The Investment Committee's Q4 Strategy 10/1/26

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1:12Welcome to the Halftime Report. I'm Melissa Lee and for Scott Wapner today, front and center this hour, the Investment Committee making some key moves as we kick off the final quarter of the year. We'll run you through those trades. Joining us for the next hour, Malcolm Etheridge, Surat Sethi, Bill Baruch, and Josh Brown. Let's get a quick check of the markets as we kick off this month of October. We are starting off with slight declines across the board on the major averages. There's fractional losses here. Dow looking down right now by about a third of a percent. S &P 500, ditto, as well as for the Nasdaq composite.

1:40Ten-year Treasury yield, that is where all eyes are on right now. 5.247 percent. We had been up to as high as 5.3 percent, roughly the highest levels we've seen since 2002 or so. So I guess when we look at this March higher on yields, is this going to be the new normal, I think is a big question for markets, because we seem to be digesting it pretty well at this point. Sarat, what do you think? A hundred percent. I mean, we're in that quiet period without earnings right now. So you've got macro, which is geopolitical, which is kind of every day what's happening. But then the rates, because that's what the market's really focused on.

2:14That's where valuations really are anchored. what's the credit market going to do on this as well, right? Spreads, whether they're going to keep on widening. And I think all those issues then dovetail into the equity market, because where do you get any liquidity from is the equity market. So I think that's what we're watching. And when you see the 10-year, I mean, it's amazing with the correlation as to how it is. So I think we're watching that. We're trying to see. And then even within the equity market, if you see, you know, the rates go up, the defensive sectors that were normally defensive also get sold off because then you get dividend substitution.

2:48So a lot going on until we really get into, I think, earnings, which will then satisfy at least where we think the market's going to go. Yeah. Malcolm, what's your take here? I'm hopeful to your point that earnings are going to actually satisfy investor appetite at this moment, but I'm not as sure. You would imagine that because earnings growth is expected to be as strong as it is that we're going to get the positive results that we want. But when you look at something like Anthropics IPO being pushed out till November, you look at Aura shelving their IPO, we were going gangbusters in the first half of this year in terms of investor enthusiasm.

3:23And now you see the semiconductor trade that carried it unwind. Everybody's moving back into the MAG-7. The expectations for the MAG-7 stocks, specifically the hyperscalers who are spending all this money to build out their data centers and such, they really have to show up. in a big way. I know we're going to talk about Micron earnings at some point today. If you just look at the movement in Micron, I think that could be apropos of what Q3 earnings could be. The semi-cap or the semi-memories are doing kind of what the semi-stocks did when all of them blew out their earnings like Nvidia, right?

3:56They're not going anywhere. So that's my whole point. And then if the hyperscalers actually don't show that they're actually have the free cash flow for it, I think you could get that negative. However, However, the other side could be, hey, we're going free cash flow and we're spending. So we are going to have to see where the market runs with that. Touching back on the treasuries, I think it's something that's really important right now. And I'm going on a little bit of a limb here. I think we're getting a low in the bonds this week and barring a blowout nonfarm payroll number. I think what we saw yesterday with PCE, yes, there was adjustments mechanically in how that is measured.

4:30But they're moving from investment advisor fees, I think, is a good way to start smoothing some of that that's rising with the market. But the tech spending, and it was really going under the consumer category. It's moved to PPI. So the market really swept this number away and forgot about it. I mean, we had an early reaction, and then the treasuries sold off. And by the end of the day, the equities had basically gone unchanged or even lower. Barring a hot nonfarm payroll tomorrow, I do think we're building out of bottom. I think there's definitely some window dressing selling in treasuries. You know, as a wealth advisor, we may not be liquidating clients' treasuries here or clients' bond holdings here.

5:08But institutionally, I think there's definitely some window dressing taking place. I think the carry trade is also a factor here in the bonds sell-off. We're seeing, you know, Japan looking at their hiking rates. But I think right now we're not seeing the yen currency rise as well. I think that's something that's also important because they're forecasting maybe the U.S. to be at a faster hiking pace than Japan. You just gave me a reason to believe that the bonds have not put in a bottom. OK. In terms of yen and in terms of oil, too, don't we need to believe that we've also seen a top, a peak in oil in order to believe that we've seen the calf on yields?

5:46Josh, what's your take? There seem to be a lot of other factors here involved in terms of yields and where they're going at this point that are out of our control that are beyond earnings season. Melissa, I always knew we'd be on the air again. I didn't know when. I was waiting for the day. Today is the day, October 1st. I've missed you. All right. To answer your question, I think it's fairly simple. Oil prices are wreaking havoc with inflation expectations. I wouldn't say inflation expectations are getting out of control. I think they're fairly well anchored. But the longer this drags on for, the more difficult it becomes to think that we're going to see a resumption of that broadening trade that we all had so much fun with this summer.

6:34I mean, Bank of America is in an 18 % drawdown right now. Nobody's even talking about it. That's a pretty substantial correction in a blue chip Dow stock. Like six months ago, it looked incredible. And there are a lot of other examples of that. And I just I think the rates thing is kind of amountable for large swaths of the market. The good news is it doesn't matter because the mag seven is back to mag seven. And I think the thing that people get wrong about these stocks, they think of them like growth stocks. And, yes, these are companies that are growing, but they're really defensive. And this is what investors rotate to when they get nervous.

7:13And that's I mean, we've seen it like 10 times. I don't know why I have to keep explaining this. the mag 7 on a year-to-date basis is now back to beating the s p 500 it's up 12.8 year-to-date spx is plus 11.8 meanwhile the if you equal weight them look at the max etf mags you you've got basically a group of stocks that are trading collectively at 24 times earnings forward the equal weighted version is expecting 21 earnings growth so that's lumpy Obviously, they're not all equal. Tesla is not Alphabet. But that's why people use these as a safety trade. They may not feel good about oil rates, the latest inflation reading, what's the next labor report, what's Warsh going to say.

8:00But they do know these companies are going to do the number. And I think you see asset managers rotate there. Last thing, very quickly, Apple, Meta, and Microsoft right now are all within single digits of a new 52-week high. and in most cases an all-time high. NVIDIA is less than 5 % away and looks like it wants to break out like literally any second. You may not get a resumption at broadening trade, but we may end up with a good finish to the year. And these stocks will be the ones that help us get it done if in fact that's what ends up happening. You get a meaningful drop in rates or even a cessation in this relentless March higher, you'll get the rest of the market back too.

8:42Maybe not all of it. But to Josh's point, financials, materials, discretionary, real estate, utilities, all down 6 % or more in September alone. The sectors that really are tied to the broader economy are all down. And Josh says a lot of provocative things every time he appears on the halftime report. I'll give you that. But I think one of the things, there you go, Josh. One of the things that he said is basically that as you see the markets go higher, fueled by the tech trade, What we're actually witnessing is perhaps a defensive tilt to the market, because that is where the defense is. The rest of the market has just been walloped.

9:22And it's rate sensitive. It's rate. The rest of it is rate sensitive. I mean, financials for the past month down 7 percent broadly as a utilities. Staples. But if Bill is right that the bond market is now reached its bottom, is this not the moment where you want to be loading up on the financials? When this carry trade and with bonds in the headlines the way they are, it's really the move is happening before we all really realize it. I mean, the selling has already taken place. I think the worst of the selling has already happened. I think we're digging out a bottom here. And really, when you look at when the Fed hikes rates or enters a hiking cycle, bonds bottom.

9:59When they go through a cutting cycle, bonds sell off. So are you rotating into those bombed out sectors? You know what? We're a little bit. I mean, we've trimmed industrials significantly in July, and we're starting to. I think we're going to touch on some of these moves. We can jump right into it. But we're starting to rotate a little bit looking at industrials. I hope you're right. The bond market just takes so long to finally tell us anything, right? It's kind of like asking your granddad to tell you a story. Like, I know there's some wisdom in there somewhere. I just really want you to hurry up and get to the important part.

10:32And that's how the bond market. Well, growing up, I mean, cutting my teeth on a trading desk, the old saying was the bond guys are always right. And you want to see what they're doing. Sure. Yeah. The bond market's going to lead it. But, Bill, as to your point, yes, when you look at, you know, Bank of America, but look at Morgan Stanley, J.P. Morgan. All of them, yeah. Morgan Stanley was$220. It's$182. You know, and if you think kind of that's the business you want to be in, this is the time to, we were cutting it back at those levels. Now we're going to start adding back to these levels for especially clients that are underweight.

11:01if it's financials or commodities or it's copper. And all these things have been sold off technically, not really fundamentally. So I think that's kind of the opportunity. Does it matter the nature of that bottom for bonds, Bill? I mean, if we say, OK, this is the worst of the sell-off and we're here, but we stick at 5.25 % on the 10-year yield and we don't give that up, does that spell relief for those other sectors that haven't hit already? I think it would be difficult to see them get back to where they were this summer. But you've got names like Citi, you've got the XLF, all breaking the 200-day moving average, which I don't think is a sell signal.

11:36I think it's talking about where you can look to be buying some of those names. We're not buying them just yet. But about the bond move itself, it's about the velocity in which it's happening. And it was a quick move over the past two weeks. That's what's really started to deteriorate that breadth even further. If you look at the bullish percentage index, which has the number of stocks in the S &P 500 that are in bullish point-and-figure patterns, It's at 34 right now. Given the March low, this hit about 31. So we're at such levels where when the market was, I mean, the fear was really there. The only difference here is the VIX is in the mid-teens compared to then.

12:12The VIX was in the mid-20s. So that's the only thing. But typically, when you start to see this bullish percentage index of the S &P 500 at these levels, the probability leans towards a sharp rally higher. And we're only 2 % to 3 % from record highs right now, which really gets me excited for quarter four. Josh, are you going to start dipping in? I mean, do you think that we have seen that sort of bottom in bonds, the peak in yields? Well, I don't know if this is good news to anyone. The one year is down five basis points today. So that's that's cute, I guess. I came on the show last. I want to I want to say last Tuesday or I I don't know.

12:53The days are all the days are all blending together. I came on within the last week and said the opposite. What we're doing here is we're looking at a two year at or around five percent. And we're saying, you know what? We have all these portfolios that have ridden this market up and up and up and up. And what we're having our financial planners do. And it's hand to hand combat. It's one conversation at a time is go to those clients who once upon a time had a 60-40 that now looks more like an 80-20 and rebalance back and look at this risk-free rate we can earn. Not that we're like gushing over 5%, but like, my God, as a risk-free rate of return that's actually positive in real terms relative to inflation, If we can hang out there, that gives us the ability to capitalize on whether or not we have a market dislocation.

13:48We're all talking tentatively, and the stock market's within 2 % of an all-time high. Could you imagine we get down 500 basis points from here the way people are going to be talking? So if you do nothing at all, OK, that's your prerogative. I guess you won't have taxes next year, but you also won't have that dry powder, that flexibility. And we want to have that. So this is what we're doing. And I don't know, man, a two percent, a two year treasury at five percent, given all of the things facing this market right now. It doesn't sound like the worst idea to look at those asset allocations account by account and say, all right, we let this run far enough.

14:33Let's do something adult and responsible. We've done this before. We'll do it again. This is our job. I think that makes a lot of sense. And I think that's a conversation a lot of people, investors are having right now in terms of if I do, if I had$10 ,000 right now, would I put into a stock market that's 2 % from all time highs? Or would I go basically not risking the premium too much and get a 5 % return? At this point in time, what would you do? So I would say depends on your allocation. So if you're retired or close to retirement or you need the money, absolutely, you get a diversified portfolio with some bond allocation to it.

15:08If you're young and you're in your 20s and 30s, don't need this money for 20 or 30 years, your dollar cost in. But you want to stay in equities. I'm a big believer that the allocation needs to fit your risk profile. So a young person should not be in bonds, but doesn't need to initially put the 10 ,000 in today. Maybe you do it over the next three months or six months. But I do think you don't need to chase here, but you don't need to be out of it because timing is just, we've talked about that at length. the eighth one of the world is compounding. And if you're not in it, you just never will chase it because when are you going to get back?

15:41How does that compare to the pyramids? Compounding. I think it's the first. I think it's Albert Einstein said that. It is a great quote. Let's go to some of the committee moves because we do want to get to it. I mean, obviously, we like broader markets, but we like individual stocks. Malcolm, you're buying more rocket companies. Why would you do that right now? We've now spent 15 minutes talking about interest rates and bonds and all the other exciting things about it. And the mortgage 30-year fix is 7.58%, 7.6%, I think, now. I think we basically just made a case for why we may be at the bottom when it comes to some of the fintechs that are extremely rate sensitive, like a Rocket, for example, which cannot get up off the floor until the 30-year fixed rate mortgage finally makes a move.

16:20But with the selloff we just got yesterday, I think the stock is down just in the last year to date. The stock's down like 40%. But it's also the least dirty sock in the hamper when you compare it to like a United Wholesale, Kenny Mac, the other servicers and loan originators that it competes against. So underneath the surface, they've been taking market share from the other guys. Underneath the surface, they've been getting vertically integrated and making sure that they pay a little bit less each time they originate a lead now because they're going direct to consumer a lot more now than they used to.

16:51And so those things will do well the moment we start to see a break in those rates. We've been talking all year, basically, since the end of February about rates being elevated. And so I think the likelihood that we see them continue to go up versus finally going in the right direction, we're probably closer to that end point. So I just think it's a good time to be adding dollars now to a stock that's been beaten down tremendously versus to the point that I think you guys were all making a second ago, piling more dollars into something that has worked tremendously well, 2 % away from all-time highs.

17:22Bill, you're buying a company that I think doesn't get too much airtime, at least on CNBC. Mitsubishi Heavy, why? With an industrial, we found ourselves in a good spot. We trimmed industrials pretty well by about 25, 30 percent in middle of July. Industrials in general have come back. And we were thinking, do we want to be adding the names we have, which we like, like United Rentals and Eaton or just some of these ones we already have? But we decided to move in a different direction. I think kind of moving away from some of the traditional ones and looking at in Japan, I think you could be at a good renaissance, industrial renaissance developing in Japan.

17:58The biggest is maybe World War Two that could be taking place. I mean, they cover energy, shipbuilding, defense. I think that defense spending is going to really start to pick up. It's down on the year. And I mean, it's had a big run coming into this year, too. So it really gives us some international exposure while not just leaning into. I love a Wab Tech and I love URI that we own. but not leaning into and concentrating on some of the names that we already have. Josh, you're adding to a position that was your best position in Q3. So how much more did you buy Snowflake and why? Yeah, so my first purchases in Snowflake, which we did here on the show, were 280-ish, 286 or something like that.

18:40I added at 303 and I just added again yesterday. I like to buy when the market is confirming that I'm right. Uh, I don't, I don't, I'm not against averaging down, but I love to average up and my stops get raised along with that. I don't, I don't view snow as like a forever position. I just think it's really well positioned for the realization that's happening right now in AI. And we did a whole thing on this show about it so people could look it up. I'm not going to repeat it, but the basic premise is that snowflake has perfectly gotten the message across to its enterprise customers, hey, you no longer need to move data to this platform, to that platform.

19:24We don't need spreadsheets. We don't need to copy paste. We don't need permission, 50 different attachments. You actually can run all of your agentic workflows right here in the data warehouse, in the data lake. That is an extremely powerful change in what people thought of this company even six months ago. Give me a one-year chart And you'll see I'm not the only one to have come to this realization. Snow is going to report in December. So they're a late reporter. They're expected to do 77 percent of 71 percent year over year earnings growth when they report 97 percent cash flow growth. The amount of large enterprise customers spending big dollars on this platform is going up and up and up.

20:08It's becoming a new A.I. darling. And the market is confirming that I want to something. So I am adding as the stock rallies. Sarat, I don't necessarily have a buy or sell from you for the fourth quarter, but how are you thinking about the fourth quarter in terms of where you want to be and what you might want to trim? So what I'm looking at are what I call fallen angels, right? So we talked about banks. Morgan Stanley is one of those. I will look for high-quality companies that kind of sell off for non-fundamental reasons or give me a reason to buy more of because the fundamentals are approving.

20:41So I think that we've been trimming financials through the last six months. We've been buying a lot more health care because we just think the opportunity. So companies like Intuitive Surgical is one that we're buying there. We're buying Striker. Striker's come off. Actually, that whole orthopedics group has come off. And I think the opportunity there for the next three to five years is going to be huge. J &J, which is a very high quality company, that is also going to spin off their orthopedic group. So I think the opportunity is there. It's a very undervalued sector compared to where the S &P is.

21:15You know, we do own the FAP7, but I think the diversification is going to be key. And you get these rotations, especially if you start getting a little more defensive. And it's right insensitive. Exactly. It's right insensitive. All right. So I had the street fight rolls on on Netflix as one firm ups its price target, where the committee stands on it next. And later, Josh Brown's back with his best stocks in the market. Halftime's back in two.

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22:24That's 5 % cash back at different places each quarter, like grocery stores, on gas, and at restaurants. It pays to Discover. Terms apply. See discovery.com slash five for details. It's the holiday season at House of Burrell, which means that it's the perfect moment to review some key rules. Rule number five, more style means more celebration. Number four, buy gifts, but remember to treat yourself too. Number three, there is no dress code, but always leave them talking. Number two, show off different outfits. No party remains unattended. And rule number one, have it all without spending it all.

23:04Happy holidays from House of Burl, Burlington.

23:20Welcome back to Halftime Report. Guggenheim raising Netflix's target to 80 bucks from 75, reiterating the price target of buy. Josh and Malcolm, you both own the stock, which has been getting a lot of attention on the street lately. There's also some commentary that Cocio Ted Sarandos has said that he's not happy with the growth at Netflix so far. I think a lot of investors feel the same. Josh, what do you think? As I've said on the show before, this is the stock that I've been the most wrong about this year. I'm look, I'm not like a prisoner to it. I could sell it any time if I really wanted to.

23:54I'm just not going to because I've already my average cost is in the 80s. So I'm already stuck in it all year. I look kind of stupid. I've averaged down. But this was 40 times earnings last summer. Now it's 20. And I don't think there's a person on Wall Street that doesn't understand why the stock's been under pressure. The last quarter wasn't great. People are worried about competition. They always have been. And I don't think Netflix has done a great job explaining how it's going to use its position as literally the biggest, most profitable and most powerful player in streaming. Like they've added a bunch of live sports, the street like that, and really not a lot since.

24:38So they have to get better talking to the street. It's not the same as the old days when Reed was there. You know, it's it's it's just been like the shine has come off of it. I don't know what changes that, but I do think I'll end up making money here. I am not in a rush to add 68. What do we want to hear from Netflix at this point? They're already spending about 5 % of their$20 billion content budget on live sports. It looks like they're going deeper and deeper. I mean, what is the strategy that will satisfy investors, do you think? What do you want to hear from that? They figured it out. They figured it out, OK?

25:13They are now actively de-emphasizing this stupid metric of time spent. The same way that Apple got itself out of this pickle of having to report iPhones every quarter, like like physical unit sales, as though that were like this all important metric. One day they just said, you know what, we're not even going to tell you what that is anymore. And everyone flipped out and Apple went down six percent. And I don't know, that was probably 300 percent ago. So Netflix is not going to be talking about time spent. They're not going to fall into this trap because think about what they're competing with.

25:48Like literally Instagram, YouTube, TikTok, people, God forbid, reading a book. It's such a dumb way for them to be positioned to say like this was a good or a bad quarter. So now they're going to focus on the profitability of the platform, the growth of the advertising side, the low churn rate, penetrating new countries and bringing on subs in places that didn't exist. That's the right conversation. it'll take a quarter or two for the sell side to get accustomed to talking about that and not talking about literally how many minutes a person sits and stares at the screen. I want to get Malcolm in here.

26:27Yeah, Josh said a lot of really good things. I think to tie a bow around it, the most important thing is the reason this is such a battleground stock is because investors are misunderstanding how they should think about the company now. So we're talking about the company for what it used to be and how we used to focus on it from an analyst perspective. But realistically, this is like asking Apple post-Steve Jobs to give you another iPhone. And instead of focusing on the fact that Tim Cook came in and just did a really great job of optimizing what they had already built. So right now, I think where we see Netflix going next is not building the next important thing, not bringing more people into the ecosystem.

27:06They've got more than 300 million paid subscribers around the globe. How do we monetize that? And I think they have enough really sticky customers the same way that Apple has enough really sticky iPhone lovers in that ecosystem that this is where they need to figure out ways to just increase that monetization incrementally. And year by year, the same way Apple has year by year increased the amount that they're able to extract from their customers, that's what Netflix will figure out. I'll tell you how this bottoms. The chart this bad, you need another very bad earnings report that takes it to$50 to$60 and then rejects it.

27:40No, thank you. higher. My basis is here at 68, so I agree with Josh. No, thank you. Look, it's one of these companies that we all love to watch, but I think the valuation is where the battleground is. Is this a growth company? Is this a cash flow company? Because unlike Apple, you don't see them losing people as fast as Netflix could just because the price point goes higher and people will move to somewhere else. We don't know. And is 22 times the right price or is it more 10 times because it's a cash flow company. And we've seen what media companies do now. They don't trade. Well, at all. At all.

28:19They are like a depleting asset. Look at Disney. Well. With an IP, with a moat. Right. With a moat around it with people coming to their show. And then you look at the assets within the parent company, Comcast and NBC. So I'm not saying it is, but I think that's the battleground. And what's going to happen with the cost of content? And then where Netflix doesn't really play is sports. sports is huge, and that's kind of where people are really paying a lot of big price for. And you've got competition from Prime, which, by the way, comes in with a subscription. YouTube. I mean, it goes beyond the media stocks at this point.

28:54And the other stuff is all free, right? I mean, Prime is basically free if you're a Prime subscriber. So, again, I think they could turn it around. It's a great management team. Suraj, Netflix does – I agree with a lot of what you said about the media ecosystem, but let's use facts here. they have a multi-year rights package for the Christmas Day games on Netflix, and it's more likely that that will be expanded in coming years. They also have the weekly WWE show and a lot of live specials, and wrestling is absolutely massive and it's global. They're doing the Tyson Fury Anthony Joshua fight. They have a lot of high-profile boxing.

29:36And then lastly, Major League Baseball opening night and a lot of showcase games throughout the season. So they are in sports, and you will see more. Formula One, et cetera, et cetera. The growth of sports, as you look at all these channels, is so expensive. And that's what hurt Disney with the ESPN stuff. Yeah. Right? That's the question. Do you want them to spend 5 % of their$20 billion content? Right. But then what growth are you going to get out of it? All right. We've got to leave this. It will continue to be a battleground. Let's get to Brandon Gomez with the CNBC News update. Brandon. Hey there, Melissa.

30:09So the family members of a Minneapolis woman killed by an ICE agent earlier this year filed two lawsuits today. One suit accuses the U.S. government of excessive and deadly force against Renee Good. The other names Jonathan Ross, the agent who shot Good, as well as top U.S. officials, including former DHS Secretary Kristi Noem. Federal officials say Ross acted in self-defense after Good tried to ram him with her car. A judge in D.C. dismissed a case against former Olympian canoeist David Hearn, who was accused of vandalizing the Lincoln Memorial Reflecting Pool. D.C. U.S. Attorney Jeanine Pirro previously moved to drop her indictment against her after admitting the damage was caused by a flawed installation.

30:47The judge dismissed the case with prejudice, meaning charges cannot be brought against her again. And SpaceX launched four astronauts to the International Space Station this morning. The mission was delayed by nearly a month because of a leaking fuel system. The crew is expected to dock after an eight-hour journey and will spend six months in orbit. Melissa, send things back to you. Thank you, Brandon. Brandon Gomez. Coming up, Josh is ready with his best stocks in the market. Today, he's looking at one under the radar winner on his list. That name is next.

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32:57We are back with Josh Brown's best stocks in the market. So this is an interesting one, Josh. And if you want to ride the GLP-1 boom, this could be it. Yeah, so GLP-1s are about 18 % of revenue. So they are definitely very important to this company. Basically, this is the company that is manufacturing the syringes, the rubber stoppers, all the equipment for injectables. And, of course, it's not just GLP-1 drugs. It's a multibillion-dollar business. But when they – give me a chart while I talk. WST, this is West Pharmaceuticals. When they reported second quarter – thank you. When they reported second quarter sales, they were up at 14%.

33:42adjusted earnings jumped 29%. Management has already raised guidance twice this year. The new earnings forecast is about 50 % above the same guidance that crashed the stock last February. On top of that, to demonstrate their confidence in that guidance, they're backing that with a billion-dollar buyback authorization. So basically, this was a COVID stock because of the vaccines. Then it crashed like all the other COVID stocks. And now they've gotten their groove back. We put all these stop losses and pivot areas in the column at CNBC Pro. I think the big thing here is to watch 383. That's the high from earlier this summer.

34:25A close above would be fresh 52 week highs. I think 350 to the downside tells traders the run may have stalled. 325 to 330 has acted, as you can see in the chart, as support twice. So for a little bit longer term oriented investor who wants to play it as a trade, maybe that's the area that you're looking at. But I like it here. Great fundamentals. Are you worried that as the world moves to multi-dose pens, that that threatens their economics? You know, people were asking the same question as the world moves to pills. The company has done a really good job explaining it almost doesn't matter the rate at which the overall pie is growing, the stronger efficacy of the shot itself.

35:14The fact that there is an increased value in making the multi-dose pen versus just a plain vanilla syringe. And on top of it all, right now, the current estimates are that about 70 percent of the global GLP population will continue with injectables because they just work better. 30 percent will be pills in that scenario. And given that it's about a fifth of this company's business, I think the street is very, very comfortable with that outlook. The other thing to keep in mind is there are so many other injectable drugs and more coming all the time all over the world. And this is really the company that helps them package it and get it out to the consumer.

35:55Morgan Stanley just this week saying that they see 10 percent upside to the streets estimates in 2027 in their bull case scenario. Bill, I know you own a lot of different health care names. Which one's your top picks? We own Lilly in our top 10, and it's also in our concentrated portfolio. We really like the forecast here with being the leader in the GLP space. And not only that, the chart has been pretty technically very well since we added it in April. I think there's some good legs in Lilly to finish out the year for sure. Coming up next, Mike Santoli's Market Memo. Stay tuned.

36:41and we're back with senior markets commentator and my partner in crime on closing bell overtime mike santoli with his market memo so what are you looking at today mike yeah well this is where i just workshop the ideas and then I finalize them later in the day, as you know. What's really fascinating, actually, first day of the quarter, and you're seeing at least hints that maybe some of these moves have gotten to a culmination point. You and I, Mel, have talked about 10-year yields of 5.3. It seems like this gravitational pull of a potential technical upside level for a few weeks. We did get there.

37:12And then a crack. And not only that, the European yield story, short-term yields really taking a dive as if the markets collectively said, we've priced in a lot of growth expectations. Maybe we priced in a little bit more central bank activity than we're going to get. And you see a little spillback in that trade. And what's the stock market response? Well, it just sort of like unwinds what we've been doing for a while. So equal weight actually has a little bit of a shot at outperforming. There's a lot of work to be done here because the wreckage at the lower reaches of the market has been so significant.

37:44But really interesting today that at least we're taking a breather on those very well-established trends. Yeah, and we're seeing signs of life here in terms of sectors turning into the green right now, and industrials now up, you know, a little more than a half a percent. Utilities are now showing some signs of life as well. Bill made an interesting call earlier in the show in terms of believing that bonds have bottomed. I think that's an interesting one because it does seem like peak pessimism on the street has been reached when it comes to the bond market. I think the daily sentiment index for bonds was like 10 percent bullish, which is really washed out sentiment.

38:17So I do think that's true. And what it would mean. And I think Krinsky over at BTIG is talking about this this morning is, you know, it would basically mean maybe the mega caps have to come in because they've been your defense against macro stress. And then the rest of the market can get a little relief. I don't want to extrapolate it just now because there's a lot of head fakes in this bond move over the last few weeks. Definitely. Mike, we'll see you later. I will see you later at least. coming up. Game three of the WNBA playoffs tips off tonight between the Indiana Fever and the Las Vegas Aces.

38:47We'll have the game live right here on CNBC. And just ahead, we will speak with USA Sports League studio host Elle Duncan. She joins us next on Halftime.

39:16Welcome back to Halftime. The Indiana Fever taking on the defending WNBA champion, Las Vegas Aces, in a winner-take-all Game 3 of their playoff series tonight. You can watch that high-stakes game right here on CNBC starting at 9 Eastern time. Elle Duncan is covering all the action as lead studio host for USA Sports, and she joins us now. Elle, it is great to have you on the Halftime Report. Welcome. Oh, thanks for having me, Melissa. This is going to be an enormous game, And it's coming off an enormous year. Last year, I think it was the highest average viewership for the WNBA since 2000. So what are you expecting here in terms of the anticipation?

39:50We expect more of the same because we trumped last year by making this year the highest viewed season since 2000, in particular for Versant, for USA Sports and CNBC. Our numbers are up 25 percent. I'm expecting, Melissa, absolute fireworks. There is so many storylines coming into this game. On top of the fact that you've got who's going to be the MVP in Asia Wilson. You've got the highest scoring duo of all time in Caitlin Clark and Kelsey Mitchell. You've got scar tissue from last year. It was the Aces that ended the fever season last year in the semis. And then, of course, you have everything that happened in game two.

40:27It's going to be absolutely incredible tonight. Fireworks in Vegas. You've got a backstory drama, that's for sure. You know, on the CNBC side, we're looking at Nike. It's reporting earnings tonight, and they just dropped the Caitlin Clark new signature shoe, which sold out. And I guess that just tells you how popular she is, not just amongst WNBA fans, but larger. It seems like there's a larger audience out there. Oh, 100 percent. I think she's been we've described her as generational, transformative. All of those things apply. I mean, there is a reason it's been dubbed the Caitlin Clark effect.

41:01That impacts ratings. That impacts attendance records. at arenas that she's either at or visiting. And that, of course, impacts apparel as well. You can't watch the WNBA game this year without seeing three or four Caitlin Clark commercials. It was a long time coming, this shoe, highly anticipated. The color displays are sick. They've been doing activations all over the place. It is zero surprise to me that there was a huge appetite for this shoe because I think what Caitlin's also been able to do is not just be transformative for girls, but if you notice whenever she talks at press conferences, she mentioned the boys in attendance as well.

41:33And I think she's just one of those stars that translates to groups that maybe weren't interested in basketball before. Tell me more about the showdown dynamic between Asia and Caitlin. Oh, man. I mean, you're talking about. Listen, Melissa, honestly, if you expand it, you're talking about who are probably going to be three of the top vote getters in the MVP race. Asia, I believe, is going to win. It would be her fifth MVP, which is absurd. But Kelsey Mitchell is the second leading scorer in the W behind Asia Wilson. And then right behind her is Kaitlyn Clark. Asia Wilson is incredible at home in closeout opportunities.

42:09She's 7-1, and nobody scores more points in W history than when she's at home with a chance to eliminate another team. After game one, it looked like this was headed for a sweep. And then the fever punched back in an amazing way. Kaitlyn Clark makes history. No one had ever, in any W game ever, had 25 points and 15 assists. and they really showed up. They were physical. They had the edge. And so I'm just really interested to see once this shifts back to Vegas, where they are very, very good with everything that's swirling, how this is going to play out tonight. All right. Elle, thank you so much for joining us.

42:43It's a very, very big day for you and for, of course, these two teams. You appreciate it. Absolutely. Thanks, Melissa. Elle Duncan. Again, make sure to catch tonight's big game between the Indiana Fever and the Las Vegas Aces. That's 9 p.m. Eastern Time simulcast live on CNBC. Up next, a setup on Nike ahead of earnings and overtime. Halftime's back right after this.

43:17Welcome back to Halftime. Nike reports after the bell. It's the worst Dow stock this year. is down 43%. Josh, you sold the stock back in July. I don't know if that spared you from losses, but what do you think of the stock here going into earnings? I mean, the bar is so low. It's like the best thing I could say. The problem is if they give increasingly poor guidance, which has been the trend for, I don't know, five years now. Like if present trends continue, it's not cheap enough that people will be like, I don't care. I'm buying it. So I already have two or three of these in my portfolio. I don't need another one.

43:58I'm happy to watch from the sidelines. Rooting for everyone. I just want everyone to have fun. Well, that's very generous of you. You know, there have been a lot of head fakes in terms of a Nike turnaround under the new CEO. And I think investors have gotten fooled maybe one too many times. I think what stands out about the Nike story that's interesting to me, at least, is that the competition, forget what they're doing, innovation, but just the competition externally on every continent is there from brands that we have not even ever heard of. I mean, China, their growth market, leaning. I mean, there's a handful of players there that are really challenging Nike, and it's going on there and Europe and in the United States.

44:38Nike's not the only one facing it. I mean, it's down quite a bit. We owned Amor Sports. We sold Amor Sports about a month ago. It's breaking a shelf. And Amor has a tremendous amount of exposure in China. And, you know, you're starting to see that whether the competition there, we look at a Nike here, you have a Lululemon that's faced the struggles as well, because these names also that are not public, like a Viore, are doing very, very well. And the competition, and then also getting in front of the consumer where, you know, Nike's pulled, had a couple different issues across Amazon. I think that's been an impact, a Foot Locker.

45:11So I think there's different strategies that have failed here. We have to acknowledge that part. But then at the started the show, consumer discretionary was down more than 6 % in the month of September. And I think it's, I just don't see what's going to turn it around right here. That's the reason I don't know that you can turn it around either, because it's been so, it's so much easier now because of TikTok and Instagram to go direct to consumer where Nike used to be able to just crowd everybody out on store shelves. How do you reverse that? So does brand not matter as much in this day and age, or is it just the Nike brand that's so injured that it can't be revived?

45:43I do think brand still matters, but it's how you deliver it. And are you using the right delivery mechanism? It used to be right. You take the shelf space. Now you need the influencers. Now how do you get there? And then how do you maintain kind of the competition? Like in China, the stuff that, you know, the replica of Nike that's out there or the On that's here or Lulu if it comes back. So it's a constant kind of battle that I think Nike and the global brands have to do now. Yep. coverage of Nike earnings, of course, today on Closing Bill Overtime. Meantime, stay with us. Final trades are coming up.

46:21Let's close out with final trades. Josh Brown. Snowflake, looking good. Top position Q3. Bill Baruch, what do you say? Micron, low out quarter, incredible margins. Maybe it's holding it back as the transparency looking visibility, looking out into 27, but I think the stock is going to be heading higher. So number two position. Sarad. Morgan Stanley, I think misunderstood. It's the wealth management business that drives it, not the capital markets. All right. And Malcolm, what do you say? Yeah, the insurance business is not AI sensitive. It's also not that interest rate sensitive at the moment.

46:57So I'm going to show. All right. Let's take a check on the markets here again as we start off this month of October in the new quarter as well. We're seeing slight losses for the markets across the We're the Dow off by just about a quarter percent. Same for the S &P 500 as well as the NASDAQ. Some signs of life, as we had mentioned, in some of the places hardest hit, like the Russell 2000. That does it for us. The exchange starts right now. All opinions expressed by the halftime report participants are solely their opinions and do not reflect the opinions of CNBC or its parent company or affiliates and may have been previously disseminated by them on television, radio, internet, or another medium.

47:29You 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. It's the holiday season at House of Burrell, which means that it's the perfect moment to review some key rules.

47:58Rule number five, more style means more celebration. Number four, buy gifts, but remember to treat yourself too. Number three, there is no dress code, but always leave them talking. Number two, show off different outfits. No party remains unattended. And rule number one, have it all without spending it all. Happy holidays from House of Burl, Burlington.