Stocks Rise as Oil and Yields Ease: Your Next Move 9/21/26

0:00Oliver Renick: At Edward Jones, we believe rich isn't about having life all figured out. It's opening yourself to all the possibilities. That's why your dedicated financial advisor provides long-term planning built around you, meeting you where you are, and helping you get closer to where you want to be. So no matter where you're starting from, you can move forward with confidence. The key to being rich is knowing what counts. Let's find your rich. Edward Jones, member SIPC. Welcome to The Circle. In this game, you never meet the other players. Your goal is simple, become the most popular. But should you play as yourself or catfish as someone else?

0:41Oliver Renick: With the new host, celebrity contestants, and this time, audience voting will influence the game, you decide who has what it takes to win. Watch the Hulu original series The Circle on November 17th, streaming on Hulu and Hulu on Disney Plus for bundle subscribers. Terms apply. 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. All right. Thank you very much, Carl. Thank you very much, Kelly. Welcome to the Halftime Report. I'm Dominic Chuan for Scott Wapner. The market rally is front and center this hour as stocks soar and yields fall as we kick off a new trading week.

1:26Our investment committee is standing by to break down how they're playing it and what it all means for investors. Joining me for the hour are Joe Terranova, Stephanie Link, Jim Labenthal and Bryn Talkington. Let's get a check on the market right now. I talked about the rally here. The Dow is up about a half a percent of 220 some points, 51 ,903. The S &P 500 up north of 1 percent at this point, up 85 points to 77 ,36. So trying to creep back towards that 8000 mark. And the NASDAQ composite, the tech heavier side of things, up one and three quarters percent. That's worth 455 points to the upside.

2:00That composite index currently sits at 26 ,978. So let's kick off the conversation now with just what exactly is driving the positive sentiment after we saw a little bit more volatility over the course of the past week. And Joe, I will start with you for this one here. From a macro big picture perspective, are the markets feeling constructive for what we've now said a lot is a seasonally weak time? of the market.

2:24Oliver Renick: Two words, risk on. That's exactly what we are seeing right now. Before we began the show, I had a conversation with Stephanie. I said, Steph, in the near term, we are seeing really positive momentum that suggests we can advance rapidly right back towards the S &P all-time high from August. Steph made the excellent point. And guess what? Sentiment is really bearish. So it kind of aligns when you think about sentiment and positioning, which moved to be somewhat defensive heading into the Federal Reserve meeting. Maybe markets are a little bit caught off sides in that regard. You have the pullback in oil.

3:02Oliver Renick: You have yields relaxing. You've got past the Fed meeting. That looks like we have a near term low in place from that day. And guess what? After that Fed meeting, we talked about the meeting bringing clarity. You didn't get the response in bond yields. that speculators wanted. Remember, speculators went into that meeting short treasuries thinking that yields would spike. You'd see the 10-year go to 5.25%. You didn't get that. That basically was the moment where if you were short treasuries, you kind of had that exhaustion. So we now have a very significant technical price gap for the S &P 500 Friday into today.

3:46Oliver Renick: Semis higher, software higher, which is a rare formation. In the near term, the market has just established some really bullish momentum. So, Stephanie, it's an interesting point, because when we talk about a possible repositioning that's happening right now, given the bearish sentiment going into Jackson Hole, going into this Fed print the last time we had an interest rate meeting this past week, there was a question about whether repositioning has legs, because oftentimes repositioning can be a very short term to maybe medium term phenomenon. And then we kind of consolidate and go back to where the trend was before.

4:20Is this enough to clear the decks to make room for constructive moves to the upside, given maybe repositioning in places in the market like treasuries? Sure.

4:29Oliver Renick: I mean, like September is the worst month of the year, but that follows then October and November are the best two months of the year. So maybe September can continue to be volatile. To kind of answer your question, I wouldn't be surprised. But back to sentiment, AAII numbers are at a year low. I mean, they're a year high, sorry. And that is just really, really negative. The economy is still doing well in the face of all this negativity. I mean, last week, retail sales, we had the weekly jobless claims are historically low. They remain historically low. The consumer is clearly spending. The Atlanta Fed tracker is running at 5.1.

5:09Oliver Renick: So in the face of all this negativity, we're still growing. And why do we care? We care because earnings are actually continuing to be revised higher. Multiples have come down from 22 times to 19 times. That means it's a little more attractive. And credit spreads are very, very tame. And I just don't think 25 or even 50 basis points in terms of a Fed hike is really going to damage the economy. So it just goes back to if the economy is good and earnings are going higher, and to Joe's point, risk on is out there. I think you want to really be looking at opportunities in September. You know, Jim, the other thing that's curious about the move that we are seeing higher right now is this notion that the leadership here is the leadership that we had been accustomed to talking about for the better part of the last decade.

5:53And that is mega cap technology, media and telecom stocks. Those are the ones that have assumed kind of a new leg higher in this last move that we've seen. The MAG 7 ETF to that point hit another record intraday high in trading just today. So I wonder if we talk about the broadening out rallies being healthy, something that's constructive, and then we see once again that there's a certain maybe 10 stocks that are powering a lot of this move higher. Is there something to be worried about if that broadening out thesis is not necessarily the primary focus for traders going in the next six months?

6:25Oliver Renick: I don't think so, Dom. It's an excellent point to raise, but the reason that I'm not that worried about it is because these rotations, as we've all seen, from the MAG-7 to the other 493, from growth to value and back again, have happened with such rapidity that I wouldn't be surprised if a week from now we're saying just the opposite. It wouldn't surprise me at all. And the reason that that may happen is because, you know, much as Joe was just talking about technicals and, Stephanie, you were talking about sentiment, and then you got into fundamentals, the fundamentals are really strong to support the broadening.

6:56Oliver Renick: I mean, let's just start by talking about you. Stephanie, you mentioned the Atlanta Fed at 5.1 percent. And let's pair that with unemployment at 4.1 percent. Let's pair that with profit growth at roughly 25 percent. And if we look at next year's S &P 500 numbers, we're trading at 18.6 times. Now, here's the important part. As we go through the back half of this year, It's the other 493 stocks that are starting to increase their earnings acceleration as the MAG7 starts to decrease. Let me be very clear about what I'm saying. The MAG7 growth rate of earnings is still spectacular. There is no question about it.

7:35Oliver Renick: But it is coming off the boil just a little bit. And as that happens, that's allowing the financials, the industrials, materials and energy stocks to really start accelerating. And that's the basis upon which the rally should broaden. Even though, Dom, as you pointed out, the last week, it's been the technology mega cap stocks that have done it for us. Look at Meta. Wow. I mean, what a run there. So, you know, it's interesting because I'm watching Bryn right now, and she's been nodding and kind of focused in on a number of points that you guys have made. She wants in. In the last five minutes.

8:05She wants in. So maybe I'll kick it off, Bryn, with my question to you being, would you be focused on the top 10 market cap stocks or the other 490? And then you can go from there.

8:19Oliver Renick: Okay, well, since I own the Qs and RSP, I would say yes and yes, right? So I think I own both for the reasons Jim said, and also, you know, many other things that everyone said. I will say, going back to Joe's two words, I was thinking my two words for today are oil and yields. And we've seen this very high correlation this year between oil and yields. And so as oil goes down, yields go down, stocks go higher. And so I really think in the short term, this market is going to continue to be very anchored on oil. Because if oil goes back up and this war re-escalates, yields most likely will go higher as well.

8:58Oliver Renick: I do think it's important for investors. I mean, if you go back six and a half decades between the August highs and the midterms lows, We've had a drawdown every single time between seven and then the extreme 25 percent. So I don't know why that would be different. Maybe it will be. But I do think this time that if we get this drawdown, which you really haven't seen, that is going to be a great time to add to positions. Because what happens after midterms is like between November and February are the best times of the year post midterms. So I do think investors need to be aware of that midterm seasonality, which has a perfect track record of having pretty significant drawdowns.

9:39Oliver Renick: But then I would take those drawdowns to add to positions on both RSP and your Q holdings, because to Jim's point, the breadth of earnings is also strengthening. But also NVIDIA, Micron, et cetera, are still making up a huge part of earnings growth. And so I want to be positioned with those types of names in my portfolio as well. Hey, Dom, I just want to key off what Bryn's saying here, because we all obviously were pretty optimistic on what we're seeing. But there's need for balance here. And Bryn points out what's going on with oil and rates. That may have a lot to do with events going on in New York City this week.

10:11Oliver Renick: Last night, you had Vice Chairman Xi of China and Scott Besson, the U.S. Treasury Secretary meeting. And the verbiage that came out of that was very positive. We've got the Iranian president speaking. I think it's tomorrow at the United Nations. We've got President Xi and President Trump speaking together, having a summit on Thursday. And there is a lot of positivity that is expected and perhaps being priced in today from all of those geopolitical events. We have to be careful, right, because we've known over the last two years that there have been a lot of false starts. There's been a lot of head fakes when it comes to geopolitics.

10:45Oliver Renick: So just we have to be balanced and acknowledge there are still risks out there, primarily in the geopolitical space. Now, Stephanie, you mentioned before the sentiment, right? You mentioned AII in terms of sentiment and framing the market moves in context there. It's kind of interesting to bring that up alongside an interesting note that's coming out from Ned Davis research. And basically, the takeaway right now is that it's tough to get too bearish. That's the takeaway from Ned Davis research, especially when they say seasonality turns positive in October. To your point, through year end, we would want to see much more trend deterioration and for longer to become more concerned.

11:21At the same time, let's flip it because this is a bull bear debate. You have Roth coming out this morning saying that leadership holds, but internal trends are cracking. Adding our best guess is for the S &P to pull back to trend similar to March. And then you should treat semiconductors as the signal that decides whether this is a pullback to trend or something maybe worse. Interesting debate and juxtaposition there.

11:49Oliver Renick: Yeah, I do think that there are more negative analysts out there right now, though. And that makes me feel a little bit better, actually. It's like a pile on right now. All of a sudden, everyone's like lowering target prices and lowering multiples and getting defensive. I think that's absolutely the wrong decision. And I go back again to point to the economy. If the economy is starting to roll over, if the Fed decides they're going to go three times between now and the end of the year and surprises people, that's something that you have to watch. But I just believe that earnings are still so strong.

12:22Oliver Renick: And last quarter, we had eight out of 11 sectors that saw double-digit earnings growth. So to everyone's point of the broadening out, we're seeing a broadening out. And that's very healthy. September, on average, is down 2.7 percent over history. October is up 2.8. And November is up 3.9. I am not going to get bearish into the seasonality. And I like the fact that I have fundamentals that I'm anchored to that support the reasons of why I would be a buyer on the volatility. Joe, to that point, I want to bring up another note that caught my attention this morning. And this is coming out of Vanda Research talking a lot about retail trading activity and flows.

13:01An interesting point there is they're making the point that retail activity is now turning lower. It had been seeing somewhat of an uptick and ramp up. Right. But now they're seeing that retail buying had begun to pick up at the start of the month, which we kind of saw. But that momentum has quickly stalled in their minds. One million rolling net buying worth of individual stocks and total listed securities is now rolling over again, reinforcing that the broader retail bid remains relatively subdued. Their words, is this something I mean, because you run an ETF that has retail traffic in there alongside institutions, that window, is it somewhat that you something that you can actually glean something from that retail buying activity?

13:41Oliver Renick: I think that's a response to the choppy environment over the last 30 days. I think, you know, clearly we are challenging the S &P having this 1 % move. But for certain over the last 30 to 45 days, we are void of a significant amount of those types of days. So it's been a very tight range. Volumes have been on the decline. I think where we are today and what's interesting, a lot of people might look upon today and say, well, it is a day in which volumes were lower. Maybe there's not full participation in the market. But let's remember something. Non-discretionary capital doesn't analyze those conditions.

14:23Oliver Renick: Non-discretionary capital sees the result of price. And the result of price is going to be a very powerful and strong reversal higher off of where we were early Wednesday morning of last week. So I think that is what is significant today, is seeing that that non-discretionary capital will engage just reflective of price. I don't know that you need that retail participation. I think retail is sitting comfortably on a lot of existing long positions and didn't feel very compelled to do much in an environment that became choppy and somewhat uncertain, given the rise in oil prices and yields. It could also be yields and switching and buying bonds.

15:07Oliver Renick: Bonds have been a horrible investment. Yeah, we've talked about 5 % being that level where people say, maybe I want to back up the truck a little bit here. I think so. I mean, I would personally myself, because I haven't talked about bonds in forever, but I think the 10-year has to stay above 5 % for a long period of time to see substantial changing and switching. But I do think it's tempting. I would be careful, though, because over the long haul, stocks well outperform bonds, right? Long-term total return for the S &P 500 is 7.7 percent. For the bonds, it's about 3 percent. So you can diversify, but I think some of that retail money is moving into the bond market.

15:44Oliver Renick: You probably want corporate bonds over government bonds, correct? Yes, and munis. Why not munis? But by the way, and you've noticed this, you mentioned before, the spreads, they're not exactly blowing out here right now. They're still relatively healthy, even though they have re-rated a little bit to the downside. Bryn, I want to bring this conversation because the yield story gets us into just how much that story affects the mega cap technology trade. One of the places that has become not just a retail, but institutional darling, of course, is NVIDIA. I want to highlight something interesting here, because over the weekend, we had CBS News sitting down with CEO Jensen Huang over at NVIDIA, and they said that he said, Jensen Huang, that there was a 0 % chance, 0%, those are his words, of AI being the end of the world.

16:29Also adding, he also said that people that are sounding the alarm about the dangers of AI, quote unquote, scaring people is unnecessary and it is irresponsible. NVIDIA is a stock that everybody on the committee here owns today. So Bryn, I'm going to start with you. You mentioned the mega cap trade, you own the Qs. NVIDIA is also part of that story in your holdings. The NVIDIA story, how much can we rely on that as being indicative of that AI trade and sentiment going forward?

16:57Oliver Renick: Well, I think the 10 % is a made up number. And I think zeros, like I would trust Jensen, by the way, he's like in the mothership of AI. It depends like how far AI scales, by the way. I mean, so I think zero, zero is probably also a made up number. But I think that, you know, Jensen giving, you know, comfort around the noise, because to me, we saw this like peak doomerism and peak regulation the last couple of weeks as we feel like Anthropic and OpenAI really want liability coverage from the U.S. government, which I don't think they're going to get. And so I think having the calming words from Jensen is very, very helpful.

17:41Oliver Renick: And so I just think this doomerism in the FOMO goes both ways. And so that's why I own DRAM, the ETF. It's having a really nice day. It's broken up above 60. And I think that you're still going to be with NVIDIA this 230, 236 is where NVIDIA has not been able to get over. And so until NVIDIA gets over that 230, 236, it's going to be range bound between 210 to 230. So I would love to get it to go over that because once it does, I think it goes meaningfully higher. But until it can break out, I would just sell calls, just understand that trading dynamic, which has been very, very solid for the last six months.

18:19Jim, the next step on my mega cap tech tour in this first part of the show is going to be on meta platforms. Interesting analyst note and commentary coming out on meta this morning from Wells Fargo, reiterating the overweight buy rating, maybe no shock there, but the target, it gets raised to$796 per share from a prior$640. Interesting point being made here about whether or not those types of stocks on the mega cap side of things deserve to be rated higher or priced for a higher band going forward. And nobody owns it,

18:54Oliver Renick: by the way, meta platforms, but what would get you into it? Well, when you say those types of stock, I mean, obviously that's open to interpretation. The way I interpret that is a kind of cheap stock. And I mentioned meta just a few minutes ago, not only because it's cheap, but because the market is clearly preferring meta right now over a number of names. I mean, this run from$600 to$700 is impressive. It's happened in a short time frame. There's fundamental reasons behind it. This shift in the compute strategy where they're going to sell excess compute is something. It took the market a little while to get its arms behind it.

19:27Oliver Renick: Dom, if you don't mind, I'm going to call a little bit of an audible here, but maybe front run something we're going to do in a second. I see a similar setup with Qualcomm right now, which I added to today. I doubled my position in it. I did actually trim it by half back up at 230 during the parabola storm in May. And, you know, look, I could have bought it at 160. There's no question about it. Bought it back, that is. But what I see here is momentum. It's up over the last month about 19 percent. They've got a mean data center business that's growing. And just like with Meta, the market is waking up to the fact that this is not what they thought it was just a few months ago.

20:02Oliver Renick: OK, Qualcomm is not. I'll make this real quick. Qualcomm is not just a smartphone chip manufacturer. Automotive, Internet of Things, and data center, that's what the market's waking up to. Joe, go ahead. Let's talk about what's going on with the Mag7, because we're going to get to the same place in terms of we think that Meta is seeing the positive momentum because of fundamental condition. But I think what's going on here, and I think it's also affecting Apple, is now we are delivering on a tangible product that the consumer can actually see. In the case of Meta, that's the AI assistant. That's Muse.

20:37Oliver Renick: All the skepticism, all the questions around the spending, where's the monetization for the spending on Meta? Maybe now you have a glimpse into that there is the monetization of spend on delivering a tangible product. And I think that's what the street is seeing here with Meta, that potentially Muse is something that the consumer can understand. And I think the same dynamic is going on with Apple, where ultimately, as Apple looks like it's pressing towards a new all time high, Apple is going to give the consumer that tangible product as well. You are seeing monetization from a lot of the mag sevens.

21:15Oliver Renick: I mean, if you think about AWS growing 37 percent, Google Cloud growing 82 percent, Azure up 43 percent. I know it's not what we want it to be. We want it to be a lot, lot higher. Consumers don't feel that and see that. I understand. I understand. I understand. But I do think the multiple contraction has been substantial. I was just looking at Amazon's. I own it, of course. It's at 20 times. It's 10 year historical averages 44 times. Cheaper for NVIDIA as well. Oh, well, and I just recently bought NVIDIA when it was really almost at the lows, actually. I got lucky because to that point, Dom, NVIDIA, the long-term multiple average, 35 times, and it's trading at 17 times now.

21:57OK, so we're going to go from Muse and Meta, Siri and Apple to Gemini and Google right now, because Google's Gemini did become the latest AI model to hack an outside computer system. Our Mackenzie Cigalos joins us now with the latest in this monetization story, Mac. Gemini at Google is something that they are actually hanging their hat on. So tell us what happened with Gemini over the course of this past weekend.

22:21Oliver Renick: So Gemini now part of this prestigious, albeit infamous, club of frontier AI models breaking out of controlled tests and into real world systems, a designation that Google had largely managed to avoid to date. But this happened during a cybersecurity evaluation where Gemini agents gained access to the open Internet from a closed sandbox, found credentials online and then ultimately broke into three companies. These incidents raise serious safety concerns, but they've also become almost a way of proving just how capable a frontier model is, especially for the private labs trying to show that they're at the cutting edge.

22:55Oliver Renick: Up until this attack, Google had stayed out of that conversation. But the company tells me there's an important distinction in Gemini's case that once the model realized it had reached real companies, it stopped on its own. They say that shows that its safety measures worked. But the question of what happens when these models cross into the real world is reaching the highest levels of government. Treasury Secretary Scott Besson says the U.S. and China discussed a new system over the weekend for alerting one another to serious AI incidents. and alphabet Sundar Pichai is among the tech CEOs expected in Washington this week as President Trump meets with China's Xi Jinping right as its model is now part of the safety debate.

23:33Oliver Renick: Dom? All right. Thank you very much, Mackenzie Segalos, for that. Mac, thank you. We're getting some breaking news, by the way, out of Washington, D.C. At the moment, Megan Casella is at the White House with the latest. Megan, what can you tell us? Dom, just in the last few moments, we heard from President Trump on Truth Social once again talking about concerns over AI, saying that any safety concerns there are a hoax. But he also presented the Justice Department as a possible safety backstop on AI. So here's part of what he said in his post. He said, I'm not going to stifle growth of something that will be bigger than the Industrial Revolution or the Internet itself.

24:06Oliver Renick: We will be careful. And that's why we have the Department of Justice and other law enforcement bodies that will rein things in if we have to. But I will only encourage AI. So, Dom, the key language there being rein things in if we have to. I want to be clear here. The Justice Department is not a regulatory agency, so he's maintaining his stance of no new regulation, no safety regulations around AI for now. But the Justice Department could be something of a backstop here as an enforcement matter. Importantly, the Justice Department couldn't really act until after a safety incident did happen. If something happened, they could potentially go after a company and hold that company liable for whatever did happen.

24:43Oliver Renick: But the president now saying they will, of course, be careful on AI and rein things in, he says, if they have to. All right, Megan, trying to identify the toolkit here for AI. Thank you very much for that. Coming up on the show, the crypto comeback as Bitcoin hits its highest levels going back to January. We're going to see where the committee stands on that trade next. Halftime is back in two.

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27:00All right. Welcome back. Crypto prices are rising sharply with Bitcoin hitting its highest level going back to January. We're currently at 85 ,791 and change. Bryn, you've got a decent amount of crypto exposure. So take us through whether this feels good to you and whether or not you think there's any move that's constructive going forward.

27:22Oliver Renick: I mean, I think just looking quarter to date, the S &P is up around two. I think the Nasdaq's down three. Ethereum's up 66 percent. Bitcoin's up similar to that. But they're both still down for the year. Ethereum's down seven, Bitcoin's down a couple percent. That being said, you're definitely above the 50, above the 200. And I think just like software, where just like there was so much FOMO around AI, that's clearly now broadened out. And so I think like software, Bitcoin and Ethereum will continue to slowly move higher. There may be some backfilling because it's really had this massive move, as I just said earlier.

27:59Oliver Renick: But I do think there'll be some backfilling. But I think setting up for 2027, both both securities to me look way more constructive than they did three months ago. All right, Stephanie, I'm going to go to you because you're a Coinbase person. I am. It's a small position, but I want to have exposure to crypto. That's where the Gen Z's and Gen Alphas are actually investing their own money today. And I want to be part of that. In addition, this company has a very diversified revenue mix away from transactions, more into subscriptions and services. I can't tell you the day to day price of crypto or Bitcoin, but I do want to have an exchange that benefits one way or the other.

28:37All right. So let's talk a little bit more about this. Oliver Rennick is following some big options action in that aforementioned crypto trade. He joins us live from the SIBO Global Markets Out in Chicago. Oliver, what do you got from Chi-Town?

28:51Oliver Renick: The risk on comeback. Crypto options traders are indeed jumping into action. Volume in Bitcoin ETF, IBIT is four times the 30-day average. In MSTR, it's two and a half times. Flows are leaning clearly bullish with more than twice as many calls, bot versus puts in IBIT. The same in master, though some call selling also suggests traders are hedging some of these upside bets. The strongest short-term aggression is in strategy, where bulls are buying calls at strikes from 170 to 175 and even the 200 strike expiring Friday, which is a bet on a 30 percent rally in MSTR in five days. Ibit bulls certainly aren't shy either.

29:35Oliver Renick: The most popular contract by volume bought today is the 70 strike December 18th call, which needs Bitcoin to trade back near its all time high of just under one hundred and thirty thousand. Market makers are pinning the odds of that happening at about 12 percent and selling that contract for about 46 cents, Dom. Interesting options action for sure. Thank you for Oliver Ennick over at the CBO Global Markets. We appreciate that. Now let's send it over to Frank Holland with a CNBC news update. Good afternoon, Frank. Good afternoon to you, Dom. Iran said today that it would use new weapons in target locations that have not been previously attacked if the U.S.

30:12Oliver Renick: launches a new offensive. The Iranian Revolutionary Guard made that statement to the Fars News Agency, adding Tehran is prepared for a prolonged conflict. It comes a day after Fox News correspondent said he spoke with President Trump about the situation in Iran, who reportedly said the choices were on the table that were on the table are wiping Iran out, letting them rot economically or making a deal. The Federal Aviation Administration issued a ground stop today for Newark Liberty, Philadelphia International and Teterboro airports because of an equipment outage affecting air traffic control. According to the flight tracking website FlightAware, more than 300 flights into Newark and Philadelphia have been delayed as a result.

30:51Oliver Renick: And Donatella Versace is partnering with Gen Z fashion retailer Revolve. The two announced a partnership today to create a new beauty and fashion business. It comes after she stepped down as the Italian fashion house's chief creative officer in 2025 after nearly three decades. Revolve says the name of the new venture, its creative vision and first launch will be revealed in the coming months. Dom, back over to you. All right. Thank you very much for that, Frank Holland. And coming up on the show here, the very latest on the battle for GLP-1 dominance. Eli Lilly is breaking ground on a new manufacturing facility down in Houston, Texas.

31:24And CEO Dave Ricks is standing by for a CNBC exclusive interview. Keep it right here. Halftime is back in two with that must watch.

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33:17The Dow is up at session highs, up 325 points. Still ahead on the Halftime Report, our CNBC exclusive interview with Eli Lilly, chairman and CEO David Ricks. But first on ETF Edge, we're going to look ahead to this week's high stakes meeting between President Trump and China's President Xi Jinping. And with bilateral relations in focus and AI threading through just about every investing story these days, What do you need to know about investing in China more specifically and Asia more broadly? That story is coming up on ETF Edge on The Halftime Report. Keep it right here.

33:57All right, welcome back to Halftime Report. We're back with today's ETF Edge. President Trump is hosting China's leader Xi Jinping later on this week. Now, from AI to trading, right, and those relationships, the two have a lot to review. So is now a good time for you to review the prospects of investing in China? Joining me now is Brendan Ahern, the CIO at CraneShares, runs one of the largest ways that people express a view on China, which is the CraneShares China Internet ETF, KWEB. So, Brendan, if you could, maybe some insight from you on just where you see people trying to take this view either on China as a broad macro play or on China more specifically as an AI play.

34:36Oliver Renick: I think it's a little bit of both, Dom. that first and foremost are seeing, particularly in the options market, a lot of call options in K-Web, very big open interest on that ETF. I think people are expecting a particularly better than anticipated outcome. At the same time, there are AI plays, obviously Alibaba, Tencent, and Badoo with cloud. And then you have direct large language models like ZAI and Minimax in the portfolio. And then companies like Lenovo, which makes AI driven servers. How much do people focus on, and it has been for years now, the kind of upper echelon market cap of these Chinese tech and internet related companies versus many of these other ones that we're hearing a lot more of because of the AI trade, but not necessarily ones that are worth the same amount that a Baidu or a Tencent or an Alibaba is?

35:24Oliver Renick: I think this is where the underlying index, which drives ETFs, is so key. So MSCI's definition of China is 80 % Hong Kong. Alibaba and Tencent are a very big percentage of that index. At the same time, the Shanghai and Shenzhen, which is only about 15 percent of the index, those semiconductors that we hold in our China semi fund, KSTAR, is up 31 percent year to date. So, again, global investors, their definition of China is Hong Kong, which is having a rough year. But if you look further afield, there are companies in China really benefiting from AI hyperscalers, And that's in the case star in the semis play.

36:04So we're going to watch and see investors. You've got a lot more in tune to the mainland side versus the Hong Kong side. Exactly. All right, Brendan Ahern, thank you so much for that. I'll be speaking with both Brendan and more over at the halftime over at ETFEdge.CMBC.com. We're going to be joined by Andrew Maddock, who's a portfolio manager at Matthews, specializing in Asian investing as well. So we'll keep an eye on that. Up next on our show here for halftime, the exclusive interview with Eli Lilly CEO David Ricks. Keep it right here. We're back in two minutes.

36:47All right, welcome back. We're back on the Halftime Report. Novo Nordisk, or I guess Novo these days, those shares were falling after the company laid out long-term goals that failed to ease some concerns about its ability to compete with the weight loss market giants out there. Meanwhile, Eli Lilly is breaking ground on a new manufacturing facility to produce its new obesity pill. That's where we find our Annika Kim Constantino, who's at the site in Houston, Texas, with a CNBC exclusive interview with Eli Lilly Chairman and CEO David Ricks. Annika.

37:19Oliver Renick: Hey, Dom, thanks so much. Let's get right into it. It's so great to see you again, Dave, and it's so great to be here in Houston. Behind us is around 240 acres of land that will be the site of your$6.5 billion manufacturing facility. So tell me, how much additional manufacturing capacity will this contribute to your obesity pill, Foundao, here? Yeah, well, thanks for covering this. It's a big day for us here in Houston. Another new site. We're announcing 10 sites in the last few years. This is one of them. This is really going to focus on the synthetic medicines or chemical APIs. So that's or forglopron or Foundao or oral GLP-1, and then follow on products in that line.

37:57Oliver Renick: But also other kinds of medicines can be made here as well for domestic use, but also shipment around the world. Got it. And when you joined us on air in April, you said around 20 ,000 patients had started Foundao and more than 1 ,000 people were starting the pill each day, just a few weeks into that launch. Yes. Can you give us the latest numbers on those metrics today or any kind of new color on what the launch has been like so far? Yeah, I think I said at that time, we're going to be fine. We're building a new brand with a new medicine and educating doctors. And then this summer, we'd go out with consumer advertising.

38:28Oliver Renick: All that's happened. You may have seen our Martha Stewart ads and raising awareness for the brand. So, so far, so good. About one out of three new starts for orals and the oral, pretty new oral category for GLP-1 medicines is going on to Foundale. And that's growing week on week. And then, you know, the federal government launched this new coverage for seniors. And in particular, seniors seem to be interested in oral solutions. And we're doing well there as well. So a good start continues to ramp. We're confident long term we'll make found out here. And then we've also launched in four or five international markets, and we expect many more in the next six months.

39:03Oliver Renick: International is a big part of the oral GPO-1 story because of capacity and the efficiency in which we can make this medicine. Again, we'll make it here in Texas and ship around the world. Great. And you talked about government coverage. So now we've had more than two months of Medicare coverage of obesity drugs for the very first time. Walk me through what you're seeing so far. You know, what percentage of new Zephound patients, for example, are now coming from Medicare and the same for Foundio? Yeah, so big start so far. I think there's about 700 ,000 new seniors who've started on GLP-1 medicine just since July 1.

39:36Oliver Renick: So that's very encouraging that seniors are talking to their doctors. They want to manage their weight. They understand there's long-term health consequences. It's very market expansionary, which is what we had hoped. Lilly's doing well in that. We're capturing about 7 out of 10 of those new patients. and a lot still on ZepBound. I think still we see physicians focusing on those with the most body weight and the most complications. That's where ZepBound plays a big role. Founday will play a bigger role for patients who want the convenience but also maybe just need to lose 25, 30 pounds, and that will help them control their obesity but also diabetes and other indications that are coming.

40:13Oliver Renick: So I'm pretty pleased with how it started. I have to give a hats off to the government. Actually, CMS probably isn't letters you think about when you think about efficiency and effectiveness, but they did a nice job rolling this out, educating physicians and working with both companies as well as the insurance system. I really haven't heard that many problems with the logistics. So good rollout so far, and lots of people are benefiting from this new policy. Great. And so you said you're expecting U.S. regulatory decision on Fandeo for type 2 diabetes later this year. So how much additional demand will that new indication unlock?

40:47Oliver Renick: and is this expected to be expansive to the diabetes market in the same way that it has been with obesity? I think we know that many, many people with diabetes who either have tried a GLP-1 and like it or who have not yet are really looking for an oral solution. Most of the medicines we use early in the treatment of type 2 diabetes are oral. It may not be well covered, but actually today still the oral GLP-1 medicines are the same size as the obesity market. That seems hard to believe, but it's about the same size market. So that's a big expansion for Foundio. We're anxious to get FDA approval and begin offering another new treatment option.

41:22Oliver Renick: And Foundio is an outstanding medicine for people with diabetes. We had data this spring that showed excellent A1C control, more than two points, great weight loss, and actually a cardiovascular benefit seems to be emerging that's even beyond our expectations. So we're excited about this. There's more data actually next week at the EASD, that's the European Diabetes Meeting, on Foundeo, on Ritatutide, our next generation GLP-1, and on a new combination of Terzepatide plus another experimental amylin medicine called Aluralintide. So big week next week for diabetes and obesity data. Great. Well, thank you so much, Dave.

41:58Oliver Renick: Back to you, Dom. All right. Thank you very much, Annika, Ken, Constantino, and of course, David Ricks, Eli Lilly as well. Joe, let's kick it around here because you own Eli Lilly for a stock that now trades at 28 times forward earnings and is up decently this year, but is up 55 percent over the past 12 months. Is this a stock that can continue with the momentum it has given the product pipeline that Dave Ricks just laid out? Yes, I believe that, in fact, it will. A trillion dollar basically biotech close to a 30 times valuation. You're getting significant growth built off of the GLP-1 medicines.

42:35Oliver Renick: But also, this is a company that is now going out and diversifying. Significant M &A transactions,$20 billion so far, year to date in 2026. So, taking that revenue that they are deriving from the GLP-1s, expanding market share, clearly there's challenges for Novo Nordisk. We see that. They are dominant. Eli Lilly is in GLP-1. ones that say, OK, we accept that significant revenue growth. Let's diversify the business model into other areas of health care services, different biofarmers. And that's going to set us for long term futures success. Rather, I think that's exactly where they are. Jim Labenthal, would you rather Eli Lilly or somewhere else in biotech or biopharma these days?

43:23Oliver Renick: Well, I happen. OK, so I don't own Eli Lilly. So I'm voting with my money. Having said that, I have to note that Eli Lilly's valuation has come down quite a bit, and it's becoming quite attractive. I think the real question is, can they diversify beyond GLP-1s, beyond obesity? Now, I'm saying that at the same time recognizing that these GLP-1s have a wide array of indications beyond just obesity, as was just pointed out with regards to cardiovascular. But I do like more diverse, what I perceive to be more diverse pharmaceuticals like AbbVie, like AstraZeneca, like Vertex. All right. Thanks very much for the Eli Lilly discussion there.

43:57Coming up next on the show, we got Mike Santoli joining us with his market memo. So keep it right here. Halftime is back in tune.

44:20All right, we're just a hair below session highs right now. And that Nasdaq trade, by the way, is up 2 % right now. Now, we're back with senior markets commentator and overtime co-anchor Mike Santoli with his market memo. Mike, I could generically ask you what you're looking at, but I want to look at something specific, which is the rally today and what Joe called it earlier, a risk on situation.

44:41Oliver Renick: Yes. Now, obviously, people are happy to take on a little more risk today, but I wouldn't say the leadership represents genuine risk. We're going back to the mega cap companies, the AI trade, the Mag7s, which have some defensive properties and have basically radically lagged what's happened with their earnings forecast. It feels to me as if there's like a first in, first out kind of a situation happening, which is semiconductors in particular. They've been on the outs for three months. They had a 30 percent drawdown. They've been struggling to kind of get back in gear. Maybe they're doing that right now.

45:17Oliver Renick: Now, I think bigger picture, it's the AI consumption story, which is helping more than the AI construction story. And it follows the kind of the doom, you know, end of humanity talk last week in a similar way. And I was saying this last week, the Cetrini research piece on death of software in February, it happened closer to the low in software stocks than toward the peak. And so I just wonder if something similar is going on. where we've kind of had a bit of a fit around this possible long-term risk. We sold out on it. We got washed out. That being said, it's a pretty narrow rally today. We're back to that mode.

45:53Is mega cap tech going to be the quote-unquote safety trade again, like it was like four or five years ago?

45:59Oliver Renick: I think it's sort of reacquiring those attributes at this point. I would look to, though, I mean, you have obviously oil and yields cracking pretty hard today, so that's clearly giving an extra bit of lift. But it's not creating a super broad market where the cyclicals are working and everything else. So I'll reserve judgment as to where we go from here. Clearly, last week's low post Fed seems meaningful on a tactical basis, at least being treated as such right now. All right. Two percent gains for the Nasdaq so far today. Mike Santoli, we'll see you later on in overtime. All right. So coming up next to the show here, we've got final trades.

46:31Keep it right here. Halftime is back after this commercial break.

46:37Welcome back to the Halftime Report. We are now here with final trades. Bryn Talkington, to you first.

46:44Oliver Renick: Uber. I like the stock at 70. It has a trade between 70 and 78. So I think it's a good entry point here. All right. Uber for Bryn. Jim, to you. Well, I'll be honest. I delayed my final trade until I heard what Mike Santoli had to say. And based on that, I'm going with Micron. I mean, it's similar to Qualcomm where this has been an unloved stock. All the chip stocks, as he pointed out, have been dead money for the last three months. I see them coming back to life. All right, Steph, how about you? So in health care, I like Natera. I continue to like Natera. I've owned it for a while. I buy it on any pullback.

47:16Oliver Renick: This is a play on women's health, organ health, and oncology. All right, and Joe Terranova. Rebuilding positions in data software, and that takes you to cloud security as well. Datadog is the name that you want to own in that space. All right, thanks very much to the committee today. That does it for the Halftime Report. The exchange with Brian Sullivan starts right now. You've been listening to CNBC's Halftime Report, the podcast. You can always catch us live weekdays at 12 Eastern, only on CNBC. All opinions expressed by the Halftime Report participants are solely their opinions and do not reflect the opinions of CNBC or its parent company or affiliates, and may have been previously disseminated by them on television, radio, internet, or another medium.

48:01Oliver Renick: 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 forward slash Halftime Report disclaimer. Which NHL teams are scoring big off the ice? CNBC Sports' Michael Ozanian has the numbers.

48:30Oliver Renick: If a dive margin in the NHL is right there with the NBA. Official NHL team valuations revealed Friday in Squawk Box on CNBC.