nvidia up nicely in this broader market sell-off that is worried now about higher rates and reemergent inflation. >> andy jassy's comments in the letter and andrew also helpful in part to continue to stoke that a.i. fire. >> cost cutting but investing in a.i., the theme from tech. that will do it for us on "money movers." over to scott wapner and "the halftime report." hi, welcome to "the halftime report." a turbulent week for investors. what it might say about the future of the rally. we'll ask the investment committee. joining me for the hour today everybody is here at post 9, josh brown, shannon saccocia, jason snipe, rick saperstein. the nasdaq is positive. you did have a cooler ppi today and that follows that cpi, which has certainly frayed nerves yesterday. josh, you told me yesterday

afternoon, you still think that this is a market to buy and not to sell. >> to recap, one of the things i was looking for is a buyable sell-off. i hoped it would have gotten worse. i never have time to panic. the kids, the job, there's just not enough. i didn't buy anything yesterday. the predominant trend is an up trend, it's not my opinion. that's data, sorry. i think it stays intact. if it changes, i'll be the first person to tell you the trade is lower. it isn't. i just don't see it. these are companies that are nominally earning tons of money because of where rates are especially relative to years past.

if you look at the lending business, business is getting done. the earnings we'll see from big banks are good to great. black rock will report. comps are easy. i think they'll do well. absent that the trend remains higher. >> rich, you're getting a lot of fed speak. the most recent one is collins at noon. we can bring you the headlines now. the fed expects it will be appropriate to begin hiking. more time is needed, but that seems to be the party line. williams, a voter, said rate cuts starting this year, no need to adjust in the, quote, very

near term. he does expect pce inflation to be 2.25 to 2.50 this year. moving closer to 2% next year. the idea you're still getting cuts is not off the table. that's all that matters. >> there's the tightening like open occurred in '99 with greenspan, and there's the slam the brakes, which the fed did, to really control inflation. and that's a trickier tightening. so inflation has come down, but it doesn't have a two handle. it's likely not getting there so quickly. the important point as an investor is to buy stocks irrespective of what the fed is doing and whether they will tighten or not. maybe they'll tighten two times -- >> tighten? >> i'm sorry, loosen, the second

hatch of the year. maybe not. the point is to identify names generating free cash flows that will do well in an environment irrespective of the fed. >> you've been negative of the market for a long time, right? are you still today? >> no. >> you're not? are you more -- let me ask you this. why don't you characterize your own level of constructiveness, if you want to put it that way, from someone decidedly negative for many, many months going back a year, it feels like. i think that's a fair assessment of your view. you tell us today where you're at. >> we raised cash 18, 20 months ago, and bought municipal bonds at 4% plus yields. we reduced our client equity exposure down, but we captured an opportunity that hasn't come back yet.

we were cautious, invested. we're fully invested today and think the economy is strong. wealth in america, isms in mafg has strengthened. it's the first time since 1947. the economy is doing well. so we're fully invested. the question really is, are we hanging on to every move of the fed to get a market higher? no. it is earnings. we haven't had earnings growth in two years. so '23 and '22 the s&p generated 220 in earnings. this year it has to move higher for the market to move higher. >> what's clear to me is, like many, not singling you out, obviously, you underestimated the durability of the economy. you expected things to happen that haven't happened and now

you don't think are going to happen. is that fair? >> that's fair. we didn't feel we were giving anything up by adding tax-free municipal bonds at 4% plus. >> of course. >> which we're happy to have right now. >> when you say you're fully invested, what does that breakdown look like? what part is in equities? >> so we had a client with 50% equities. took the client down to 45%. added 5% to the fixed income side. now that 45% is back up to 50%. so we're back to par in our asset allocations. allocations are running from 20% to 40% on the fixed income side and 40% to 60% on the equity side. >> you're one of the highest rated financial advisers in america, and presumably people who watch you on our program, they want to know what kind of

breakdowns you have. they're asking their own financial advisers these similar kinds of questions as shannon, the bulls still feel emboldened. they're not ready to give up the ship just yet. they think the economy will remain strong and the fed is going to cut. we don't need the cuts anyway so no big whoop if we have to wait. >> the last point you made is the most important point. if you look at the bull story for the equity market, for commodities, for not just here in the u.s., ex-u.s. stocks, you think about the difference in the u.s. economy versus outside of the u.s., and the real thy is the difference is that we have been able to digest this higher rate scenario. so if you look at what the fed is looking at, okay, we have the

lever to be able to cut rates. pce will be in the 2s, right? that's what the fed looks like, not pci. they have the opportunity to cut rates, but they don't need to. because they're looking at the economic data we're all looking at and saying, yeah, there are pockets of interest in lower end consumers. the realty is for the bulls to change their mind, they need evidence the fed will have to cut because the economy is deteriorating and we're actually seeing a re-acceleration in manufacturing. we've been in a manufacturing recession. it's been an expansion. >> jason snipe, khrinski says it's too early to buy. another says the opposite. too early to buy versus too early to bail. do you want to weigh in on that? >> i take a lot of what shannon just said.

pmis are rebounding, labor is strong, the economy is strong. and, to rich's point as well, earnings, we've been in the earnings recession for the last two years. obviously earnings have strengthened and we're expecting, again, revised down from 10% to 5% but earnings to carry us through the rest of the year. margins are expanding as well. i do not think it's early to buy or too late to sell. i think this is an opportunity for all market participants to get in and stay in. i think the market will give you more opportunities the rest of the year. >> let's play the what if game. that's what the bears are going to say, well, what if inflation proves too sticky for any rate cuts? what if the economy buckles under higher for longer and pushes cuts out another 30 days

from what we thought into the summer. is the market too complacent about either scenario? >> whether 21 1/2 times early is the new 16 times earnings. a lot has to do with a third of the s&p and large cap tech. the markets have been fueled by a.i. tail winds, the prospect of declining inflation as well as fed cuts. we start moving the fed cuts later or off the table, the market has to see earnings improvement to move higher from here. >> which is inspected. >> it is. i think we have to move the ball from the fed's playing field into where is their value in an environment the fed doesn't cut at all? >> where is that value?

i think it had gotten legs on the cuts. on the idea, well, the economy will remain strong, and the fed is going to cut. so if i take cuts off the table, or at least i push them back, do i need to rethink the broadening trade itself? >> i think a couple of sectors will continue to do well. they're returning the capital to shareholders. i think the broadening trade could occur. we're remaining focused with our overweight position. >> your energy call has been spot on. josh, you've been talking about it a lot. materials, utilities, other areas, financials. you talked about it top of the show. we're going to get some real world view in earnings for some of the names.

>> it's a good question. is the reason we've had a broadening out in the market, is it predicated on people sensing that the fed easing is coming closer and closer? perhaps in some areas you could say yes. certainly with smaller capitalization companies. but i want to build on something rich said, because i think it's really important. you mentioned there being three primary tail winds the market has enjoyed, and i agree with all three of those. the fed rate, the prospect of fed rate cuts, i would argue the prospect is better than the cuts themselves. so that's one. two, disinflation. okay, it's not as great as it was six months ago, but we're sort of still on the right track. it's a little bit of a hiccup right now. i forget the first one but i agree with that, also. let me add some more, because these ain't going away. >> glp -- >> well, first --

>> i'm not kidding. people say that's one of the bullish things in the market along with a.tive. the glp-1. i digress. >> i agree. there's a bull market on obese people, 100%. yes. but, what i would add, and not that, is we just have a shortage of equity, and the "ft" did a piece and everyone on wall street read it. it is undeniable that every year due to buybacks, globally we remove $1.2 trillion worth of stocks from the markets that can be bought by investors. it's a fact and it's not going to change it. this year it will go higher both in the u.s. but now abroad as country after country look at the u.s. model and they say, actually, do you know how you fix your economy? fix your capital markets first. china is doing it. japan is doing it. larry fink dedicated his shareholder letter to 17

countries around the world engaging in this idea, hey, let's do what america did. let's get the stock market fixed. so that's taking place, and that will involve more and more buybacks, which means less and less places for money to go. you have private equity sitting on, what is it, $2 trillion in dry pouder? >> lots. >> there were 3,000-something stocks when i started in the business, there were 7,000. most were penny stocks so throw that out. the wilshire 5,000 can't muster an index. so that is a dynamic. when people say, in my day the baseline p/e ratio was 16, it ain't your day, player. it's my day and in my day valcations are systematically higher because people need to invest. >> do you see any tail wind

risks? geopolitical? >> oil price spike, that wouldn't be great except for you and i. >> to his point, those always exist. are you going to take on less risk because you're worried about geo politics? >> no. that's why you own oil as a hedge. >> i'm with you on that. >> there's one going on under the hood which is washington is running a $2 trillion deficit. they have to issue $10 trillion worth of bonds. >> been hearing that for a year. >> there's hibernating animal that's called the vigilanty of the bond market. and that could occur this year. >> it's a myth. the japanese have been looking for that vigilante for four decades like sasquatch. >> the fed might curtail qt, but if you look at a tail risk event not priced in, that's one.

we're shortening maturities in our bond for the foal yoes as a risk that's possible. >> if you're into equities, what are you -- historically what's your number? if you're managing wealth for a high net worth cohort, you may never be more than 50%. you're trying to preserve wealth not create necessarily more at a time taking on excess risk, correct? what historically are you? >> typically the clients give us -- we have one directive, the return of capital is more important than the return on capital. >> my point exactly. >> it has gotten as high as 60%. let's call it 50% with 30%, 40% in bonds and 10%, 15% in less

market correlated. at 50%, if we have 4% tax free and a target rate return what do i need to squeeze out of the balance now that i have a base of 4% tax free? >> again, return of, in your world, is more important than return on. people have different objectives based on the level of wealth they're managing for people. you are now where you have been. how do you assess the proper mix? >> the thing to think about is that prior to -- prior to 2020, the challenge was you had to take increasing levels of equity risk. you couldn't counseled on that income component and had to take on better returns or had to add

more equity. one of the challenges there's a perfection that all of these investors will go back and anchor themselves to a 2005 portfolio when there were bond yields. i think the challenge now is that people have been building wealth based on equities for 15 years now. and i think it's going to be difficult to reanchor those investors to say, listen, we're going to cut your equity exposure because you can get the yield in the other part of your portfolio. there's inflation whether it's 2 or it's 3, or we didn't have that. we were deflationary prior to the pandemic. now you have to balance out, do you need your capital to continue to grow in excess of inflation? the mix is not going back to 2005, in my view. i think still a bias to a slightly higher equity mix because people are looking at that as a real way to grow their

wealth over time and preserve it. >> let's go granular before we take our first break. in terms of places you want to be, stocks you might want to trim. jason, this nvidia move you've trimmed, you join people who have trimmed the name. now it was in a 10% drawdown -- >> which means nothing. >> of late, and it has been snapped up including today, by the way, with nvidia shares up 2 1/3 percent. why did you trim it now? the price target goes to $1, 110 at raymond james today. >> stock up close to 80% year to date. for us, it's above our benchmark. and we've trimmed it several times especially over the last two years. and, for us here, this is not an

indictment on the stock. it's not a reaction to what we hear from intel or other players producing chips at a cheaper price. as boring as it might sound, it is something we need to do. the gtc conference was impressive, i think even with what they're able to develop for developers is expanding even more. but, again, we wanted to take a l little off the table. >> amazon is higher today. right now it is above a new record closing high. the high is 188.65, josh. we have new air here for shares of amazon. >> this was the large tech name

i thought would be the performer of the year. so far i'm right. we have a long time to go. but the reason that i felt that way was really that expectations had been fairly tame versus the apples and the microsofts of the world. that's when you want to take a second look at stocks when the street is not looking for huge leaps and bounds. they're very involved in a.i., extraordinarily so. there is no a.i. if amazon web services is not delivering, quite frankly, most of it. people forget, where is the money going to be made? it's not just in semis. the semi play will get brutal. the platform play is better, you think the typical customer cares

if they're running a gpu from company a versus company b? no. they will care about the services built onto their a.i. platform. that's where amazon has potential. the stock is 26% above its moving average. it may not be the best possible day to buy it, but i will stay long here, and i would not be afraid to get long this stock. it's been above its 200 day for about 233 trading days. the trend is solid, and i think there will be opportunities on the way up, but i'm long and i'm pleased with what i'm seeing. >> rich, you're long the name as well as it gets reiterated as a top large cap pick at evercore. mahaney says he sees amazon as one of the few large caps with material rerating this year. >> a lot has to do with the dynamic of changing their cost

structure, which is a large catalyst. it's moving their cash flow likely from $32 billion in 2023 to $82 billion in '24. so all the reasons josh mentioned and the analysts on the street are out there but there's that dynamic in the cash flow. >> jason, do you want to take alphabet, too? tactical outperform. we view the short term, our channel checks have been consistently constructive. a direct quote in the note today. >> for google we were talking about the a.i. rollout that didn't go so well. what i will say about google, if you flow back to the last report, operational margins grew and the stock has performed better than a lot of the other major names we talk about all the time.

a partnership at apple that could be profitable going forward. >> rich, microsoft, target from 465, and that's at morgan stanley. >> well, i think if investors are going to find certain companies they want to own in that a.i. space and embedded in there has to be microsoft. it's not a cheap stock but great companies are not cheap. recurring revenues, a lot of cash flow. we'll trade the financials. they are on deck for earnings starting tomorrow. the etf that tracks that space is below its 50-day moving average for the first time since november. we have a lot to talk about and trade between that and a lot more when we come back after this. >> announcer: are you following

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welcome back. let's talk about the banks, because they do kick off earnings season officially, shannon, tomorrow. i mentioned some of the damage in that space.

month to date the stocks have all not performed very well. this sector was one of the better ones over the last, i don't know, five weeks. have things turned because of rates? >> i think there's some concerns around that. if you look at the banks, they have been beset by continuing increasing provisions for credit losses, slow loan growth that josh talked about earlier, and there has been an expectation and wide divergence between the big banks and regionals. that's been in place since early 2023. but i think that you're also -- this is a second half story, scott. but to put a point on it, estimates have been revised down for the big banks for 2024 by 10% for the regionals, by almost 25%. you're not coming in with really constructive viewpoints on banks for earnings this year. and so while this near-term overhang from this changing rate environment, whether it's june, july or september, some of that

has already been priced in just from the low expectation that is are being set. what you could see coming up the next few days is you could see no major credit surprises. you could see maybe modestly increasing loan growth. for the big banks, you have investment banking and wealth management that will look better in the second half of the year. >> if we focus on the biggest banks, why do you think it's a second half story? >> because i think that they are expecting that they will get that rate lift from a net interest income perspective the second half of the year. they're going to guide for better results in their true banking segment. there's an anticipation that capital market activity is going to pick up in the second half of the year based on the fact we're seeing a foundationally stronger environment for equity issuance. >> rich, if i own the jpms, goldmans, and bank of americas, as you do, how am i supposed to feel about this space as it suffered, as i said, some

technical damage. below its 50, the xlf, if rates remain higher for longer, chargeoffs, all that kind of stuff to be concerned about, do i need to rethink the financials trade? >> well, years ago when reagan was president, used to be able to buy this industry below book value when you sold it at one and a half, two times book value. bank of america is one and a half times book. jp is 2.2 times book. the return on capital is 11, 12%. they're doing well. they're expensive. but keep in mind, bank of america had $130 billion of unrealized losses on their balance sheet and their portfolio that's down to $100 billion. would i be adding them here? probably not. are we holding them? yes, we are. >> are you in that camp? you love jpmorgan better than all of those banks, because that's the one, i think, you

own, the only one, right? >> i don't feel the need to own the group broadly. jpmorgan will be among the better performers if they work. if they don't work, i don't have to wake up and say, do i literally own wells fargo? i don't have to have that conversation with myself. that's where i am. jpmorgan will do $4.15 a share, it's not a huge jump but it's not nothing either. and that's versus $39 billion in the year ago quarter. i mentioned nominal growth we would see from the banks. that's what i mean. it's not like all of a sudden banking is an amazing business. it was just so bad in '22 and coming out of that in '23, and now you have a better environment overall. jpmorgan trades at a premium, which rich mentions. i would argue with good damn

reason. 22% cagr the last three years. none of the other names can say that. 13% the last five years. that's not just a recent phenomenon. i expect jpmorgan to have a good quarter t. i think it's worth more than $200 a share. i like the fact it's down. a little bit of a gift here. blackrock reports tomorrow and larry fink will visit tomorrow. don't miss that first on cnbc. it's always interesting to hear on the network after earnings are released about that. the headlines with dom chu. a rule, a judge, a judge rule today. the new jersey senator bob menendez and wife nadine menendez, will stand trial separately for their bribery case. that judge mapd the ruling due in part to nadine menendez's health and she would need to find new lawyers within 30 days as her current team would have to step aside due to conflicts

of interest. senator menendez is scheduled to stand trial may 8. u.s. aid administrator said it was credible to assess famine already happening in gaza. she noted that prior to october 7th, the rate of malnutrition was nearly zero but now one in three children. power's response makes her the first to publicly agree famine is happening in the war torn region. and crews are working quickly to patch a 60-foot crack in a utah dam that could endanger a town nearby. while state and local officials believe the dam is not in danger of breaking, they have warned the 1,800 residents in a nearby town to be ready to evacuate if conditions worsen. stunning video. >> i appreciate that, dom. up next our "calls of the day." trades on costco and chevron, amex and more in two minutes.

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♪ we're back. we're going to do some "calls of the day" now, andwe'll start with chevron. take a look at shares. the target was raised to 195 from 170 at scotiabank. upgraded to sector outperform. you are way overweight oil. >> and canadian natural resources. we're overweight oil. it's a geopolitical hedge. their earnings contribution to the s&p is going to be 10%. their market cap is only 5%. but with regard to chevron and exxon, we're talking about companies that have gotten discipline in their capex, so they're generating roughly 12, 13% operating cash flow, free cash flow 7%, 8%.

dividend it out, buy back stock. in an environment where you have an uncertain fed and a g geopolitical hedge, all these names are great adds to a portfolio. >> shares of qualcomm today, added to the negative catalyst watch. jason snipe, price target is 170. they still have it rated overweight. however, they say we are yet to see any significant change for the smartphone market with recovery to remain muted in 2024. >> yeah, i will say this about qcomm, qualcomm, the stock is up 16% year to date. the multiple has been driven up some. android has recovered so automotive has been driving growth for the company. i think they have a solid ip

business. i think with the multiple expanding some, in a limited growth rate of 11%, i think that's where a little bit of the concern is. >> you accidentally said costco so i will give that you one. it was reiterated d equal weig at wells. >> the multiple has expanded quite a bit, the price action has been solid the last year and a half. i think it's been challenging going forward. i think in a market that we're in, costco is the best retailer in the space. >> josh, barclays flagged costco. price target 76.

that's about 20% uptied from here. >> yeah, and that's a couple days after morgan stanley said it's a top pick with an $80 target. i think as an investment the stock works its way higher. there aren't that many versions what nasdaq is and does. the nasdaq has exchanges all over the world. as i mentioned two days ago, they've also been diversifying so it's not just markets related revenue. a very healthy portfolio there of arr-type businesses, which is what wall street loves. the annually recurring revenue model coupled with, i think, a significantly stronger ipo market, and the market side this year, i think you have a double barrel shotgun approach and it works to 76. i am long. i like the technicals and i like

the fundamentals. >> jason, quick on amex. deutsche says it's a good place to hide. the safest place among the card issuers. >> i like the consumer they focus on. credit quality is strong and plays well in that space. i think, for me, as i look forward and i look at the quality of the consumer and where business travel is starting to grow. i think it's my favorite. >> a good day to hear from mike santoli. every day really is, but especially today given this second inflation print. a lot of fed speak. the market is acting interesting. we'll talk to him next. at morgan stanley, old school hard work meets bold new thinking.

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a.i.'s sam altman. >> he was coming out of senator todd young's office just now. he was -- senator todd young is a member of an a.i. task force appointed by senator chuck schumer, and this is coming after sam altman spent the last few days in the middle east talking to potential investors and government leaders about raising money and plans for his grand ambition. our karen sloan was there. here is what he said about the trip. >> can you tell me about your meeting? >> i think it was great. >> what did you say? >> we talked about the need for the u.s. to have leadership to deliver all the benefits of services. >> did you talk about your chip? did you talk about a.i. chips and whether the united states

is -- >> chips, energy, the whole package of what it takes to deliver a.i. >> tell me what you said to leaders in the middle east sunday? >> it wasn't just about a.i. chips. funding is obviously part of it. there's a complex supply chain, a thing we'll need to figure out about how to do security and policy for this. it was a conversation like we've had in many other countries around the world about what it takes to do this as a global effort. >> what about here in the senate right now? they're trying to get through policy. do you feel it is taking too long and what should be the priority? >> that's what we're thinking is what they think the priority is. it's a complex thing. we've been asking for updates on that at meetings. i don't think we have a view yet. >> have they given you any updates? >> so, scott, altman there

talking about his trip to the middle east. you might remember we got that headline, that report, saying he was looking to raise trillions of dollars for whatever these ambitions are to make artificial intelligence more powerful and capable. like he just told karen there, he said it's about more than that, enormous amounts of energy will be required to run the data centers and really achieve the vision he's thinking of. on the legislation front or the regulatory front, also talking about meeting with lawmakers there. as we know, he was on capitol hill about a year ago talking about what his view for a.i. regulation should look like. nothing has happened then, and also our congress has been slow to act on previous generations of technology like social media and so forth. so not a lot of regulatory action going on there. i will mention democrat adam schiff, who is running for senate in california, is in congress now, did put out a bill yesterday saying these companies should disclose if they're training their a.i. models on

copyrighted data. some interesting stuff from sam altman about what he's talking to leaders around the world about, scott. >> i appreciate that. steve kovach, nice job from our d.c. bureau as well to get that exclusive video and sound om fr sam altman on the hill. mike santoli is next with his mid mid.

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who programmed you?! i'll see you tomorrow. the future isn't scary, not investing in it is. 100 innovative companies, one etf. before investing, carefully read and consider fund investment objectives, risks, charges expenses and more in prospectus at invesco.com. senior markets commentator mike santoli joins us with his "midday word." yesterday, we were down and out, and today we're back. >> back to a degree, scott. also, you know, yesterday down and out for sure, but it was relatively contained. i think that you got into this position where the rise in longer term bond yields just throttles the market breath, so the internals looked weak yesterday, they don't look great today, but there's not a ton of

motivated selling across the big caps in the index. the other thing about ppi today, to the extent you want to extrapolate it out into the inflation number in a couple of weeks, it should come in not that far from expectations, which is not far from where the median fed official says that core pce should be at the end of the year. so i don't think that the story was entirely up-ended, even though we had a market coming into april that was probably going to be needing to cool itself and maybe broken some momentum in the short term. >> undoubtedly, i guess a sigh of relief in some respects from the bulls. i'll see you on "closing bell." that's mike santoli, our senior markets commentator. we're going to do "final trades" next. that's coming up.

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matching your job description. visit indeed.com/hire welcome back. i teased a move that rick has made in the market. you bought fidelity national. why? >> it's a $40 billion software provider to a financial services industry. 2% dividend yield. but 80% of their revenue is recurring. they're growing at 6%.

they're a 9% operating cash flow. so you take out the dividend, it has some cap backs. >> how recently was the buy made? >> still buying. >> okay. appreciate you mentioning it. let me remind you of what's coming up on "closing bell" today. we have cameron dawson, we have the former dallas fed president robert kaplan. also just added an interview with "the wall street journal"'s nick tumeros is what the fed is going to do next. we catch up on all things market. let's do "final trades." shannon, start us off. >> i'm going to talk about commodities. this is my contrarian trade of the year and we're getting some steam behind it. so happy to see motion in commodity prices. >> jason? >> chubb. operating income was up 42% yeefr over year. >> rick? >> chevron, a geopolitical

hedge, and i love the sector. >> obviously do. way overweight energy, says rick sapperstein. >> josh brown? >> toast. not because i love someone to hand me a tip when they hand me a muffin, but i think we'll see a good quarter. so i'm long here. >> "the exchange" is now. ♪ ♪ scott, thank you very much. i'm tyler mathisen in for kelly evans. here's what's ahead this hour. the market fixated on the macro, but that's a good thing says one of our guests, helping to set up into earnings, which he says couldn't be better. he's ready to push his cash to work. he'll tell us where. plus, the street underestimating apple once again. that's the gist of the new move with bank of america. and some five years after we works implosion, adam newman takes the wraps of