The Run in Rates 9/25/26

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1:16Thank you, Carl and Leslie. Welcome to the Halftime Report. I am Frank Holland. And for the judge, Scott Wapner, front and center at this hour, the running rates and what it means for your portfolio. The Investment Committee is standing by right here at Post 9 with how they're playing it. Joining me for the hour, we have Steve Weiss, Kevin Simpson, and Rob Seachin. Before we get started, quick check of the markets taking a look. A lot of green on the board right now. You can see the Dow is up more than 300 points. The S &P up a third of 1%. The NASDAQ up just under a half a percent. But you also have to look at the 10-year right now at 5.17%, hitting multi-year highs.

1:48And really, I think that's where this conversation has to start, Steve. Rates right now, are they competition for equities right now? or are they just something that we have to be in mind of? Because you see a lot of notes out here is that the reaction of rising rates hasn't been as severe, at least to the downside it has been in previous years. Yeah, I think what the market's focusing on at this point is more oil than it is focusing on rates. And to me, that's a mistake. So I think ultimately rates are going to continue to go higher, even if we come to an agreement with Iran, which is highly, highly unlikely, at least one that actually is executed.

2:25And that's part of why the market's up also today. That, you know, it's going to take a long time to get oil back to where it was in terms of what it actually means, rather than the commodity trading that we're seeing in terms of what it means to the economy. So right now, all we see are rising costs. We see a Fed that's definitely on a tightening schedule. You just don't tighten once. And by the way, 25 bps does nothing if you attack inflation. So I think the market should not be ignoring rates because I do believe that right now the 10 year is competition, except for the greed factor. So you continue to see and what's not going to be disintermediated here is A.I.

3:06spending. We hear that time and time again. Now we'll hear it again when Micron reports in about a week. And so I think that the market, it's sort of OK, but, you know, and I bought some stocks that had gotten really trash. But I'm not putting new money into this market here, not with where rates are going. Historically, the correlation is pretty strong, particularly over 5%, you know, over 5%, 10-year that's going higher. You're talking about a 5 % 10-year. I've actually been talking to a lot of investors, wrote a story for CNBC Pro. Kevin, I want to bounce this off of you. If you look at the one month, almost at a 4 % yield.

3:40So if you want to sit out some of these AI uncertainty issues, oil prices rising, you can actually just lend the government money for a month and get almost 4%. That seems to be a bit of a headwind for the equity markets. Well, I think it has to be a bit of a headwind for the equity markets. I don't want to sound overly bearish. When I was here last week, I said that I think the bar is getting a little bit higher. The threshold for risk is getting a little bit higher. And every time that the yield goes up on the, you mentioned the one month, I was going to say the 10 year. But every time that yield gets higher, I think that bar gets a little bit higher.

4:13And it's interesting. The two things that I have on my ticker next to the S &P 500 is the yield on the 10-year and the price of oil. And I think both of those things, we're seeing the inverse trade. If they're moving higher, risk is coming off. If they're moving lower, then we're seeing risk on. If they're moving higher in tandem, I think it's a little bit of a one-two punch because you have to worry about margins. All kinds of things get affected. But for me, to think about what could go right. What could go right is some resolution in the Middle East. If energy prices come down, that takes a lot of pressure off of it.

4:45But if it doesn't, then I think that 30-day 4 % feels pretty good. Yeah, I think a lot of investors think that's pretty good. So you're talking about what could go right. Right now, we're looking at Brent crude at 106. We're looking at WTI at 94. Seems like people are seeing the potential, at least, of a lot to go wrong with the oil price to stay on that elevated. Well, because it's gone wrong several times before. Every time we think we're on the precipice of a deal, it doesn't happen. And so that has to be a persistent worry, to Steve's point. I do think the big story in the market, though, is rates.

5:19I actually think that the Fed has no aspiration to break the market, because breaking the market would break the economy. And here's why that is. So many people are taking the wealth effect that they've achieved from being investors in the market and investing in the real economy every day. I think the biggest threat to ongoing prosperity is a collapse in the market. Now, the beauty of this is the constituents of the market that make up most of the market construct when you're talking about the S &P 500 are as strong as it gets. Many have re-rated quite dramatically because their earnings have outpaced the price achievements that they've seen.

6:01And so multiples have compressed. And so I think there's a bit of a buffer there. So I think the Fed does have room to tighten without hurting that segment of the market. Now, other segments of the market are going to be much more sensitive to rates than those segments. And so the beauty of that is they're much smaller constituents of the market. And so you have this push and pull that I think is really important to driving the ultimate outcome, which is likely we're worried about a lot, but earnings continue to deliver in the segments that matter, allowing the Fed to get some control in time for the Middle East issues to get settled.

6:43So how long would the market have to be on its butt to affect the economy? We've seen lots of declines in the market. We've seen 10%, 20 % in their V-shaped recoveries. I think there's a condition out there that's persistent now. By the dip, I would agree with you that it's pretty tough to break the back of the market. But rest assured, we definitely do not want that to happen. We don't want there to be a bad reason for rates to start to come in. And I will tell you for certain, that is not what the Fed wants in this case. You know, the consensus seems to be you guys are saying there's a lot of problems, but you feel pretty constructive about the market.

7:29I want to bounce something off you. Coming from Citi, Scott Croner. I didn't say that. I didn't say I'm not putting any more money into the market. Yeah, but you don't seem overly concerned. Well, I do have concerns about the 10-year, but if I were, you know, not concerned about anything, I'd be putting more money into the market. That's fair. We hit on the fact you said there's a number of issues, but you don't seem overly concerned. You feel like there's an opportunity for a path forward that's at least positive. I want to bounce this off you, Weiss, since you want to chime in. City, Scott Croner and his team putting this out.

7:58Scott, coming up on Closing Bell just a bit later. The title is Near the Boiling Point. So I think that's a bit more extreme than where you're sitting right now, right? Near the boiling point. Macro headwinds are rising. Growth remains resilient. Earnings momentum is still positive. And the economy's sensitivity to higher rates appears lower than past cycles, as I mentioned earlier, leaving us still overweight equities relative to fixed income. But we acknowledge that the balance of risk has become less favorable. So I don't think you're at the boiling point, are you? No, not at the boiling point.

8:25And keep in mind that when analysts and strategists put out things, they're looking for eyeballs. And you don't get it that, hey, nothing, you know, headlines, nothing to see here move along, like the famous British saying. Look, there are definitely headwinds, but there are always headwinds to every market. Now, the reason why rates aren't hitting this market as much as others, because the spenders, right, Those are deploying the CapEx and the investment dollars are extremely well-funded companies that can borrow below market rates. I'm talking about the Metas. I'm talking about all the others.

8:58So the problem here is that the spending that's going versus prior cycles, whereas industrial spending, CapEx spending, is now all driving, is being driven by AI. So that's just an important differential. Yeah, to your point, by the way, Michael Hardnett from Bank of America coming out saying he sees growth outperform. Cyclical is going into the midterms. Air as he likes, MAG7. Part of your thesis is that they have lower borrowing costs. Biotech, which I don't think they have lower borrowing costs, but small caps and REITs. Kevin? Yeah, I think the previous note, the word that kind of hit me was resilient.

9:32And I think immunity is different than resilient. The markets are resilient, but they're not immune to this market if interest rates continue to move higher and higher. And it's not because the fundamentals aren't good. They are. It's not because earnings aren't great. They are. But it's because the quant funds are going to move from risk on into a risk-free rate. You talked about a 4 % on the 30-year. If you can get 5.5%, imagine that on a 10-year, you're going to see money move into it. It's not going to come from private credit or private equity. It's going to come from equities. And it's not an all-or-sum gain, but I think it's something you need to be aware of.

10:04So we're being a little bit more conservative, definitely not a boiling point, maybe not as pessimistic as Steve. But we're raising liquidity. We're tightening up the risk profile of the portfolio, writing a lot of covered calls here. So I think we're prepping for some bad news. And if it doesn't happen, well, great. But I think it's better to be prepared now than to think about it after the fact. So, by the way, I was talking about the one month. You look at the 30 year, almost at five and a half percent. Siege. You know, the consensus out there is that earnings are going to continue to save us.

10:35and I believe that earnings are incredibly strong. And I'm squarely in that consensus, but I hate being in the consensus, right? If everybody's on the same side of the ledger that earnings are going to deliver, high rates aren't going to matter, eventually there is a fracture point. So we do have to maintain control of the long end of the curve. I would say, you know, we've had, you have to pay attention to the fact that we've had a multi-standard deviation move in interest rates. Some of that may have been pulled forward. I'm hoping that is the case, right? That the rhetoric on multiple more hikes that Steve says, once they hike once, they continue to hike, that's proven to be historically true.

11:20But a lot of times, the market doesn't pull forward that move into pricing the way we've seen it pull forward into pricing. So we might be at a point where you actually see rates at a level that can be modestly constrictive. You get a little ease off the boil in the Middle East, and that tamps some of that pressure down. But, you know, we're definitely walking on a knife's edge. A lot of talks about reopening, I should say, the Strait of Hormuz, a lot of hope when it comes there. But we're not quite seeing that in the oil market. You guys were talking about the economy a bit ago. Just looking up some economic stats.

11:56I mean, this week we had U.S. flash manufacturing, much better than expected, much improving month over month. Services pulled back month over month, but still better than expected. I also like to look at the weekly jobless claims. If you look year over year, those are down on the four-week moving average, 15%. So we're not seeing the displacement in the labor market that a lot of people thought, at least, would come from AI. Is that, in your mind, perhaps at least something that calms investors down who may be getting nervous that we're still seeing economic strength despite this rise in rates and rise in oil prices?

12:25Yeah, so it's interesting. It's an interesting question, because does the Fed want to see that kind of strength? Because that kind of strength feeds into price increases. So it's really a double-edged sword. So all good news here in terms of the economy is a double-edged sword. So you've got to look at what's driving those economic numbers. Now, we've got a very controlled, skilled labor pool. And by that, I mean electricians, plumbers, all that. They're working on the data centers, right? So you've got to really pay up for talent in those areas. We've also got education, right? So they're always big hires.

13:03And finally, health care, which generally is the largest hire. And there's such a shortage of health care professionals in every single discipline. I mean, pre-COVID, you can get to your doctor in a week, right? Now, give me two months, right? First time I can see you in two months. Or you only see the physician assistant. Right, or the physician assistant. Well, that is that's actually a an efficiency and margin move, because if a physician assistant and we're in the process of looking at at building some upskilling health care hospital schools. But if you can see a physician physician assistant and what they get paid versus what a doc gets paid.

13:40So the docs going to the higher best use of their time. So the bottom line is the labor pool is being, you know, is growing or it's not selling off as you would expect in this environment. But but that's raising prices, is my point. So that the economic numbers, I think you'd rather see like like more even keeled economic numbers from a Fed perspective than what you're seeing now. I want to get back to the broader market. LPL with a note saying since July the 28th, so basically last two months, the S &P stocks that are above their 200-day moving average were 73 percent back then. Now it's only down to 51 percent.

14:18I mean, I'm looking at you guys. Should we be worried about breadth? Is that an issue right now? I wish it was an issue because every time we seem to get a little broadening out and you get excited about it, everything narrows back to these main companies. Even over the past month, technology up 7 percent. It's mainly driven by these MAG-7. So I run a broad, diversified portfolio. I would much rather us be sitting here talking about breadth. But no, I think it is a little bit of a concern. I'm saying narrowness. I'm sorry. Should we concern about narrowness? I think we're saying the same thing.

14:47Yeah, for sure. I think the answer is no. No. And the reason being is what's happening should be happening. I think there's incredibly rational behavior in the fact that small caps, those that are going to have more problems with rising rates are not performing as well. No, they're not collapsing. When you look at the MAG7, they're up 16 % over the last month. When you look at the rest of the market, on average, it's down 2. Big deal, right? What's happening is supposed to be happening right now. Now, what you worry about is that you extrapolate that out. Now, you're starting to see credit spreads widening.

15:29That's a little bit of a tempest in the teapot for me. That's scary. And yet, at the same time, you're seeing capital goods orders growing fast, the inflation pipeline worsening. And as a result, you've seen this monster move in yields. I think it's a really interesting time because I would be sticking with what's working. I think the most powerful force in markets, Steve and I talked about it the other day, is momentum. I think you have to ride that momentum because that's where the earnings are and that's where the price re-rating was. But, you know, I'm not as negative on buying bonds here.

16:07You finally have a ballast to a portfolio that if there is the one calamity that will knock the economy down, it's the stock market going down hard, and bonds will protect you in that environment. They will because they will rally. There's still going to be a flight to quality if that scenario plays out. I'm not wishing for it. I'm not thinking it's going to happen. But, boy, we can clip a coupon for a while at a pretty high level and also insulate our portfolio. That, to me, is a great situation. But that's a place to hide bonds, right? But so are the large-cap stocks. So are the Mag-7s. Don't you want to look for some safety?

16:47As Siege points out, the AI trade is driving the market, and we have so much talk about regulation, moratoriums on data centers, guardrails that a lot of people think will slow down the innovation. I mean, don't you want to at least have some protection? Protections, cash generally, right? But I think if you're holding stocks for long term and you're holding what historically have been permanent compounders, who cares about what happens in two months or three months? Don't even look at your quotes. But here's a story. I was just confirming it. The average five-year return for a multi-industry bond fund is less than 3%.

17:23The average return for a five-star Morningstar manager in equities is 12%. So to me— Okay, let me give you another stat there. Hold on. I don't see—I don't really see—if you're old, if you can't replace your income, not working, you probably shouldn't be in equities, and maybe you should be in bonds. But you still got to keep pace at the rate of inflation. You're not going to, right? I'm no bond manager, but we have bond managers at the company. And if you talk to them, they're incredibly enthusiastic about what they're seeing in the bond market. Think about a New York City taxpayer. The tax equivalent yield for a New York City taxpayer is north of 10 percent in a high quality municipal bond.

18:09OK, if Steve's telling you and he's right that the long term compounding on terrific businesses is 12 percent, and you can get 10, tax equivalent, you out of 10, that's a pretty good ratio of that. Now, by no means am I abandoning what Steve's talking about, but I'm trying to paint the other side of the equation of balance in the event that we have a re-rating in equities. I don't think anybody watches have time to talk about bonds. Let's get back to the equity market. You got a quick point? I'm falling asleep with this bond conversation. I don't think anybody's tuning in. Everybody, feel free to X.

18:44I don't think you are. I want to get back to what you were talking about, the MAG7. Meta in particular. Meta hit a record high on Thursday, having its best month since all the way back in 2013, now approaching$2 trillion in market cap, pulling back today. However, a lot of this rally is due to that release of the Muse app. Ceech, I want to come back over to you. It's a consumer app. We've been hearing so much about the enterprise adoption of AI. This is a consumer app that's got everybody excited. Should we be a bit concerned that the consumer focus is what's moving these stocks higher? I don't know why we're concerned.

19:14When you own the app layer like Apple or Meta owns the customer, that's pretty exciting. You're able to sell product into that customer. And I don't know if you saw the things that they've released. It's amazing. Are you using it? What they're doing? Not yet. I'm not as tech forward as Steve. It's not out yet. He'll be a first adopter. I'll watch to see if it goes well, and then I'll jump in. But I have been a long owner of this company. And it is really tough to bet against them, especially when they're multiple compresses. They're still one of the cheapest hyperscalers out there. And I think the growth prospects that they have are pretty enormous.

19:54Let's be honest. If you can capture the consumer and you can monetize it, that's why Apple is trading at 36 times right now, because people believe they own the customer. And ultimately, the app layer is going to flow through the customer. The infrastructure layer, that's what you end up worrying about because pricing becomes a commodity at times. I don't think so this time because it's an intelligent infrastructure layer versus when we were laying fiber optics and things like that, it didn't have the same level of intelligence. It was bandwidth based. This is intelligence based, a little different, but I do think that.

20:29So, by the way, we're just showing the magic number for MetaHit, that$2 trillion market cap. It's$785.08. Obviously, right now it's under$750. So that would take a big jump for at least today, but getting pretty close. Kevin, I want to come over to you. You're making some moves with your meta position. Yeah, I mean, I couldn't be more excited about it. I think that the consumer does drive this stock. I'm a big, big fan of the glasses. I think when you can implement some of these Muse techniques into them, it's going to be really exciting. They already have the infrastructure. There were like 2.8 million downloads when I sold this covered call a few days ago.

21:03But what we did is we took half of our position, Frank, after this huge run. We sold 770 options. Now, believe it or not, it was in the money this morning. Now, I think the stock's pulling back a little bit here because some of what we're seeing out of Copilot. But we brought in$20 a share on that strike. So imagine if we had been called. We're talking about getting out at 790 on half the position. I think this has legs. I think it's a wonderful story to watch a founder mature into a CEO like this. I just love Meta. I love what they're doing. and I think it's really exciting. The only thing I would be cautious about is that the other LLMs, the other companies, are going to be following suit with products.

21:39Open AI, ChatGPT, they didn't hire Johnny Ives to just sit around and do nothing. So there is a first-mover advantage here, but be prepared to see other competitors follow. Well, that's kind of what I was alluding to when I was talking to Siege. I talked to a lot of people who are smart about tech. They say there's going to be a lot of competition in this space. Copilot already existed. A lot of people want to put out these consumer apps, but you also have to remember the consumer is under quite a bit of pressure, Steve. Steve, I mean, gas prices, rates, everything else. If things continue to tick up, how many airplane tickets are they going to buy?

22:07What are they going to need this personal assistant to do if their wallets are feeling pretty tight, Steve? Have you looked at airline tickets lately? I have. The prices, I mean, they are insane. Absolutely insane. Look, the economy has two different constituencies. One is the one that Rob was talking to that, well, you know, you've got a lot of the majority of households own stock. They either own stock outright, even more have it through their pensions and IRAs and so forth. But what I'd say is that it's a bifurcated economy. So there's the ones that can spend, they will continue to spend on airline tickets.

22:46They will continue to spend on consumer products. They will continue to spend on the latest technology. Then there's the other part of the economy, which is critically important to the economy, that can afford to spend, that's really, really besieged by higher prices. But the bottom line is, is that I believe that with the consumer products, that what they're targeting right now will be enough to that constituency, be enough to carry them through until the economy improves, prices go down, and the rest of the country can catch up to and adopt it. So I'm not all that much concerned about it. I've marveled at it, that people don't have any fear factor.

23:22That's because the market has always had these V-shaped recoveries. So they think they're going to keep making money and make money. And that's a danger, and that's why you may have, I'm not predicting it, I don't see it, a sustained sell-off in the market. That could happen if earnings don't deliver, because that's all you hear. Well, the economy's so great, earnings are up 30%. They'll be up another 30%. So let's see and keep in mind also that it's not across every industry. It's very narrow. All right, just to cap things off with meta, as we just saw, pulling back about 3.5 percent. Also, Piper came out, raising its price target from 785 up to 875.

23:59Magic number to hit$2 trillion, 785.08. All right, when it's thrift gears a bit, we're tracking some breaking headlines. Let's get to our Megan Casella, who's live at the White House. Megan. Frank, we are seeing markets move just a bit on this. Stocks are up. Oil has fallen on a headline that we have not been able to confirm. The headline is that the U.S. and Iran have moved into technical negotiations, moving forward on this idea of a deal to end the war. This is from CBS News, citing an Al Jazeera journalist based in Tehran, saying that the talks are moving into a more detailed technical phase, that sources, their sources in Tehran, are describing the atmosphere as increasingly positive.

24:38Again, though, this is one report, no confirmation on this, nothing from the White House on this yet, and we've not been able to find the original report. This is CBS News citing an Al Jazeera reporter. I'll also caution, Frank, that we've been in this situation many times before over the past seven months since the war began, even of being in what was described at the time as a technical phase of negotiations, and nothing, of course, yet has come to fruition on a deal to end the war. What we do know is that Iran's foreign minister yesterday on the sidelines of the UN did tell reporters Iran had put forward a new proposal to end the war, they say, in seven days.

25:12It would be a phased deal to reopen the strait first and then launch more concrete negotiations on the nuclear program. Again, nothing on the White House on that either. Iran saying that that deal will hold if the U.S. agrees to their conditions. And so far, Iran's conditions have always been full of red lines for this president and this White House. So lots of caution there, but we did want to bring you that news, given that we are seeing markets moving quite a bit on it. Yeah, absolutely. We're looking at the Russell right now. I believe it was negative when we started the show up just about over a third of 1 percent.

25:42The S &P rising a bit, Megan, and to your point, oil pulling back a bit. Our Megan Casella live at the White House. Megan, thank you very much. Coming up next, more committee moves. Kevin's got two new trades to tell you all about. We're going to give you all the details. Halftime's back in just two minutes.

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27:56Welcome back to Halftime. Let's get to some more of Kevin's moves. Kevin, you're making some moves. You bought some Sentinel-1, a cybersecurity player. Yeah, we've been busy in our QDevo and the growth side of things. These are a little bit more speculative trades. We own CrowdStrike. We own Palo Alto. We took a starter position in Sentinel-1. I know you guys were talking about it yesterday because of the S symbol, but I like that. More than that, I like the non-GAAP operating margins moving from 2 % to 10%. So this is at play on security, cybersecurity specifically. We're big believers in it.

28:26We're adding a third name into the growth portfolio. Again, a little bit higher risk on this name. All of the sector has moved incredibly over the past month. So if you're going to enter this name with us, I would do it over tranches, take a small position here. We'll see how it trades. I think it's around$23 today. Yeah, pulling back a bit today, almost 4%. But as we can see, huge run over the last month, up over 13%. Ceach, what do you think about this move? Obviously, right now, cybersecurity is a big thing with so many AI, not so many, but AI jailbreaks, concerns about that. And also this new term, AI governance, it just came out of nowhere.

28:58And all of a sudden, it's one of the biggest things in the market. Well, we own Fortinet, a little different bit of a way to play it. I know a lot of people on the show own CrowdStrike. I'm friends with the founder of CrowdStrike. But my team loves Fortinet. They think it's the most durable name in the space. It was trading relatively cheap to the others, I think, because of its growth rate. So listen, I think any time you have the narrative that's out there right now, there's a heightened focus on security around that narrative. And these companies are going to continue to be beneficiaries. They're also going to continue to innovate, which I think is going to accrue to their advantage over time.

29:39I believe in them. All right. I want to go to health care. Kevin, you also bought some Natera. Give us a sense. Healthcare trade has been under a bit of pressure lately. Why? Well, I mean, our themes from AI are where can you monetize it? Where do you see a return on investment? Certainly cybersecurity, I think, is a big number one, and healthcare, biotech, a big number two. To your point, they've been down quite a bit lately, but not this stock. If you look at Natera, this thing's been on a run. We just bought it the other day at$3.55. I think it's about$4.10 right now. The big reason for it is basically a blood test for pre and post cancer.

30:15So you're talking about something that's going to be covered by the health care companies down the road. This is something that doctors are using almost now like a mainstream medicine. It's something that's just incredible in terms of their growth rate. Specifically, the Signatera is the jewel here behind this thing. But, Frank, we also covered it yesterday, and the thing just continues to run. So covered half the position, just like we did with Meta. It's just being a little bit careful in a market that's really, really dicey, depending upon what happens in the Middle East. We just had some good news with the last report.

30:49But Natera is a really nice position for us. We're super excited about how it's traded out of the gate. And if it does get called on that half of a position, we're making literally an 18 % return in three weeks on that half. So I don't mind trading it like that. As you pointed out, huge run up over the last week, up over 11%. Why is your take on playing on either this stock or just the health care trade right now in general? I like the health care trade. I still like UnitedHealth. I mean, it's been kind of volatile, but I'm telling you, you know, Steve Hemsley, and I caught up with him last week, is, you know, I've got to throw a friend in there because he threw a friend in there.

31:25Who's your friend? George Kurtz, you're saying? Yeah. If we're name dropping, you've got to always drop the name all the time. I'm not going to drop the name. He did drop the name. No, I didn't drop the name. He just dropped the identity. Yeah, but if you're going to name drop, you have to actually say the name. You can't shadow name drop. By the way, by the way, that guy is one of the best race car drivers you ever encountered. Okay, now we're getting a little bit. Once we get to shout outs, we've got to take it easy. Yeah, yeah. Anyway, I like UnitedHealth. I think, you know, Steve came back.

31:55He's changed things. Put up a few good quarters. I think he'll continue to. I also like in the private market. We've got some private market investments, which is on the disruptor list, TimeCare, which has grown like a weed. I mean, they're growing 100 % a year, extremely profitable. So there are definitely ways that you can make money in the new health care as well as the old health care. So I'm a fan of health care. Ditto. And I really agree with Kevin here. I just think there are going to be beneficiaries that are taking the 30s and the 40s and bringing them into the next three years. And the level of innovation, if the government can keep up with approving some of these things, is going to be tremendous.

32:41That's the key. Yes. That's the key. We're also, investors company, Digital Diagnostics, which diagnoses diabetic retinopathy with over 90 % accuracy without any physician overread. A high school student could do it. Right now, conventional exams are 33 % accurate. And guess what's the leading cause of blindness in the world? If you don't catch it within the first year, there's no recovery. You're blind. So it's unbelievable. And one other innovation, through the eye, and one of the things we're leading, you can tell about cardiac health. You can tell about so many different ailments you may have earlier than your doctor's going to show to you.

33:20Steve's going to live another 10 years. Maybe. Kevin, you got a quick name you want to drop, a shout out? I'm kidding. I have a selfie with Frank Holland today. We're going to go on to the news update with our Pippa Stevens. Pippa. Hey, Frank, a court win for the Trump administration today. The Supreme Court is allowing states to use the federal government's controversial voter database. Administration officials say it will stop non-citizens from voting, but critics say it could disenfranchise eligible voters. The emergency order today is unlikely to impact the midterm elections because systematic voter poll purges are banned within 90 days of an election.

33:58Ossler Middle is halting production at Ukraine's largest steel plant, saying it's no longer safe to operate because of repeated Russian missile strikes. The company is also taking a$1 billion charge for damage to the plant and equipment. It says it is working with Ukrainian officials to preserve the site for a possible reopening after the war. And a rookie trading card for Dallas Mavericks forward Cooper Flagg just sold for more than$8 million at auction. That is the most ever paid for a single-player basketball card and the fifth highest price for any public sale of a sports card. The trading card is one of one.

34:33It features Flagg's signature alongside a patch cut from his first official game-worn jersey. Frank, back to you. He had a really, really good rookie year, so looking forward to his sophomore season. Pippa Stevens, thank you very much. Good to see you. Coming up, checking in on the consumer with the sector on a weeks-long losing streak, how the committee is positioned. Coming up next.

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36:20Costco hire after reporting higher fourth quarter profit. Kevin, you own this name. Yeah, I mean, the numbers were good, but we all know how much of a multiple this thing trades at. So you always have to kind of hold your nose and look at it. Stocks still up a little bit on the year. The one thing that I thought was really interesting about the numbers is that the under 40, the new membership is up 60 percent since COVID. I think that's really important. It's one of the things we like about Amex. You can get the next generation embedded into your ecosystem, and I think that's valuable. This is still going to have a lot of pressure with higher prices.

36:52I know tariffs were a little bit of an abatement on them, but we own it. I don't know that you need to rush into it at this point. Yeah, to that point, seeing a lot of notes out here, a little bit pessimistic on the name. Target trimmed at Goldman Sachs from$1 ,159 down to$1 ,134. Also moved to equal weight at Wells Fargo. Target cut from$1 ,000 down to$950. Another consumer stock to talk about Dow component. Nike getting cut to sell from neutral at Bank of America. Weiss. Now, I know you don't own Nike, but you own Dick's Sporting Goods. I do. Just kind of your take on just the, I guess, athleisure space, the sneaker space, whatever you want to call it.

37:25It's highly competitive. I mean, take a look at Lulu. If you own Lulu and you thought they were only going to be the only ones in yoga wear and athleisure wear, well, look what happened to it. So it's become very competitive there. And people like new brands. Nike's seeing the same. They've also been lost from a management standpoint. And there's not a ton of confidence in the new person coming in. The new CEO just started about a week ago. So, look, I prefer to own Dick's because it's, you know, they can pick their vendor. They can pick who they want. They've got tremendous buying power. It's an experience.

38:00And I'm generally not a big buyer of retail stocks because it's very faddish. But I just think that they are doing extremely well and continue to do extremely well. And again, it's a destination store. So if you have a special story like you do with Costco, like you do with TJ Maxx, others, I think you can be there. But otherwise, it's tough in this economy. To that point, you bought some more this week. I did. Any concerns about potential China risk? I mean, the idea that things could blow up, the trade truce has been extended, but if tariffs go back up again, that's going to hurt dicks like it hurts just about every other business.

38:33Yeah, but it's a question of what you can pass on and how much it actually means to each product that you're selling. So I do absolutely have concerns about China. I just don't think we're going to see it now with the elections coming near term, although I continue to be surprised by the White House. But I think we're OK here. I don't think it's in his interest at this point, meaning Trump, to continue to raise tariffs. Let's squeeze in one more. McDonald's, everyone knows the Golden Arches, set for a seventh straight negative week, longest losing streak since August of 2014. Today, pulling back fractionally as well.

39:09I want to come over to you, Kevin. You own this one. What's your take on this? I mean, how are you playing this name? Well, I've made a secret about my lack of enthusiasm for McDonald's for some time. The only saving grace in our portfolio is we took the position from 5 % down to 2.5%. Wish we had taken it to zero, but we have to have a diversified portfolio and need to own something. So at Investor Day, they try to put on a good face. But what's important, I think, for me to have any hope for them is they're not losing market share. People aren't leaving McDonald's and going to Wendy's or going to Burger King.

39:41This is really a consumer story. And when gas prices are this high, people don't have money to go out to eat. So this is a story that if you're interested in McDonald's, you can certainly look at it here. I wouldn't be rushing into it. I'm not adding to it. If anything, it's a stock maybe we have to look at with a fresh set of eyes. But it's down probably 30 % and very, very disappointing for sure. Yeah, to your point, Investor Day certainly didn't seem to instill confidence. The stock's fallen all week. Still a great interview by Carl if you want to check it out online if you're a McDonald's investor.

40:11All right, Mike Santoli's Market Memo. That's coming up next.

40:25We'll be right back.

40:55We are back with senior markets commentator and overtime co-anchor Mike Santoli with his market memo. Mike, we were talking a bit over the break, just kind of looking at the market's reaction to news that there may be some progress between the U.S. and Iran. Yesterday, you know, we obviously got a little bit of a test run of this. It's almost like, you know, the defensive back kind of keeps going for the pump fake. And so to a lesser and lesser degree each time. It's going to happen at some point. I think what's more important is that parts of the market are primed to have some kind of relief trade.

41:26Obviously, mostly it's Treasury yields, yield sensitive parts of the stock market, you know, oil. Maybe we come in a little bit. I don't know that that's going to define the next leg of this market, but it could help to in the interim take the pressure off the median stock in the market, which has been really taking a lot of punishment, even with the AI trade managing to hold together the S &P 500 itself. So you're saying the market is the cornerback, ready to jump on every one of those pump fakes. But the oil market, or at least oil investors, they don't seem quite as eager. I'm looking at Brent Crue right now at almost 104.

41:57WTI did pull back from earlier, but still at about 92. I think there's a good discussion to be had about how much immediate downside there is in crude, even if you get one of these agreements to reopen the straight. I'm sure it would take it off the boil. But you don't know if we're not going back to 60 or 68 probably right away. So I still think it's OK. I mean, the world economy has shown that$100 Brent has not cracked it quite yet. So I think that's one of the reasons that global yields are where they are. Yeah, let's just hope it gets back to like 60, 70, though, Mike. Mike Santoli with his market memo.

42:30We'll see you coming up later on OT. Thank you. Still ahead, Options Action with Oliver Rennick. Halftime returns right after that break.

42:55Welcome back. Let's get to today's options action. Oliver Rennick, he joins us live from the CBO Global Markets in Chicago. Oliver. Hey, Frank. Options traders are buying the dip in crypto stocks after news of a$350 million hack of crypto exchange BitGet. More like BitGon. We're seeing call buying in both Bitcoin ETF, IBIT, and Strategy, MSTR. Volume in master is two and a half times the average right now with total call volume double puts. There was at least one big call seller, but four of the five biggest trades by dollar amount were bullish, including someone who bought 20 ,000 in-the-money calls expiring today worth$30 million, which were two of the biggest trades in the entire options market today, as total premium in MSTR surpasses$230 million on the session.

43:48And in Bitcoin itself, IBIT, one popular trade for late October expiry was to buy the 52-strike call, a 60-cent trade that needs an 11 % rally to pay off. So resilience, Frank. Oliver Rennick, live from the SIBO. Oliver, thank you very much. Get your reaction. I want to come over to you. Just kind of some of the buying that Oliver was pointing out, some big buys there. You remind me. I was distracted. Honesty. You get points for the honesty. Kevin, I'm hoping you were paying attention. I was paying attention, but it fascinates me that you'd see that kind of money backing a crypto from the uptrend.

44:24I think this thing was just trading at$59 ,000 or$60 ,000. It seems like a day or two ago at$83 ,000 to put$30 million on a bull trade is pretty brave. Weiss, any quick thoughts? I don't see crypto, but it's purely a momentum trade. So you've got to get in when the momentum's there and have tight stops on it. So, you know, we never know what investors do when they put money into what position they have aside it, etc. I'm going to give you a mulligan, throw you a softball right here. Vanda research out with a note saying that options flow stand at about$18.4 billion, roughly three times the typical amount normally seen during September.

45:05They say that as a signal that there's kind of some risk appetite under the surface. Yes and no, right? Because one of the ways to get risk exposure in a risk-controlled way is to do it through the options market. Sometimes that's rotating out of positions into call positions to replicate the exposure to insulate missing while truncating your downside. And on crypto, you know, I am more bullish on Ethereum than perhaps anything because it provides the base infrastructure layer for all financial transactions that are being done by some of the biggest investment houses. Could you translate what you said the first part?

45:46I think we've got to go to the break. I give Siege credit for rebounding. He got caught not paying attention. I was reading. I was reading something about whites. Listen, teach. Better late than never, but never late is better. Always remember. Always. All right, stay with us. Final Trades coming up on Halftime.

46:12Welcome back to Halftime Report. I'm Diana Olick. We just got the mortgage rate for today on the 30-year fix. It is 7.49 percent, according to Mortgage News Daily. That's up another five basis points from yesterday when it jumped 19 basis points. Add it all up for this week, and that makes a 32 basis point jump in just three days, well over a quarter of a percentage point, and the highest rate in more than two years. The homebuilders are actually up on the day, but that's likely with the broader market. They have been taking this month hard as rates have really been soaring on the back of the 10-year yield.

46:46But again, 7.49 percent today, the highest in two and a half years. Frank? Our Diana Olo with the very latest on the mortgage market. Diana, thank you very much. We're also following some breaking news out of the White House. President Trump just posting on Truth Social that Treasury Secretary Scott Besson will not be the AI czar. Trump posting Scott Besson will not be going to the superintelligent czar position. Number one, he doesn't want to. Number two, he's doing such a great job at Treasury, and that's where I want to keep him. Why would I ever make such a change? Just more fake news, according to the president.

47:17He then signs it. Very quickly, no comment. Final trades. Rob, you're up first. Hewlett-Packard, Enterprise. Nice, HP. Kevin. Natera, Go Birds. Weiss. Night at health. Night at health, we've got to leave it there. That does it for halftime. The exchange with Brian Sullivan. It 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.

47:56You 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. You've never been one to settle, stand down, or stand still. You're a lifelong learner, energized by excellence.

48:27There's a fire inside you you can't ignore. You've got competition to outrun, momentum to build on, and your own high standards to meet. Stop now? Not a chance. At Capella University, we help you catch what you're chasing because you've always had the drive. Now, go earn the degree. Capella University. What can't you do? Visit capella.edu to learn more.