Markets after Nvidia and Warsh: Your Next Move 8/31/26

I'm Scott Wapner and you're listening to CNBC's halftime report the podcast the most profitable hour of the trading day. You record this live weekdays at 12 Eastern listen in. David, thanks so much. Welcome to the halftime report. I'm Scott Wapner front and center this hour. The next move for stocks as a traditionally tough month looms. We'll discuss and debate all of that with the investment committee joining me for the hour today. Joe Taronov, Shannon Sikosha, Jenny Harrington for in talking to take you to the markets. We'll show you what we're doing 12 noon in the east. Red across the board rates are up oils up and thus stocks are down. Iran and the US trading military strike. So that's got a little bit of unease in the market. And as we said September historically the worst month for returns for stocks. That's looming large. I thought we'd start with what is our takeaway from what happened last week. Which was such a consequential week going in. In video, what did they do? They validated the AI story as much as they had to and where demand is currently sitting. And the war speech he was definitely hawkish but I mean that doesn't mean September is a shoe in and by any means for a rate hike. So what now? Where does that leave us as we have September looming? I still think we're stumbling a little bit as we go into September specifically related to the momentum. Boy, I know you're going to go there. You knew I was going. I'm glad you did. So tell me more and then I'll bring in something to add to that conversation. The Wall Street Journal was writing about that today and some of the stats that they have are pretty staggering. Yeah, so I had hope and I think Brink can confirm this. I had hope that you'd get that shot of adrenaline into the momentum factor as a derivative of the Nvidia earnings call. You really didn't get it Scott. It was somewhat disappointing in that regard. I don't think Micron or Corning really went anywhere. The following day you heard from Marvel that was a second opportunity to kind of restart the momentum trade show too. Because that didn't do anything here. It didn't. So we kind of had this inability to do that. I think that leaves us in a position where focusing on positioning as you move into September and October momentum funds like myself. They're kind of getting more confirmation of moving away moving away from that high beta AI exposure into your healthcare, into your energy. And by the way, into commodities we're going to talk a little bit about this as the show evolves. But I will tell you agriculture prices right now are on fire. The momentum is clearly intense. I think strategists are speaking to exactly what you're talking about. As for momentum and I mentioned this piece in the journal by Greg's argument in good energy. I thought it was interesting. The momentum index has tumbled more than 9% since July 1st lagging behind the S&P's 2.8% gain. The index is on track for the biggest quarterly underperformance in 25 years. July was the second worst month for the momentum trade in around 40 years. That's according to Bank of America estimates that they cite the only month that was worse was April of '09. We were right in the midst of the financial crisis. So if you needed more evidence of just how tough it's been, Shan for momentum, say no more than that. Because that paints it pretty clearly. Wolf points out on Marvel the rallies come to a screeching halt. If that trade has come to a halt, is it a problem or not? Well, I think if you look at the proportion of the names that have essentially led this momentum rally over the last year or so, then I think that if you look at the index itself, that is a challenge. And you're looking for some form of catalyst that can drive semis and other AI-related momentum plays higher in this environment. The challenge is that, just as you and Joe said, Scott, Nvidia didn't do it. And I think that again, you're looking for some sort of use case or tangible change in terms of demand. That's going to drive these names higher over the course of the next six to eight weeks. I'm not even sure what you need a change in demand. I mean, demand is off the charts. I think what you need is I think you need a new narrative. This has been essentially priced in, in my view, in terms of what does that demand look like? We're not at risk. I don't think the AI narrative is at risk. But I think in terms of that next step function higher, in terms of some of these names, I do think it's challenging right now to just look at those as being the market leaders. The other thing that's happened is that the sectors that have been performing better over the course of the last couple of months, the challenge is that they don't make up enough of the index to really move the needle. I'll tell you what's interesting. Since you use the word narrative, the narrative, if anything, has been negative lately, nothing around demand. Jensen want to tell you as much, but the narrative has been negative around data centers to the point where Gavin Baker wrote a long piece on Twitter. Jensen Wong quoted that making his own case for the benefits of data centers. The president this morning on truth social with a post on data centers, so the narrative has gotten decidedly negative around data centers, the polling says as much. Maybe that is the narrative that needs to change for this trade to improve over anything else, because the fundamentals are as solid as you could ever imagine them to be. The demand is not going to matter if you can't deliver on it, and I think that's where we're hitting at this inflection point. Politically over the next couple of months, we are going to see data centers and other forms of AI where the benefits of that investment is accruing to big businesses. I think those are going to be assailed in the press as a result of the elections, and I think that the other challenge here is that there's a lot of parts of this trade that are tied up with data centers and with the assumption that this delivery can actually be achieved. That speaks to some of this shorter term weakness. We haven't talked a lot about the election Scott. The minute we turn the calendar page after Labor Day, that is all we're going to be talking about in the two months up to midterms, because there are some political hot button issues that actually impact the from the perspective of investors, whether we can deliver on the promise of AI over the course of the next few years. The problem is that politicians are going to politic, and they're going to do their thing leading into the midterms, whether as both Baker and Jensen Wong point out that all of the virtues and the good things that data centers bring to communities in terms of jobs and a whole host of other things, and that if you don't take them, somebody else will gladly do it. And to the president's point as well, China is more than happy to have this social issue unrest being debated, because they just feel like they get a leg up from it. This issue, I feel like, is central to why these stocks haven't worked lately. Polling is terrible, if you look at the journal had a piece last week, everybody's talking about it to the point where Baker has to post this long thing about the virtues of them, Jensen Wong doesn't have to say anything but does, and he sort of adds on top of that, so there is a fight back in Silicon Valley about this very issue. And I see it a little bit differently, where I think we had a huge move into this part of the year, the market's up 13.5%, following three years of near 20% and 20% plus returns. So I look at it more like the first six to eight months, just pulled that positive narrative forward, and it's okay right now to consolidate, and it's okay to digest. And with respect to the political narrative, that's definitely going to be ugly. What we know is the economics always trumps politics. So if the money is there to be made in data centers, which I think we all believe it is, and if money is there to be made in AI, that's going to win out. And so I don't see between now and the election, I don't see whatever noise, and it is going to be deafening. I don't see that noise disrupting the AI trade, right? I just see you don't think it already has. I don't really think it has. I don't think that's what I don't think that's what's paused it. And I don't like what do you think has? I think literally it's got that it's already up 13, that the market's already up 13.5% on the year. And that there's already, you know, you and I were talking about this a couple of weeks ago, and we have time out Cisco, right? And you're like, well, if it had such great earnings, why isn't it still flying? And I'm like, it's already up 50% on the year. It's already trading at 25 times earnings, that's richer than it's ever been. I think we're just in a pause in a consolidation. But maybe the political noise isn't excused. Maybe the societal pushback isn't excused. But it's okay to pause. I don't think it's anything more than that. And I think there are kind of two separate things. I just, I don't see however ugly the political noise around data centers gets. If the money is there, investment dollars are going to follow, and they'll run. But at some of the valuations and some of the confusion that there's been, it's okay to just digest this. And I've been, I've just been thinking too about like, you know, sales force and Adobe. Those are impossible to me at least. Those are impossible to put a valuation on right now. Because the AI disruption is so overwhelming. I think when you think about Caterpillar and GE Vernova, even those are kind of hard. You have these huge cues for the gas turbines. What if they slow a little? What if they don't? It's just making it hard and I think that Difficulty. That's the reason we're pausing, but but it's not off track. It's just consolidating. No, I don't know I think you know gee even over the last months down 10% okay, but what's it up here to this? This straw is down 7%. Quants is down more than nine and a half. Eaton is red. You know to your caterpillar is red I think there's a little more at play than oh the stocks were just up a lot. So now they're consolidating because if you get if you get what in video Had to say There's no reason why you would think that that trade should be doing what it's doing if you didn't have the whole data center debate on the front ages G even though it's still 36% any year where the market's up 13 so it's up nearly three times the market Down 10% is just a rounding error as things just pause About 10% is a little more than a rounding error, but Brent what's your what's your take I think we have this confluence of events with the data centers I think it's really important last week. You know x or twitter found a bot swarm of 200,000 Chinese bots You know having misinformation about data centers and energy And I think unfortunately the politicians on both sides are just eating it up I mean, I know that center point here in Texas just announced five billion dollar initiative to pay back to Lar in large part from the data center build out PG&E out in California just announced the same thing And so I do think I agree with you Scott. I think the data center is real because not only do we need this build out to go But also outside of data centers getting pushback from people from Abbott all the way to Newsom We also have the you know 60% of the plan data centers That have been approved to come online in 2027 haven't even broken ground So I think this comes this air pocket that we're seeing whether it's g for an overdown 10 Nvidia should have rallied but didn't I do think you have to like ask the hard questions Why aren't these stocks rallying? G even over should be over a thousand, but it's not so I think that we are setting up right now Especially going into midterms going back to the 60s the data is really clear from September to November We typically get about a 10% drawdown in most years I don't think this year will be any different that being said on the other side of that after midterms returns are very very positive But I do think investors need to like ask the questions, you know going back to what Joe said on Nvidia You know, I did not like that 60% of their revenues this last quarter were account receivables like why is that? Why can't these people just pay their bills? Why why does that need to be such a big number? And so I'm trying to look look through the tea leaves and just take from the market what it's telling me And say is there something bigger coming on here that's going to call the bigger drawdown? I don't know the answer at this point But I think you can't just be polyanna about all of this and you need to be pragmatic as an investor This is interesting. I mean you get calls on Nvidia today Melius the argument for Nvidia to go higher has strengthened I don't think anybody necessarily takes issue with that Um because if you obviously look at the results and listen to the guidance What was it they guided to like 70% revenue growth right now? They looked out till 28 which they never look out as far as they decided to this time in the street was at 44 So like wow, that's an incredible number of now you have the buyback hanging out there um That's sort of the thing that Melius is is talking about today I'm not sure if that's been right to sir or or not because I don't have his name in front of me But it may very well be Uh wolf Nvidia can finally break out. We'll see We'll see Yeah, so in in an odd way I think the effect of what we heard last week from Nvidia is going to place managers like myself in a difficult position Because you potentially lose this narrative about the market broadening out and finding this suite of opposition In fact the opposite over the last several days is actually happening the markets get going back to being more concentrated Why because Nvidia is stepping forward into leadership and you're seeing some of the other mag seven names Participate in that regard. So that guy that creates a little bit of a difficult environment as you move forward I think positioning is a really big question right now and Jenny highlighted some of the software names Well, the software names they're benefiting because capital is going away from the momentum names We talked about that later on but here talk about let me let me get something hold on. I'll just hold on a second Um, I want to just get more into the positioning thing for a moment If you don't mind Because there are so many different notes out today on that very topic which you brought up at the at the very top UBS is still bullish, but they say diversify discretionary financials health care to your point industrials utilities they like City today. Yep 88100's come in, but it's going to be a broader path take more cyclical Components contributing their severe subromania. She has the lowest target on the street For a major strategist and is talking about oil gas consumables metals mining banks leisure products insurance consumer finance Um, so there's a lot of focus on areas away from tech and away from momentum They see people see the writing on the wall also. So the people see That the alpha generation opportunity might be pausing in high beta AI momentum There's a limit to the places that you could look to generate alpha elsewhere There's the obvious okay financials health care I'm not sure we want to go to industrials because that's part of that AI universe So it's financials and health care that gives you a significant waiting You could do Interest sector Rotations which is what I highlighted before we won't dig deeper into that But I think the challenge in that regard to dig deeper into it But but if you read the document today you know that we're So let me finish let me finish my thought because this is no less Let me finish my thought because I think this is important all right If you tell me that you are going to move away from Nvidia move away from Apple to your point where it's got I know I have a buyback right underneath the market and I want to go and I want to Generate the alpha and take significant stakes in my energy and my health care in my consumer discretionary I ask all of you a really important question How confident are you that the high earnings expectations that we have over the next four quarters That that area of the market can meet it because if you rely on history You're going to be disappointed. It's only specifically been in the mega caps in the technology names The financials the health care they have disappointed you when you have anticipated four quarters out Very high earnings expectations. I feel like the next two weeks Two and a half weeks are going to be dominated by Geopolitical and yields before the Fed meets mid-month And then we actually get to see whether hawkish talk Injaction hole becomes hawkish action I'd be surprised so let's put you that way if the Fed raises rates in in September For a variety of reasons, but now that earnings are basically passed Now you're going to have a two and a half week kind of air pocket thinking about well septembers historically a bad month yields are elevated oils elevated iron and us are firing at each other again And what is to change the narrative from those Driving stories what what's out there? Well, I got the data center issue on top of all that Where's the positive catalyst? They're likely over the next few weeks There's not a lot of positive catalyst because one you're pointing out a period where without earnings and where we're reliant on Large macro and geopolitical themes. There's much less dispersion in the market And so I don't actually argue with Joe's Believe that this we're going to see some continued consolidation over the next few weeks because frankly That's what happens when you see large macro themes moving the market the other catalyst those god is just what you said You know if you're looking at the Fed and you're anticipating that they're going to hike once or they're not going to hike at all Whatever it is there's three interest rate hikes priced into the market right now And so I would argue with you that areas like financials that small caps you might see pressure in those areas anticipating three interest rate hikes Particularly after the Jacksonville. That's right. It's a russles down more than everything else today and lately But if you don't think that's going to happen, which we don't we don't think there's going to be at three interest rate hikes Then I would argue with you that the catalyst could be a rotation into those names on anticipation that The markets had the bond market in particular has come too far too fast in terms of betting on the fed to raise Maybe broadcom's going to be a catalyst this week for something right it reports on Wednesday after Nvidia and after marvel It may be this becomes the next most important thing as it gets reiterated today sector perform at rbc with with 400 bucks You own it. I do what I'm just going to say if Nvidia couldn't be a catalyst. Why would broadcom Bay? You know and just one counterpoint or one addition to Shannon if Shannon doesn't think there's any Positive catalyst coming in the next couple weeks. I don't think there's any negative ones coming either Well, I think there's a different way how much does broadcom raise its guidance. I mean those those things I think we felt like we knew we already checked all the Nvidia boxes before they even reported I don't think this is as cut and dry On that I just I also don't think it's this broad reaching. I just think we were so reliant on Nvidia to say exactly what they did And let that trickle through you know, and that was there. Maybe you're right, but I just think it's such a, you know, such a small comparison as opposed to Nvidia. - I actually agree with you, Jenny. I think it's idiosyncratic with Broadcom. I don't believe there's something here that's universally gonna lift the high beta momentum trade once again and move people's current positioning, which is away from there, back into it. Obviously Broadcom could rally. They have a lot of questions internally that they have to answer. What in particular is it relates to tensor processing units and their grasp on current market share. But if you're looking for a lift, I think the lift comes specifically in the stock itself. - Can I just clarify something? - Yeah, real quick. - I just wanna clarify, lack of a positive catalyst over the next few weeks does not mean that you should not put money to work in anticipation of positive catalyst in earning season. - Okay, thank you. - Thank you. - I just wanna clarify, I might be. - And can I add onto that one too? - No, no, you can't, actually, 'cause I'm moving on. It's Tim Cook's last day at CEO. I mean, you asked, so I'll you get me answer. - Can't please everybody all the time. - You see, I'm just, I'm listening to you, and I'm okay. - So Mackenzie Segalos, we're going Mac. Hi Mac, this is Tim Cook's last day and he just wrote a nice memo to the team at Apple as well, which I think you have your hands on and you'll bring us a highlighter to from, but this is a momentous day, obviously. Not only for Mr. Cook and that company, but John Ternis, who officially becomes CEO now. - Yeah, so we just heard from CEO, Tim Cook, in that goodbye note to employees this morning, obtained by Bloomberg. And in it, Cook says what he's most proud of is what an annual report could never capture, writing the culture triumphs over everything. He also gives his successor, John Ternis, a huge endorsement saying that few people understand how to build products that change the world the way that John does, but he's inheriting. John Ternis is inheriting some big challenges from day one now on costs. Apple's already raised Mac and iPad prices by 20%. And it's signaling that iPhone hikes are next. That puts Ternis in a tough spot, protecting margins without choking off demand. He is also facing soaring memory costs and diselerating growth in Apple's highly profitable services segment as regulators and courts keep chipping away at App Store economics. And then on AI, serious still the obvious consumer test, but there's a significant hardware opportunity emerging around the Mac. It's fastest growing segment last quarter as AI labs buy high-end Mac minis and Mac studios to run models and agents locally. And then there's the all-important iPhone. Apple leaks and supply chain checks point to the foldable debuting next Wednesday at Apple Park, the biggest iPhone form factor change in 20 years. But Ternis will have to prove that it's compelling enough to keep people upgrading at a much higher price point. Scott? >> In fact, thank you very much for that look. Another piece of this note that Tim Cook has written to the staff, I'll misleading you and being with you for every step, even as I take enormous comfort in handing the helm to someone as brilliant and wonderful and capable as John, speaking of John Ternis, of course. Few people understand what it takes to build products that change the world the way John does. And I could not be more excited for his leadership. Brynn, I toss it to you on that note because at the end of the day, the products that Apple makes are the bread and butter because of the installed base that it has. And that will be among the challenges that John Ternis has in front of him, keeping an iPhone upgrade cycle robust along with all of the things that McKenzie mentioned in her reporting. >> I think that they are locked in on their hardware. I mean, Android's had a foldable phone forever. And no one's switching, because we're so embedded in it's such a great product. Ternis is a product guy. And so I think someone like Tim Cook is a unicorn, Satya Nadella, Larry Cole. There's a few of these non-founders CEO's that are unicorns. So I don't think you can replace Tim Cook. You just want to have Ternis be able to shepherd in the next 15 years. But I do think from the product side, if they can incrementally, it does not have to be exponential. And incrementally, continue to get Gemini inside of the Siri, where we can just ask questions and it pulls up all of our apps. We trust Apple. Apple's going to continue to do very well as a company. And so I don't think anything's existential. No one's switching to an Android. No one's switching to any other device. We don't want to open AI device. We want the Apple device. And so I think he will be the right person at the right time. And Tim Cook is still there, right? He's going to be obviously chairman and do great things, I think, in China, et cetera. So it's definitely a big day. And I'm definitely along and not even thinking about selling it. >> Yeah, Joe. So I think this comes at a perfect time. In the near term, that entrenched base that you're speaking towards, they need to deliver on Siri AI. That's the first step they have to take. But now you're looking at the setup and leadership as follows. You're talking about John Ternis, who has been the chief hardware engineer. Every product that we have been blessed with from Apple across the board. I don't have to cite them all. John's fingerprints are on them. Next, Tim Cook is not going away. He is remaining as the executive chairman. He has already indicated that he is going to manage the relationship as it relates to the president and relationship with the Chinese. Isn't that the perfect setup? Who better than Tim Cook to manage the relationships while John is dealing with delivering future products AI oriented? I don't think anyone should have any concern about where this leadership is going for the company. >> Okay, so we'll take a quick break and we'll come back and we'll finally get to the segment that Joe wanted us to get to minutes earlier. But we made him wait. You're going to get a number of software earning reports this week. We got ones last week, they knocked the cover off the ball and the sector took off even more so. We'll talk about that coming up. >> All right, welcome back. Here it is, software. Joe. >> Let's do it. >> Mayacolpa during the break, by the way, from Joe, which we appreciate. So last week, CrowdStrike and Octa, knocked the cover off the ball, the stocks, it was like a clean sweep. I think that's, I love the way our producers wrote that in the doc last week, a clean sweep for what we got last week. All we're going to get a clean sweep this week, Palo Alto's tomorrow, do you get a tell from what you already got in cyber, along with reporting that the Kesharora had considered doing some deals in that arena. Dell, Brent, I'm going to come to you in a minute. That's tomorrow. Snowflake is on Wednesday. That's been key because it's bucked the trend. When software was going through a malaise to say the least, Snowflake wasn't. Stocks up almost 30% in three months. HPE is Wednesday, DocuSign is Thursday, Jenny, I'm going to get you on that in a minute. Vscaler is on Thursday, but Joe, what about Palo Alto tomorrow? So I think Palo Alto continues the trend that we are seeing. We saw it last week at CrowdStrike. We see it with Octa. As well, keep in mind with Octa, I think that's a little bit more than just a story about cyber security. I think the street really believes, given the size of this company that ultimately they are a takeout target. Cyber security, the trend is resilient. The positioning there is being rewarded for staying anchored. If you move away, which in past years I have done, you are punished for that aggressively, very difficult to get back in again. So I would expect Palo Alto to deliver. If in fact they don't, I think the buyers show up aggressively on any correction. Okay. Dell, Brynn is tomorrow, as we said. You have that name. Yeah, so I mean, the numbers are going to be great. We're supposed to be at 112, revenues up 48%, but within video, trading down, Marvel trading down, who knows what the stock will do, but clearly with their servers, they're in the epicenters. Because they do have a big CPU business, I'm sure memory will come up, but the stock's just been a complete beast and has re-rated. So who knows what we'll do tomorrow, but it's still the epicenter of the AI build out. Let me have a look at the IGB guys if you could, like just let me see where that's at. As we think about this, because Wolf has a note that the IGB's well positioned over the near term to midterm to retest its highs, and that was 118. I don't know if people realize that, that it's not that far away from its highs. The signature that move is Palo Alto here. Yeah. Well, for sure, which by the way got a call today too, reiterated by Loop Capital 220 is the price target there. I'll come back to you on that if you have a comment on Palantir's robust rebound has meant everything for this space too, as Joe points out. I think a lot of people mistakenly shorted the stock. This has been the original AI software application company. They are AI neutral, they execute for the government. They pivoted their business two years ago to the corporate side. They're growing earnings and revenues, like exponentially, and so I think this is still a great name to own, and so be careful what you've short, because this name continues to go the opposite of where the shorts have wanted it to go. Yeah, Snowflake, as I said, has also been a nice helper. in the comeback of this trade, too. It's more than 11% in a month. So now, Wednesday, HPE, that's Joe Jenny. DocuSign on Thursday. What do we think about that? - Well, I think that what we've seen so far is that the soccer socks are really differentiating themselves and being punished or rewarded individually. So at down 6% on the year, with a 13 times multiple and a 10% free cash for yield and double-digit earnings growth ahead, I think DocuSign is totally de-risked and I think we really need to pay attention to the different kinds of soccer. So earlier, I picked on Adobe. Just to give you an example, a couple of what, two weekends ago, I had a personal pet project and I used ChatGPT to help me, you know, do it. It's whatever, creating this calendar. But the thing is, to create the calendar that I created, I would have needed Adobe and some serious graphic design and Adobe skills. I can do that easily with ChatGPT. What I cannot do with ChatGPT is recreate DocuSign, which we use in the office all day, every day to sign out, to send things out. So DocuSign's unique. They have networks in place, security in place, pipelines in place to get things in and out. That is not easily replicable. And I think we're going to start to see that in the Thursday earnings report. You know, again, like 10% free cash for yield 13 times, think you buy it now. - Did you have, after you went through that personal exercise, which we're really thrilled to have heard all about, did you have an intervention with Farmer Jim about his Adobe position? - If we're being serious about that, I've tried throughout the year. It hasn't been like what received. - Why has DocuSign, why has DocuSign, look at the chart, again. - Yeah, no, it's terrible. Like I said, down six percent on the year still. - No, no, but it's not terrible lately. That's my point. - Oh, okay, but that's just part of that, like, you know, at the end of 24% in three months, why? - Yeah, but that's just bigger. At the end of June, everything you see, the semi-stocks plunge since the end of June, and the software stocks recover broadly. So there is some of that systemic trade in there, and I think that's all that it is. But it's still, you know, not great for the year. I think you need to take a bigger picture. - Did your project turn out well? - Yeah, it's awesome. - Yeah? - Yeah, awesome, thanks. - Fueled Packard, enterprises on Wednesday, this company has not grown at the pace, their revenue of 30 plus percent, since the great financial crisis. So what does that do? That indicates you have to prove yourself to other software names. Apploven, it's at a 52 week low. Why, in early August, the earnings didn't show up. Zoom communications, take a look at that. That stock reported, because of positioning, a little bit of a pullback, take the other side, you want to be long there, because of the anthropic relationship. - Okay, Frank Holland has a CNBC news update for us. Hi, Frank. - Hey, good afternoon, Scott. Prediction market, Kalshi just handed out its first ever Light Time ban, to former Congressman George Santos, and July federal regulators settled with Santos, over allegations he profited by placing bets on whether he would attend the state of the union address. Kalshi also imposed in more than $70,000 penalty, CNBC and Kalshi have a commercial relationship. Liv Golf could reportedly offer bankruptcy protection as soon as this week in an effort to restructure the tour. That's according to the Financial Times. Earlier this month, CEO, Scott O'Neill said, he had secured financing for a new lead investor to keep the tour going beyond this season. And soccer superstar, Leonel Messia is retiring from Argentina's national team. He made that announcement on social media today, saying now is the right time. Argentina lost his year's World Cup final to Spain. Messia played in six World Cups, winning it all in 2022, and scored 21 goals. One shy of record hold, and colder, Kyle Mambapese, 22 goals. Back overdue. - Okay, Frank, thank you. It's Frank Colin. Up next, ETF Edge, with a domino. What's coming up? All right, so Scott, as markets and investors get more complex and sophisticated, so are the products they're using to get those outcomes. The ETF business is seeing even more innovation, and we're gonna speak with one ETF issuer who's pushing deeper and deeper into derivative space funds. That story's coming up on ETF Edge on the halftime report, so keep it right here. All right, we're back on the halftime report. I'm Dominic Chew with today's ETF Edge, income generation products have gone from niche to more mainstream, so much so that one old line bank, if you wanna call it, that is buying up one of the newest innovators in that space. This is another story we've done again. Brian Lay, Goldman Sachs Asset Management, Chief Transformation Officer there, and co-head of Third Party Wealth, let's talk about NEOs. Goldman Sachs Asset Management goes out and buys another ETF issuer complex. This time it's NEOs before it was innovator capital. There's a common theme developing here. What is exactly is Goldman Sachs Asset Management looking for when it comes to ETFs? - Yeah, no, you nailed it, Dom. When we think about Goldman Sachs Asset Management, we are trying to deliver solutions to investors, and when we do that, we're seeing that they want the ETF wrapper and they're looking for something differentiated in the ETF wrapper. Innovator, obviously the leader, they invented the defined outcome space. NEOs has obviously come under the scene in an incredible way, a very client first culture with an incredible range of income products that fits perfectly next to the innovator brand. - So we're showing this NEO's NASDAQ 100 high income fund. In essence, what you're doing is you're taking a NASDAQ 100 in its performance and putting derivative instruments around that core position to do a defined outcome. What exactly is the purpose of this particular vehicle and how does it fit into your overall scheme? - Yeah, so people want to know the companies that they own and obviously you recognize a bunch of the names in the QQQ, but investors also really want income. This derivative income category has been growing at 80% a year for the last five years. Investors are looking for ways to get income. Doing that in an ETF with a covered call strategy like QQQI allows them to get that income while keeping that exposure in their portfolio. - All right, it's a big topic for sure. A lot of growth and active ETFs because of this type of product. We're going to continue this conversation over at etfedge.tmbc.com. Brian's going to be joined by Pedro Palindreni, who is the global ex head of product research and development, so a big conversation on the future Scott of the ETF business. I'll send things back over to you. - All right, Dom, thanks, that's Dom Chu. Take a look at Apple shares. As we do have more news moving related to this name, Mackenzie Segalos is going to join us now with what is actually happening here, Mack. - So Scott Phil Schiller, this was the person in charge of the app store. A major executive at the company under both Steve Jobs and then Tim Cook is going to be moving out of that role into more of this Apple fellow position. It of course comes on the same day that Tim Cook is transitioning into this executive chairman role. Shares taking a bit of a hit on this. Seen as a very significant figure internally, who from his executive chair was also weighing in on certain product decisions around the iPhone and other major product series, including the iPod and Mac models. So a bit of a knock of confidence. Of course, this comes amid a larger exit of talent from the C-suite in particular. We saw a turnover not just in the CEO role, but the CFO, the COO. So we are seeing this changing of the guard. A lot of change at once, perhaps. That's why we're seeing those shares take a bit of a dip Scott. Yeah, I mean, this is a big deal. There's no two ways about it by, I guess, my understanding of if nothing else, that's the biggest name beyond Tim Cook himself to transition out of a current role, either by leaving altogether or as obviously Mr. Cook is doing into executive chairman, but this is a big deal. And it comes at a significant time, not just for the app store, but also for the services business more broadly, taking a lot of heat in terms of regulators around the world. A lot of people pushing back on that 30% app store fee that was able to provide them such robust margins for such a long time. Now, we still have any cue in charge of the services business. There's been a question as to whether or how much longer he will stay in that role. Services segment was soft last quarter. And that's really important to their business, especially as they're facing this margin pressure from memory prices as well. And so losing the person in charge of the app store, when you've got regulators around the world pushing back, they've already had to make concessions in China, bringing that 30% app store fee down to 25%. That's not when you want to see a significant leader internally move into this more figurehead type of position. I will say this, Apple, I'm out to them, they're not weighing in on the record. >> I'm glad you brought that up. The fact that services, revenues, in the most recent earnings period, missed the street expectations in what I think you can say if the most important part of their business right now, just relative to where the whole AI rollout is going, and the services that are going to augment whatever ends up being the finished product. >> Exactly, because at this point, the only sort of model that we've seen them float in terms of making money from a Siri AI product is in the cloud business, potentially having these different tiers based upon your usage or using some of the more advanced models you'd have to pay for that in the context of the cloud business. But there have also been questions around whether you might have this special AI part of the app store. So creating this consumer tool booth, if you want to use cloud in the context of Siri AI, or some of these other plug in your own bot situations, there might be a way for Apple to monetize that. But again, this is the person who's been just such a product engineer and visionary within the app store, so to lose them at this moment, when you really have to figure out how to monetize AI, because at the same time that you want this to be popular, you don't have the compute to back it up necessarily, so you've got to find another way where you're paying for expensive compute, and then making up for it in the services side of the AI business. >> Yeah, great perspective. Matt, appreciate you jumping on with that news. That's Mackenzie Segales. You've got to comment on this as a owner of these shares. I mean, so it's, again, you have a gentleman deemed to be a product guy taking over as a customer. CEO as you know this gentleman Phil Schiller steps down running product events in the past but also as you see the App Store. So the first question is the shareholder. Do you ask yourself do you believe the company has a strong succession planning in place? And I think Apple does because I think Apple understands that there is going to be a handoff from a group of veterans that have stewarded this company for multiple decades, three decades. Obviously Phil Schiller is a great example of that to a younger generation that holds only been there several decades and I think that succession planning is something that I'm confident in but I think Apple has the deal with that and navigate through it. A lot of veteran leadership moving to the side and also you know look it hardly feels like a coincidence that we're having this move announced today as John Turnis officially takes over as CEO tomorrow. We'll continue to follow but we'll have more on closing bill. I can assure you of that at three o'clock. Up next, stop Shins Action. We're playing it with Oliver Renek. We'll be coming back. We're going to play some options action now. Oliver Renek joins us from the CEO. Global markets in Chicago. What are you looking at? Hey Scott, Tesla shares are ripping this morning ahead of the company's cyber cab launch event on Thursday. Options trading is 60% above the 30-day average right now with just about a billion dollars in premium exchanged and roughly 70% of it tied to calls. Most of it looks like buying of calls which outnumber buyers of puts by almost double. It's also interesting that the strike with the most open interest is the 400 strike which is still 10% higher from here. This could be a big moment for the stock. It's down about 20% on the year but has almost completely recovered losses since its gap down last earnings. One trader this morning bought 700 contracts of both the 300 strike puts and 600 strike calls a more than five million dollar trade betting on a return to those lows after earnings or a huge rally by mid-January 2028 Scott. Oliver, thank you. I will see you as well at three o'clock. I look forward to that. It's so timely because Brynn, you just made a move in Tesla. Did you? Tell us what that was. Yeah, I added to my position which I haven't added quite a while. I'm added about three at 360. So the semi event is more ceremonial on the 24 so it's a ceremonial event but what I see is that the robotaxies are everywhere in Dallas. They're everywhere in Dallas and in Austin. The cyber cab which are still being driven by the engineer are also everywhere. They're on every other street in Dallas so that is ramping up. I haven't touched my steering wheel in like weeks and so FSD is getting better and better and so I feel like there's this confluence of events and then we're going to have towards the end of next year Optimus as the freemont factories being built out. We're going to just start hearing more and more. We're not hearing much about Optimus today. And so as Oliver was saying it's recovered so nicely. I like the stock above 360 since it's earning declines. I just took that opportunity to add. If I ultimately do think those multiple catalyst will drive the stock price higher over the next 12 months. Interesting. The timing certainly. Brynn, thanks. Coming up, merger Monday. We have four big deals on four committee names which means we have four committee trains coming up. We'll call a merger Monday. We haven't said that in a while but you got four deals. Aeon, USI Insurance Services they buy from KKR, 17 billion in cash, Joe you hold Aeon. I do. I think the the better trade and opportunity here is the seller. It's KKR in 2017. They made this acquisition. They're now selling it. They're making about 3.3 billion. This is a big bite for Aeon. Okay, Lily, making a deal today, SLB making a deal today, about making a deal today. And you think there's going to be a lot more people making deals in the days ahead? Yeah, absolutely. I think that there's a huge opportunity for consolidation in some of these industries. And I think that we're setting up for despite the fact that rates are a little bit higher. Really, you know, a ramp over the next six to nine months, especially against a political backdrop that's still supportive. Yeah, I think I wonder if there's a scramble between midter now midterms because if we go purple, what does purple mean? It means gridlock. You know, like I'll bet they're out. A lot of people are going to try and get deals in before that. Think about where the deals are. Slumber, Jay, it's actually a thermal managing unit that they're buying. This is getting them into the data center, build out itself. The one oak deal is about the Permian bases, liquefied natural gas and Eli Lilly, 20 billion in deals in 2026 diversifying away from weight loss trial. We'll take a quick break. We'll come back and we'll do finals. All right, three o'clock Eastern time on the closing bell. Carman Dawson, Courtney Garcia, Stephanie Gild, Keith Lerner, Alex Cantrowitz. He'll be with us as we continue to talk about this transition happening at Apple and also the data center debate. So we'll do all that three o'clock and I hope you join me then. Brynn, what's your final trade? GPIQ, one of our favorite equity incomes names and then a half percent yield. Jenny Harrington. All right, GXO, the leading supply chain outsourcing company. It's trading with a 6% free cashflow yield 14 times earnings and is down 6% this quarter after great earnings. Shannon, financial specifically, we just talked about dealmaking. I think that's going to be important for the alternative managers. I thought you're going to come like software again. No, forgot that we did it. No way. Nutri again. I want exposure. I will personally buy this on the close. All right. Oh, you will. Okay. Good stuff. I'll see you at three. Exchange begins right now. You've been listening to CNBC's half-time report, the podcast. You can always catch us live weekdays at 12 Eastern only on CNBC. All opinions expressed by the half-time 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. You should not treat any opinion expressed on this podcast as a specific inducement to make a particular investment or follow a particular strategy, but only as an expression of opinion. 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