trade that well. Now it's not trading that great going in. It had a really great stretch until earnings, and it hasn't traded really well since then going into this marquee event. Maybe some of that has to do with the uncertainty around Tim Cook leaving as CEO and John Ternus moving into the-- [Jim Lebenthal] It could be, Scott, but Tim Cook is still hanging around in the chairman's position. So it's not like he's gone to Tahiti. I really think this is about earnings. I think that's what knocked the stock off of its pedestal. It was a pretty lofty pedestal in terms of the valuation. It was priced for perfection. I don't think there's anything they could have done last quarter to match the expectations in the multiple. And that's still the problem now. I don't think that gets solved until you get another earnings report. There's nothing that's going to happen this week with the product launch that isn't already expected, thus in my opinion should be in the stock. The only thing that's unexpected and to look forward to is the next earnings report. Now that will be going into the fourth quarter, going into the holiday season, in what has been a good year, notwithstanding inflation and the effect on the consumer. This has been a consumer that has consumed throughout the year, is well employed as we saw last Friday, and is likely to have a good holiday season, including buying Apple phones at whatever the price is. [Joe Terranova] I disagree with all of it. [Scott Wapner] The fact is the fact, no way to hold on, September 100-- [Joe Terranova] Percent, and the stock can go down, but when I say this product might get traction, you're not going to know in the month of September. This is something over the long term that's going to add incrementally another reason why you want to own this company. [Scott Wapner] Well, let's see when they come out tomorrow and they say the phone's going to be available as of X date, and then do you get the big lines outside of the Apple stores? We'll see. [Joe Terranova] It's got the potential to go sell 10710 million phones somewhere in there. And I also think the stock -- look, yes, after earnings it was disappointing. Remember where the stock was going into earnings. It was literally sitting at an all time-- [Jim Lebenthal] High, and at a mid 30s multiple. [Joe Terranova] OK. But since then it's had a very steady gradual recovery, a series of higher lows. It's doing what you want it to do. It really hasn't broken down. It's trading 315. The all time high is what, 334? We're not that-- [Jim Lebenthal] Far away, and it's a valid point. We were showing the two-month and the three month chart there. And I will say you can really on those charts make of it what you want. It's almost a Rorschach test. Look at it right there. Yes, you are correct that it's trying to rally there. But if you look at a 2 month chart there, it's gone nowhere. I just think it's too expensive. I think it's a great company. I think the product will sell. I just think it's too expensive. That's why I trimmed it at $330 and I'm in no rush to put it back in. [Scott Wapner] So it's reiterated Hold at Needham. Laura Martin has been cautious on that name for a good while. Reiterated 380 is the target. Buy at B of A; Moffett Nathanson neutral. So the street isn't -- they haven't fallen all over itself to express its bullishness around the stock. I guess they want to see what happens with all of that. == Oracle's Earnings, Funding, and AI Infrastructure Growth == [Scott Wapner] We want to see what happens too with Oracle, which is this week. Let's talk about that for a moment because the company does have earnings. We've had a really critical couple of weeks for software earnings. Well, it continues this week. Reiterated by Deutsche, talks about that biggest question on investors' minds, what in part seems to be weighing on shares, around funding requirements. We talked about that endlessly. How are you guys -- Belski, you with us, or what are you doing? The index finger on the phone is like hard at work. You with us? [Brian Belski] I'm reading what's coming up next so I can be prepared. [Scott Wapner] Get an invitation? I want to make sure you're present. OK, all right, Jimmy, you're first. No, you know what? Belski's first. Belski, you're first. [Joe Terranova] You guys own Oracle? [Brian Belski] Oracle. No, we do. Remember what they do own Oracle? They're a software company. I think they got thrown out with the SaaS. It got thrown out, the baby with the bathwater. With respect to this funding, I think that the company has already bottomed. It's starting to get a little bit more traction, becoming a little bit more convincing with respect to the recovery. To me, this stock is, if you're looking for value in tech, this stock's providing some value in a tech space that obviously is very, very expensive. So we still like it. It's one of our core names in a couple portfolios and we expect things to be a lot better in terms of the funding. [Scott Wapner] As long as there are questions around the funding, there's going to be questions around the stock direction. [Brian Belski] Yes, I think so. [Scott Wapner] When are the funding questions going to go away? Because I don't feel like they're going to leave anytime soon, do you? [Brian Belski] No, I think they will. The more clarity -- this is going to be an earnings report that they're going to provide more clarity in terms of their funding mechanism. [Jim Lebenthal] I would like to see them not raise their CapEx expenditures for this year. I think it's at 70 billion, but that's really what's kind of weighing on the stock. Yes, I agree the SaaSpocalypse, it was kind of caught up in that. But the real story here -- the SaaS business or the software business is their cash cow, and they're using that to fund the CapEx along with external financing. Don't raise that, because they've been issuing a lot of debt. The five year credit default swaps are over 200 basis points, don't want to see that going higher. But ultimately what you look for in this report on Thursday is the top line growth there. OK, let's just start there. Let's get the top line growth, because this fiscal year ending in May, we're expecting 33% year over year top line growth. If they can hit that, then we can worry about the margins as these data centers are built. We know the Abilene, TX one seems to be coming online. We should be getting a report on how that's doing in terms of margins. But overall top line growth, we can't disappoint there. [Scott Wapner] OK, Cantor's calling a bottom, by the way, in AI infrastructure. Now maybe they're talking about the whole fervor around the data center push back, which Wells today says is at a fever pitch. Did note that Eaton got upgraded. The stock hasn't traded all that well along with a lot of the other energy names. == Qualcomm's Amazon Deal and Diversification Beyond Smartphones == [Scott Wapner] I want to hit a couple more things before we take a break. What's the Qualcomm takeaway from this deal with Amazon? Speaking of data centers. [Jim Lebenthal] OK, so more progress in the Internet of Things for Qualcomm, which de-emphasizes the smartphone business. It's good. That's great news and I'm tempted to buy today, but because September is, as I've already said, a heavy month, I'm not going to do it today. I also have to note that over the last year, there have been several data center announcements for Qualcomm and it hasn't really gained traction in the share price. So I'm going to wait. But believe me, I was tempted to add today. I trimmed this. Scott, you may remember this. During the parabola season, I trimmed it in half. I think that was around $230. I'm not going to look right now. To make up for the taxes that our taxable investors would have to pay, I need a price below 196. So at 176, yes, I'm tempted, but it's a heavy month and that's my thesis. [Scott Wapner] You're not doom scrolling anymore. You're good with this. [Brian Belski] Listen, Qualcomm, Qualcomm. I think this is a structural change for Qualcomm. This is a very good signal that they're getting in business with AWS. And I think, given what happened historically with their Apple position, I think this sets Qualcomm in a very, very good stance in a space that they've been kind of behind on. [Joe Terranova] Yeah, I would agree they need to diversify away from the smartphones and that's exactly what they're doing. To Jimmy's point, they already have an existing relationship with Meta. The price action -- I'm a little bit surprised it's up right now, 445 percent, let's call it. I would have thought it would have rallied even more given the way it's traded, how poorly it has traded since the end of May. This is not a unique deal you're seeing. A lot of the hyperscalers like Amazon going out trying to get relationships to secure these customers. [Scott Wapner] It's not a unique deal. Then why would the stock rally more than 5%, which seems pretty nice to me. [Jim Lebenthal] Look at that chart. That is one heck of a base forming. I'm not even the greatest technician at all on this desk, but that is one heck of a base forming. So I do need to add to this, also a very cheap stock. And as I said, this is about the third announcement this year of data center business. By the way, what if Apple does do well in the fourth quarter? What if those sales pick up? I know Qualcomm is shrinking its business, not voluntarily, with Apple, but still. So that's going to inure to Qualcomm's benefit. We don't want to emphasize the smartphone business. There's a lot going well for Qualcomm. I will add to it, just not in September. [Scott Wapner] All right, we're going to take a break. We'll come back, pharma in focus, one big player in that space tracking for its worst day in six years, all over that move, how to play it. We'll talk about it next. == Novartis Setbacks, AstraZeneca Success, and Biotech Growth == [Scott Wapner] Welcome back. Big news today on a couple of fronts in the healthcare space. Annika Kim Constantino's following the action in Novartis and AstraZeneca, joins us with more on what's happening here and why the stocks are moving the way they are. Hi. [Annika Kim Constantino] Hey, Scott. Let's start out with Novartis, which shares pacing for one of its worst days on record after the company had yet another trial setback today. Novartis said its drug for a muscle wasting disorder failed to meet the main goal in a late stage study, and that treatment was the centerpiece of the company's roughly 12 billion acquisition of Avidity Biosciences last year. The other key trial setback we saw came on Friday, when Novartis said its cholesterol lowering drug failed to meet the main goal in a phase three trial because it did not significantly improve cardiovascular outcomes. And these two studies were seen as high stakes readouts for Novartis. So the results are putting more pressure on the company's efforts to navigate upcoming patent expirations of blockbuster drugs. Now let's turn to AstraZeneca, which posted full phase three data on its drug for a progressive lung disease called COPD. The biologic treatment showed benefits across a broad population of current and former smokers, including a group that currently isn't eligible for existing biologics for COPD. And AstraZeneca's CEO told me this morning that's why the company sees the drug raking in more than 5 billion in peak annual sales. Scott. [Scott Wapner] OK, good stuff, Annika. Thank you, Annika Kim Constantino. So Amgen is lower on the Novartis news. It makes a rival treatment to the one that failed. So that's a move in sympathy that you see right there, down near 10%. What do you do with this? [Brian Belski] Well, the Maritimes in stage 3, so they really think that it's going to be a competing drug. That's number one. You've got to remember why people were buying Amgen about 18 months or two years ago anyway, because there was so much market cap that left Pfizer, Merck, J&J, the traditional kind of the vaccines, and they went into biotech. So where'd they go? Went to Amgen, Gilead and AbbVie. And so Gilead with their new drugs and with their pipeline, with the balance sheet very strong. But Amgen has become this juggernaut in terms of cash. So it's not surprising that they're being stepped on here a little bit with respect to this GLP stuff. But I think Amgen from a longer term perspective has the pipeline, has the balance sheet and has the continued wherewithal to do very well in that biotech slash pharma space. [Joe Terranova] I would agree with that. [Scott Wapner] Downgraded, by the way, guys, to hold from buy 450 BMO, your old firm, BMO. [Brian Belski] It's a great call by BMO. We love the BMO. [Joe Terranova] Probably goes into a little bit of a consolidation phase, but I don't think you want to move away from what healthcare could provide to you in your portfolio. You've seen a little bit of a revival here in the third quarter. We own 15 names in the JOET ETF in healthcare. The common denominator is you have to have the revenue growth. If you're a healthcare company in this type of market, you have to deliver on the revenue growth. There's only three of the names that we own that don't have double digit revenue growth. So Amgen, it's right there at around 10%. I kind of take the other side of it. The industry that's interesting in healthcare that over the last several years we always talked about on this show is medical devices, and they are trading awful. They don't have the revenue growth. It's Stryker, it's your Baxter, it's Intuitive Surgical, they're not giving you that revenue growth. So I urge everyone, you're going to make a move into healthcare, I want you to be there because of what the characteristics are, what it could offer in a portfolio, but make sure you have the growth. [Scott Wapner] B of A likes AbbVie, reiterated buy, target to $282. It's up a little bit from where they were, 276, and you're essentially there, 30 bucks away again. 282 on AbbVie at B of A, which Jimmy-- [Jim Lebenthal] You own, and I've held it for a long time. I really like AbbVie. Mid teens multiple, about a 3% dividend yield, diversified product line. And remember this was a stock that had a very single product. It has migrated away from that with Skyrizi and Rinvoq. There are always competitive threats out here, but AbbVie does a good job. It doesn't bat 1000, nobody bats 1000, but they do a good job of in-house product development and acquisitions to make sure that they have a diverse pipeline, not a single product single point of failure earlier in their portfolio company. [Scott Wapner] Goldman, Belski, likes Merck and J&J among a basket of names that they say are best positioned into the year end. They're cautious on Pfizer, which is part of your ownership as well, but J&J and Merck make their list of best positioned. [Brian Belski] J&J's done an amazing job post the whole vaccine issue in terms of really thinking about diversifying out their product line. Of those big three, J&J by far is our favorite. Of course, we like Merck because it's been up so much. But Merck has had the biggest turnaround because of their pipeline, because of their pipeline of the drugs. Pfizer's just a bottomed out kind of turnaround value play. But in terms of where the fundamental growth is, it's J&J and Merck. == Top Headlines: Geopolitics, SCOTUS, and NFL News == [Scott Wapner] Frank Holland has a CNBC NEWS UPDATE. Hey there. [Frank Holland] Hey, good afternoon, Scott. A sharp escalation in tensions between the United Kingdom and Israel today after the UK announced it would ban imports of goods produced in Jewish settlements in the Israeli occupied West Bank. The UK's foreign minister said the government did not want British companies to finance, construct or advertise any new settlements, which are seen as undermining a 2 state solution in that region. Israel said it would close Britain's consulate in East Jerusalem in response. The Trump administration asked the Supreme Court today to allow it to use a voter verification database blocked in June by a federal judge. In the ruling earlier this summer, the judge said the system was haphazardly assembled and contained unreliable citizenship data. The Department of Justice said in a filing today that decision threatens the integrity of upcoming elections. And New England's Christian Gonzalez has reportedly become the highest paid cornerback in NFL history. He agreed to a $135 million contract with the Patriots. According to the AP, Gonzalez celebrated that history making deal on social media, writing, thank you, Lord. Scott, back over to you. [Scott Wapner] All right, Frank, appreciate that. That's Frank Holland. Coming up, calls of the day. Got 5 bull calls on five committee stocks, which means we trade and debate them coming up. == Shake Shack, Starbucks, Airbnb, and GLP-1 Drug Impact == [Scott Wapner] Let's do some calls of the day. Shake Shack, outperform, RBC, it's an initiation of coverage there. 89 bucks is the price target, so a nice upside here. You have the stock, you own McDonald's and Starbucks as well. What do you think about the call? Where do you rate this stock relative to the others you have in this space as well? [Brian Belski] Three very different stocks in our view. Shake Shack is to us more of a thematic play. I think Shake Shack is to Gen Z what Chipotle was to millennials. I think that the headwinds of beef prices are being quite frankly mitigated with respect to their higher margin business, with respect to the kiosks and the drive throughs. And I think Shake Shack is a secular play on that. McDonald's is a steady Eddy value play in our view. Comfort food has done well longer term, not as much as the last-- [Scott Wapner] Well, because one of the charts look pretty similar. What was Shake Shack down 15% year to date? This one's down 16%. [Brian Belski] 30% Shake Shack the last couple months. So I think the bottom is in place with respect to Shake Shack. Starbucks is a secular operating recovery story, period. And Brian's come in and completely reshaped the operating standpoint of this company. [Scott Wapner] Brian Niccol. [Brian Belski] Brian Niccol, yep, from Chipotle. And we sold it from our value portfolio a month ago and put it in our tactical because we firmly believe that this is going to be a long term winner in that consumer discretionary space. [Joe Terranova] One thing I don't understand, all these quick serve restaurant names the last several years, they have not been trading well. I don't hear anyone present the reasoning that potentially these GLP-1s are contributing to quick serve not seeing the type of demand that it saw 5, 6, 7 years ago. [Scott Wapner] I think number one-- [Brian Belski] Quick serve restaurants is a tough business. Those businesses longer term are very tough stocks to own. Restaurants in general are very tough stocks to own. I don't know what the GLP -- I've never thought about the GLP-1 side of things, but I think more on the thematic basis when you're buying small midcap consumer discretionary names, which I would throw Shack into, a midcap discretionary name that has a secular theme behind it. [Scott Wapner] What are the two year charts look like on these guys? Can you quickly throw those up, if you're able to do that, on Shack and McDonald's and some of the others, Chipotle? [Joe Terranova] McDonald's, Shack, Wendy's, it's universal across the board. I think you can even throw up Domino's, DPZ. Look at Domino's over the last couple of years. That's not trading well either. So Shack down .7-- [Scott Wapner] Percent over 2 years. I mean, there's probably something to there. There's your two year chart there as well. [Brian Belski] I mean, again, Domino's has had problems with respect to on the operating side. Chipotle has as well with respect to a lot of headline risks they've had and issues from the leadership. [Scott Wapner] You don't think GLP-1s have had a significant impact? Over the last couple of years, let's say, if that's when they became more mass market, well then you can say that. [Brian Belski] Then you can throw in Mondelez. Let's throw in Coca-Cola. Let's throw in General Mills. Yeah, you could if you want to. You want to be kind of lousy, right? [Jim Lebenthal] Consumer staples has been nauseous. [Brian Belski] Because at the end of the day, people are not eating those names. I would say that that would be more-- [Jim Lebenthal] I think it's all this GLP. I'm guessing that the Lilly-- [Scott Wapner] Chart against those looks like it's in the opposite direction, right? [Brian Belski] Again, I haven't put a lot of thought in terms of what that means with respect to those. [Scott Wapner] Maybe you will now. That's one of the things that happens on this program. [Brian Belski] Is that-- [Scott Wapner] Maybe you will now, something. Thank you. [Brian Belski] Hey man, we try. [Scott Wapner] Oh, we got one more I want to get to. Airbnb upgraded to outperform. 200 bucks is the price target. Josh recently put it on his best stocks in the market list, said he had to do a double take when he did so. So we're upgraded today. What do you think about this? Did you look at the JOET ETF and see it in there first? [Joe Terranova] He probably might have and realized-- [Scott Wapner] He's got a really-- [Joe Terranova] Strong momentum on August 7th. Kate Belski. [Scott Wapner] On Airbnb, guys, so on August 7th. [Joe Terranova] Guys staying in the same -- I'm-- [Scott Wapner] Not even going to-- [Joe Terranova] Say the brand. [Scott Wapner] He's staying in the same hotel every time he comes here. Humulus Capital. You need to-- [Joe Terranova] We got to keep these expenses-- [Brian Belski] Tight. [Scott Wapner] That's why, you know. Airbnb versus that five star property that you stay in every time you come to town. [Joe Terranova] Early August, 2nd time this year they increased their annual revenue forecast. They are having price moves after earnings that they have not seen since 2020. It's fundamentally oriented about a traveller that is very resilient, has not stepped back, whether it's Europe or here in the United States, and also the World Cup was very beneficial for them. [Scott Wapner] I just don't want people waiting outside the hotel for you if I say where you stay. [Brian Belski] No, but do they have a coffee maker in the room for me? Literally I need more coffee today. My coffee maker in my room at an Airbnb. [Joe Terranova] I'd like you to study more of the effect of the chances that they have a coffee-- [Scott Wapner] Maker in the house are probably pretty good. You don't think so? [Brian Belski] I guess I don't know. Yeah, people spend. [Joe Terranova] Have you ever stayed in an Airbnb? [Scott Wapner] This is more important than your stock conversation. You ever stayed in? Pre COVID? [Brian Belski] Yes. Pre. [Scott Wapner] OK. [Brian Belski] Are you impressed? Not really. [Scott Wapner] Santoli's next. == Mike Santoli on AI, Semis, and the Q Top Index == [Scott Wapner] Senior markets commentator and Overtime co-anchor Mike Santoli is at post 9. And before we get to your views on the market, we want to highlight your market memo. I'd say anytime you publish anything on the markets, it's a must read. Tell us more about that. [Mike Santoli] Yeah, so this is, I guess, the formal official launch, weekly newsletter, kind of packages up a column I've done on markets for a long time, but also adds to it, creates a little more kind of data items and observations, sort of a little more color than just a straight kind of state of the markets snapshot. So free to subscribe and it's going to show up from here on out Tuesday mornings as we get a little bit of a read on how the week is shaping up. [Scott Wapner] Oh great. So how is this week in your mind shaping up? [Mike Santoli] I find it interesting that it's as if people came back and said, wait a second, software was rallying huge. Everybody piled into healthcare. What about semis? Have they been de-risked enough to actually go back? So I think it's a little staticky in terms of whether this is going to be the new mode of things. Last week we were talking, Scott, and you talked a little bit about Mag 7 sort of reasserting itself. I like a slightly broader basket. I write about this over in the newsletter, the Q Top, which is the 30 largest stocks in the NASDAQ 100. It's kind of what we think of when we describe AI because it's got Micron and AMD in the top 10 and it trades more like it. So I have my eye on that. It's still 4% below its record high. It has not printed a new high in about 3 months. So that to me is a tell as to whether AI is going to kind of take control of this market again, or if it's still going to be kind of, you know, one day it's broadening, one day it's mega-cap. [Scott Wapner] Mean oil and yields today primarily the story, do you think? And CPI's coming in and, as we said, the Fed decision's 10 days away. It's oil and yields. [Mike Santoli] And again, the market attempts to reach for the semis and the things that are not necessarily so exposed to those things, to try and hold together. So I do think that's the story. But the stakes do build as we get toward the inflation data this week. [Scott Wapner] All right, good stuff. We'll talk again at 3:00. [Mike Santoli] And look forward to that. [Scott Wapner] Congrats again, Mike's Market Memo. Don't miss that. Up next, we'll play some options action with Oliver at the Cboe in Chicago. == Bearish Bets, Bullish Stocks, and Strong Commodity Trends == [Scott Wapner] All right. Welcome back. Oliver Renick joins us live from the Cboe Global Markets in Chicago with today's options action. We mentioned at the very top of our program oil moving higher. You, interestingly enough, have some bearish bets in energy today. [Oliver Renick] Mixed at best, Scott. Despite the move in crude oil and energy stocks, the trading in options around USO and XLE has been quite nuanced. Volume in the USO ETF is about 50% above the 30 day average, but in XLE it's just average. And in both there's a healthy 2 way trade going on. Puts outnumber calls by volume in the USO ETF, though some of the richer higher premium trades lean towards the bullish call side, but two specific names really stand out that I want to focus on. Among oil producers, Exxon shows distinctly bullish trading. The most popular contract there today is the 170 strike call expiring Friday, which means a 6% rally into the weekend. But the real star of this sector is arguably Bloom Energy, ticker BE, the fuel cell business, up 11% today. Options there are booming, with 50 percent more calls likely bought versus puts and $350 million almost in options traded today already. That is more than SpaceX. Scott. [Scott Wapner] Wow, Oliver, thanks. I'll see you at 3:00. That's Oliver Renick. So I mentioned top of the program, the Global Energy ETF, that's the IXC, all time high. The XOP highest since June of 2015. 52 week highs, ConocoPhillips, Valero, Marathon. Talking about -- you've been talking a lot about the refiners of late. ExxonMobil outperformed today, 182 at Bernstein. Take it where you want. [Joe Terranova] I could see that there would be some hedging against oil prices at $93-94.00. So I have no problem with that. I think you stay with the refiners, and collectively just the theme of commodities is a very strong one right now. Copper prices moving towards highs, agriculture which we talked about last week, it's all of it. The commodity trade is probably arguably the strongest trade in the market. Gold's come back a little bit as well. [Brian Belski] Exxon is just a juggernaut in terms of what they're doing, businesses overall, not only on how they pay out their dividends, but how they're diversifying out their business lines. But the refiners are a great business. Why no refiners for you? [Jim Lebenthal] Because I've got it in ExxonMobil. ExxonMobil is the world's third largest refiner, but it's tucked into an integrated oil company. I think to expand on what Brian and Joe just said, that even if oil prices do come down, they're probably not likely to come below $70. And there's a lot of money to be made all along the product pipeline above $70. [Scott Wapner] We'll have finals when we come back. == Panel's Last Stock Picks and Episode Wrap-up == [Scott Wapner] Liz Thomas, Dan Greenhouse, Abby Yoder, Oswat the Motor and Karen Murphy, the NASCAR CEO, Steve O'Donnell, the USA sports president, Matt Hong. The Chase is on, talk some racing coming up at 3:00 as well. What's your final trade? [Brian Belski] Pinnacle Financial Partners. Bank of the Southeast. [Scott Wapner] OK. [Jim Lebenthal] Cheniere is down on a technical factor. Here's your opportunity. [Joe Terranova] I like Freeport-McMoRan to move into the 80s. [Scott Wapner] All righty. I'll see you at 3:00. The exchange begins right now. 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. You should not treat any opinion expressed on this podcast as a specific inducement to make a particular investment or follow a particular strategy, but only as an expression of opinion. Such opinions are based upon information the Halftime Report participants consider reliable, but neither CNBC nor its affiliates and/or subsidiaries warrant its completeness or accuracy, and it should not be relied upon as such. To view the full Halftime Report Disclaimer, please visit cnbc.com/halftime report Disclaimer.