Jim, what tung b about this. 12 month base case, s p 500 target. 2700. Its a bold call. The number that i quibble with is 12 months. I think thats more of a 24 month figure. For that to happen within 12 month, youve got to see a lot of clarity on trumps policies. Particularly tax reform. Unless the price of the index, but i think its a 24month target. Not a 12month. Steve, they say it has less to do with trump in term of the rally. Hes just turbo charged it. They say the cyclical upturn that began a year ago has less to do with trump and more to do with the Global Business cycle that bottomed in the First Quarter of 2016. Trumps simply the mechanism to take it to the next level, if you will. I agree. If trump didnt come out with the tax plan, keeps pushing it back, i think the market would still move. The economy was in great shape when he was elected. Hes benefitted from that tremendously in his presidency. The Global Economy is also in very good shape, so as we set off, youve got to synchronized Global Economy with still incredibly low rates that are very conducive to growing economy, so i dont know if its 15 . I think the direction is still up. There will be bumps along the way and there are pots of overevaluation. You look at the rotation, you see that, but yeah, i think its an upward trend. Theyre point is were not n knave to where we are in is the sickle. Theblg be so yut youth sized, they could sprids people. Just because you read a note this morning that sounds somewhat unrealistic does not mean you remove yourself from the marketplace. With we are right now, still currently in a period where the state of the union on march 1st was the high of 23. 95 an the market continue on low volatility to consolidate. What the next move will be, that might determine the direction. But i think overall, theres no reason right now if you are sitting in the marketplace and you are along to be looking to exit and i believe when you talk about a 2700 price target, go back to a carl icahn talkeded about years ago with apple. Youre not no it and it goes higher, youre basically short the market and thats almost something that brings its to fill filament. They say the end of the cycle is auch the best and theb think 1999, think 06 to 07 in the low return world, investors cannot return to miss it, yet youre sitting in more than 20 cash. Well, its 17. Puts them to work internationally, but 1999 was a blowout in crazy valuations on tech. A huge move. Heres why this aint going to happen. I think the markets going to give us somewhere between 2, 2. 5 on cash field and another 4 to 5 best case in capital appreciation. Im a 6 to 8 guy. Heres two reasons why were not going to get 18 in 12 months. Making the call in 12 months, that was a mistake. Should have bought more time. Nrnl is going to be b a big disappointment we are now where we are in terms of growth before this occurred. At the end of the year, it will be historic highs and rate count. I dont see energy getting past 50, 55 range for a long time. Thats going to keep the sector muted, plus the debt rotation coming through there is going to hurt equities and im not bullish on Financial Services and financials an small cap banks and regionals and all that without trump giving him the goose he promised on deregulation and tax reform. Im thinking youre lucky to get 6 to 8 . It tackes a lot of kai hoon nas to call it 15 gain. Call it 19 pe and say, dont worry, theres more gas in the ton. Youre putting so much onus on to what the Trump Administration does Going Forward, where Morgan Stanley wouldpoint out, k look, the economy has good. The Global Economy is improving to a level thags why the market was going up in the first place. I like that. I get it. But you cant deny the p pee pangs. The optimism, you know, the whole animal spirit debate rages on. Trump unleashed that. He was the person that said look, were going to get much more optimistic. I get that. But now were at a place, the economys grinding up, thats good, but were not talking 3 gdp growth here. Its not like china at 6. 4 on india at 7. 1, were still in the dull drums in growth. If youre going to play that story as you just put it out. Put more money internationally. Because theyre trading at a 20 discount now where we are in the s p. I would just say there is no correlation inside of one year between gdp growth. But between gd p p growth rate and performance of a stock market, just not there. Its actually surprises in gdp in both directions that have a correlation to either bull or bear markets. Thats first. Second, were talking about 10 earnings growth. Largely driven by the fact that so much of the s p is health care and tech. It may not be a big story, but its not all animal spirits. Theres growth happening at rate we havent seen in a while. Last thing is and i think this is really important, it is not outrageous for Morgan Stanley to say 15 is possible. If you go back and look at every single bull market to 1926 and you look at the average return and final 12 months of the bull u market, its 26 . If you look at the median, which will affect a little bit of 1999, its 21 . So, actually, what Morgan Stanley is saying is fairly in line with history if you think theres another year or so left in this thing. They say kevin that youre just about to enter euphoria. Are you just in disagreement on where we are in the cycle of a bull market . My issue is to get that kind of performance that josh is talking about. You pretty well need every sector participating. Cant have massive drags or seg tors over 10 and energy is over ten. Financial services are over ten and are not going to grow 15 in the next 12 months, so youve got to find where the pistons of growth. Where do you get this from, where do you back engineer such a move. Do i hope hes right . Absolutely. I havent cut back my domestic positions. Ive just started to take new money. I took money out of financials and regional banks. I cut it in half and exited energy because its not performing. My attitude is without those two sectors moving and grooves, i dont see 15 from the s p. This is an s p call. And they would agree because theyre on the other side of that. They are overweight financials, industry, energy and tech, so they those types of gains. And i think what theyre saying is that this is a blow off rally. Because this will end market so thats reasonable and right when if you look at the spectrum, it turns to euphoria. The big riddlen o the street now is is why do we have new highs ef week in the north america nasdaq. There really isnt euphoria per se, especially professional ly. I think theres something spres l zbr anywhere. So i think theres Something Interesting going on, which is theres no queeuphoria because s dread on wall street about whether or not people are going to have jobs in this industry a year, two years from now. Wlen you see blackrock replace traditional pms in the northeast with engineers in san francisco, that will lessen the enthusiasm for even the most vicious bull market because people are like, okay, this is great, i just dont know if i have a role in this a year from now. Two years from now. Thats the answer. Doesnt mean its not going to happen. We just have not had that. Their point is you cant take the risk of missing it when it happens. You can take your risk if youre an individual investor and youre not comparing yourself to anyone. If youre a pro. Correct. Youre an individual investor, you have to lick your wrouounds and reconcile. If you sit on the sidelines, you may miss it. Kevin makes a good point. Weav were talking about degrees of exposure, so p if youre looking at this saying well, historically, entering the market at 30 cape has not been good for forward runs, maybe i dont want to have 100 of my money invested in stocks, than i would have, so maybe thats really the conversation. Im long, im short, bullish, bearish. I dont think the majority of people trying to figure out their Asset Allocation in such stark terms do we agree with their sector overwrightweights of fns, industrials, energy and tech . I do with with the exception of energy just because i see the price of oil languishing here and possibly going down because of simplies, but those other three sector, absolutely. I do just want the follow on his point, we seem to be coalessing this would be euphoria. To have it and were only at 25. I dont understand why were talking about euphoria in any context of this conversation. Yes, theres optimism. Saying that youre about to see it. Hold on for a sec. Theres optimism from the Enterprise Committee on the election of President Trump. The belief that regulation goes away. Take away the s p 500 year to date and think of the things that have occurred this year. Starting from where the u. S. Tenyear is. Health care failing. Efg that has gone on. No delivery in terms of what we expected in terms of policy, but yet, the market is up 6. 5 . What does that tell you about sentiment . No one believes the move. Thats the catalyst Going Forward of why it goes higher. Sentiment itself, no one believe it and we came into the year think iing that international w going to stick. I dont think thats true. I think its tracking earnings. And earnings has been growing nicely. Thats what the market has. Thats what the positive sentiment is about. They look at trump as maybe thats an add on, maybe it helps. I dont think most people believe trump could get anything done. I also think its a black cloud from the Prior Administration where the market didnt grow where the economy didnt grow for eight years. That alone being removed is given markets some imptous. I dont know. Youre at 18 times estimates for the s p 500 of 130 a share this year an were about to get the First Quarter, which will be the first indication. Hang on. No, no, hang on. Let me finish my statement here. This will be the first indication of whether 130 is rational or not. I happen to think that it is. But 18 times 130, if youre going to go higher from there, i do, joe, think its euphoria and the problem is that it eventually becomes a game of Musical Chairs of whos going on to be the last man standing, whos going to be the first to get out and last to get out. Youve been around long enough to see euphoria. Its not right now. But if theyre not saying it is. Right now. 15 in a year. That would be euphoria. And whether the market should go to 2700 is a different question. As to whether it does. Right . Justified or not. Im saying exactly what the analyst is saying, which is to say if you get to 2700 in 12 months, 15 from here, the end of that process is euphoria. Thats the point where youve got to be looking at whos going to be standing. Euphoria gets to that point. Go back to your sectors. I agree with financials. I think theyre so hated now. As i said, we see rotation. I think theres upside there. Well find tout end of this week when they report how it is. Industrials are overvalued. Because theyre betti inting on infrastructure spends quite a bit and i think caterpillar is overvalued. Maybe Ingersoll Rand is overvalued. Kevin, can you get to a period of euphoria in the stock market if yields keep going lower . Thats not in your favor. If yields keep going lower and bond guys are in the room because takie ining risks ef da theyre telling you mute it. I bought into 130. Im there. Unless i see bad in your opinnu next three weeks. Im asking myself to get another 13 out of this market, what is it dwoipg to take . Upside surprises left and right. All over the place in multiple sectors. Thats unlikely. But i love euphoria and i like to make money with it, but i think at this point, youre taking a lot of risks because index calls take a lot of guts. Youre telling everybody the entire indices is going to move 15 . Its hard to see that given the yoef all valuation. Im talking about financials saying theyre fully valued. Energy is overvalued. Even where it sits now. I think tl theres a lot of problems with thchlt when you talk about investing, youre going to go find these returns by betting sector and overallocating the ones, youre js adding risk to your port fol owe. I dont care in youre an individual invest or institutional one. This is going to be a tricky 12 months. My point is how do you get to u forarea if people continue to buy bonds. The whole debate over whether its telling you. Thats whole different story and ill disagree with kevin. The bond guys are sometimes the smartest guys in the room like the high yield guys. All you have to do is stay there until they mature and your principle is 100 in tact. What theyre believing is that theres less risk in bonds than there is in ek with wii theties. All right. Just getting started. Heres what else is coming up on the Halftime Report. Tesla is on the move. Speeding past ford and gm in market cap and trying to catch up to new and bullish wall street calls. Do you want to own this stock . Were debating it, next. Plus, man versus machine. One fund manager is betting heavily on computer despite the fact hes trailing the market. Find out why hes so confident his model will win. The Halftime Report with scott wapner, the traders and kevin oleary is back in two minutes. Online u. S. Equity trades. You realize the smartest investing idea, isnt just what you invest in, but who you invest with. When this guy got a flat tire in the middle of the night, so he got home safe. Yeah, my dad says our insurance doesnt have that. What . you can leave worry behind when liberty stands with you™. Liberty mutual insurance. So yourhow nice. A party . Music plays throughout ill be right there. And the butchery begins. What am i gonna wear . This party is super fancy. Lets go. Im ready. Are you my uber . [ horn honks ] hold on. Dont wait for watchathon week to return. [ doorbell rings ] whos that . Show me netflix. Sign up for netflix on x1 today and keep watching all year long. We are back. Shares of tesla popping today on an upgrade to buy. The firm saying even with the ris b ks, Growth Investors cannot afford to ignore this stock. It is our call of the day. A line from their note really seems to sum up the entire scenario. We sympathize with bears, they say, but their arguably rational arguments probably wont matter. Many ways, tesla seems to play by its own rules. Right . Investors in stock let them play by their own rules. Thats a great argument for fek cal analysis. This stock fundamentally has never made sense yet it oscillates 50 returns, a 30 drop, 70 rally. Has nothing to do with fundamentals. So, if you agree with that, but you want to be long, why wouldnt you trail this with a where you say this is where sellsell s have come in and if you dont want to be in it, dont. I think its so easy, this stock right now. Its such an easy choice. Kevin, youre one of the bears they sympathize with. They say who cares. They play by their own rules. I get the whole argument of the cult status and i have to admit my 20yearold son beats me up ef day to buy the new gull wing suv version. I have no problem with elon m k musk, with the product. Ive driven it. I think its fan ttastic. Must be nice. My son beating me up to buy him a new nerf football. Hear me on this. I teach young engineers about investing, about the longterm of investing because a third of the classes i teach are to entrepreneurs. Theres a concept on this planet where we invest on the planet earth, at the end of the day over a long period of time, including cult stocks, multiples of Free Cash Flow rule 100 of the time. The company is not generating cash flow. That isnt doing anything like that. There is no way to evaluate it. It has merritt, it has ip. Its got a brand, a product and by the way, a lot of the ip is being given away by the companies so others can join the revolution of electricals, thats a different story. This multiple is is silly. Its stupid. One ta, i dont know when, gravity, my friends, is going to hit that stock and grown men will weep all around the world when they figure out they owned a car company at a stupid you could have said ill pay 11, 12. You could have said the same thing at 40, 50, 60, 70, 85. That argument you make is 100 true, only it doesnt tell you in which direction this stock is going and in fact, i could give you an argument where the Shareholder Base does not want to see profits for reasons that youve stated, which is that then there are actual comp, which would be terrible, so i think the cult status is impossible to model financially. These guys at piper r, just making things up. They want to be long the name, they want their clients to be long the name and theyre using quotes like creative valuation methodology. Theyre free to do that. What does that mean . Zpl go ahead. Its noninnocence. Nothing. Heres what it means. He says as a growth investor, you cant afford to ignore this. Hes ignored it so now, hes got to get mission because he cant come with a price target thats like the fifth or sixth highest. He doesnt want to be crazy. This is not a specific analyst story. This is the story. Right. Write your name in here if youre a this guys target was 100 something. Whats he going to do, say 200 . Theres a place in the market for these stocks, some people make a lot of money investing in it. I dont happen to be one. Amazon is not that much distinguishable from this. Turned a profit. Thats tesla. Musk is brilliant. Hes a great entrepreneur. A lot of adversity in the Business Model of amazon. You can be overpaying for multiple revenue streams. By the way, if you get back, i brought this up before. Look, youre driving on the largest lithium battery ever made. I dont know about you, but i was wondering, whats the effect on my package with that . Has no one thought about that . You spend your time driving on top of a giant battery . That makes me a little nervous. It could well be in amazon, which josh, you pointed out. What it reminds me of is Southwest Airlines 15 years ago because these headlines today, tesla is bigger than ford and gm. 15 years ago, Southwest Airlines had a new Business Model. Their market cap was about 15 times all the legacy carriers together. If you bought Southwest Airlines 15 years ago, you know how many years you had to wait to make your money again . Ten years. And the legacy carriers figured out why they were successful and got in the same game. Exactly. I have a feeling thats where were going with this. Where were going with this is were moving on to the next story. Its a great segway because speaking of airlines, whatever happened to the segway. Exactly right. There you go. Youve probably seen this by now. This video here. Aboard a United Airlines flight sparking outrage. A passenger being dragged off flight from ohare in chicago to louisville, kentucky. The flight was overbooked. Phil is live in chicago. Now, we have a new statement i understand from united and the ceo, phil. Yeah, what they said last night was hey, here are the facts and heres what happened and a lot of people said that was cold and uncaring response and the pr backlash has been immense today. We just received this statement from united. Im not sure how much more sympathetic it is to the situation, but at least oscar realizes people are upset by the video. He says this is an upsetting event to all of us here at united. I apologize for having to reacome dpat these pass gentlemens. Our team is moving with the authorities to conduct our own detailed review of what happened. We are also reaching out to this passenger to talk directly with him to address and resolve this situation. That is from the ceo. The video has been not only on our air, but frankly, you cant go anywhere on social media without seeing the video of this passenger on a flight from chicago to louisville, he was being bumped off the flight. It was an oversold flight. They said well give 800 if somebody wants to give up their seat. Okay, were going to randomly pull people off. Its not completely random. They go through the system and say, who are the lowest paying customer rs, who have the least amount of seniority, then they go through the list. This passenger was not going to leave unless he was pulled off, which he was, but airport security. A little earlier today, we had a chance to talk with former continental ceo about this situation and about how this passenger likely was one of the people picked to be remove frd the flights. Probably based on what he paid and maybe just been a mistake they put him on too soon. But certain rilileriley, its a emotional scene. Dupt have to have that kind of immature reaction. You should handle it in a different way. And that comment in itself has some saying, wait a second, this guy was immature, what about yubt united . Scott, one last thing. Throw up shares of united because they were up today. Theyre not really moving lower. Ive had a lot of people say boy kout united. Its trending on social. People wont fly united. Study after study have shown based on schedule and fare and while they may not be happy with what they saw yesterday, at the end of the day, when youre booking a trip, you go on schedule and fare. Because if you li in a major city, chances are, youre ham strung by the hub system, so you have no choice. But a couple of things. So, munoz calls it upsetting . Whats upsetting, the fact that the gentlemen wouldnt leave the plane or the way they drag off because brad, a big shareholder in united, tweeted just a while ago, making sort of it clear where he stands. Im disgusted how local police treateded a united ed passenger last night in chicago. I have no doubt the Company Shares these views. He is not on tv today. Phil. Maybe it has something to do with the fact that the shares are in the green. I dont know, but they still leave more questions with these statements. Dont you agree . Right. And at the epd of the day, heres the problem. When somebody is bumped from a flight and reck, when you buy a ticket, it says do you agree to the above conditions . One on every airline is that if its an oversold flight and you are not allowed to board that flight, if you are bumped, you have to leave. So, heres the question for united. How do you change the process in the future . Because no doubt, everys got a camera on a flight and this is going to happen the next time somebody gets bumped. What happens if the person says im not getting off. Just dont let them on the plane in the first place. Thats where they made the mistake in the first place. That was the mistake in letting him on the flight, but in this day and age where theyre moving to get people on and off as quickly as possible. This will happen. Youve been on flights wihere they say weve got an overbooked situation. Who wants to take 600 o to give up your seat. Weve heard those conversations at the gate. Ive heard it on flights. Not a lot. But i have heard it. Brad tells me that he was so upset with the whole thing, he called the company. He called them to say how outrageous this whole thing is. In the first place. Is there any lasting backlash about this story . You mentioned the numbers. People continue to fly. You know what i think . I think the lasting babb backlash could come if somebody in congress and somebody will, say you know what, we need to make some kind of bill of rights, if you will, for the passengers and there are certain stipulations that are there. For example, if youre stuck out op the tarmac over x period of time, theyve got to bring you in. Cant keep you out there all day. Which was the case ten or 15 years ago. I wouldnt p surprised if this is the type of video that has somebody in congress, we know there are certain senators who like to get in if forefront of who say if youre going to be bumped from a flight, mandatory, they have to give you x about of dollars and you have to, theyll try to do Something Like that, so this situation is not repeated. This is the culture issue with not just United Airlines. Where the young girls couldnt get on because of leggings. That was united, also, but if you fly, youre sort of afraid to Say Something to anybody who works for an airline because theyre going to take you off as disruptive and breaking federal laws. You cant even ask for a pillow. They dont have them anymore. Youve got these people running these air llines on the ground that are just arrogant, they dont know what theyre doing and it creates a confrontationaluation. Not all of them. A lot of them are very, very nice. Thats why weiss only flies b. And yet, you guys are investing in airlines. Well, theyre up. I loif in new jersey. Newarks is closest airport. Thats united hub. What am i going to do . Drive to thats my point to phil. No choice. Exactly, thats where these companies these companies have discovered the profit motive after 40 or so years. Its a reason bable why berkshire is buying four of them. Hes the number one shareholder in three of the four right now. These are companies that have figured out how to make money. They like making match e inmone. The its a whole different ball game and sometimes, things like this fall through the cracks, they make mistakes. They want to move planes efficiently. But if it werent a plane, it would probably look less bad. If this were a steak house and they overbookeded and came in and removed someone, probably the dragging and pulling over the seats wouldnt have been as necessary. It would still be bad. On a plane, just looks so much worse. This is just abject stumd ts the people. Were done. Next up, we need to didnt get his take on that. Defebding the rise of machines in the world of stock picking. Halftime report is back in two minutes. Minutes. This is the new new york. We are building new airports all across the state. New roads and bridges. New mass transit. New business friendly environment. New lower taxes. And new University Partnerships to grow the businesses of tomorrow today. Learn more at esd. Ny. Gov weve done well in life, with help from our advisor, we made it through many market swings. Sure we could travel, take it easy. But weve never been the type to just sit back. Not when weve got so much more to give when you have the right financial advisor, life can be brilliant. Ameriprise im on it. Ar does weathertech go to protect your vehicle . Weathertech. Made right, in america the power of the nasdaq market. The power of 100 of the worlds top companies. The power of an etf. The power of qqq. The thinking we put , clients get out. Power your clients portfolio at powershares. Com qqq. Before investing, consider the Funds Investment objectives, risks,harges and expenses. Call 8009830903 for the prospectus containing this information. Read it carefully. Distributed by invesco distributors inc. Welcome back. The debate over active versus passive investing. With blackrocks move to replace some Fund Managers with computerized stock picking. Does it mean for hedge funds . Roy is the founder and president of needhofr capital management. Good to see you again. Thank you. So, explaintous exactly how you pick the stocks or how your firm picks the stocks . Our strategy is automated and our computers are constantly scanning dploebl stocks and other sectors took into consideration. Commodities, fixed income and identify i identifying which are having shortterm moves. So, the Human Element is not involved in any way in picking the investments your firm or fund makes. Most extreme circumstances, absolutely not. We believe the computers do a better job and remove the emotional element. But the Human Element whats writing the programs. The computers arent coming up with their own subroutines. Its a human being probably a pafd saying this is what i want you to do. Right . There is, thats a good point. In some sense, every strategy really is a discretionary strategy. You do have emotional mistakes one can make. I guess part of the skill antd what weve developed over time and good firms as best practices will do this, is to take that out and say i believe in the model, even when its not working. You dont just frantically remove the bad ones and put in good ones. With the programmers, there are certain elements they may have a bias towards, so there is a Human Element to it. Its much further removed than active stock picking. Thats right. Just a question, just to clarify, so youre really doing a relative value strategy where bonds are, certain bonds, certain stock, bonds response, currencies respond. I would call it more of a directional strategy. Where were trying to say 55, 58, 62 of the time in this particular configuration, u. S. Bonds rise. The dax falls. So, up in the 1950s, there was a moment when the yield went above and everyone said this hasnt happened before, so most likely, it will revert back. If you put on the trade, its 70 years later and youre still waiting. How do you know when something is no longer the case. Discretionary. Thats why i asked you. How do you know your discretionary stock picking strategy isnt working nil. In the quantity world, at least you get to do statistics. Theres a chance this could be occurring because the market changed. Having a lot of observations the way someone with a lot of turnover would u experience allows you to see more rapidly than over the course of decades. What happens when it doesnt work . Your performance wasnt great last year and your performance year to date hasnt been good either. With all due respect. What do you do when the computer model fails you . Its a challenge not to react emotionally. Weve been around for almost a quarter century and our goal is to provide Downside Protection and return and make money during volatile periods. Weve experienced in the last 12 month, one of the least volatile periods in market history. Its been five months since theres been a 3 correction and our view is decades, centuries of market data suggest that you want to be in both short and long strategies. Kevin, you have thoughts . I do. Im a big advocate for this type of technology. If i was to say look, i want to put a a Million Dollars to work in the s p specifically, what is it about your strategy that would derisk me from just buying the index . Say i have a threeyear view. Put it in s prk y, can you gi me three rules that i can cling to to make it feel better, help me sleep at night that your strategy is going to do better . Sfwl i cant give you the special sauce, not selling that yet, but in periods like 2008, when our fund was up 50 plus percent, its 2000 up 50 plus per sebt. Our fund is designed and many are designed to be b a compliment x an insurance policy that will protect you when you need the protection and hopefully, over time as many and we have have a positive rate of return, so were not designed to outperform during the ups. Were designs to make your overall port yoel owe better over longer periods of time. We need volatility. To increase to make the model work better. The same thing active managers have said when volatility comes back, this is going to cyclicly come back, its not a secular issue whatsoever. How can both be right . Well, i think you can make money from a rising market that has a lot of volatility. Hedge funds have gotten too teper, anybody says it. Standing room only. Over 100 people in the same room. Cant that become too crowded . I think the best way to value is given what i already have, is this fund improving my portfolio, not just providing alpha, but protection as well as forms at other times. By looking at funds that are able to do that, you can separate funds that are just making money from being long and funds that are out of skill. Thank you. Now over to Michelle Carusocabrera with a look at whats coming up on power lunch. Starts in about 17 minutes. Top of the hour for power lunch. Wells fargo, clawing back millions from former executives over the fake accounts scandal. Is the worst over for that stock now . Another pr nightmare for United Airlines. Guys on halftime couldnt get enough of that. That alarming video of a man being dragged off of a flight because it was overbooked. He already had a seat. Is the entire culture of united to blame . And is it back to square one for President Trump and his tax reform plan . The Halftime Report back after this, but dont miss power lunch, starts at the top of the hour. Hour. Eather emergency. Announcer soon, Insurance Companies wont pay for damages, that is, not if they can help prevent damages from happening in the first place. At cognizant, were turning the industry known for processing claims, into one focused on prevention with predictive analytics. Helping them proactively protect the things that matter most. Get ready. Because were helping leading Companies Lead with digital. Usaa gives me the and the security just like the marines did. The process through usaa is so effortless, that you feel like youre a part of the family. I love that i can pass the membership to my children. Were the williams family, and were usaa members for life. Welcome to holiday inn whether for big meetings or little getaways, there are always smiles ahead at holiday inn. Deartheres no other way to say this. Its over. Ive found a permanent escape from monotony. Together, we are perfectly balanced, our senses awake, our hearts racing as one. I know this is sudden, but they say if you love something. Set it free. See you around, giulia low internet can actually hold your business back . Say goodbye to slow downloads, slow backups, slow everything. Comcast business offers blazing fast and reliable internet thats over 6 times faster than slow internet from the phone company. Say hello to internet speeds up to 250 mbps. And add phone and tv for only 34. 90 more a month. Call today. Comcast business. Built for business. [vo] quickbooks introduces he teaches lessons to stanley. And thats kind of it right now. But rodney knew just what to do. He got quickbooks. It organizes all his accounts, so he knows where he stands in an instant. Ahhh. Thats a profit. Which gave him the idea to spend a little cash on some brilliant marketing ha, clever. Wow, look at all these new students way to grow, rodney know where you stand instantly. Visit quickbooks. Com. Back to the Halftime Report. Want to welcome in gill be bert, who says the market is setting up for another reversal. Show w somebody say were going to 2,700. Got to join the party or get out of town. Its been a rousing hour so far for sure. By the way, nice to see you. Its great to be back. Whats the problem with the market . Recently weve started to see that the market is being led by what we view as unsustainable winners. We believe this dislocation is wide enough now that its set up for reversal. This could create opportunities or risks for investors depending on how theyre positioned. I mean, the economy is getting better. The trump agenda, though stalled in some places is still garnering optimism among investors. Why wont all of that along with earnings push stocks higher . Lets talk about the market and the economy separately. The market is forward looking. Its a discounting vehicle. When you look inside the vehicle, sometimes you hear people talk about the trump rally. When we look inside of the rally, we see two distinct periods. Right after the election the market was being led up by quality stocks, highly cash flow generre tiff, value was doing well. What were seeing so far is the reverse. You talked about this earlier, the market is being led up by what we define as rocket stocks. They can take off and crash to the ground. Are you talking financials . You can see in tech, health care some of the large but Speculative Companies have high Growth Expectations. Theyre burning cash because of those High Expectations for the future. You think tech has gone way crazy, too far, and that its going to flame out as the rocket, come back downtoearth and crash. And, in particular, a certain kind of tech stock. Listen to these numbers. In 2017 so far this year we have seen that companies with negative operating cash flow have beaten the market in seven months. The rocket stocks have beaten the market by 8 in just three months. When you look over history we look back to 1995 and we saw that those types of stocks tend to underperform the market by 10 per year. And so at this point were seeing extremes that look unsustainable. I love the extreme of the debate from the top of the show to the back of the show, 2, 700 versus watch out. 70 of the s p, 500 is above its 200day moving average. You may mott have leadership but you have rally participation. That hasnt fallen apart yet. I do agree you can bifurcate the trump trade, quote unquote, probably november 8 to the beginning of december and since then a lot of those trends have reversed. Transports have gone nowhere. Im not sure that it bodes for a reversal so much as maybe a pause which arguably weve already been living through. Or a change in leadership. Really the concern is what types of stocks are leaning. Why high Growth Expectation stocks tend to underperform over time. People become so enthusiastic, they become so emotional. The prices are too high. Theyre priced to perfection and the valuation cant keep up. Reversal or not in terms of the direction of the overall market is reasonable to expect in here a change in the leadership of the market just because these types of themes cant go on forever. It could be a positive, though. High quality leadership takes over. You would be happy about that. Good to see you again. Come back soon. Nili gilbert. E trades powerful trading tools, give you access to indepth analysis, and a team of experienced traders ready to help if you need it. Its like having the power of a trading floor, wherever you are. Its your trade. E trade is it because so many go after it the same way . Chasing after short term returns. 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And new University Partnerships to grow the businesses of tomorrow today. Learn more at esd. Ny. Gov now on the next page youll see a breakdowhat . Costs. Its just. We were going to ask about it but we werent sure when. So thanks. Being upfront is how edward jones makes sense of investing. Were back with final trades. Baba to 120. Lulu, still sticking with it. Earnings on thursday. All right. Yunited is up today. Think about the commitment of longs in that name. What you said was a telltale sign. Good stuff. Thank you for watching. Im Michelle Carusocabrera. Wells fargo going after former executives over the fake account disaster. The banks saying we want you to give back 75 million of your salary. Is the worst over . Another pr nightmare for United Airlines. It was about leggings a couple weeks ago and if you havent seen this video, wow, shocking new video of them dragging a passenger off the flight because the airline overbooked the flame. Is it with united management . Theres an evenig