Jim, josh brown, stephanie link, John Najarian and onset is kate moore, chief equity strategist at blackrock. You know what, kate, im going to do you first. We were going to start off talking about the momentum names which really have had a comeback of late. But as we approach 20,000 on the dow what are your thoughts on where we are in the market . I think were in a good place in the market. Not just because imen equity strategist but equities are the place to be in 2017 and that were getting greater recognition that the improvements and business sentiment, improvements in Consumer Confidence are well founded. I thought the jobs report today and average Hourly Earnings were pushing us in that right direction. I feel pretty good about both Economic Growth and the Market Movement in 2017. You guys pretty much share those sentiments or as we start to get towards 20,000 do you think about lightening up rather than buying more. Im encouraged that youre seeing a rotation and a broadening out in the market. Its not just the cyclicals leading or the defensives leading. Now you have health care participating, growth, technology participating, you have some consumer discretionary. Its mixed this week. But media and auto has picked up the slack for some of the discretionary and retailer names. I like the fact that we are seeing a broadening in the marketplace. Nd i think that sets us up very well headed into earnings. I, too, agree with kate that the nonfarm payroll numbers today, the wage number was the key and that number, i think, Going Forward actually starts to increase and that gives you confidence Going Forward, too. Financials after leading us to where we even are have started to underperform relative to some other sectors. And these fang stocks, high growth names that were so much in favor and out of favor, had a comeback this week alone. Facebook is up 7 this week. Amazon 5 1 2 . Netflix, 8 . Google 4 . Scott . The financial stocks probably topped around december 9th, december 10th. Theyre not underper forring. Theyre doing something better. Theyre consolidating. This is exactly what you want to see after a massive move. Xwha you dont want to see is Empire State Building like chart where they just get so incredibly stretched so quickly that theres no opportunity at all. Consolidation is perfect for what you would want if youre construct i. Let me tell you something. After being in this range for the last month, look at Goldman Sachs. Now breaking out of that consolidation technically. And then you just look elsewhere. So financials are important, 15 of the s p. Look at the stocks not doing well that have turned around. Sbi is up 7 . Equal weight biotech, these stocks couldnt get arrested last year. Probably a ramp into what people consider the super bowl of biotech. Fine, look at starbucks, nike, these are stocks that were not working, that are now working along with Companies Like deere that just continues to rip higher. Disney ripping higher. This is what you want to see if its broad based, different groups and they take a rest. The next group comes up. Substantially a better situation than when you just have four stocks leading the market and everyone talking a them everybody. I thought we had a good debate yesterday on the program with lee kecooperman who was he and positive on the markets but not wildly bullish by any stretch or have given where he thinks we are in terms of valuations. Jeremy siegel, famed war on the professor, a little more bullish than Lee Cooperman. Jim, where are you today. Im in the wait and see category. Look, if you look at the valuations, theyre not cheap, theyre not expensive. This isnt bubble territory but were one week away from the earning stream to come in. Next friday you get bank of america and a few other financials reporting. Thats going to start the deluge of earnings. Im at the point where i need to have it proven to me in what the dpek tives say xars looking forward into 2017 that the growth will be there. I suspect strongly that the growth and earnings is going to be there but i need to see it. I need to have it proven to me right now. I like it. A lot of the material names that pete and i have been talking about, the steel names just on fire here, judge. Freeport, fcx, we talked about it for unusual call activity zooming higher. I think 7 on the week. I think he talked about weatherford at the beginning of this week and its up 20 since last friday. I mean, these are names that are just under heavy accumulation. Thats not just because the 5 stock but the turnover in that stock Weatherford Plc is in incredible. Youre looking at that and bank america number one volume leader in the s p again. Ahead of the earnings that you spoke of, josh. I think these will be good earnings. Kate, you guys are neutral on the u. S. Market at blackrock. Were constructive on equi equities in general. We looked for rotation. Talking about rotation within the u. S. Equity market, rotation globally as well. Some areas of the world that have been underowned we recently raised europe to more neutral weight and we haven overweight call in jpmorgan. More tactical in currency inspired. But never the less, we want to own kind of the broad equity market. The thing that i loved that stephanie and josh just pointed out is that were getting closer to a more normal market. Were actually having these fits and starts of Different Industries leading. Paying attention to fundamentals. Not just the fed. Thats the point youre making. Not even talking about the fed anymore. Its great. Its a pleasure. We will. For four minutes. We will. Policy will continue to be important but i think were finally entering a stage where all of this fear that investors had overhanging their decisions is starting to fade. We just need the growth and earnings. The dow is in a 198 point range over the last 18 days which is extraordinary. And now youve got this situation where were spitting distance from 20,000. Its not a relevant thing in terms of market mechanics. Its highly relevant for that to appear on the front page of every local newspaper or every local news website. Mainstream. Even those who have said, look, dow 20,000 is meaningless. People care. Its a sign post. As i said yesterday for where we are and how weve gotten to where we are from the election. Alltime high in the s p 500 right now, right . Yes. And the nasdaq has been making new highs. Maybe add in positive commentary from the companies when they report earnings. A couple weeks ago Goldman Sachs had a Financial Services conference and the banks were there. A lot of Financial Services companies were there. And all of them were very of the mystic. They the photone was sont different. The crowd was so different. Im wary its getting to be consensus to long financials however i think all theyll need is confidence about whats happening in the marketplace and the economy and that could get us higher Going Forward. I dont want to get past, kate, the fact that you are not as bullish on the u. S. As you are elsewhere. Im wondering if you can expand on exactly why that is. Aside from the fact that you may see better value elsewhere. What is it about the u. S. Market that makes you a little bit weary . Were positive on the macro. Positive on the fundmentals. The two things making us more neutral are the valuations and the sentiment. If we look at our positioning data, flows, u. S. Is the most wellowned market globably. We see optimism around the u. S. Dollar. I think that is a place that everyone has as a giant anchor if their portfolios. Also the valuations, while not too expensive, are at the upper end of the range. Especially relative to other regions which are also its valuation in positioning. Do you see the prospects of earnings being better, getting multiple expansion . Thats the bull case is built on that alone. Absolutely. I feel really good about Business Confidence numbers and if we get great guidance from companies as they report Fourth Quarter and full year 2016 numbers, that will make me i think even more confidence that the earnings revisions that weve seen recently will continue. Maybe the valuations wont look so stretched if we can get that e higher. Are you willing to go against the grain on currencies . Everybody is saying that the dollar is going to continue to strengthen. As if ignoring that it strengthened so much over the last two years. Are you willing to go against the grain and to say part of the reason to be outside the u. S. And investing is that the dollar might revert . No, our view is the dollar will appreciate but much more moderate pace than the record is expecting. Calling for gradual dollar appreciation. Theres going to be push and pull on the currency. Its not just a oneway bet at this point. I think if we had a huge appreciation in the dollar in 2017 it would make me nervous. Its bad for large caps. Also bad for small and midcaps. I think it would be a real challenge for foreign investment. The euro is down so much. Why are you just neutral on europe, especially since the valuations are so attractive, margins are depressed. What would get you more bullish on europe . It was a big deal to raise europe to a neutral recently. From an underweight where we had been for most of 2016. I have to say its been wait for operational leverage to actually make sense and translate into something productive in europe and i think theres a lot of sentiment scare and overhang from politics in 2017. Unlike in the u. S. Where businesses are feeling better, i think european corporates have incentive to hold back until the elections. You mentioned politic, thats going to play in i think thats why the u. S. Out performs, quite frankly. Because those regulations are not being rolled back in europe. Right. Nor can just one im not sure about that. The frontrunner in the french elections assuming they dont go hard right, is probably a reaganesque figure for france, take that with a grain of florida sale. But, for example, the french stock market. Like 1. 5 gdp growth forever. Really disappointing bank situation, et cetera. But its 14 multiple. Thats a discounted in. Huge, huge yield. My point though is the regulations. On difficult dividends. Youre not going to see a roll back in regulations over there like youre going to see here. You dont need it on these valuations. You dont need it. Youre being paid for the fact that you dont see that. That gives you the boost here. Jon, the s p 500 is a 125multiple on trailing 12, 18 forward. Assuming we can do, i dont know, 125, 130 in earnings, thats about 400 we were talking yesterday thats fine. Youre getting paid that discount for owning europe right now because everyone recognizes not as good as the u. S. Lets bring it back to where we were sort of, you know, a few minutes ago with this conversation about whether fang was back. Technology has been doing well over the last couple of days. And, you know, the stocks as i said, the facebooks of the world are up 7 . Are these stocks that you want to be in . Absolutely. Ia. Yeah. We pounded the table, judge, at 114 again on facebook. Not a favor for a while. Now its back to 123, almost 124. Ten bucks. Probably see 130 before the end of january. I think were pretty good on that track right now. I took profits in amazon today though. I took profits in amazon. Took a shot and bought a puts spread because the recovery has been so strong in that name. After the election, they pushed it aside and slammed it down. Now it has made basically flat since the election. Down 7 . It was down over 80. Over the last three months. I actually bought more amazon today. So i probably bought what you were selling. I think the growth story is so fifteen nominal. Then you look at what macys and what some of these other companies, jcpenney and kohls, those were disasters. They sure were. And it is clear as day that amazon continues to take market share. And guess what, yes, theyre spending a lot and thats the concern and thats the wall of worry on the stock and i like that you have something to worry about. I dont want everyone to be so euphor euphoric. You trimmed a little amazon. Took off all of my long amazon. You took all of them. All the long amazon when it was up 12 today and put spreads above the market. You bought more pop long going until. I dont think these should trade as a group. They dont. We just talk about them. Youre making my point for me. When you look attal if bet, yes, its a momentum stock in terms of how the stock moves. In terms of the valuation and fundamentals a value stock at this point. Heres a news flash. Fate book is entering the same category. Amazon, steph, im impressed that you own it. Im on a different side of the valuation. Same as netflix, great companies. Cooper man said he owned it. Another Value Investing he joe biden. Which one . Amazon. God bless him. You can go do the parts analysis and get to it. I get the valuation call. Theres a limit. I totally get your facebook because that stock is very attractive for the growth youre getting. Exactly. I lean towards that one as well. Why cant you just brush the concerns aside and say, yeah, okay you cant brush them aside. Valuations pay be crazy but its such a disruptives for im going to buy it. It cant be used in innovative industries. Dangerous thing to say. Im not calling you out on it. Thats what the investors who are buying are saying to themselves. Okay. The stock trades at Something Like 100 times this years earpings. If it was 80 times this years earnings, over priced an down 20 . Youre in the second inning of frame growth internationally. Youre only in the 50 probably in the sixth or seventh inning in prime growth in the u. S. That is huge. Prime members spend two to three times as much as regular members. That is whats driving the retail its worth dont you know thats not using amazon. Its worth pointing out this is a stock thats been public now for 20 years. Its up 38,000 . It has never traded at a reasonable price to book, price earnings. Sometimes valuation, traditional valuation metrics just dont apply. Thats not to sigh who care it is they ever make money. Its to say that there are things like Revenue Growth that are more important if youre trying to really understand a growth story like this. And you can own macy much, much cheaper. People could own eastman all of the way to zero . 12 times earnings a year before it went bankrupt. There are things that just cannot be captured unfortunately with traditional that doesnt mean throw it out. It just means lets be realistic. Not everything can be looked at through the same prism. Lets move on. Cyber security in the spotlight today as president elect trump meets with top intelligence officials about 15 minutes time. One noted short seller making a bullish case for a long position in the sector calling it the 2017 market darling. Citron Research Founder andrew left with us live today from palm springs. Andrew, nicely tanned. Presumably from a round of golf. Welcome back. Nice to see you. Happy new year. Why the long case in this particular name . Well, first of all, i just heard you speak for the past five minutes amazon, facebook. Everything that we know is reality, every ticker on the bottom of your screen right now is based on a notion of some form of Cyber Security. I think we saw yesterday with the Senate Hearings that this is something its not a trend and much like you just said two minutes ago, scott, youre talking about Disruptive Forces versus valuations. I think the notion of Cyber Security is beyond a disruptive force. So now why palo alto . So the stocks over the past two years, many of the Cyber Security stocks, were, first of all i. T. Security spending was down last year. And then this year they didnt benefit from the rotation of stocks out of technology and to, lets say, bank stocks. Youre getting pricing like this. But i look pal to at to as short seller. I cant be short everything especially as we see the market hitting new highs. If i was always short i would probably be living in my mothers basement or something. Why do you see the risk reward in this particular name more than some of its peers, whether its fire wire or check point or others . Mainly with checkpoint, one interesting thing about palo al alto. I cant bring it down in my time with you. Over 60 of the revenue is subscription revenue. Which should be valued at a higher ratio than install revenue. And not more importantly, with the knock against Palo Alto Networks in the past few years have been the amount of machine any they spend on sales and marketing and the amount of money they spent building this business as kept it compared to checkpoint which has been a lot more fiscally conservative. When you deal with this type of market and the size of market were going to see on Cyber Security by 2020 theyve been able to capture i think its 85 of the fortune o100 companies ad theres a Network Effect revolved around Cyber Security. The more customers you have this could become a winner take most type business. Also it gets prohibitive for other people to enter. For all those reasons i think theyre in a good situation. Theyre a u. S. Based company. We can sit here and argue about single pass architecture all day long. But i like corporate i. T. Spending. The companies have decided to go with them. I think its an unloved company. What will happen, sure, the stock did get ahead of itself two years ago but this year as people see Cyber Security theres no way this market goes higher. Theres no way these companies can spend more money without addressing the needs across the board for firewall and security spending. Andrew, i have a panel in front of me as you know we always do. Stephanie link has a question for you. Shes long the stock as well. Hi, andrew. I agree with you, especially the fact that its unloved. I guess the only question i have is product revenue. Guidance is for 11 , 12 . Some people think its going to come in 5 , 6 . You are having a shift of i. T. Spending on the cloud and not on premise i. T. Near term you could see a little disruption in the share price. Does that concern you at all . Are you willing to ride that out because the long term secular trends are still so great . Yeah, this is a longterm secular trend story. Its funny. If stephanie, if you look at what people expect i. T. Cloud security spending to be, ive seen the numbers go 2020 very in like 6 billion range from the low to the high. Yok anyone actually knows it. This is not the kind of story you look at quarter to quarter. Its a land grab for palo alto. I think theyre doing the right thing. And it was yesterday that really hit me thats why i put out the note when you saw the u. S. Senate discuss Cyber Security its the type of thing, its not a problem until its a problem. As i said before, everything that we talk, every stock you discuss, everything that we know is security based in this country and stability is based on a notion of some form of Cyber Security. And therefore you cant just look at this story quarter to quarter or how much they spent on sales and marketsing versus their hang on one second. So just quickly then, if you sort of have this notion yesterday watching what was taking place on the hill with these hearing, did you just buy this stock and go long yesterday and put out no, nobody presented the bull case to me a few months ago. And i read it and it made total sense to me and like i said i always have to have i have longs and i have shorts. So i read it and it made sense. When i was listening to the hearing it started to make more sense. And when i watch your Network Every day and i see everyone talk i think everyone has to understand that what we know as as safety security, every stock that we discuss is based upon a notion of security. We need to have it. So corporate i. T. Spending as this market is hitting new highs, and people have to reevaluate their i. T. Spending, the amount of machine any dedicated to security most definitely has to increase over the next few years. And the Network Effect and the Network Effect of this cannot be discounted. You just cannot walk in and say, you know, as much as i know cisco wants this space its very difficult to walk in tomorrow and replicate what palo alto has. I agree big picture Cyber Security is probably the biggest story that we dont talk enough about as investor, probably along with climate change. Im totally with you. I just would go the other way. Its hard to say palo alto is unloved. Its 35 times forward earning, ate times sales. Checkpoint is right name. And check point now has 25 of its revenue recurring and that number is growing very quickly, more than half will be recurring at a certain time in the near future. For palo alto its 60 right now. Understood. As an investor and eight times sale and mark key customer list like facebook, et cetera, its great. Technically speaking palo alto has a nasty double top. Im not convinced it can get through it or challenge it at 81, 90. Change checkpoint has been consolidating. Its about to break out of the range. Two points away. When this thing goes theres no one who owns it higher. Theres no resistance anymore. I will agree with you and make you a deal if the stock gets to 180 ill sell it and thats a double top. Thats quite high from here. I wouldnt be so concerned about that. Andrew, we appreciate the time. Actually real quick, before i let you run. Is there any update to give on nvidia as you put out the research on that and then weve watched that stock come in as i think you said the stock could trade down, if i recall . Nvidia is a great company. When it gains 20 billion in market cap in 2 1 2 weeks off technicals everyone has to sit back and reevaluate it. Its not a knock on the company whatsoever. Im not a ces. It reason seen what theyve done. I know theyre making inroads in autonomous driving obviously. But those are more difficult markets. Still pretty much a gaming company. Not to saying theyre Artificial Intelligence will play a factor but the market got ahead of itself. So you know, thats thats why it opens every day. Andrew, appreciate the time as always. See you again soon. Byebye. Citrons andrew left. Let me. Out at the bottom of your screen the dow is about 25 points or so away from dow 20,000. So were picking up a little bit of speed here. Its a gain of 75 points. Well call it. 19, 974 is where the Dow Jones Industrial average currently sits. Next up, getting ready for jpmorgans stock moving Health Care Conference. First, check out broader markets. As i said, we are closing in on that milestone of dow 20,000. We are back right after this. C . N less than 30 points away from dow 20,000. Lets talk about health care. The jpmorgan annual Health Care Conference kicking off next week. Many calling it the super bowl for health care investors. Our meg tur rel is getting us ahead of the trade. Im sure you will bed aing out. In about an hour. Getting ready for this the the super bowl of the olympics pretty much every big event in health care investing rolled into one. 9,000 investors, executives, analysts and others coming to this conference. Many more are going to be around the conference talking about the year ahead in biotech after the bad year we had a lot of people might be holding off from fr this space even though the beginning of the year has been good for biotech so far. Jpmorgan put out a report looking at Historical Performance of biotech for the couple days of the conference over the last 15 years. What they found is historically the btk index out performed the s p 500 by almost 3 . 81 of the time it has beaten the broader market. The caveat being last year was terrible performance and then we had a terrible year. So it will be interesting to see how the year starts off. Interesting to hear some of the commentary from ceos regarding a president elect and some of the commentary and the rhetoric come out on that front as well. Im sure youre going to be speaking with many of them asking those sorts of questionss well. Well have a number on your show. This a lineup of our ceos joining us. Sell jean on Halftime Report they kick off the conference on monday morning. They give guidance and preannounce so people will being looking at news from them as well as regeneron. Josh, you mentioned the move in xbi. I made a comment whether its the runup and the sell its the runup ahead of this conference. That would be there. Something to that. How they will run Retail Stocks into back to school. Theres High Expectations going in. Its important to note, xbi is equal weight, so its basically 40 stocks that are 2. 5 each, give or take. It tends to favor the smaller bio ticks more speculative attractive ahead of Something Like this. But amgen is rock and rolling. Bristolmyers, huge turn around. The big stocks in health care, pharma, also participating. So maybe its more than just the run into the Health Care Conference. Do you like it . Yeah, health care is a favorite sector for 2014. It takes all four boxes. Down last year. Down last year, helps. In terms of strong secular demand story. Fundamentals where we see Solid Earnings and sales growth, how many sectors can you say that for . Valuations, one of the only sector trading below fiveyear average and sentiment, sentiment is a sector no one has wanted to put more money to work in. If its avoid and the fundamentals work good and its the secular demand trend its hard not to want to dip you toe in and it will be interesting to see what the news is out of this conference next week. Well, i echo a lot of your sentiment, your thoughts. But one were tweet away from this whole group being doup 5 . So you have to be very, very careful. You have to be balanced. Youre not going to im not going to load up by portfolio with b biotech and pharma. I hear what youre saying. I raised this issue so many times on this show but that can be at this point anything. Anything of schwarzenegger today. Thats why im telling you want to be balanced. Im not saying you dont want to be there. Im iniand lilly. I like the Services Stocks because other protective. I kind of feel like the repeal of the aca might actually be helpful to them or at least theyre not in the cross hairs. I dont want to wake up and find stock down 10 overnight which is exactly whats going to happen if he tweets out something. Meg, im going to say thank you and good flight and good travels. I look forward to that. I do want to call you attention to the fact that we are now also than 20 points away from dow 20,000. Oh, my god. Do it during our show. Please do it. Maybe this was the day. There was a huge run after the election and a couple of weeks stallout, doc, and maybe this is the day. Im wondering what you would advise people who are watching this to think about their own portfolios. The same thing weve said all along, it doesnt mean anything. We hit it. Its great. Its great for schwalb and td amr trade and etrade financial because they are Self Directed where a lot of folks are trading their own money. Thats great because in the headlines means people trade. Thats all it means. Its not a time to buy or sell. You should only a couple of points away from the alltime high in the dow. Remember, we came within 13 points a few weeks back. Then had this stallout and maybe here we go again. Were at 19,9984. We should have a camera on art cashin. Its like historic. He should be the guy that breaks not to produce your net would have been im just, you know. You like it a lot. I love art. It should be him. Why should today be different than any other day . Jim, youre the value guy. Look expensive . No. Theyre not too expensive. First off, look at the market overall. 17 1 2 times this years presumed earnings. Lets not nosebleed territory but more to the point and weve all been talk about this is different sectors are priced differently. Theres a lot of value kate and all of us were talking about the health care sector. I see value there. Other sectors are parts of the cyclical world that have value in them. This is not a onesize fits all market. It is a market in which i think active stock picking this year is going to matter quite a bit more. So youve had this massive run as weve said since the election. And weve talked a lot about the banks which were the big fuel in that. And then they sort of took a little bit of a break. Once you hit 20,000 can you go much further or lets take it even from the s p in a more broad perspective. Can you go much further without the banks because theyre such a large group, continuing to rise . You want to see the banks. Right . Theyve gone up 30 since the election. Yeah, but theyre trading at 1, 1. 2 times tangible of value. Theyre not very expensive. Look what where they were many, many years ago. So maybe they take a pause and thats why i said at the top of the show its really nice to see a broadening out in the marketplace and to other specters but at the same time its not like the financials have tanked. Theyve just taken a pause. But, no, of course. Of course not. Maybe theyre down, you know, minuscule amounts. Theyve got multiple catalysts, judge. The momentum propelling the financials which was thus propelling the market. Sure. Well, you want to see energy and industrials. Techs coming back. I mean, you know, well we all know the techs are the biggest contributor to the s p 500 right now followed by the banks. Did you guys we are all at an alltime high with the Dow Jones Industrial average. 19. 990. 20 points away from the milestone. Did you see this thing in the wall street journal, the deek questionization of america . There were i think the number was like 9,000 stocks in 1997, publicly traded in the u. S. There were like 5700. So and thats about the same number that there were in 1982. The size of the economy has doubled since then. So hate to say shortage of stocks because it sounds euphoric and ridiculous but there is something to this idea that americans need to retire. Youve got now geny binger than the boomers. 73 million millennials. There is increasingly fewer stocks to allocate to. So what should multiples be if there arent enough stocks to go around . Not to say that they should expand forever but maybe it shouldnt be so shocking that were 18 times next years earnings . Its not just about, i think, whats in the market. Its about the full opportunity set for most of us as multiasset class investors. Were equity people here sitting around this desk. If youre 30 shouldnt you be mostly stocks . I should hope so. I should hope so. Especially given our outlook for Interest Rates and bond returns over the next couple of years. Without question. That doesnt mean millennials are not just buying funds and actively allocating themselves. What i will say though is that we are in an environment where multiples have rerated and may stay structurally higher as long as the opportunity set, especially for fixed income. Doesnt look great. Were less than two points or three points or so away from dow 20,000. Do it. Do it. Ill Start Talking and this will will get it going and then you can interrupt me. It feels like it wants to go there. Just about three points away. But some of the risks that weve talked about, you know, whether its market going too far too fast. Whether its rates getting out of hand. Whether its the dollar becoming too strong. We dont seem to care much about much of that. Well, i worry that if Interest Rates do go higher we talked about this on tuesday, if rates go higher what multiple are you paying for the earnings . Even though you get better Earnings Growth you might pay a lower multiple. Then you push back but maybe earnings are going to be great. I hope thats the case. An i think thats case. If you have higher Interest Rates and higher dollar you have the headwinds. Its not all perfect and i dont want it to be all perfect. Never will be either. Thats something that i worry about for sure. Is the multiple of what people are willing to pay for the growth in a rising Interest Rate environment. I think some of the optimism weve had in the market since the election is really ability less regulatory pressure in a number of key sectors. Yes. Thats a risk in 2017. Look, you make a great point. The reason why the stock market has gone up from election day until now is purely on expectation of the trump agenda being put through in relatively easy order given the fact that the republicans control congress, that regulations are going to be rolled back to some extent thats going to be beneficial to the financials, and otherwise. The risk of course is that its a more messy process that investors are counting on. Scott, the only thing i want to add to that, thats definitely part of why the market has rallied, also the market has rallied because the u. S. Economy has been picking up steam. This is before any regulations have been rolled back. This is before any congressional agenda has been initiated. Youre certainly seeing it in todays jobs numbers. Youre seeing wage gains again. This bodes well for consumption which is 70 of u. S. Gdp. And let me finish. The markets are not going to go up on gdp aopponent. No. But gdp leads earnings. Thats what i said about the top of this show, is now is the time that the earnings need to come through and prove it to everyone. Youre bringing up right lie, the financials have at least paused here. Next friday you get bank of america and a few other banks reporting. For the last two or three quarters every time the first of those banks have reported, its jolted the whole sector. Now, its rotated sometimes have been jpmorgan, sometimes its been is itity group. Its bolted the whole sector higher by 3 to 5 percentage points. You get that again and you should get that next week because all the wind is in the sails of these companies. You will see them set new highs. You have to to believe the commentary coming out of the earliest part of earning season is going to be pretty good. Yeah. Right . Not from retailers. Forget retailers. Thats the one area you dont want to count on. The banks. The banks come first. Fixed income. Its not jstz the numbers that theyre going to talk about. Huge. Or theyre going to deliver. Its what theyre going to talk about moving forward. And that you have to believe is going to be a more positive tone to the message that theyre trying to deliver. Thats why i mentioned their tone at this goldman conference a couple of weeks ago. They were feeling good. You could tell. Does that translate into better earnings and guidance . You have to see. I would think it does and therefore the pause is a Good Opportunity for those that are not invested in financials maybe to take to pick up some. Stephanie, i think there are a lot of people still not in financials. We look at the positioning, the same stuff i was referring to in terms of u. S. Equity exposure, sector basis, the truth of the matter is that financials are still consensus underweight. People added a little bit in the second half of 2016, i dont even think theyre neutral yet. Wow. Theres room if we see i think really good guidance and great forth quarter numbers for people to add to bank stocks. Im told we have our bob pisani and Arthur Cashin on the floor of the new york city. There he is. Youre welcome, america. Art, im going to you first because josh brown said it wouldnt be right unless you were on camera as we were approach 20,000. Im curious your thoughts as were being teased a bit. We got within a couple of points and then backed up again. Well, i thank josh for that but maybe im going to be the handicap here that we came out, we got within about three points and came up short. So well stand here for a little bit more with our fingers crossed. Id like to be here for the historic moment. Dont you think its a little ironic, art, what weve been talking about the financials on this show for the last hour and whats got us over the top in the last six weeks since the election has been the financials. Goldman sachs is one fourth of all the advance in the dow and yet the biggest laggard since dow 10,000, back then in 2009, has been the financials stocks. So theyve gone nowhere for years and years. And suddenly theyre the ones that are pushing us over the top. And they were perking up until yesterday when Interest Rates began to move the wrong way for the financials. And, art, you know, beyond adding another hat to your collection, do you want to speak to what you think the importance of dow 20,000 is for the individual investor who is watching right now . Yeah, no, i think its completely psychological. Its not a technical important area. But i think as josh aptly said earlier, the key thing here is that it will wind up on the front page of virtually every newspaper. Even newspapers that rarely if ever talk about wall street and the stock markets. So it will alert a lot of people who are not only on in the market but a lot of the public who doesnt think that much about the stock market. I think the big issue, scott, is whether hitting dow 20,000, if we hit it, is going push us over the top into the next phase of the bull market because we have been essentially sideways since the middle of december, by and large, and i think everyone agrees now that what will take us through the next phase is positive earnings, not for the Fourth Quarter but for 2017. Stephanie was talking about this. I think the concern people have out there is the companies are going to be more conservative in their 2017 guidance than a lot of people are anticipating and that might be a little bit of a problem. Obviously were geared up. Positive guidance would definitely push us up to the next level. Im just wondering whether the companies are going to on blige the wish of the bulling right now. Art, bob makes a good point. He took the point that a question i was going to ask him was the real question is, what happens next . Well, you recall that dow 10,000 was a rather difficult area. We went i think we crushed that line 57 times before we conclusively broke through to the upside. So i hope we dont repeat that here. Two worst things that could happen would be a touch and repel and the other is to just zigzag around it. So id like to get it over with like many things in life and move on to the next thing. I think most of us would as we come within spitting distance, some four points or so, bob. Yeah. Ill tell you what the problem is today, art. Weve got oil which is moving up, exxon and chevron are not participating in the rally. A point and a half away. Oh, no. This is it. You know. Oh, no. Im going to take it here, bob. You big tease. You moknow, maybe i think theyre cheering just to get it over. Maybe some of the oohs and aahs of not only our newsroom but the New York Stock Exchange are being heard by our viewers. Again, we tickled 20,000 there for a moment. But we but we just cant get away there. Art, does this all make sense to you that were theyre in what feels like a relatively short period of time from the election . Yeah, no, i think so. I think theres a great deal of hope that youre going to get less regulation, tax reform both on corporate and on a personal basis. Things like that. People think well give the market a little bit of a room, thats where the animal spirits have perked up. So well have to see. Youve got everybody down here excited. All the cellphones are out pointed up at the various screens. So everybody is hanging on every tech here. Dow 20,000 hats are out, too. Art makes a good point, guys. He mentioned animal spirits. Its part of the conversation that we had yesterday with Lee Cooperman and the professor down at wharton as well in terms of what stage of this bull cycle are we in and whether weve reached that level of euphoria or animal spirits or whatever you want to call it or if were getting close to that level and what the the thing is we did reach euphoria in late 2013. We got into a few months of buy anything. Small caps were up like 40 that year. And then we paid for it with consolidation. 2014 a lot of nothing for most stocks. 2015, ang third of the market was in a bear market. But weve come through that. So you can have euphoric moments. You can have moments where people get way ahead of themselves. It doesnt have to lead to a crash. It doesnt have to lead to a crash. It can just lead to, hey, we pulled a years worth of gain or two years worth of gains into one year and now we consolidate those gains while we wait for earnings to pick back up again. That could be the case again. We do have jeremy steagal on the phone as well. Professor, welcome back. One day ago at this very hour we were having a conversation about where stocks could go. What are your thoughts as we kiss 20,000 there, tried to, and backed off for a moment . Its exciting. Im actually standing in American Airlines club in philly. Our family is going to take a vacation in hawaii, so im watching it up here. Art cashin has it right. Its a psychological level. But it will hit the headlines if we go over. And one does remember when it went over 10,000 i think it was two or three or four times it went over but did not close over 10,000 for at least ten days. So even when we cross, were not sure were there, but it hits the headlines. Gets the public more involved. And theyre not all that involved yet in this rally. How about that notion . Psychological. You raise an interesting point about who is involved and who is not. And whether you really think that an event like this or the prospects of what president elect trump is going to be able to do once he actually takes auchesz office i couple om weeks will propel the average investors on the sideline or the professional for that matter who has not put a tremendousment of money to work to become fully invested, whether they actually will now because of this at least in part. Yeah, theres still a lot of skepticism about what trump is going to do. A lot of people is saying why is it rallying so much . Really going to reduce taxes, really going to reduce regulation, are earnings really out of the slump that theyve been in . I mean, theres no question. Valuations are high, anticipating good things. The question is do we have to start seeing some of those good things before we get that next big push or will the promise of it continue to move it higher . I mean, i think theyre justified just on tax relief alone, i think this rally is justified if we get regulation relief and even a little stimulus on infrastructure, thats frosting on the cake. But a lot of people are saying i want to see it before i believe it. You made the case yesterday in our conversation with lee that maybe some of these more conservative earnings estimates are simply too low based on a number of things that you just said. Right. Right. I mean, they think they havent factored those in because most analysts dont put them in until they see the actual changes but i think the market of course is going to lead to that. There are so i think that again, theyre reacting on the an expectation, i expect it to happen, too. I dont think this rally is over. What about the dollar . How worried are you about, you know, a more appreciating dollar and putting a lid on the types of gains we may think we could get to . Thats definitely, you know, thats an offset to that as well as higher Interest Rates. Thats the way markets react. They change other macro variables to help push against whats the primary push over here. And for the multinationals that have a Big International exposure, stronger dollars definitely going to be happening and thats one reason why i think we saw such great move on the russell 2,000 which is less subject to the dollar pressures. But, yeah. And the fed will take that into account. They look at the dollar when they decide how much to move rates up. So all that gets factored into the equation. Do you want to opine on this whole notion of growth versus value and whether as people are looking at the market and the way that certain sectors have performed since the election, value stocks, cyclicals, industrials, things that had been out of favor, has the tide now turned for good . Have you seen enough evidence that value after being kicked to the curb for so long is back in favor. Oh, i wouldnt be surprised. I mean, a lot of people are worried about values. We have higher dividend yield, my god, and rising Interest Rates, i dont want to be there. But i dont think the rates are going to increase that much to challenge. And dont forget, you know, s p has a 2 , 2. 1 yield with growth and inflation and, you know, huge history of longterm rises. I mean, if you want income, this is the place to be. Much more than bonds at the present time. So i mean, if you need income and are scared over the rise in Interest Rates, i would much rather be in the stocks. So, i dont think that rotation that weve been seeing to value is over. And i dont think that rising Interest Rates are really going to threaten it. Art cashin, you can certainly feel almost the resistance when you get ever so close to 20,000 and the inability to get through it. Help us understand, does that mean that once we actually do go through it, you are going to get that whoosh, as bob pisani has wondered . Again, were not entirely sure. History doesnt tell us that exactly. Ive been here since we went through 1,000. So, you dont always get a complete move. As i said, there are three different reactions. Either a push through, inspires shortcome nth algorithms or you zigzag and power through it. Its like a kid waiting for his birthday so he can learn how to drive. Art, you and i have discussed this the last three weeks. This is an important event. We all know that its not that important on Everybody Knows that. The public doesnt watch on the same level that all of us who are talking now watch it at. Gallup had a poll, only 52 of households own stock, lowest on record since theyve been doing this. 82 of all the stock in the United States is controlled by the top 10 of all households. Wouldnt it be nice if Something Like this maybe the optimism about 2017 got more people involved in the stock market overall. Thats why i think dow 20,000 is important, art. You and i talked about that many times. I agree and i suspect some very prominent fellow will probably tweet something about it when we hit there. I wonder who. Probably so. Though, he could be in the midst of the intelligence briefing. Were speaking, of course, of the president elect. That wont stop him. So, kate moore, we come within literally its stunning to look at the bottom of your screen and say weve come within a third of a point to dow 20,000 and we just werent able to get there. We werent able to get there. We were talking about earnings and how important upwards earnings would be in 2017. I think its worth pointing out because im a Global Equity strategist and think about the rest of the world as well. Strong upward provisions to earnings not just in the u. S. , but also in europe and japan. And this is really a much bro broader based opportunity than just buying more u. S. Large cap. You raise the point, too. You talk about the u. S. Market in general. Josh, you were speaking to this before. One of the reasons people feel so good, if you want to use that word, about the way stocks have gone where they have, since the election, is that it has been broad based. The criticism of the rally, you know, last year or two years ago. Last couple of years all fang. The breadth of the market was unhealthy and narrow. Yes. I think you had small caps peak to almost 30 . Bear markets in biotechnology. Some very large sectors were down 20 , 25 . The median stock was down 20 , 25 in these groups. Absolutely, it didnt feel good to see the s p racing to new heights with mainly apple, amazon, a couple of companies doing the heavy lifting. This is just the opposite. More than 70 of s p 500 above its 2 hyundai. Things are working for a lot of areas in the market and thats health. Thats exactly what you want to see when you hit a major milestone. You doesnt want to see the job get done because a handful of companies were very influential. S p is not the dow. Dow is 30 stocks. Its price weighted, et cetera. We know all the criticisms but these two indexes end up in the same place. You can dow shame and say its not representative. S p is at an alltime high today, too. Were not being led by utilities and staples and by the defenses. Defensive sectors. Thats what happened in the first half of last year. And then in july all of a sudden you had it totally reverse and the cyclicals rally and the more offensive sectors rally. What youre having now is a little bit of both but more offensive sectors are rallying than defensive ones and that is a good indication that growth is getting better. These are like the hope sectors rather than the defense, right . For sure. And the market is a forwardlooking indicator. Its expecting better growth and thats what its telling you. To kates point about international stocks, part of what youre seeing here is not only breadth in the u. S. Market but internationally. Thats based on the assumption that good u. S. Economic growth is going to transfer to International Economic and profit growth. Some of that will be because the dollar is strong and that helps exporters outside of the u. S. But also because consumption is picking up with the wage gains, labor gains. And there are imports that come from consumption here in the u. S. Expect the breadth to appear geographically as well as within the u. S. Stock market. Doc . Well, ive said it time and time again. I know steph is on this page with me, the fixed income and currency trading numbers will be blowout next week. So whether we make it today or next week, were going through this number, 20 thou. Then what happens . We start getting some of the regulations rolled back, which means repatriation of 2 trillion, that tracing into this country along with tax reform thats going to happen here, i think thats huge. Again, supply and demand. Were going to have more demand than we have supply. Thats going to push prices up. Still a fair amount of people out there, you hear from, say you buy now, you sell the inauguration. Not if Economic Data gets better. To jims point earlier, the Economic Data has been getting pretty good. Little bit better in manufacturing. Weve got 2 in the Fourth Quarter. Do you know what you could do . Sell heading into april because if the narrative is true, that everyone is put off their sell decisions last year because tax rates will be lower why decry that . Tax reform probably doesnt happen this year, sorry. If thats what everyone is saying, then as we get toward april, some of those gains might be taken at that point. So maybe thats a better thing to think about than inauguration. Actually, seasonally speaking, when you look at that april period, it tends to be a period that can lead to market correction. Long time between now and april. No doubt. And a lot of periods of consolidation throughout the year. This is what we want, as we were talking about, as a normal market moves ahead, retracements. People having a chance to rebound their portfolios and take advantage of good stories, good earnings and changes in Regulation Without having to be in it all on jan 1 for the full yea year. Yes, you may get some hiccups along the way. Weve heard that from some of the biggest and brightest investors around but it sounds here as though those will be buying opportunities. Absolutely. In all of your minds. Yep. Absolutely. What will be most interesting, scott, is so far the market for the last two months has been incredibly yes, boeing gets hit a little bit and rebounds when he tweets about air force one and a dozen more like that. The market really has been sa senguin when he tweets about north korea. It will happen and that will probably be the catalyst to buy on a dip. What you like is youre going to get right starting next week numbers in commentary from the banks. Biggest sector in the market. One of, for certain. And youre going to get a real good indication as to whether this kind of optimism is justified or not. Or youre going to get smacked in the face. Look, i think youre going to get a lot of things in earnings season to that effect, scott. At the end of the day, to johns point, whether or not this happens now, a week from now, three weeks from now, i think the Bigger Picture is that we are in this uptrend. Its very undeniable. More and more stocks have joined as weve been making new highs. So long as that continues to be the case, sure, you should be skeptical, worried, focused on what could go wrong always. Not just because were at dow 20,000. If the russians will just get off the offer and let this thing go through finally freaking russians. We can call it a day and what do you do when you break a milestone . Do we all kiss . Im not kissing you. Oh, god. No. How about a hug . Im just putting it out there that if somebody wants to kiss me. I see ron getting ready for his chair when you said that. Said heck no. Youre going to hear from those guys in less than a minute. Save me, ron. Theyll pick up where we left off, for certain. Look, i think it was interesting that you said you took everything off the table today in amazon. Stephanie link, you added to your position. Yes, i did. Today in that name as well. There are pockets of opportunity in which youre both looking to lighten up and add to new positions here. In earning season, it gives you chances. Make your list of the companies where the strong fundamentals are. If you get a pull back, you buy them. Easy as that. Kate, weve got 20 seconds before we hand it over to power lunch. You never know. Its been great having you. Kate moore with black rock. Dow jones industrial average as you can see, 19,992. Came within 0. 37 points of the 20,000 milestone. Power picks up that story right now. Scott, thank you so very much. This feels to me like new years eve minus mariah carey. Exactly. Im tyler mathisen. On the verge of hitting 20,000, coming within about a third of the point. Lets get right to bob pisani on the floor of New York Stock Exchange. Robert . 0. 37. We kept going, what . Its got to go over that. And it didnt. Were close enough, folks. Lets just evaluate where we are. The stuff thats pushing us right up against the door of dow 20,000, same stu