Trading Stocks as Yields Rise: The Investment Committee's Portfolio Strategy 10/2/26

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1:12Thank you, Carl Morgan. Have great weekends and welcome to the Halftime Report. I am Frank Holland in with the Judge Scott Wapner. Front and center at this hour, positioning possibilities. The Investment Committee making a number of new portfolio moves as bond yields and oil prices remain a bit volatile to start the fourth quarter. Joining me for this hour, we have Jim Ladenthal, Amy Raskin, Malcolm Etheridge, and Bryn Talkington. Before we get started, quick check on the markets. Green across the board, as you can see, but off of the highs of earlier this morning. Right now, the Dow's up about 176 points.

1:42Earlier was up almost 300 points. The S &P up just about three quarters of 1%. The Nasdaq and the Nasdaq 100, both up over 1 % hitting new 52-week highs. Taking a look at the 10-year, 5.264, down about 5, 6 basis points from the levels that we saw yesterday. And really, Jim, I think that's where we have to start this conversation. Bond yields pulled back a bit after that soft-than-expected jobs report, and we're seeing tech taking off and video hitting a 52-week high as well. Well, I think you're starting in the right place, which is the 10-year yield. I mean, this bounced back from the teens today, and now it's at 526.

2:14I think that's just a little muscle memory, Frank. I don't think that's really the trend that we should be looking at. Because this week we've gotten a lot of data that takes a little bit of the heat away from the Fed in terms of raising rates at least this month. We got the PCE. That was a little lighter than expected. And then the jobs report today was kind of Goldilocks. It was good enough that we don't have to worry about a meaningful slowdown. But it wasn't so hot that the Fed really needs to go this month. I think they would be unwise to raise rates this month, by the way. I think that just would put a crosshairs on their back one week in front of the election.

2:49So where you are right now is the odds of a rate hike have gone down to about 20 percent this month. I think that should pull the 10 year yield down with it. I know the two year, by the way, is still predicting about four rate hikes to come. Here's my call. You can disagree with it. I think the two year is way ahead of itself. OK, here's why. If energy prices just stay where they are, let alone go down, which they're doing today. But if they just stay where they are, inflation over time comes down because, as we all know, it's a rate of change, not a price index. So that being said, I think you can see inflation come down towards the target.

3:23The Fed isn't as antsy to raise rates. By the way, you had that good micron result a couple of days ago. There's a lot of reasons to maintain a bullish attitude, as I do, for the end of this year. So just to your point very quickly, CME FedWatch tool, 77 % chance of a hold today. Just a week ago, it was about 36%. Brent, I want to come over to you. As we're looking at the market right now, again, the Nasdaq hitting a 52-week high. Is this trader saying that they don't believe the Fed's going to raise rates? Is that what's giving the market confidence? I think going into midterms, you know, obviously November, it's a very low likelihood that the Fed does anything, I think, until their December meeting.

4:01Just they want to stay out of the way of being looking to be political at all in either way. And so I think the Fed is on hold through at least December. I agree with everything that Jim just said. The two year is telling you that we're going to have multiple rate hikes. It's telling you inflation's higher. And I think the two year has overrun itself. And so I think that as inflation, core inflation, continues to come down, I think we'll see the two year actually start to settle in more towards, we'll say, Fed funds rate than closer to the 10 year where it's moving directionally. And that's really positive.

4:36I think once we get through, you know, October historically is up about 58 % of the time. Obviously, everyone remembers the crash of 87, but that's more the anomaly. And I think this midterm election cycle is a really great time to dollar cost average into names you like or ETFs if we do have that traditional midterm volatility. So, Bryn, you didn't see this. Jim did a little celebration dance because you agreed with his points. Amy, I want to come over to you. Is the market perhaps doing a bit of a premature chore celebration dance. I mean, remember, we do have a carrier group going into the Middle East.

5:10The Iran situation has not been resolved. To Jim's point, Brent Cruz down three quarters of one percent, WTI down two percent. But certainly there could be another energy shock. And we also have some other inflation reports coming up this year. He seems to say, you know, mission accomplished. It looks like things are moving. No, I that's that's I don't have over those words. That's overstatement. Directionally, you're saying that it looks like we're in the right direction. Thanks for correcting me. Yeah. But should we be a little concerned? Is this the right time to have bullishness when it comes to stocks?

5:36Or is this a time for caution in Q4? Look, I think in the near term, we're OK. But longer term, so I'm not as focused on the next Fed meeting or even the December meeting. I think it's going to be hard to get rates down sustainably without a slowdown in economic growth. So if you think economic growth is going to be robust, and I think most people do, and that's sort of the trend that we're having, I think rates stay at these elevated levels. And I do think eventually that puts pressure on the S &P multiple. It just always has, and I think it will. That's not a one-quarter projection, but I do think to get rates sustainably lower, you need much lower economic growth than we're seeing right now.

6:15You know, speaking of the S &P, Malcolm, S &P is trying to avoid its third down week in the last four, but it's also important to note it's still about 1 % from a record high as well. Yeah, I think realistically for the next month at least until we start to get earnings from the tech companies that will include guidance for what they see spending-wise and everything else, it's going to be a lot more of playing of the old hit. So this whole year, or at least since February, we've had this issue with the 10-year being elevated. Incrementally, it crept up as the war continued on. Energy prices stayed high.

6:44All of those things have been true throughout this entire year, and the market has not cared. Stock investors specifically have not cared. I think that that trend probably carries through the month of October at least. Yes, September was rough. Seasonally, it is a rough month historically anyway, But I think a lot of it had to do with the AI doomerism that we got that was starting to make people question whether some of the things they've been holding all these months and years that they felt so strongly about, maybe they're starting to be cracks forming. Now that that has kind of faded a little bit, we're probably going to get an IPO from Anthropic in mid-November.

7:17At least that's what we've been promised at this point. Those things will lead to people being a lot more willing to continue taking the same risks they've been taking, regardless of whether oil cracks 125 or 150, regardless of whether the Strait of Hormuz opens tomorrow. Those things have been here. All right. Day two of Q4, obviously. You're seeing some bullish notes coming out today. One from Citadel, Scott Rubner, calling it the Q4 reload. I want to get your take on this. Return more constructive on U.S. equities in the Q4. September delivered much of the reset we wanted to see. Leverage came down.

7:47Retail cool. Systematic sold. Valuations compressed. The market enters Q4 from a cleaner starting point with considerably more capacity to rebuild exposure. Jim, agree, disagree? Agree. And let me just qualify what I was saying before when I said not mission accomplished. I meant that in particular. I overstated. That was my. No, but I meant that in particular with regards to Iran. I am bullish. I am in agreement with the Citadel comment about what the next few months can bring. And I just want to restate for the purposes of buttressing the argument that you don't need oil to go down. You don't need diesel to go down for things to calm down.

8:20You just need it to stop going higher. And I think to the extent that even if we start bombing after the election, OK, I'm not hoping that that happens. But if we do, you know, there have been a number of workarounds around the Strait of Hormuz already. So I think we've already started the decoupling process that will take years, but we're well into it now from the Strait of Hormuz. With regards to the rest of the setup, I mean, we've got good economic growth. Atlanta Fed GDP at 3.7 percent. Some will say, hey, a week ago it was 5 percent. True, it was, but still 3.7 % is darn good. We know about the profit growth.

8:54The labor market, I'm going to say it's good. People like to say it's stable, but I'd say it's good when you've got weekly initial jobless claims below 200 ,000 for two months running. So I see the fundamental setup looking very good for the rest of the year. All right, fundamental setup is good, but what about the breadth? Malcolm, I want to come over to you. You and I have talked about this quite a bit. Bank of America's Michael Hartnett coming out saying, in part, 400 of the S &P stocks are trading below their 50-day moving average. Is that concerning from a technical basis and just in general that is so much narrowness in the market?

9:24And you were talking about this anthropic IPO. So much of the action is in tech. Yeah. Yeah. It would be concerning if not for the fact that that's been the case for four years since Chats GPT set the world on fire. Right. Like I made we've had these rotations or these head fix, I would even call it, throughout the summer where it looked like the broadening was going to take shape. It looked like other sectors were going to matter. But I've been making the argument for some time now, a lot of the sectors that we're seeing the spillover into are also related to the AI boom, right? So we're talking about the industrials and we're talking about the heavy earth movers and we're talking about the HVAC companies and like the second and third order effects that we suddenly become aware of and that these companies exist and have ticker symbols because they're helping to power the AI build out.

10:08And so until we're given a reason to stop believing that OpenAI and Anthropic are going to somehow figure out a way to be able to spend at the level that they have committed to spending at these hyperscalers, again, I said it before, it's going to be a playing of the old hits. That means the S &P 490, probably not going to matter all that much toward the end of the year. It's really the 10 that have been doing the heavy lifting throughout the course of this year. Yeah, but to your point, you kind of made a comment about HVAC companies' carriers up almost a half a percent. Trade technology is also up about over a half a percent as well.

10:44So to your point, they're getting a residual effect from the tech trade. Amy, I want to come over to you. Jim said there's no reason to wait. You're not waiting. You're making a bunch of moves. You got some cells. You sold CrowdStrike, Natera, Aluminum, and BWX technology. Why don't we start there? Is there a theme there? Well, I did sell out of BWX, but I trained Aluminum, Natera, and CrowdStrike all because they've done amazingly well. So Illumina has basically tripled since last year. Notera is up 150 % since last year. CrowdStrike's up over 100 % year to date. The position sizes got too big.

11:19Illumina is still the largest position in my portfolio right now. I like it a lot. It's just we've had some mega, mega moves. So there's a thought here. You want to take some profits here because are you concerned about volatility going forward? Or do you want to just put that cash to work somewhere else? I agree with Malcolm. I think the whole market is one trade right now. The whole market is really trading on AI. And we're going to get a lot of data points. And we're going to hear from Q4. We're going to hear from companies in a couple of weeks. And we have to hear incremental productivity.

11:46We have to hear these uses. And I do think that there's a scare that maybe people aren't as optimistic. And I do think the whole market, I think for Goldman, for Williams, for lots of companies that we're going to talk about, they really are benefiting from AI. and the second order effects. So Malcolm, you own CrowdStrike and the BUG ETF. Just a quick thought on trimming here. I can't argue with the logic of anybody who looks at a 200 times forward earnings multiple and says this looks like a great place to be taking some risk off of the table. There's also opportunities in the market right now that haven't gotten their AI bump, at least in recent months.

12:25And so it makes perfect sense that that would be where you're rotating with those fresh dollars. All right. Amy, I want to get some of your buys. Berkshire Hathaway, Vertex, Thermo Fisher, Cognex among the buys that you have as well. So Berkshire is more of a defensive play. I do think there is a war for capital now and Berkshire has capital. And so I do think that they're well positioned should something eventually go wrong and they've come back nicely. And so I like Berkshire. Vertex has a lot of drugs in the pipeline. I'm particularly excited about their type one diabetes drug. That's not getting a lot of press right now.

13:00I do think they are really well positioned with their CF franchise to fund new acquisitions. And they're using genomic data almost as good, if not better than everybody else. Okay. Sorry. I wanted to jump in with Jim. You have two of these names, by the way, Berkshire and Virgin. Yeah, big believer in both of them. I just, there was one name that Frank didn't list, but it's on your list, which is this international drilling company. I just wanted to hear what the story was. Major drilling. Yeah. So I think we are in a world where we're going to continue to print money. We're going to continue to stimulate globally.

13:31We have had a shortage of investment in the commodity space, major drilling. That's a$1 billion market cap company, full disclosure, but they are the biggest drilling equipment company in North America. And so I do think they're going to be able to price up. I agree. I own Transocean. That's why I was just curious, because not many people have been in this sort of drilling services area. So I like it. I like it. Brent, I want to get your take. Is this an area where you're looking to take a few profits on a couple of names that are up? are you looking to kind of reposition your cash in different places?

14:02Well, I mean, I've got calls on some names, so I'm not looking to sell anything. I do think that going back to like this whole market's been about AI. Actually, I think this whole market's been about energy this year. It's just such a small percent of the S &P. The XLE's up 40. The QQQs are up 21. If I look at Microsoft up eight, Google up eight, Meta's up about the same. I mean, outside of Apple, I think it's been quite challenging for the tech companies. And the only reason why the NASDAQ is doing so well is because of Micron, Intel and AMD. So I do think it's a really interesting market. I love Amy's buy of the small energy driller.

14:41So I do think energy, it's still such a small part, continues to be such an important infrastructure asset that I still think has legs to go. And I don't think this straight up Hormuz is going to end anytime soon. All right. You mentioned Micron. Jim, you have some buys as well. Micron and Oracle, you're buying more of these. Looking at Oracle, it's up today, but Micron actually pulling back about 1.5%. Yeah, well, Oracle's up primarily on the lower interest rate projection. Now, granted, we talked about the 10-year, and it snapped back up at a 5.25. But once we had that sort of tepid jobs report, you saw Oracle rally in the pre-market.

15:18And I believe that was just on the idea that this company, which has a lot of debt, will benefit from lower interest rates. You know, all that said, this isn't so much an AI trade. I'm not really playing the rotation or the sustenance of that AI trade. It's just I believe in it, period. So if you believe in the artificial intelligence data center build out, Oracle is one of the highest beta ways to play it. Sure, you could be in core weave if you wanted to. You can be in N scale when it comes public. But it's down a lot. So, you know, Amy, I liked when you were talking about trimming your winners.

15:50The other side of that is if you believe in a company and it's come down, you want to add to it. And I see this being the time, particularly after Project Jupiter is having some power supply delays, and that has created a good entry point, if you ask me. Micron, it's just this is playing on offense. That's all it is. I know there are people who are saying it's cyclical. I agree it's cyclical. The comment I make back is this is one heck of a super cycle that's going to continue for some time. And if you look at the expiration of their limitations on buybacks, which comes at the end of this year, they're going to be buying back potentially 10 percent of the company each year.

16:27And I want to be in that, particularly with the company trading roughly six times earnings. I know a lot of people are going to say, hey, cyclical company, don't buy it at six times earnings. I say again, no debt. They're buying back shares at six times earnings. I'm going to play that. Oh, by the way, talking about the pullback today, about one and a third percent, it's up 275 percent year to date. I just want to keep that in perspective. Speaking of tech, we have another portfolio move to hit in that tech space. Let's bring in halftime committee members, Stephanie Link. Steph, always good to see you.

16:56Thank you for the special guest appearance. You bought Meta. I did. I did. Now, I know the stock has had a really nice run off the lows. It's up 37 percent, but it's still down 6 percent from its highs. And it's flat in the past year compared to the Mag 7, which is up 14 percent. If you exclude Tesla in the Mag 7, the Mag 7's up 20 % in the past year. So it's been a major laggard. But I think this story is totally changing. It's going from one-dimensional to multi-dimensional and beyond ads. They're in the early stages of releasing front-end models and AI products, and eventually they'll see monetization.

17:32But Muse is a game-changer in my mind. They're going to leverage 4 billion users, and they already are doing so. They're number one in the App Store within a month. They have 5 million downloads in 22 days. So that compares to Chachi PT that took 56 days to see 5 million downloads. Grok, it took 103 days and Claude, 492 days. So they are really using their scaled distribution and their ecosystem and they're just beginning. The TAM is in the trillions in my mind, and the product itself has security and privacy advantages. And of course, they also have signed up a number of vendors to help in this whole process.

18:16In addition, I like the hire for their enterprise story as well. The ex-CEO from MongoDB and DB rather, and he was also at Salesforce as well. So I think they're really going to ramp up the enterprise side as well. So I think there's a lot of ways that they can win stock trades at 20 times earnings. I just don't think that's egregious, again, for major catch up in this area. All right. Steph Link buying Meta, as you mentioned, coming off its best month since 2022. Steph, always good to see you. Have a great weekend. Thanks, Frank. You too. All right. Steph riding solo on this. No ownership on the desk.

18:53Brent, I want to come over to you. Why not own Meta? I saw you nodding a bit while Steph was talking. So why not own this name? I mean, I have the Qs. I have GPIQ. I'm so overweight technology. And so I was nodding my head because Muse is so amazing. And I use it, I hooked up my Gmail. If you're on your iPhone, it's protected. I'm not sure about the desktops, but it is so incredible. You're kind of like struck by why hasn't Gemini and Apple doing this? But it's very flawless. It's fun to use. It's very effective. So Stephanie's owned Meta before. Kudos that she's getting back into it. So I already own it.

19:34But I do think Meta, from a consumer perspective, is getting back to its roots of being consumer-led with Instagram, Facebook, and now Muse. I feel like it deviated for a while, didn't know what it wanted to do. But now that the excitement around Muse, I think, is just going to continue to go exponential. I think the stock will continue to go higher. But I already owed the Qs and GPIQ. So I don't want to own. I can't own Alltech. All right. Fair enough. Rave review for Muse. I personally haven't used it. I haven't tried it myself. But I want to go to you guys. Amy, why not own Meta? I mean, so much excitement around this consumer app.

20:08There's a lot of excitement around it. I agree. I haven't used it yet either. Full disclosure. But they're not going to own this market. There's Instinct. There's other apps. So it's still unclear to me how they're really going to monetize it in a trillions way. You know, I'm sure they'll monetize it somewhat. But that remains to be seen. I don't own Meta because of the issues around what they do to children. I mean, just simple fact, I just can't get over that. I think any company that knowingly harms children, and you had the whistleblower on Squawk Box this morning. I read that report in detail.

20:47I read The Exist Generation. Like, at some point, this company just owes it to the world to stop doing what they're doing. and saying everybody else has to do it too. Like, I get that, but they're the leader. They should lead. Malcolm, well done, Amy. Well done. Thank you. You know, I've never had a client push back on me when I say that. For that rationale, you're saying? For that rationale, yeah. Malcolm, same question. Why not own Meadow? Yeah, I think the logic is sound from both Steph and Brent. I don't disagree with anything they're saying about the potential for Muse. My issue, though, is specifically the monetization of it.

21:23So we've got a$20 tier. We've got a$100 tier. And I think the reason that it set the world on fire at the moment is because you're not paying anything for it. And I know the whole goal here is the freemium model. We get you to take it, put it on all of your devices, fall in love with it, decide you can't live without it. And then we start to increase what it costs to get the good features. I am not so convinced that that is actually going to work here. I think that in this case, it's a fun toy for a lot of people who are willing to try it out for free. One, we haven't really run into enough of the issues where it can overrun where it's supposed to be and start to make automated decisions it was never intended to make, that could be catastrophic and be a reason we've got to shut it out.

22:01Also, we haven't gotten into a place where any of the big model builders, the frontier model makers, have stopped subsidizing what they are subsidizing to get companies to take up their products, the claws of the world, the codexes of the world. So it's definitely going to be hard on the consumer side if the enterprises are still requiring subsidies to be willing to use these tools. So I think it's early days. I think there's a reason to be excited about it. We want to see consumer AI finally come into the world because it's been enterprise focused to this point. I just don't know that this is going to be the product that gets it there.

22:32All right. You are making some moves in the financials, actually. You bought some Goldman Sachs and Morgan Stanley. I was taking a look at the charts and talking to our data team. Since the 10-year hit 5 percent, Goldman Sachs down almost 12 percent, Morgan Stanley down 11 percent. Why come in now? Is this a bet that rates have kind of hit their peak or is there some other play you're making? No, it's rates agnostic, if I'm allowed to even say that, about a bank. Realistically, if you look at the one-month number on both of those names, they're down more than 10%, like you said, but just in that month.

23:01And I think it has a lot more to do with the shift in sentiment that I was mentioning before, where suddenly we're concerned about the AI trade. We're concerned about the IPO boom and whether it's going to slow down. We've seen a few of them be shelved recently, which isn't a good sign for the two companies that are buying to be the left name on the IPO perspectives of every company going public. But I think that it's a little bit short sighted in the sense that these companies make a tremendous amount of their revenues in the wealth management business. That has never been better. Specifically, Morgan Stanley, I think 45, 50 percent of their revenues come from the wealth management business specifically.

23:36So the IPO business will pick back up, especially if Anthropic lets the world know that it's OK to go into the public markets. And we see some of these prospectuses come back off the shelf. And so I think on a pullback like this for two of the biggest banks in the world that are participating in literally every M &A transaction, every IPO that's happening this year, it was an opportunity to take some dollars from what has done very well this year and move it to some places that haven't done as well recently. Yeah. By the way, a lot of market commentary about the banks. Bank of America saying that J.P.

24:06Morgan is its top idea and money centers prefer it. I know you also own J.P. Morgan. They go on to say within the money centers, we see the most attractive risk reward in our top pick, J.P. Morgan. And they say some of the others are likely to remain challenged until evidence emerges of a sustained pickup in capital markets activity. One of the names they mentioned that might be challenged is Citi. Jim, that's one of yours. Yeah, I actually thought that they said they liked it. That's what the chyron said. Oh, I'm sorry. You're right. Yeah. You don't like it? No, no, I don't have an opinion. I feel like you've had editorial content there.

24:38I'm sorry, I was looking at some of the names. I looked down for a minute. You caught me. They did say, followed by Citigroup and Wells Fargo. I apologize. They like Citigroup. I like Citigroup. I mean, the special gem about Citigroup is their services business, which is kind of like all the plumbing of the financial world. It's kind of esoteric and hard to describe, but it's highly profitable. It's the real growth engine for their business. Now, on top of that, you know, you're looking at an environment of low unemployment. So credit quality in their credit card business should be good as well.

25:09They do have a little lower FICO score on average in their credit card business. So you really need the labor market to look good, which it does for them to extract extra profits from that business. And then, as Malcolm was saying, you know, there's been some negatives on the financials right now about the IPO market pulling back. But I agree with you. It will eventually snap back. and Citigroup amongst Goldman Sachs, Morgan Stanley, JP Morgan, all will benefit. The good news is they all report earnings in like two weeks. And so we'll find it. So we'll have a read. Oh, wait, the farmer keeping me on my toes today.

25:39Man. The last time they reported earnings, it was great. And the stocks didn't react as much. But I own them too. Thank you for the correction. One of the names they said could be challenged is Goldman Sachs. Amy, that's one of yours. Yeah, I mean, I own Goldman. I think it's well positioned. But my big concern is that last quarter was amazing. And I listened to the call and it was all about AI. So talking about the derivatives of AI and the deals and the debt, equity capital markets, debt capital markets, the stock didn't react that well. So we actually have more of our financials overseas. European banks have been phenomenal.

26:12So it's Japanese banks. We just bought Itaou, a Brazilian bank. So we own these. We own these, I think, those are fine. But we're actually looking elsewhere for alpha as well. All right. Just to add another point of view, Oppenheimer on the bank saying, quote, trading may be dicey. So just kind of another take on the banks right now. Coming up, Supercharged Tesla shares balance as delivery's top expectations. Where the committee stands on the trade. Plus, we got our top calls of the day. Halftime is back in just two minutes.

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28:23Welcome back to Halftime. Let's get to some stocks that are on the move. Tesla topping delivery expectations for Q3. Bryn, what's the name you own? Owned it for a long time. It's one of my bigger positions. So they had 486 ,532 deliveries for the quarter. Very solid. Obviously, they're streamlining to just Y and 3. Technically, 370 is an important number to get over. That was support that the stock actually broke through last quarter and went down to 300. So we've seen a really nice rally. If you can stay above this 370 and sit a little bit higher, I think the stock can move higher over the next quarter or so.

29:02And I also think if when they merge with SpaceX, there's another premium there. We've got robots. We've got TerraFab. There's just so much to like about the company long term. I still I think there will be a bid for this company. You can also sell calls on it. Huge option premium. And then I got to give a shout out. I did a round trip flight to San Francisco on United and Starlink, which is obviously SpaceX was on there. And it's so amazing. So another feather in Elon and Teams cap. Yeah, to your point, SpaceX shares are up just about six percent today as well. Tesla shares up more than four percent.

29:36I want to go to another name, RBC out with its top 30 global ideas for Q4 and materials company CRH. They made the list. Jim, we've talked about this before. You own this one. Yeah, and I still like it. I mean, it's come down quite a bit, Frank. And the multiples come down from 21 just a couple of months ago to 14 times now. First off, this is about as simple a company to understand as you can possibly have. They make aggregate gravel, asphalt, all that sort of stuff that we're using to build, build infrastructures, pave the way into data centers, etc. So you can see what the fundamental drivers are.

30:09And I don't think those fundamental drivers are in question. Any time that you've seen the stock pull back like this over the last 10 years, it's been a buying opportunity. That's what I think you've got now with the fundamentals intact and the multiple now at 14 times, in my opinion, very attractive. But this is not something that I can say to you, oh, next week or two weeks from now, there's some catalyst that's going to propel it forward. This is something you have to buy with an eye towards holding it two to three years. All right, moving on. Snowflake also made RBC's list. Amy, you own this one.

30:38Yes, and I trimmed this one too early. So before you follow my trims, just be careful. We still own it. It's done really well. It's in the center of the data world, and companies rely on it and need it. So we like it longer term. It is expensive. All right, looking at Snowflake today, though, pulling back about a half a percent. But again, in context, up more than 50 % year to date. Wolf out with a cautious note on REITs. Malcolm, you own Digital Realty. Brynn, you own CBRE. Brynn, why don't we start with you? I mean, CBRE's earnings are crushing it. They're growing at 25 % a year. They are at the epicenter of this data center build out.

31:16So I think CBRE specifically is a wonderful company growing earnings. They're using AI, operating efficiency, and they have a very fast growing data center build out. So I disagree if they're isolating CBREs. I think individually it's a wonderful, wonderful company and good stock. All right. Malcolm, I want to come over to you as well. Yeah, I guess this one's tied to rates and it makes it an uncomfortable place to be in aggregate. But I think to Brent's point, when you think about who is participating in the data center build out and who's most likely to come out on the other end less scathed, if not unscathed.

31:51unscathed. It's a company like Digital Realty that actually has relationships, like deep relationships with all of the companies that are doing the building in the sense that they won't get left holding the bag because of some of these nonsense covenants that are in some of these contracts where the company gets to walk away if they don't like the way the wind blows once the data center gets built. In this case, Digital Realty, to me, is one of the safest ways to play that data center build out. And so, sure, I mean, if you want to downgrade it from here because as interest rates are moving in a negative way, I guess.

32:22All right, DLR up almost 1 % today. All right, now we're going to turn to our Dom Chu with the CNBC News Update. Good afternoon, Frank. Defense Secretary Pete Hegseth is ordering a one-day stand-down to ensure all military members have the opportunity to vote. He directed all commanders and supervisors at all levels to execute the stand-down no later than October 15th and said the move would continue for every election. California, New York and two dozen other states, cities and counties are suing over President Trump's decision this week to finalize a rule sharply lowering vehicle fuel economy standards.

32:58They say the move violates requirements the standards be set at a maximum feasible level. The Trump administration says the rules would cut manufacturer costs by more than twelve hundred dollars per vehicle. And Argentina launched South America's first citizenship by investment program today. The plan offers citizenship through a non-refundable contribution of$350 ,000 or the purchase of an$800 ,000 public bond. It comes as Argentina looks for ways to inject much-needed capital into its economy. Those applications will open by the end of this year, Frank. I'll send things back over to you. Dom Chu.

33:36Dom, thank you very much. Coming up here on Halftime, Nike shares having its worst year ever as it reports low sales and weak items. Look at that chart. We're going to discuss the state of the consumer coming up next.

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35:34Welcome back to Halftime. Shares of Nike hitting a 13-year low after posting disappointing sales. as the stock won't pay for its worst year on record. Our Brandon Gomez joins us now with much more. Brandon. Hey, good morning, Frank. Topped profit expectations missed on revenue, then issued a far weaker than expected outlook. Bottom line here, Nike is telling investors the turnaround will take longer, with pressure extending to early fiscal 2028. Now on the call, CEO Elliott Hill emphasized momentum and performance, which helped North America return to growth. He also pointed to early success in women's basketball, including strong sell-through for the new Kaitlin Clark shoe.

36:08But management was also clear those wins are outweighed by painful resets in sportswear, Jordan and China. It is clearing inventory, pulling back unprofitable digital distribution in China and rebuilding that marketplace. Actions that hurt sales now and hopefully will be helping later. Now, analysts this morning not giving the quarter much credit. Morgan Stanley called the profit beat low quality. Whilst Fargo seeing little good news and cities saying Nike is becoming a cost-cutting story. Now, the new PACE restructuring plan will be the blueprint here, but the biggest savings aren't expected until 2029 and 2030.

36:43I know you guys have tossed this name around a lot in recent weeks, and hopefully November's Investor Day will be the next test of where the stock goes from here. Frank? Brian Gomez, the very latest on Nike. Nike shares pulling back just about 5 % right now, but as we mentioned on PACE for its worst year on record. Brian, I want to come over to you. You used to own Nike. You sold back in February along with On Holdings. Was that sell because you had some doubts about the consumer or doubts about Nike? I owned it for a minute. It was a trade. It was I thought the skims, the skims relationship would be helpful.

37:15I thought the veteran CEO that's been at the company, they'd see execution. But ultimately, they really made a huge whiff when they left Foot Locker to go direct to consumer. And people just forgot about them. And I think they got too political. and there's just too many choices. There's just too many choices. And so whether it's on or Nike or Lululemon or Viore, consumers have so many choices. And so I think these retail space, I typically don't buy retail stocks for this exact reason. They're just fickle and we have so many options. You left one out. Hoka is also another competitor, a lot of competition in this space.

37:51Amy, you formerly owned Nike, you sold out of it. What do you think of the year that Nike's having and the business in general? I mean, Brandon's saying that the cost cutting measures won't even take effect until 2030 or 2029. Yeah, I sold out of it years ago and that was too late. So it really has been a tough slide for a formerly phenomenal company. I agree with everything Bryn said. There's just too much competition. Even when I go online to buy sneakers for my boys, I'm like, OK, I can buy them for$120 and$150 and I can't tell for$120 and$50. And I can't really tell the difference. Nobody's marketing to me saying this is why you should buy the more expensive sneaker.

38:29So I default for the cheaper one. And I just something's not right there right now. Jim, you formerly owned On Holdings. Yeah. And I think the problem here is China. I hear you, Bryn, on Foot Locker. Maybe that's a contributor. I hear what you just said, Amy. And there's definitely competition in North America and the developed markets. But I really think not just for Nike, but for On and for all of these athleisure brands, China was going to be a major growth market. And China did what China always does. It promoted its homegrown brands. And we've seen that happen with other industries as well.

39:03We saw GM had a mean business in China about 10 years ago until the Chinese brands came up. It was supposed to be a major growth area for Starbucks. So, you know, I know it's not just China, but that is a major contributor here. And I would label that as actually the number one cause, as opposed to saying that there's something wrong with the consumer. This quarter, it certainly was. I think it's more than one quarter. China expectations have disappointed now for years. But in fairness, it's not just Nike. We're showing some of the other consumer discretionary names. And also on Tuesday, we got our lowest consumer sentiment read since 2014.

39:39So Malcolm, coming over to you, do you want to buy any stocks that are so closely leveraged to the consumer right now? And how do you look at the consumer discretionary sector? No, I own almost nothing tied to the consumer for that exact reason. One, I think that even though people have the willingness to continue spending as they have shown since basically recovery from COVID or during COVID even, I'm concerned about at some point, people's capacity to spend has to disappear. The banks start to pull back. You can't really borrow and spend tomorrow's money today. And that's gonna negatively impact all of these companies.

40:11Plus, there's only so long we've been hearing the rumblings around diesel prices and some of the companies have still been able to eat those costs at least a little bit. rather than having to hand them over to the consumers completely. But that has to hit a wall, too. And so once we start to hear from the retailers about how much they've had to increase the shelf cost of the products because of the cost to get the good to their shelf, plus they just finished with the disruptions from tariffs and on and on and on. So I think the consumer is a very tough place to be. But to go back to Nike really quickly, if I may, for anybody watching this who has an affinity for Nike and you're looking at that chart and saying, well, it can't go down any further from here.

40:49Now is the time to buy. I made that mistake with my beloved Peloton once upon a time. In 2021, it was like$88,$89,$90 a share, something like that. It got down to like$27, $28. And I said, oh, it can't go down any further from here. Why not buy it? It's down at like five bucks and can't get off the floor. So Nike to me looks like another beloved name that people would be jumping into saying this is the deal of a lifetime, when in reality, it may just continue to cascade down. Yeah, I'm a big Nike fan. I can't buy the stock. I can't buy individual stocks. However, if there's some size 14s on clearance, I'm going to be on it.

41:24All right, coming up, Mike Santoli's Market Memo. It is coming up next. Stick with us.

41:42Welcome back to Halftime. We are back with Senior Markets Commentator and Overtime co-anchor Mike Mike Santoli with his market memo. Mike, we were actually talking a little bit earlier. Bond yields came down after the jobs report, but they've kind of ticked back up. I'm looking at oil right now. Brent's just down fractionally. It was down quite a bit earlier today. What's going on? Yeah, it's a little bit counterintuitive after the soft and expected jobs number. I do think we took some of the starch out of this bond sell off yesterday with a lot of the dovish Fed speak. You had the relatively benign inflation number.

42:10So we were in off the highs. But I do think the stock market is still kind of outsourcing its worry to the bond market and maybe isn't so sure whether, in fact, it can kind of be comfortable that it's going to take a breather. That said, even though we're off the highs in the S &P 500 corresponding with that lift in bond yields, it is led by the AI theme. You do have NVIDIA. It's more broad than some of the rallies have been recently. I am receptive to the idea that we had a pretty decent reset of sentiment and positioning in September. If that's going to be enough to really get us an upward push or not, That's the question.

42:42So you mentioned the name that I'm surprised we haven't already talked about. NVIDIA hitting a record high right now. Everybody here owns it. Is this simply kind of mechanical with bond yields pulling back that makes people more enthusiastic about AI? Or is there something else? I mean, something broader is going on. Semis are up in general today. NVIDIA has been sort of the quality defensive semi. I think the brute force of the volume of earnings growth that's now expected as you inch closer to next year. Maybe it's hard to get that valuation to come in anymore. So I don't know if there's much of a story behind it.

43:11It does make some sense. I don't think it's great if you only have semis up and everything else down. But a day like today, when you have clear leadership from the AI tech trade and other stuff is still at least firming up, I think that's fine. Even though bonds are not celebrating, consumers not celebrating the yield story. So I don't know. Still some questions going into the weekend. Yeah, by the way, the momentum ETF also up today. Mike Santoli, great to see you as always. Thank you very much. Coming up, we've got options action with Oliver Rennick. Stay with us.

44:07We'll be right back.

44:26Welcome back. Let's get to today's options action. Oliver Rennick joins us from the CBO Global Markets in Chicago. Oliver. Hey, Frank. Bitcoin was quick out of the blocks this morning when jobs came in light and bonds rallied, but has faded as yields climb back. Options traders are striking mostly positive positions still in Bitcoin Trust, IBIT, with more than 100 ,000 calls bought versus about 50 ,000 puts. And the majority of call premium looks like it was coming from buyers. What's interesting is that in strategy, MSTR, whose options often skew aggressively bullish, bulls are quite shy. Volume is pumped up to almost four times the month-long average.

45:08But in the$160 million of call premium traded on Master, about$90 million of it looked initiated by sellers of calls. In fact, of the 10 biggest trades by dollar amount today, seven were big call sales, including one$4 million bet that MSTR will stay under 162 spot five between now and today's closing bell. And that trade was likely paired with another bet. It will stay below$175 through next week. Oliver Rennick, live from the CBO in Chicago. Oliver, thank you very much. Brent, I want to come over to you. You have some crypto exposure, the Bitcoin ETF or a Bitcoin ETF and an Ethereum ETF. Yep.

45:50Yep, Ibit, both BlackRock. You know, Bitcoin really in six weeks has gone, as we've all seen, from 62 ,000 to 85 ,000. So it just has ripped higher. And so it's still negative for the year. But I do think that downtrend is somewhat over. You could see some consolidation here. I like what Oliver was saying about with MSTR selling calls, because after such a big move, there's going to be some consolidation. So I agree with selling calls. They're still really nice premium. But I do think that crypto winter is thawing and better days are ahead. All right. Looking right now, Bitcoin up over a half a percent.

46:26Stay with us. Final trades. They are coming up on halftime.

46:36welcome back to halftime time for final trades bren you're up first nvidia we all know about the tech the fundamentals are very strong but the technicals if it can stay above 235 break out of that six month trend i think it goes much higher also hitting a new all-time high malcolm yeah i'm spotlighting okta the rise of muse makes identity security that much more important. Amy. Cognex. It was a recent ad that I didn't get a chance to talk about, but they just did an acquisition that could materially expand their addressable market, leader and machine vision. Jim. Delta Airlines coming off of a recent low.

47:11If you look at any chart, one, three, five years, you see just a beautiful setup of higher highs and higher lows. And I think it will set a new high before the end of the year. Obviously, earnings coming up next week. All right. That is going to do it for halftime. The Exchange starts right now.

47:54investment 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.

48:17Oh, look, you just got added to a meeting about coordinating meeting another meeting, to prepare for the pre-meeting ahead of the follow-up meeting, which will, of course, require a recap meeting, and then another meeting. Hit your booking point, book with Southwest, and enter airplane mode.