Navigating the Risk of a Market Correction: The Investment Committee Weighs in 9/9/26

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0:56Scott Wapner: Edward Jones, member SIPC. Guys, thanks so much. Welcome to the Halftime Report. I'm Scott Wapner, front and center. This hour, correction risk. Is it rising? Some new calls today suggest stocks are, in fact, prime for a pullback. Do we agree? We'll discuss and debate with the committee. Joining me for the hour, Joe Terranova, Kerry Firestone, Brent Talkington, Steve Weiss along in just a few minutes. We'll check the markets here. I think by now, you know we're red across the board, and a lot of that has to do with what both oil and yields are doing. Let's show both, because oil is higher. Brent, 101.

1:30Scott Wapner: That's significant in and of itself. There is WTI above 96. The 10-year note yield, though, is one to keep an eye on today, basically at 485. So we get more details on the Treasury buyback today and what happens when we do, yields moved higher. So that's having an impact, as we know. I want to start there because I have highlighted Citadel's Scott Rubner in his notes over the last month. Excellent. He says his highest conviction right now, why I asked the question at the very top of the program, are we at risk of a correction? He says the highs are in for the month. Mid-month rally starts the seasonal weakness.

2:14Scott Wapner: Blackout window starts on the 12th. Options expiry on the 18th. Quarters over on the 30th. These are all historically very large risk transfer events. RBC today pretty much agrees with that. They say the risks of a garden variety pullback of five to 10 percent have grown for many of the same reasons they throw in geopolitics. I think we all know what is at stake globally and what the risks are as we think about the rising price of crude and the hostilities that are taking place within the Middle East. That's kind of the backdrop of the commentary today. What do you think? So when you have the good fortunate to sit on this platform.

2:52You listen to what many different people say, and you understand who has the hot hand. And Scott has the hot hand. He's been very accurate in his notes. I sat with you yesterday, Scott, and I said, the next 50 handles up or down for the S &P, I'm not really sure where we go. I understand, forget the seasonality of September. I don't want to formulate a bias on that. But I understand the headwinds that are in front of us right now. the blackout window for buybacks, rising oil prices, rising yields, CPI coming out. I understand collectively all of that. Then I turn to myself and I say, OK, is that going to allow you to remove your overall bias, which is to be bullish and turn bearish?

3:35And what's interesting is what I fall back on is not earnings, but I have this belief and I think a lot of people in the investment industry share it. Do we really think heading into the midterm election yields and oil are going to stay uncomfortably high where they are right now? I would say most of us don't. But guess what? That that's asymmetric risk. That in reality is not is is really going to catch everyone off sides if, in fact, they do stay elevated, because I think there's so much skepticism regarding where the pricing is right now. So I think you have to be very careful understanding that.

4:10And to Scott's point, understanding what you're navigating in the month of September. And if you are going to go out and step out and buy something, I think you do it very, very lightly.

4:20Scott Wapner: There may be asymmetric risk right now around the Fed, too, ahead of the meeting next week. Kerry, you made the argument that for the last many weeks, don't underestimate the Fed raising rates. I get that the market is at 60 percent or whatever it is. I still think a lot of people don't think that will happen, that they're not going to raise rates and be at risk of making an error. But it's out there. Yeah, it's out there. There are a lot of growing risk that seem to be out there, which are leading those like Mr. Rubner to have the kind of conviction that he does right now. Yeah, exactly. Well, we had a summer that was quite blissful in terms of looking at earnings that were fantastic.

5:00We've seen so many reports about how S &P 500 on the whole, I mean, the broad market has been beautifully earning nicely and numbers going up week after week after week for this year and for next year. So if stocks are somewhat priced to perfection and we have this risk, which has grown, which we have expected for rates to go higher, whether it's this September meeting or the next meeting, There are going to be hawkish noises coming out of the Fed. They are going to be much more hawkish than they have been, particularly with oil prices where the consumer seems stretched. You looked at the reports from the consumer companies, from the retailers.

5:41They did not show the type of gains that were expected, particularly with the big tariff returns, the rebates they got from their tariff. Where did that money go? Why didn't it translate into profits for them? And the Treasury market has been showing us for months now that it expects the 10-year to get to 5 percent. So this is not surprising. We have a September correction often. It's generally after you've had a real nice period of rising stock prices and benign earnings.

6:15Scott Wapner: Unless, Bryn, people are getting too worked up on the calendar and yields and oil and everything else and taking their eye off the earnings ball. Barclays goes to$79.50 today following earnings. The MAG7 resurgence has been interesting to watch and watch it play out in this market. All of that started really after the tech-led earnings. That's why people remain bullish. B of A's client flow trends, sixth biggest inflow week in history since 2008. That's where the second straight week clients were net buyers of equities. Why aren't people running for the calendar hills? Because earnings are too good to do that.

6:53Scott Wapner: and the Middle East is going to figure itself out. Oil prices are going to go down at some point. Yields are going to go down at some point. And you're going to have earnings to fall back on. That's the bullish case. Is that right? Longer term, yes. But earnings are behind us outside of Oracle, let's say, and Adobe, which I'm sure we'll talk about. I mean, I may not be Scott Rubner at Citadel and have all those GPUs at my fingertips, but I do have history. And if you go back, Scott, to 1962, every midterm, there's like been 16 midterms between now and midterms. We've had a peak to trough decline of between seven and like in the 70s, it was like 28 percent.

7:35So if history is any guide, we will have a drawdown again during midterms. Why, it doesn't really matter. But then on the other side of that, going back to like the price targets for year end, after those midterms, And the majority of the time, like 95 percent of the time, between November and February, the market's positive. So I think that to Joe's point about if you're going to add new positions, this is a great time, we'll say, to dollar cost average if you have these historical drawdowns, which we've had every single midterm. But I think going back to your point, Scott, we do know the earnings backdrop is still very, very, very solid.

8:10And it's still very anchored in technology stocks. So I think just like buckle up. Don't turn to don't turn temporary volatility and make permanent permanent losses on that. Just like ride through it because this will pass. But I do think we have a drawdown like we've had every single midterm since 1962.

8:27Scott Wapner: I like the J.P. Morgan note today as well. They look at what's happened with momentum because, you know, that factor itself has had such wild swings at times. You had that tremendous run up. You had the tremendous run down around the situational awareness blow up, then a quick comeback and then an unraveling again. J.P. Morgan looks at all of that and says it's reassuring that despite big falls in the momentum factor, key equity indices are holding near their highs. Right. Let's keep our eyes on the ball. How far are we from an all time high in the S &P? two and a third percent. That's probably what they would say.

9:10Scott Wapner: They think that the momentum unwind is likely complete. Thus, the downside risk to the overall market should be easing as well. Stephen Weiss is here. I think you've been checked in. It's good to have you. We've been discussing since the top of our program the idea that there are seemingly a growing number of people suggesting that the risk reward has changed right now in the market, That correction risk is rising. Rubner of Citadel Securities is the latest to voice that opinion, though he's been sort of suggesting over the last several weeks that maybe the risk reward has changed. How do you see it?

9:47I see the risk reward has changed. But that doesn't mean you should sell longstanding positions and pay taxes on them, even capital gains opposed to ordinary tax. I think you hold on to your quality investments. But I also believe, and we've said this before, you know, Joe, when we've done the show together, that now's not the time to deploy new capital unless something is really on sale. I did some work over the weekend looking at the correlation between high energy prices, low approval ratings for the administration, and really didn't find much. I mean, if you have sustained higher energy prices, then, of course, that's going to lead to more tightening.

10:28So that will take the market down. So the real question is, is this a spike? And I think one of the reasons the market's staying in check near the highs, well, first of all, it's AI. If you look at it, even today, it's the AI trade. So if that goes away, then the bottom falls out. But that's not going away. But there's also always the risk, if you get short, and I admit to being short some queues and VOO, and not deploying the cash that I've had, that the president comes out and says, as he said, maybe a dozen times before, were close to a deal. And for whatever reason, the market will believe that, the shorts will get nervous, and then they'll be carried out in a cart.

11:10I'm not worried about that because I just don't see an off-ramp for lower oil prices. And that's consistent for everybody I talk to, whether it's in foreign, military, people that know, geopolitical experts. There's no off-ramp right now. So despite what happens with the Iranian people, And that's the biggest risk to the market. Now, the Fed can't control energy prices with a hike either. So you can be left with the worst of both worlds, which is higher rates and then higher oil prices.

11:41Scott Wapner: I'm wondering what should inform our views more at the present time in the market. The fact that I think the rising oil and the backup in yields has impacted sectors like discretionary and industrials, for example. So that would make one, I think, predisposed to feel a little bit more negative on the market. But then I would turn around and I say, well, remember what I just told you about momentum? Look at the semis. Look at the semis. AMD, green by three and a half percent. Micron, green. Hynix, almost five percent. Marvell, better than 5%. That's key in keeping the market in a relatively good place, even in the face of these added risks that we've just identified and discussed.

12:29So one of the advantages Scott Rubner has is identifying exactly where that tactical capital is flowing. And you know I always like to focus on positioning, and I love where you're going with this, Scott, because if you think about it, I think ultimately that's the most important thing to do, is identify the rotation. 2026 has been the story of a rotation. The market just keeps rotating. So we said last week, what did we see in momentum? We saw that momentum was somewhat washed out, right? The sell-off was washed out. We felt like it was stabilizing. That's led to a rotation. Higher energy prices, higher yields.

13:04Now what is it doing? It's punishing all the bulls that were sitting in healthcare, that were sitting in financial, that were sitting in the S &P equal weight, that were sitting in small caps, which are down aggressively. So I think you always want to identify where are we in positioning? Because when you have turbulence and elevated volatility like we're experiencing now, that forces the next rotation.

13:25Scott Wapner: And I think we're clearly in the midst. Speaking about rotation, how about the move back to semis, as I mentioned these names from software? Remember, you've had a back and forth. Right. Tremendous outperformance SMH over the IGV. Then you had with the momentum roll, you started to get this big outperformance of the IGV over the SMH. Not just the cyber names, but names like Palantir and others in that group that had had a huge comeback. Well, now look what's taking place. All of a sudden, the last couple of weeks, software earnings have started to come out. A lot of the stocks haven't traded all that well since.

13:59Scott Wapner: And now here we have a resurgence in the semi trade. So you have had yet another rotation, this one within the sector of technology. But I think that's something interesting to keep an eye on as we're going to get Oracle earnings as well. You own that name, but you'll have that tomorrow. You'll have Adobe tomorrow, has its own issues, idiosyncratic, whatever. Datadog's leading the S &P today. Just things to keep an eye on as we're kind of discussing the internals and the trends that are making themselves known within this market. Well, the issue of software, if you go back six months ago, it just became too cheap.

14:36Everybody sold software because you had to get rid of it since AI was going to replace all of the software companies, including Microsoft. I mean, look at every software name and they all traded down 15 to 40 percent over the prior year. So then they became too cheap and people started to buy them. And news came out that sounded better and the earnings have been reasonably good. So that made sense. And remember that the semis, the semis are cyclical stocks. Even if the earnings right now aren't cyclical, the stocks themselves are. People trade in and out of semiconductors. And we've had huge run-in, enormous price increases, 500%, 600%, 1 ,000%.

15:19Then they drop back. So now they're having a run-up. They are big momentum names. I don't find this surprising. I think that the Oracle quarter will be reasonable. You've got to look at the revenues they're generating, the demand for their products, not the debt that they have. I would just like to point out one thing, Scott. In terms of energy and technology, remember, these big AI names, they don't need energy. This is something I've said before. They are not consumers of energy. Price of oil could go to$150, and it really wouldn't affect Google. You mean oil. Oil. Sorry, sorry. It would not affect them.

15:52What they do need is money. And when the price of money goes up over 5%, 6 % for them, it will make a difference, and it won't be positive.

16:00Scott Wapner: All right. All right. Let's talk about Apple, because at one o 'clock today, you do have the event that everybody is looking forward to. Surprise and shine. That's what they're calling it. The expected debut of a new phone. Mackenzie Sigalos is in Cupertino this afternoon. It's nice to see you there. And what's going to be a big day, the biggest of days probably thus far for John Ternus and his career at Apple as well. Now that he's the CEO and he's got a lot riding on this. that's right scott and we're now less than an hour from apple's main event and the focus is really on two things how new ceo john turnis puts his stamp on today's launches and whether apple's first foldable phone can be more than a niche luxury device now the foldable reportedly expected to be called the iphone duo could start around two thousand dollars with higher storage versions approaching three thousand this would be the most significant change to the iphone's physical design since the iPhone X and really the first time ever that Apple's changed the basic shape of this product so dramatically.

17:00The iPhone 18 Pro and Pro Max are expected to look familiar, though with a fresh set of color options, but they will get major up camera upgrades, better battery life. We've seen a range of estimates on pricing, but TD Cowan expects both Pro models to rise by$100, which is actually less than some investors had feared given the memory crunch. Be on the lookout for new models of Apple Watches and AirPods as well, with a focus on health and fitness upgrades. But regardless of the splash it makes, Barclays says the foldable iPhone may be too low volume to move Apple's numbers much near term, helping explain why the stock reaction has been relatively muted heading into the company's most significant hardware event of the year.

17:42Those shares down around 1 % right now, Scott.

17:44Scott Wapner: Good preview. And we'll see you throughout this afternoon. Everything getting underway in about 45. Mac, thank you. Mackenzie Segalis and Cupertino. Of course, we follow Morgan Stanley's Eric Woodring quite closely. He is a frequent guest of mine on Closing Bell. He says this may be Apple's most consequential iPhone launch since the X. Apple's first foldable and the largest iPhone price increases in years creates a critical test of pricing power. Talk about supply chains and everything else. Those are the key issues. Everybody here owns the stock. Yes. Yeah. And you probably have been, Joe, the most aggressive in adding to it over the last six months.

18:22And I will continue to be aggressive. I want to read something for you. And I really don't understand what the analyst community is focused on. If I look at Microsoft, NVIDIA, Alphabet and Amazon, you're looking at a percentage of buys in the analyst community for each one of those stocks above 90 percent. I can't get Apple above 60 percent. Apple sits at 58 percent. There's so much skepticism surrounding the ability for Apple to continue to have price appreciation and revenue growth. The 12-month average price target is$330. This is, without question, the biggest hardware design that we have seen in well over a decade for this company.

19:02And it's being led by John Ternus. Now, the price point, it is going to be expensive. And I agree. This is going to be a test of the ability for them to retain that pricing power. But if, in fact, they are effective here on the innovation which Samsung and Huawei brought to the market in 2019 and 2020, they have the ability to take that innovation and extend it into other areas like the iPad. And I think that's a powerful force.

19:27Scott Wapner: That's fine. But I feel like you are not mentioning the number that matters more than the price of the phone. That's 33.7. because that's the multiple that 33.8 now that Apple currently trades at. And probably for those analysts that you cite and for many investors who are more skittish on the name, they can't get their arms around why you should pay almost 34 times forward for a stock that's historically traded around 23. That's the number. Full stop. That matters most of all to many right now. How do you counter that? You're going to get me in a valuation argument because I think you know me.

20:08The way I look at equities, I'm not particularly respectful or utilizing valuation as an indicator to get in. Not even for something like that? What do you mean? But I don't believe that 33 times for a company of this size with the ecosystem that they have, with the extensive balance sheet and the buybacks that they have, I just don't see that as an extreme valuation. To me, that's not an impediment. And by the way, I still don't think, you know, everyone keeps talking about this underperformance. The stock is not that far away from an all-time high. Well, people have a problem. It's relative to their, where's their revenue growth?

20:46Beginning to reaccelerate. So you guys are right. In 2020, the end of 2024 and 2025, it absolutely, it disappeared. It flatlined. I acknowledge that. We took it out of the ETF for that very exact reason. It's coming back again. I'm getting my double-digit revenue growth.

21:00Scott Wapner: Coming back and willing to pay the biggest premium that the stock's ever been priced at, at least, you know, since the first days of being a public company. Right. I think some of that extreme valuation, sorry, Steve, some of that extreme valuation, though, I think is a byproduct of the market that we're in right now, that bull market. I think that's lending itself a little bit there with Apple. Well, how do you say that, though? How do you say that? Microsoft's at 25. It's 10 years, 27. NVIDIA's 19. It's 10 years, 36. Meta is 21. It's 10 years, 22. This market isn't just describing astronomical valuations to anything under the sun.

21:38Yeah, look, that's fair. That's fair. From a shareholder perspective, and admittedly, it's a small position. And I bought it because getting a little squeamish about the market, safe place I thought to hide. Momentum going into the new phone launch, which always dissipates and reverses after launch. So comparing to iPhone X, that launch was a dud. Let's remember, it's supposed to be the whole new wave of technology didn't happen. The good news here is that there is no expectation on this launch in terms of new product enhancements and things like that. Maybe you get a great Siri. Who knows? What do you mean, no expectation?

22:16Scott Wapner: There's, like, huge expectations. I think the market's telling you there's not a lot of expectation. Well, you already had a huge upgrade cycle in the 17 that I think surprised a lot of people. Dan Ives pointing out now you have 25 % of the installed base that hasn't upgraded in over four years. Why Woodring says it's the most consequential iPhone launched since the X. And the only reason to upgrade is if there's a new Siri. We don't need more handsets on the camera. A number of people that are going to buy a foldable phone, which doesn't really add much to it. There is a new enhancement on Siri.

22:46Scott Wapner: Right. I know. I know. That's a whole ball of wax right now. Right. That's the only reason to buy it. That's the whole reason. AI getting the AI rate. My point is that we had a report last week about negative growth in the app store. That's not a good thing. That's what everybody's been hanging on to, as that's the reason you own it. You own it for the app store, for the margins there. But the company, just because they're showing some signs of growth, doesn't mean they should get a premium. That's almost twice what the market premium, what the market multiple is. So at some point, every stock, I understand, valuation's not in what you really look at in your ETF, which I'm a holder of.

23:28But the fact is, most, I think, of active managers more to what the historical valuation is, and it should not be at a 50 % premium here.

23:37Scott Wapner: Bryn, how do you view that question? Yeah, well, whether the stock should trade at 32 or 34, that's like mincing PEs, there's no way this event is going to even remotely give multiple expansion. I think this is like a Vision Pro event. It's a big event for Apple to say, oh, can you make a phone that doesn't crease down the middle? I think McKinsey set it perfect. It's going to be a luxury niche product like the Vision Pro, which they haven't sold very many of those. And so I think that to Dan Ives' point about there's people wanting to upgrade, they're not going to upgrade into this phone. They're going to upgrade into like the 17, which is getting cheaper and cheaper because the 18 is going out.

24:18And so, I mean, ultimately, it does deserve a premium multiple because they have amazing balance sheets, very little capex, free cash flow, buying back shares. And so you're going to keep like a Costco, you're going to keep that premium. But I do not think this event is even remotely relevant for anybody outside of Apple. and us getting the tone and tenor of John Ternus, which would be really fascinating, but a$3 ,000 phone, even with the AT &T T-Mobile rebates, and the foldable phone is old. Like you said, we've had it since 2019 with Huawei and Samsung. I just think it's a vision pro day. So to me, it's a nothing burger.

24:57I think the stock is stuck here. It's made like a head and shoulders, technically. And so I don't think it's going to raise to all-time highs, probably until later in the year after we get through midterms.

25:06Scott Wapner: Let's talk meta. I want to move. I want to talk about it because I don't want to lose sight of the fact the stock's up better than 6 percent. It's having a huge day and it's had a really nice couple of weeks. They launched the Muse AI agent. It was a big deal yesterday. Top pick carry reiterated at Morgan Stanley. 775 is the price target over there. Mizzou host today says it was more promising than we expected. But that chart says more promising than we expected. and maybe investors are a chorus on that because they seem to agree. What do you think? Yeah, I think Meta was a buy. Meta got hit hard, sold off, underperformed the rest of the MAG7 all year, and it's starting to catch a brick and catch momentum.

25:50And it deserves it because its multiple is low, its earnings are growing. They have their debt, I think, aligned in the right place right now. And this is a big announcement. So if their agent can perform the kind of tasks that people need using AI, then I think it proves the point that the large incubators of venture capital ideas are the Mag7 and the hyperscalers. They're the ones that have the ability, the know-how and the money to develop these products internally. This isn't a part of Facebook. It's not Instagram. It's a new product that is really going to expand their markets and draw people into their ecosystem.

26:33And I think this is an enormous opportunity for Meta, and it shows the strength of these companies relative to, I'd say, the broader class of development of ideas that we have traditionally thought of venture capital is providing. And now we're seeing more of them being developed. How about this stock?

26:53Scott Wapner: Sorry, I'll give you the ball in a second. How about this stock over the last month? You want to talk about outperformance? Meta's up better than 10 % over the last 30 days. Amazon's down 8%. Alphabet's down 7%. Microsoft's down 1.75%. NVIDIA's a flat line. And so is Apple. This stock's come back to life. Yeah. So here's what you have to know about Meta. I've said it before. I'm going to say it again. And, you know, Zuckerberg knows how to navigate these markets. If you look at those companies you just mentioned, right, they're on the second generation of founders, of operators. They're with professional operators.

27:30Zuckerberg has never lost that startup mentality where he identifies a problem and finds a way to fix that problem. And that's what he's doing here. Finds a way to take advantage of the holes in the market and the opportunity. The others don't do that. They're more focused on let's run the business as we inherit it. Let's grow it where we can versus having that founder, that startup mentality, which is critical in troubled waters. So that's what I attribute this to in the moves they've made. The last several quarters, the criticism has been on the spend and not seeing something tangible in which they realize they're monetizing the spend.

28:11This is something where you say, okay, they're spending money. We're monetizing it. Here's something tangible. This is really good. This agent can actually be powerful for the consumer.

28:21Scott Wapner: Okay. We're going to take a break. When we come back, we're going to highlight one of Joe's new moves. I'm kind of surprised to see it, and we're going to debate that. There's no question about that. Calls of the day ahead as well.

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30:20Scott Wapner: Welcome back. Committee move. I mentioned, so you personally sold Costco. I did. Don't tell me it was because of valuation after you just made the case that Apple deserves its. I can't do that. You got me on that one. Come on, let's go. July 7th, purchased the stock at 965. I'm going to take you through why I purchased it in a second. But let me first share with the viewers why I exited. There's two reasons to put a stop in. Number one, price. Number two, time. We're at 60 days. I was down somewhere between 5 % and 6 % on the position. So I time stopped myself out. Now, why did I buy the stock?

30:54It's interesting because in the ETF, I observe at all points how we do on particular names and sectors. I've told you, consumer discretionary. I don't think the ETF does a good job there. But in Costco, we purchased the stock back in July of 21 at 429. We sold the stock in April of 26 at 1 ,014. And I said to myself at that point, we still own Walmart. We've owned Walmart for the better part of the last several years. I want to maintain ownership. I'm going to buy this back personally. I should have listened to my own rules, which exited in July at 1 ,014. And that helped me this morning when I said to myself, OK, let's go with this time stop because this stock is going nowhere.

31:36By the way, Walmart is not trading well either.

31:40Scott Wapner: So the rules dictated that it had lost both quality and momentum characteristics. In the case of Costco, it was more momentum. To a lesser extent, the three-year growth rate on revenue had moderated to 6%. So there was a little bit of moderation there as well. How do you feel about the valuation? Yeah. No, I'm serious. It's a legit question. People bring it up all the time. So I think valuation for both Walmart and Costco was an absolute concern six months ago. And I think people for a consumer staple company that were trading towards the mid... 41 times? Well, I think at the highs, it got into the low 50s.

32:18What is it normally? What's like the historical highs? Upper 20s, around low 30s. Low 30s, I think, is more of a comfortable area to be in. And the multiple has pulled back for sure. But there's something about each of these individual names where the dynamic is absolutely scarce. But their operating margins are pretty narrow for a company with that multiple. Yeah.

32:40Scott Wapner: Well, but they have the membership fees, the annuity. Yeah. But still, they're all growing the premium valuation that they do. Yeah. Right? Subscription models always give you premium valuation. So let's talk about a stock in your orbit that, I don't know, looks, dare I say broken? I don't know. Dick's Sporting Goods. Yeah. Give me a longer than an inch a day, guys, please. I don't know, a year to date, maybe. Yeah, there you go. Thank you. Down 33%. Yeah. So the stock went down a bunch on the last earnings report, blamed mostly on Foot Locker. Yeah. But what's going on here? because BMO today initiates it with an underperformed 110 is the price target.

33:21This is one with every tick up in energy prices, oil prices. I say, should I be selling this? But here's what I have. Number one, let's not forget that I put it as a high risk trade at the end of the show right before they blew the earnings. Foot Locker was supposedly turning. But then on the quarter, on the call, we heard that it didn't. I bought a lot more of the stock in the 20s. Not the day it fell, but the next day. So I'm up a little bit, still losing some pretty good money. You mean the 120s? In the 120s, yeah, in the 120s. It's problematic.

34:00Scott Wapner: I think any consumer, any retail stock is problematic at this juncture. Well, apparently in this space, like, you look at the charts don't look so dissimilar. If you pull up, Nike is a little more dramatic, but on Nike, you could probably pick others in that group, too, that kind of look horrible. Right. That's true. But they have buying power, number one. Number two, they're redoing all their stores, and their stores really becoming destination locations. So right now, it's an expensive stock. The question is, do the earnings continue to decline? Because they took them down by 20%. So it was very reasonable.

34:39The stock itself went down 20 percent. So that's where it is. And I don't know how to think about it. I can tell you I wouldn't be surprised. You shouldn't be surprised if on the next show I come out and say I've sold it.

34:51Scott Wapner: So you'd be inclined to sell it rather than buy more at these levels. I'm not buying more at these levels. Definitely. You need a significant change in material costs. The price of rubber is at an all time high right now. I think you need the consumers to start feeling more spend. Yeah. And just the other one I look at, which is broken is FTA. You know, that's pretty broken. I don't know what to do. It's dirt cheap. It's not affected by consumer prices. Airline leasing. I don't know what to do with it here. All right. We'll go to Christina now for a CNBC News update. Hi there. Hi, Scott. Well, the Kremlin said today it hopes U.S.

35:29mediated negotiations with Ukraine. Mediations actually will resume soon. There have been no talks actually since last February. The renewed interest in bringing the nearly five-year Ukraine war to an end comes after U.S. envoy Steve Wyckoff and Jared Kushner traveled to Russia and Ukraine just over the weekend. The Kremlin said Abu Dhabi is its preferred venue for negotiations. Norway laid King Harald V to rest today, culminating 13 days of national mourning. He died late last month at the age of 89 after spending more than 30 years on the throne. A number of dignitaries were among the guests, including Sweden's royal family, Britain's Prince William, and Ukraine's president, Vladimir Zelensky.

36:08And opening statements will begin today in New Mexico, where Facebook owner Meta is on trial over privacy concerns tied to the Cambridge Analytica scandal. The state claims the tech giant failed to protect users from a personality quiz on the platform that harvested data from roughly 87 million users. The data was then sold to a political consulting firm for targeted ads back in the 2016 elections. Scott.

36:33Scott Wapner: Christina Parts and Evelos, thank you very much. Up next, ETF Edge with the domino. What do you have coming up? It's been dormant for months, but a slew of different catalysts have woken some traders and investors up over the last few weeks. Can that momentum actually last? And is it still all about Bitcoin or will other parts of the crypto market take the leadership reins? We're going to tackle that coming up on ETF Edge on the Halftime Report. Keep it right here.

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38:29Welcome back to the Halftime Report. I'm Dominic Chu with today's ETF Edge. Bitcoin's on a tear, up 22 % in just the last three weeks alone. Right now, we're just hovering right around the 80 ,000 mark. Michael Bucella is managing partner over at Neoclassic Capital, has been around this cryptocurrency ecosystem for a long time. So, Mike, I wonder, in your kind of opinion, is this something where Bitcoin surge is indicative of the rest of crypto and then can it last? Yeah, so I think we're in an interesting part of the market right now. So we've seen Bitcoin surge primarily on a short covering back on August 19th when the Treasury announced they're going to be buying a substantial amount of long duration treasuries.

39:14And so the good part about this is we've actually seen spot buying support the move in Bitcoin. So the initial spike was on a liquidation of shorts. And we've seen a follow through on the spot side where we've seen open interest grow is on the option side with call skew, meaning people are buying upside. And the actual futures volume or the futures OI has come off. So it's kind of been a healthy rotation for Bitcoin. The rest of the market has seen a substantial amount of leverage enter the system. So open interest, again, this is the leverage, implicit leverage in certain assets, is incredibly high in altcoins broadly, so ex-Bitcoin.

39:52We're approaching leverage levels last seen in October 2025, just before we had a very large liquidation and a pretty substantial move lower in the market. I'm not saying that this move isn't sustainable. I'm just saying you should proceed with a lot of caution. Don't fall into this feeling of, I've missed the move. Let me pile in now. We should be treading cautiously but optimistically. And Mike, is it just Bitcoin or can we feel comfortable a little bit more with other parts of that crypto sphere as well? So I think, you know, Bitcoin strength wields strength across the board. We've seen leverage move down the risk stack, meaning, you know, we've seen Ethereum has been a massive outperformer.

40:30You've seen assets like Hyperliquid outperform. You've also seen a lot of their fundamentals grow alongside that. you're seeing enormous leverage in anything attached to Robinhood chain, which has had enormous growth over the course of the last few weeks. And anything from, you know, Leiter, which is their derivative exchange or PERPS exchange. You've seen Uniswap, Morpho. You've seen a lot of these names attached to Robinhood chain, which is kind of this like sort of indication of animal spirits as PONS, which is a launchpad, token launchpad, has really taken off the volume of mean coin launches.

41:06So we're starting to see parts of the market that we haven't seen active in quite some time really start to accelerate for better or for worse. Again, Bitcoin looks relatively strong. The other rest of the market starting to look a little more risky. All right. Michael Buccella over at Neoclassic Capital. Thank you very much. We are actually going to continue this conversation on the crypto surge over at ETFedge.cnbc.com at 1 p.m. Eastern time. Michael is going to be joined by Zach Pandell, the head of research over at Grayscale investments.

41:34Scott Wapner: A big chat about the exchange traded products market vis-a-vis crypto, Scott. I'll send things back over to you. Domino, thank you. That's Dom Chu. Mike Santoli, his market memo is next.

41:51Scott Wapner: We are back with Mike's market memo from senior markets commentator and overtime co-anchor Mike Santoli back at Post 9. OK, what would the memo be writing today if you had to publish it now? Well, I would turn it around and say bonds keep getting cheaper and nobody wants to buy them. I mean, that's another way of framing yields going higher. Obviously, a little bit of modest intraday disappointment with the impact and size of this Treasury buyback announcement. But I do find it interesting that just when we have pretty generous yields in recent, you know, based on recent levels, at an initial level, they should provide a little bit of cushion for the market.

42:32And everybody's pretty well exposed to stocks, even at a time when they're saying stocks are unusually susceptible to bonds going high. You know what I mean? So it's a little bit dissonant to say stocks are going to get hurt if bonds keep selling off. But I don't want to buy the bonds. I'd rather own the stock. So it's kind of an interesting one.

42:49Scott Wapner: Because you are starting to hear conversation and read, OK, now you have bonds as legit competition for stocks. That's really what you're talking about. Yeah. But you still can't get a bite. I never think of them as competition for the same kind of role it plays in a portfolio. It's much more about is it going to provide a little bit of support under certain adverse scenarios. And I know everybody wants to say, well, they're not correlated inversely anymore as they were before. And therefore, bonds are not a great hedge. Well, that's the post-2000 reality. As if 60-40 didn't work before 2000. I went back and looked.

43:26In the decade up to the peak of the tech bubble in March of 2000, the 60-40 portfolio gave you like 70 % of the S &P return. You get less, a smaller percentage of the S &P return this time because the initial yield was so low. So when the initial yield is up here, it's not, you can't get hurt as badly in bonds, I guess would be the way I would put it.

43:48Scott Wapner: But it is telling that if you allegedly have trillions and trillions of dollars in money markets, that you can't entice a greater portion of that money from cash into treasuries with yields as attractive as they are. That is very true. And I do think that partly it's because the margin you're getting to go out the curve relative to T-bills, it's just not that fat based on historical norms. So eventually you'd get there. I don't know what kind of havoc it would cause if we tear through 5 % on 10s and can the market handle it. But I do think that there's something to think about when everyone believes that higher yields are only a matter to be feared and not something that you could lock in now.

44:33Scott Wapner: Good perspective, as always. I'll see you at 3. Mike Santoli. Don't forget about his market memo. Still ahead. Options action. We're playing it with Oliver at the SIBO. And we're talking to Apple. What is the market suggesting? He'll tell us next.

44:52All right.

44:53Scott Wapner: We're less than five minutes away from Apple's big iPhone event. John Ternus is first as CEO. What are traders betting is going to happen today? Oliver Rennix live at the CBO Global Markets in Chicago with options action for us. What do you see? Hey, Scott. Apple's defining characteristic this summer was its inverse correlation to the AI trade. But options today look priced for something very different. Apple implied volatility has been very low compared to the rest of tech and the Nasdaq 100. But today, the zero data expiry options are trading with a vol of 85. Right now, market makers are pricing a more than one and a half percent swing in Apple stock by the closing bell.

45:39About more than three times the typical move. That looks a lot more appropriate for a big AI event as opposed to just a phone company updating its phones. $200 million in options have traded today, and the heaviest volume is on the call side with the most popular contract currently. The 320 strike call expiring today, which trades at roughly 60 cents and needs a 2.2 % rally from here to pay off, Scott.

46:06Scott Wapner: All right, good stuff, Oliver. Appreciate you as always. Oliver Rennick, final trades after the break.

46:16Scott Wapner: All right, 3 o 'clock, Adam Parker, Chris Verone, Dan Ives, Rick Heitzman, Shad Khan. He's the Jacksonville Jaguars owner. We've got CNBC's new valuations list out today for the NFL. Don't want to miss that. Brynn, final trade. INFL up 25%. I think it has more to go. Weiss. Don't own it. Wells Fargo. Gary. Thermo Fisher picking up momentum. Can I clarify? I didn't say don't own it. I don't own it, but I think it's great. Thank you. Stay with Nutrien. Okay, good stuff. I'll see you at three. 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.

46:53You 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 forward slash halftime report disclaimer. Who's ready for a bike ride? Peppa Pig is learning to ride her bike. First, pop on her helmet.

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