Nasdaq and Yields in Focus: The Investment Committee's Strategy 10/5/26

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0:58Oliver Renick: I'm Scott Wapner, and you're listening to CNBC's Halftime Report, the podcast, the most profitable hour of the trading day. We record this live weekdays at 12 Eastern. Listen in.

1:14Oliver Renick: Carl, thank you very much. Welcome to the Halftime Report. I'm Scott Wapner, front and center this hour of the state of your money with bond yields backing up, burning season around the corner, the Nasdaq extending new highs. Joining me for the hour to discuss and debate it all. Joe Terranova, Stephanie Ling, Jim Laventhal, Josh Brown. Go to the markets. We are green everywhere but the Dow, and the Dow is threatening to go positive as we speak. A lot of the conversation, as you know, is on yields, not just here but around the world. We're still about 532 on the 10-year. Getting a little bit of relief.

1:45Oliver Renick: There's 533. Getting a little bit of relief in France today. That's obviously one of the hot spots. Ed Yardini, Aljo, says, for now we're sticking with our S &P target of 7 ,900. My question, I guess, to all of you to start is how long stocks and bonds can coexist at their respective levels, at their respective levels. Right. Yields keep backing up. Stocks are hanging in. We're new high on the Nasdaq. You're barely off the high for the S &P. So with the information that we have in front of us, I think there's two things that provide evidence that this can continue. First of all, there was a concern surrounding rising yields and what would be the effect on the CapEx cycle for AI.

2:29Oliver Renick: In fact, would it be an impediment for companies that were going out and offering debt? That was challenge number one. I think we had a clearing event last week with the meeting with the president at the White House and the tech CEOs. I think the market grew very comfortable and comforted after that meeting. Secondarily, I think Micron's earnings last week validated that the demand, the insatiable demand, is still in place. So I think this continues. And what is happening in front of us right now, this resiliency that you're seeing in which 10 out of 11 S &P sectors are higher, the market is looking forward, anticipating, pricing in, and positioning for what will be another strong earnings quarter.

3:14Oliver Renick: Now you've got every sector today is in the green step. I do think the backup in yields and the whole move to a more concentrated market is pretty interesting. And if you look at it this way, so over the last month, let's take that as the time frame of reference. Since September 5th, on September 5th, the 10-year was 478. So we backed up like 50 basis points between then and now. And over that period of time, concentration has only gotten more pronounced, right? One has followed. The other is yields have backed up. We've gotten smaller in the market. The equal weight's down 4.5 % since then. NASDAQ's up almost 5 % since then.

3:58Oliver Renick: That tells a pretty good story. Does that continue? I mean, I can't believe bonds in September are down 8%. I mean, bonds are supposed to be your safety, right, mechanism? It's supposed to be right down the center of the fairway. And it's been nothing but not. So to me, I think 5 % plus on a 10-year for a long period of time makes bonds pretty interesting. That being said, I think the long-term total return for the S &P 500 is much more compelling. We've grown 8 % on average over the last 10 years, 7 % in the last 50 years. And why I think we're going to continue to see a rally in equities is because the economy continues to do really well.

4:37So last week, we had a really good week in terms of economic data. We had the S &P services, PMI, at the best level since July of 2021. And we had the official ISM this morning, which has been the best number since in four and a half years. So we've had such a consistency on the services side. Manufacturing is starting to pick up, too, comfortably above 50. It's a diffusion index, so that's what you root for, above 50. We had employment numbers last week that were pretty good. Weekly claims are at the best level since 1969. and we had a revision on GDP, you add it all up, Scott, and I can't imagine that earnings are not going to be really good.

5:16And yes, they're going to be very good at MAG7. One of the reasons why I've been adding to MAG7. Right.

5:21Oliver Renick: Meta, for example, is your newest, right? Meta last week, right. But NVIDIA as well, about two months ago. So my point being is we're going to see great earnings in tech and comm services. They've had a nice run. I hope that we're going to see these other sectors do well as well. I think the setup is really good because all of the other sectors are down in the last month and the expectations are for really low. They're low at this point in time. We've got to get through this week. We have no data for the rest of this week, really. So next week is when we're really going to start to see the evidence.

5:52Oliver Renick: The only sector over the last month that's up is tech. Now everything else has gone negative, including comp services. Now that's basically flat. But if you look down the stack, that's what the story is telling. And you do have some pretty big divergences, which Evercore points out, Jim, today have reached extremes. Energy plus 40 percent year to date, outperforming obviously along with tech, which is plus 30 percent year to date. Divergences to the extremes to such a degree has been rare. Even rare is the fact that the financials have been underperforming relative to those by such a dramatic amount.

6:29Oliver Renick: Financials down 2 % year to date. Only eight times since 1990 have those divergences happened to such a degree. Now, that obviously speaks to the fact that we've gotten smaller. We've gotten much more concentrated and more top heavy. Again, the question is, does that continue as long as you have bond yields where they are? The idea, again, as I ask at the top, the coexistence of stocks at these levels and bond yields at these levels and how long that can last and the ramifications of it within the market. Yeah. I mean, they can clearly coexist at this level. I will tell you I'm uncomfortable at this level.

7:04Oliver Renick: And if bond yields go higher, I'm going to get even more uncomfortable. And some of the sectors that you spoke about, Scott, are directly affected by higher interest rates. So if we think about just, for instance, energy or excuse me, many sectors that have a lot of debt in them, they are now going to face over time higher interest costs. That is a weight on them. Not to the extent, by the way, or to a lesser extent, is the MAG-7, which, OK, the 10-year-up 50 basis points isn't going to derail any plans that they have for data centers. There may be political issues, but interest rates are not going to, at this level, derail them.

7:38Oliver Renick: All this a way of saying that we've had a year where the rotations have been fast and furious. It's hard to believe, but six weeks ago, the equal weight S &P 500 had a year-to-date gain above that of the headline S &P 500. Now it's well behind. We could have that rotation flip back. But in my opinion, you do need to see the boil come off in terms of interest rates and give some relief. You also mentioned financials, which we've been worried, Scott, that maybe as interest rates have gone higher, maybe something would break in the financial sector. I don't think that's what's held financials back.

8:09Oliver Renick: I think really what's held financials back is the lessening of the IPO calendar. We had a very robust expectation for the fourth quarter. There's still expectations that anthropic will come. But with all this volatility in interest rates in the equity markets, that IPO calendar is looking a little less exciting as we go through the end of the year. Josh, if we just stay sort of where we are internally, I guess, and where yields are, is there any reason to believe that the internal market picture is going to change anytime soon? I don't think so. And I think we're almost like saying, will something happen after it's already happened.

8:46The S &P 500's year-to-date price return is lying to you. The whole world changed in March with the attack on Iran. Nothing has been the same ever since. We had an enjoyable summer rally in the quote-unquote rest of market, but that has now given way to continued defensiveness. The thing is, people haven't really gotten up to speed here. What does defensiveness look like in 2026 versus what it looked like when professional asset managers started their careers in the 80s, in the 90s, in the 2000s. Defensiveness now is you pull the lever and you go along the giant technology companies that have dominated the markets for the last 15 years, and nobody ever yells at you for being equal or overweight.

9:37And that's exactly what people are doing. So I want you to think about this. Only 41 percent of the S &P 500's components are above their own individual 200-day moving averages. That's a number that we're seeing actually fall, and it could get way lower. We just do not have the majority of stocks in a bull market right now. But again, the index is lying to us, and we know how it works. It's concentration, And it's not only concentration of market cap, but where the earnings growth is coming from. And to Stephanie's point, the MAG-7 is now the easy button. It is outperforming the S &P plus 14.1 percent versus plus 13.8 percent for the S &P 493.

10:24And you're not really you don't really have to pay up meaningfully to put that trade on. You're at a forward multiple for the overall market at 19.1 times and tech is 21.6. So not only are people racing back to this old Mag 7 trade, old faithful, for defensive reasons, they're actually not being forced into a weird position where they have to materially raise the valuation of their overall portfolio. Last thing, the NASDAQ itself has an RSI of 65, which is really healthy. But then I tell you, only 2.85 % of those stocks within the NASDAQ are trading in an RSI over 70. There's a reason why the NASDAQ has become the safety trade.

11:15Forward earnings estimates have absolutely ripped up 32.5 % year to date. So you have these Nasdaq giants, I think, masking a lot of the pain that people are feeling in names that are away from this A.I. trade. It's been going on for a while now and it's getting exacerbated. And I think that is the big change that we've experienced since March with higher yields, higher oil, rising inflation. Think about what we were talking about before Iran. Scott, we were talking about cuts, insurance cuts, we were saying. Now the question is how many more hikes and for how long do they maintain weights at this level?

11:57And I don't think there's any insight. So to answer your question, no, I actually think this is going to be the status quo.

12:03Oliver Renick: So then does that then, Joe, if you have only 40 % or whatever the number was that Josh mentioned was above its 200-day moving average, Does that present opportunity or just show you sort of underlying risk in the market that such a broad swath of stocks are underperforming the overall market rather than the opportunity? Because people, you know, we've made the case you play you play offense and defense in the mega caps. And that's kind of the cases that have been made on the show. But if you have such a large number of stocks, remember, we've cited, well, you know, X number of stocks are hitting 52 week lows versus 52 week highs in a records in a still record setting market.

12:47Oliver Renick: Does that tell you that that presents opportunity for all the names that are not? Or does that show you underlying risk to the market itself? That's an interesting question. I think the cyclical component of the market is set up nicely. If you are an investor that kind of allocates in that direction, it's set up nicely to have a reset on valuation and performance and really rebuilding of positioning. Now, I will not be there. I will not be there because what is the driving force of my investment strategy is momentum. and that cyclical component of the market has clearly deteriorated and lost its momentum.

13:26Oliver Renick: But there is an opportunity there if you believe that you will see a relaxation in the price of oil and that you will begin to see yields move lower. Do you think clearly it's a secret to believe that it's going to happen anytime soon? The evidence that we have in front of us right now? No. On the other side of the midterm election, is there a resolution as it relates to oil? I don't know. There's been an indication that that possibly could happen, but I'm not going out and investing based on that hope. What I'm just doing is identifying where the potential opportunity is. Like I said, I'm not going to be there.

14:00Oliver Renick: You know, maybe Steph or Jimmy, you'll take an opportunity to look at the valuation reset. I am there. OK, so there you go. Me too. But I'm not. Well, right. They're not momentum. A lot of these, like the industrial sector, a lot of them are down like 18 to 30 percent. But the valuations are getting more compelling, especially as I highlighted the economic data points. If the economy was rolling over, you don't want to be anywhere near cyclicals. But the economy is actually accelerating and multiples are contracting. And last quarter, we had eight out of 11 sectors that actually posted double-digit earnings growth.

14:32And they did rally. I think they're going to again. I think they can sustain those rallies into the end of the year, again, because the economy has the momentum behind them.

14:41Oliver Renick: Morgan Stanley agrees with you. They say that industrials right now are the best risk reward in the market because the prices have reset so much. It's been painful. Quantum services are down 18 percent. Vertiv is down 34 percent. GE Renova is down 18 percent. These are all from their highs, of course. But the backlogs are only accelerating. The backlogs are anywhere from 30 to 40 percent. And we talk about this all the time. That's visibility. To me, organic growth is accelerating. And it does have a lot to do with the data center and the build out of the data centers. But I just I don't think that that is rolling over either.

15:14I think that's going to accelerate. And I think these earnings are going to be great. And I think you're going to get rewarded. But you've had to be patient because it's not been easy owning these things.

15:21Oliver Renick: Well, Vertiv, BMO, real quick, BMO on Vertiv today outperformed 329 is the target, more or less, you know, 31 percent upside. They talk about the stock and the multiple compressing so much that it presents opportunity. But again, to your point, though, you know, it's tied so closely to the data center play. I think when you look at industrials, you kind of need to look at industrials that are AI and data center related and then all the others. Yeah, but I mean, I think that the aerospace cycle is still alive and well and Boeing hasn't done well and GE hasn't done well. And I think they're going to have great free cash flow numbers and good guidance.

15:57And so I think you'd be picking picking and choosing some of these names. I own a company, Dover. You know, that's short cycle. If the ISMs are accelerating, they're going to win and that stock hasn't done anything either. So I think you can pick your places within industrial. It doesn't all have to be AI data center related, but that's where the excitement is clearly. And in terms of verted, I mean, they're going to do 31 percent organic growth this year alone. That is crazy to me.

16:21Oliver Renick: Yeah. OK. Industrials are easy. I'm there with you. Financials, too. Because of the AI left. Consumer discretionary, would you go there? Well, I've made a lot of money in some of the names that I own in discretionary. I think you've had to be picky for sure on that. But, I mean, Starbucks has been great. Amazon's disappointing. We'll talk about Estee Lauder in a little bit. Got an upgrade today. It did. So I think that there are places that you can find within discretion. I wouldn't and I don't anymore own anything housing related. I just think that's going to be a slug for a long period of time, unfortunately.

16:51Oliver Renick: The point you're also making here is that it's it's it's difficult to find stocks or try and pick stocks within these spaces, thinking that they're going to do well in an environment where many of them have not. Sure. Like, if you want to buy a discretionary name, OK, tell me which one. But can you tell me five? Can you tell me 10? I don't know. I don't know if you can. I think you can identify them. The problem is, what is the catalyst? I mean, there's just a number of consumer discretionary names, particularly travel and leisure stocks, that have languished, done really poorly for the last few months.

17:23Oliver Renick: And one might want to say, well, OK, if the war with Iran gets resolved, maybe Disney, maybe Wynn will start performing. I mean, it's a reasonable thing to say, except that there is no indication of when that resolution with the world of Iran will happen. My point exactly. And nobody said, you know, you could go down, you could name 30 AI related or tech related stocks that are that you buy today or that are, you know, buys. I don't think you could literally name me 10 consumer discretionary names today. I definitely can't give you the catalyst that will move them. But, you know, where we started this conversation, we started talking about energy and then we got into industrials and now discretionary.

17:59Oliver Renick: I think energy is very interesting because whereas people may say that a resolution with Iran will cause energy prices to plummet, I will say not so fast. And I would cite just today the CEO of Saudi Aramco, who said it's likely to take two years or more to refill commercial and strategic inventories across the world. And I do think that the energy sector, whether you're looking at an Exxon or Stephanie, I think you're in Chevron. Maybe I've got that wrong. Or the XLE. These are stocks and ETFs that are in an uptrend right now. Now, look at the 50-day or the 200-day. And if you don't get energy or crude oil dropping down to$60 a barrel, I don't think it will, by the way, based on the need to restore inventories.

18:38Oliver Renick: If it just goes down to 75 on West Texas Intermediate, these companies are going to mint money. I agree with that, but I see the bigger challenges. Oil goes down and yields stay high. Yields are high because of oil and other reasons, like the generous supply on the AA capex cycle, the deficit. To me, it's much more challenging to get yields. Growth. Growth, Scotty. Yeah, but still. It's 100 % growth. Well, not 100 % growth. It's close. It's close. You think yields are where they are 100 % because of growth? Nobody expected 8 % nominal growth this year for GDP. No one. Not even me. And I was very bullish about growth.

19:15So it's much better than expected. And it's the dominant part of the higher rates.

19:19Oliver Renick: I think people would even debate that. I mean, there is a debate here. I mean, let's talk about the other side, which is there's a heck of a lot of supply coming on of debt. And it's not just treasuries, which we know. I mean, we saw what happened with the Paramount debt deal last week that flooded the market with paper and that traded poorly in the secondary. So we can't ignore, Scott, this is the point I think you're making. We can't ignore that the supply of paper is very large right now. But I do think, Joe, to the question you're bringing, what happens if yields stay high as oil comes down?

19:48Oliver Renick: I think I agree with Stephanie. I think it's more likely because of growth. Let's put it this way. If you could go and you could say of all the reasons that you think yields are up, none of those is going to roll over anytime soon to potentially bring yields down. Inflation is where it is. AI build-out is where it is. Growth is strong, accelerating, to Steph's point. Not to be argumentative. We're making progress on inflation, though. We're not where they want to be. I get it. But we're making... Remember, we hit 9 % inflation. Yeah, I get that. But that's like, who cares about that now? OK, the core came in better than expected last week, PCE.

20:27The average hourly earnings came in better than expected, which I don't like to say that because I want everyone, the consumer to make money. But average hourly earnings was much better on the inflation front. The three month average in terms of CPI is now running in the twos. So you are making progress. We're not going to get to 2 percent with 5 percent growth in the economy. I just don't see it. But I do think we're going to eventually see productivity improve, and that should help.

20:52Oliver Renick: But this is why all roads lately, Josh, have led back to, as we said at the outset, the mega caps. NVIDIA, first record high since May. The market cap,$5.7 trillion. Mellius upgrades Microsoft today to a buy. You've got positive notes on Amazon. You've got positive notes on Apple. And I don't see why anybody thinks that any of that's going to change. anytime soon. That's right. Last week, I said NVIDIA about to break out is the most important chart in the market. I think today proves it. Look, you're in a situation now where you have to make one of two bets. Either the mega caps are going to take us all the way into the end of the year with the participation of the S &P 493, and they will eventually find their lows, exhaust themselves of sellers, and those stocks will come back.

21:53Or the other bullish scenario is that doesn't happen, but it won't matter because Apple is in a product cycle, one of the biggest stocks in the world. And we could talk about consumer discretionary, which is a nonsense category. It's a made up sector where they just throw things they don't know what else to do with. We can talk about those stocks that are mostly tiny with a few exceptions. But the truth is, if Apple is in a product cycle and making highs and now you have NVIDIA after consolidating for God knows how long, starting to make new highs and you've got earnings revisions going higher for those two names.

22:36Microsoft is in some sort of a stasis. Meta has gotten its groove back. They've gotten the narrative back. They're getting multiple expansion on top of a new earnings growth story. Those are the stocks that really matter for, like, how does the S &P finish the year? And I know there's a lot of people that are like, well, it shouldn't be that way. I'm sorry. I don't control that. Deserve's got nothing to do with it. We could have a 20 percent plus S &P year on the back of Apple, NVIDIA, Meta, Microsoft acting better. That seems to be what's playing out. And, you know, there's no asterisks in this game.

23:15If you're managing money and you're trying to deliver returns to shareholders, nobody wants to hear about the asterisks. It's what was the what was the result right now? Now, I don't think this market could handle 7 % 10-year, but that's not what it is. Right now, it's 5 and change percent. That was the average absolute rate of the 10-year throughout the 1990s, a decade in which I think we would all agree stocks did pretty well. And so absent some sort of bizarre spike that catches everybody off guard, we can live with this. We can survive. You do have to be more specific with what else you're buying away from NVIDIA.

23:54Stephanie's right. Joe is right. I agree.

23:56Oliver Renick: It shows up in the financials, for example, cuts both ways. You know, the flattening yield curve, obviously not good for the banks. And that's the reason they over the last month are down 7 percent from best tech to worst over the last month. Financials. There's a big call in the space, though, today. Let's look at Wells Fargo, guys, because Morgan Stanley has upgraded Wells to overweight. and, you know, Steph has a very long history in this name. At one point was the largest stock in her portfolio, sold out of it and recently bought it back. Now, this is a big call. What do you think? Well, the CEO was on CNBC on September 9th, and he did talk a lot about how the asset cap lift has actually started to benefit their business.

24:43So the asset cap went into play, came off on June 3rd last year. It's taken them that long to actually build market share in investment banking, in asset management, in actually deploying capital for their businesses to grow. And so he did talk, the CEO did talk about how net interest margins have probably bottomed. And when he said that, that's what made me actually buy it back, because that's what we have been waiting for. Net interest income is going to be up a couple basis points. It's not going to be anything to get excited about. But I do think these other parts of their business, in addition to the net interest margins expanding, that's a good thing for this.

25:18and especially at 11 times earnings or 1.4 times book value. And it has underperformed the big six banks by something like 14 % year to date.

25:29Oliver Renick: OK, let's take a break. And when we come back, our calls of the day. One top analyst sees nearly 80 % upside for a committee name. We reveal it. And later, Josh Brown, his best stocks in the market, Brady Bunch edition.

25:55We'll see you next time.

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27:37Oliver Renick: All right, welcome back. Look at SpaceX. 20 percent. It is up since the IPO. Adam Jonas today at Morgan Stanley says it's going a lot higher than that. It's a 167. He says 300 is the target. Cheap and getting cheaper. Stephanie Link owns this name. Big upside. Yeah. The stock. Yeah. I mean, the stock is still down 17 percent from the highs. So it has a long way to go to play catch up. But, you know, I've talked about this being a very long term position. You kind of buy it, set it and forget it because there's a lot of ways you can win and we just don't know which one is going to win or maybe they win all three in terms of space connectivity or renting out AI compute.

28:17What I do think is interesting is last quarter they actually increased their CapEx by 65 percent but talked about it seeing a payback in one year's time. That is very significant ROI in my opinion. So I think as you see that better returns coming I do think the stock will follow higher.

28:32Oliver Renick: All right you want to take Estee as well. You did reference it earlier upgraded to overweight. Yes. The target to 108. That is at Barclays. And I did a CNBC Pro video on this a couple of weeks ago. Okay, watch out, because when you did one of those on Starbucks, it looked pretty good after that. We'll take it. We have a couple of good ideas up there. So last year, the CEO became the new CEO. He's been at the company for a very long time, but he put in this strategy called Beauty Reimagined, And it's basically just product innovation, better experience, digital, and just executing, better executing, and then also focusing on profits.

29:09And they kind of lost their way over the years. I mean, this stock is still down 74 % from January 2022 highs. So it's had a nice recovery off the lows. I think there's a lot more to go because they are starting to see organic growth, better cost cutting, and then obviously better earnings.

29:23Oliver Renick: CBOE, TD Cowan upgrades it today. Joe, to a buy. Yeah. Targeted at 334. It was at 315. You own that personally. I do. I bought it back in June at 266. I was ready to time stop myself out of it at the end of September. We had a nice little move. And it really was the renewal of the licensing agreement with S &P securing options there for the CBOE and also securing the potential tokenization of those SPX options as well. Barclays is weighing in today on consumer finance, CapOne and Synchrony, if they like. You have Synchrony. Steph, you have CapitalOne. Jay, you go first on that, and then Steph, I want to hear from you.

30:05Oliver Renick: On CapitalOne, the target to 237. That's a little bit lower than where it was. Yeah, Synchrony, Scott, clear breakdown in the momentum, and it really fundamentally challenged. Retail fee-driven model, which is going to struggle in an environment where you see rates continue to move higher, and the lower end of the economy is challenged. Spotify, UBS goes to 675. They were at 690. They still like the stock, Josh. Yeah, technically, this thing is in no man's land. I like the stock, too. It tends to trade with Netflix, and neither one of these can find enough buyers to get them out of this range.

30:47I do think Spotify might be one of the best businesses in the entire world. They have more users than most companies you can think of. They're profitable and they're growing. So I think the stock should eventually work, but it hasn't recently. All right. Let's go to Julia Forston

31:03Oliver Renick: in L.A. with our CNBC News update. Hi there. Hi, Scott. Vice President J.D. Vance said today the U.S. removed bombers from an English air base out of an abundance of caution. The U.K. is investigating a suspected terror plot last week on the base. Secretary of State Marco Rubio said he wouldn't directly tie the probe to the move that was made, saying the Pentagon is constantly reallocating resources. U.S. Southern Command said a weekend boat attack in the Caribbean Sea killed four people. Military officials say the vessel was operating along an established narco-trafficking route. The Trump administration began targeting what it calls narco-terrorists since September of 2025, and so far has killed at least 235 people in its campaign.

31:46And Alex Ovechkin told his teammates on the Washington Capitals that this season will be his last in the NHL. It comes after the 41-year-old signed a one-year contract with the Capitals over the summer. He holds the league's career goal-scoring record, and he captain the team to its first Stanley Cup championship in 2018. Back over to you.

32:07Oliver Renick: All right, Julia, thanks so much. Julia Borson coming up next, ETF Edge. Brandon Gomez has that for us. What's coming up? Hey there, Scott. There's a generational opportunity in bonds, according to JP Morgan. We'll explain more after this break.

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33:57Oliver Renick: We are back on Halftime Report. I'm Brandon Gomez with today's ETF Edge. Bond yields have been sticking solidly around multi-year highs. To some, that's a warning. To others, that could be a once-in-a-lifetime opportunity. Joining me now is Priya Misra, Portfolio Manager at JPMorgan Asset Management. Priya, thank you for taking the time to join us today. Thanks for having me. So we teased it before the break. You call it a generational opportunity in bonds. Can you unpack that a little bit? Sure. So you're able to buy bonds now, high-quality bonds, between 6 % and 7 % yield. I mean, these are levels that for the last 25 years we've not had.

34:32And I think the value of bonds or fixed income in a portfolio as a diversifier and as a source of income, we just haven't seen it in a very long period of time. We think we're there. So that's why we're seeing inflows into bond funds, into bond ETFs. I think investors are saying, look, if I've got all this equity exposure and I may want to diversify, I may have a lot of concentration in the AI trade. How do I diversify? How do I get income? And bonds are giving you that. And you don't have to go down in quality. We're talking about high quality fixed income. giving you that level of return.

35:04Oliver Renick: And so you talk about these record inflows, but also the how folks are getting into them. I mean, what do you recommend when it comes to those ETF investors? I mean, should they be looking for individual ETFs or perhaps a portfolio that has exposure to multiple bonds? So we actually think if you can be in a diversified set of sectors within fixed income as well as bonds, I think that makes sense. So rather than a narrow sector, because then you're sort of putting all your eggs in one basket, might be better to be in a diversified. And there's opportunities across the board. I mean, there's credit risk.

35:33You can buy credit risk in simple hyperscaler, unsecured debt. You can buy structured, you know, deals, data center deals. You can buy ABS. You can start to buy duration. Now with the rise in rates, we think, I mean, it's impossible to pick the peak in the 10-year, but we think we're getting there. I mean, some of the data in the last two weeks suggests that the economy is resilient, but it's not accelerating. And we've heard from the Fed that they may not have to hike a lot more. So I think adding some duration risk, credit risk, structured risk, which is why I would say a diversified portfolio of fixed income where the manager is picking which risk makes sense, where are you getting the best risk adjusted return?

36:09That's what we would say makes sense.

36:11Oliver Renick: You said it's hard to pick the peak, but where do you see rates going from here on out? You know, I think we're getting close to the end. I mean, because I look at the rise in rates and I know the markets handled it OK, but it's been driven by real rates. This is not an inflation fear. Despite all the talk around inflation, if you look at inflation expectations in the Treasury market or you look at surveys or even the Fed, inflation risk is actually well anchored. So this is very different from 2022. This is a supply side shock. The Fed's hiking. The market's already pricing in four rate hikes cumulative.

36:43They've hiked once. Market's pricing in three more. Global rates are starting to stabilize here. So we think somewhere around here, whether it's 5.3 or 5.5, I don't know, But I think we're getting to the end. This seems like a technical led move. I think there's just positions squaring. We think we're nearing the end of that.

37:01Oliver Renick: Well, we'll definitely keep the conversation going with you as we continue to track those rates. We'll be having the conversation on CNBC dot com as well with Priya. We'll be joined by Bond Blocks co-founder Joanna Galagos. Send things back to you, Scott, for the time being. OK, Brandon, thank you. Brandon Gomez up next. Josh's best stocks in the market highlighting two winners, two losers as well. The names when we come back.

37:28Oliver Renick: All right, we're back. Josh Brown's best stocks in the market. I mean, you do know why I said Brady Bunch Edition, right? Tell me. Well, I mean, look what you're wearing. I'm a Cindy for sure. I was like Greg, Peter, Josh, the long lost Brady. Take it away. I look good, though. And I can't remember the last time my hair was this banging on air. I got to be honest. So finally put some product in it. We're all appreciative. Yeah. So Sean and I thought it's the end of the third quarter. Let's take a look back at some of the names that have been on the list all year and some of the names that fell off.

38:13Because, you know, we talk about a lot of stocks and they don't all work. and some of the ones that work just keep working and they don't even give you a reason to look for a new name. So we'll start with the winners. Intel, this is more than a double since we first wrote it up. It's up 163 % since January 26th when I brought it on air, another 39 % since April 27th when we followed up. It's a 200 % year-to-date gainer and it never gave you a reason to doubt. So what we wanted to do was just take a look at the stock levels because every position has risk management attached to it and update those.

38:53The second one's Valero. This is important because it's not tech. It's not AI data center. It's a really unique pocket of the stock market. It's not even really anything like the other energy stocks. Valero, Phillips 66 and Marathon are the three best performing names in the XLE far and away. This one doubled also from where we brought it to the show. And, you know, it's just this thing where, like, you don't have to be all in tech just because AI is the trade of the year. I know my castmates on the set know this, but I think it's worth reminding the viewers there are winners in every sector all the time.

39:35It's just not the whole sector. And Valero is a really great case in point. Two names that got knocked out. CRH. This is cement. It's not quite as solid as what it sells. This was a name that broke down. We gave you the stop out. The stop out worked and it continued to break down. And I think the lesson here is you don't want to change your rules just because the market tells you you're wrong. I think if you go into a trade and you have a predefined risk management, you say to yourself, okay, I'm not sure why this is happening, but it is happening. I'm not going to be in denial. And a lot of times your first sale is your best sale.

40:13Since we wrote it up in January, it's fallen 33%, but the stop got you out way sooner than that. And thankfully, because as you can see, it seems to want to make a new low almost every day now. First solar, we didn't like this when we wrote it up. This is the last one. we basically said, look, it's on the best stocks in the market list, but that doesn't mean it's a buy. We didn't like the parabolic nature of that rally that you can see here. And fortunately, we were right. So we avoided it. And not every stock that is a best stock in the market quantitatively is created equal. And I think this is a really great example of where the list could steer you wrong if you don't know the setups to look for.

40:58and not every good performing stock will stay that way. So I wanted to bring these four out. Appreciate that.

41:05Oliver Renick: I'll just come to you since you ended on CRH. You own that name. Yeah. And, you know, Josh has a rules-based methodology here. The chart here is terrible, so I'm not surprised that it violated the rules to get out. This has been an excellent long-term compounder for me. The reason it's down on a fundamental basis is interest rates. $54 billion market cap against$19 billion of debt outstanding. However, knowing what it does, aggregates, gravel, concrete, knowing the amount of infrastructure, data center, the ISM manufacturing surveys, this is likely to continue to be a good long-term compounder.

41:39Oliver Renick: And swoons like this, where it goes from a price to earnings multiple of 18 times just in July to 13 now, have proved excellent entry points. So while Josh is 100 percent right on following his rules within the technicals that he's doing, from a long-term fundamental compounding point of view, I'm not going to sell this. Okay. Valero, that was on the winner list. Joe? Still haven't sold any long from last year at 144. I keep talking about potentially selling some just from a risk management standpoint. I just can't bring myself to do it, knowing what's going on with the fundamentals related to domestic diesel challenges and even more importantly, the diesel challenges in Europe.

42:18Oliver Renick: That has an impact on gasoline. Remember, you're making diesel and gasoline simultaneously. First Solar, you want to take that too? Awful. It's been an awful name. Chinese polysilicon imports. The cost of those dramatically lower than anticipated. In December, there's the potential for a minimum import price on that. We'll see what happens. But this has fallen off any moment. Also a victim of the interest rates and housing trade going south. So First Solar gave us three different ways to lose. This is probably in my never again pile, by the way. All right. We'll take a break. We're going to play some options action.

43:04Oliver Renick: We're going international with Oliver Rennick next.

43:09Oliver Renick: Let's play some options action. Oliver Rennick, CBO Global Markets in Chicago. Are we going to Brazil? That's right, Scott. Bears are getting waxed by this huge rip in the EWZ ETF, which is up 13%. The first thing you'll see in today's options is that volume is 15 times higher than normal and implied volatility is collapsing, much like what you would see after a company's earnings report. There is a lot of call selling, but this shouldn't be taken as a bearish indicator because this fund has been the subject of unusually bullish call buying flows for at least a month. What we're seeing today is a lot of profit taking of contracts whose strikes are now in the money.

43:52Brazil's election still has its final round on October 25th, but in the roughly$250 million of options traded on EWZ today, virtually none of it was tied to puts. Less than$10 million of that premium as the rally in Brazil extends to more than 40 percent year to date.

44:11Oliver Renick: Oliver, thank you. We'll see you later. Oliver Rennick. I've never seen an ETF up this much or even down this much, right? I mean, it's not supposed to act that way. But obviously a very big surprise from a political point of view. I do not own it for the politics one way or the other. But it's really more demographics. They are the seventh largest country in the world, the 10th largest economy. 63 % is tied to services and growing. And they have what everyone in this world wants, power. We have new holdings in the JOTE ETF. That's digital banking in Brazil. I believe the stock is up close to 14 % today.

44:47Oliver Renick: consistent to your remarks on how remarkable the performance is. Okay. We're back right after this.

45:00Oliver Renick: Are you following the Halftime Report podcast? What are you waiting for? Look for us in your favorite podcasting app. Follow the Halftime Podcast now.

45:12All right.

45:13Oliver Renick: Closing bell, 3 o 'clock. Black Rocks, Rick Reeder. Goldman's Tony Pascarello. Dan Ives will be with us today. We'll see the final stretch at 3 o 'clock. I hope you'll join me then. Mr. Josh Brown, what's your final trade? I don't think NVIDIA is done going up. Okay. We'll ask Mr. Ives about that. Thank you very much. Shanir, who's that? That's me. You know, it keeps setting higher highs, higher lows, and it's come down recently because it didn't get included. It might have been the S &P 500. That's a buying opportunity. LNG exports. That's what it's all about. Al Michaels was in Cleveland last week for the game.

45:50Oliver Renick: He sent me a picture of Cleveland Cliffs. I'm going to send it to you. He told me to share it with you. Okay. Al, I got you. I feel like that's going to come through. I feel like there's going to be a day of celebration. He did. He sent me a picture. I'm going to forward it to you. So anyway, Al, don't worry. I got you. Steph. So I still like Copper, Antifagasta, really well-run company, good execution, and another Latin America play. Joe T. Steel Dynamics. My man. There you go, Jimmy. Right in your face. There you go, Jimmy. He dunked it on you. No, we're on the same team. Steel. Go. All right.

46:23Oliver Renick: I'll see you. The exchange is 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. Life is full of surprises. you're cruising along not a care in the world when out of the blue life hits pause maybe it's a lost job or lapse in health care coverage well united health care is here with a variety of plans to keep things moving everything from health care plans that fit where you are in life to supplemental coverage like dental and vision united health care your plan for taking the surprise out of life surprises