Its not just the faang stocks its the semiconductors. Microsoft, all these names cisco, oracle, really moving nicely to the upside you throw in the biggies amazons and facebooks and apples people went and looked for value that they felt they could trust off the fundamentals they heard when they felt this market moving back. Were back as if the correction never happened. Leaders are leading again. Its the industrials tech, cyclical stocks that got us here in the first place where we are now yeah, leaders are the companies that have the most to gain from repatriation and have the best Earnings Growth and no one should be surprised by that. Thats actually whats been leading for years now. And so maybe this year ss gotten a little bit exacerbated netflix is easy. Its up 53 year to date even after a massive correction in early february apple is is another great example. Down 16. 5 at its low. Its now within points of the record highment back above a 900 billion market cap. Biggest stock in the world so i think the story really hasnt changed we had an interruption there are people that would say that had nothing to do with the economy. It was a glitch. Involved with vix related etfs Bigger Picture investors are sticking with whats been working for years. Institutional and retail Everyone Wants the high growth names and theyre buying they will up. Before we get too giddy ore this comeback and its easy to do so, going to get a jobs report soon and be paying attention to the wage number again. Is more volatility on the horizon . I think the answer is selfevident and its the right question its what was on my mind i agree with what you have said. That we are going to go higher from here, but i think next friday, sorry, a week from this coming friday when the employment report comes out, everybodys going to be watching that number because that will be the first read on february as far as inflation goes. And despite what the inverse volatility etfs did sh there was a portion that was an adjustment to higher rates and we could see that coming back next friday so is it too dangerous to say everything is over the worst is over. Not going to retest. Stocks have come too far now away from these moving averages . So the characteristics of the rebound are what you want to focus on and historically, you dont have the environment rilgt now that would suggest we go back and retest the lows to petes point, youre seeing the growth stocks. Momentum stocks. How amazing was it how quick ly the momentum stocks led the market higher once again. I cited this last week i was blown away by the rebound. I did not say to the viewers, the bottom is in off of february 9th. I think people were hesitant to make the call how stocks fell everyone was he hsitant to me the call give you pass on not calling. No, there shouldnt be a pass fundamentals didnt change which is why it was more concerning stocks went down like they did you cant point to a real reason get yoi hold on on the sprInterest Rates you can talk about volatility, but the other side is the capital usage. We knew this was coming. Capital usage in 17 and 2016 was negative were going to see this year close to sa increase, so youre out of the window. The blackout period for companies to buy back their stocks i think this is a fair point. Im going to paraphrase by saying half of the correction was this technical factor that wont repeat itself. I agree about the fundamentals i still have 10 cash which i would expect by the end of the First Quarter to have at work and im waiting to see if you get not a retest, i dont think were going back, but a little vol itty, which in certain names will give me an opportunity to put that money to work it depends on what may be rates do in the near term. We have gunlock on the other day who said as long as rates arent truly really hurting you, you could still have a decent environment for stocks listen to what he said and well react to it on the other side. As long as bond yields do not break out to the upside, which is a clear and present danger now, then you can keep some stability going in risk markets. I have a low conviction feeling that were going break out to the upside on yields so yields have moved lower. Hes been right stocks have continued to move higher since he made those comments he has been right. He talked about 292 as one of the levels to keep an eye on we hit that, then started to pull back. We all talk about this every day, the velocity of these moves. Going back, i know everybody here on the desk all wants to talk b about these inverse volatility instruments thats a big, i think its less about that, more about algos and when they start running with momentum, folks pull the bids and scott what that means is the bids and offers become so wide people get more nervous and that forces the speed and velocity of the moves, but take a look how long we stay ed in the 20s. Less than two weeks. February 2nd, it was 17. Then the 14th, back under 20 we are up in the 50s closed above 37 in another, but look at how the velocity of the markets changed and how fast they corrected thats a good point one of the things thats so disorient eed for investors who have decades of experience and maybe this is an example of where younger traders have an advantage. Just from a mental perspective, to see a correction that would have normally taken six weeks to play out in the 1990s play out in two weeks six hours it felt like. Then you have to think like shouldnt these things work their way through the system faster given that a, everyone is a Technology Assistant today b b. Photography. Useded to take six hours now its instagram if picture is posted and published in the time it takes you to blink so why wouldnt that velocity also migrate and find its way into the markets and why wouldnt we be processing the types of things that used to cause four week, six week, eight week corrections in a couple of weeks. It makes perfect sense that would be case. Its tough show for macro guys that made their bones in the 70s people that were trading on the phone with other traders in the 80s its a tough thing for them to get their heads around and maybe the younger guys on desks are more acclimated to this. When we agreed with this commentary on friday, as long as bond yields dont break out to the upside then you can keep stability going if risk markets. He said i have a low conviction feeling were going to break out then pete and josh would be correct. Because the fear most active managers had was that the macro was changing and if it change, youre not going to have this driven type of correction and driven rebound in a very short duration if the macro fundamentals are changing, then you are going to have this play out over the course of not just six or eight week, but months that character of the market is going to change. Look, one of the things gundlach said if the german tenyear bond yield was keeping u. S. Yields lower, thats what he said. Heres the problem that i have with that. Why is germany relevant right now . I dont think it is azris relevt as chinese tenyear bond yields, which are higher thats what gives me pause he is right that if they stay low, this stock market should be fine but if you actually shift to im using your somewhat icon clasic attitude, josh, that maybe the chinese tenyear bond is maybe more relevant than the german was, we might have you like what i said then. Im trying to understand. Little louder id have to decide. You can argue your case. Its a good word. Your witness, judge coming down hold it. While some are predicting stocks will soon retest the lows, our next guest is not one of them. Jonathan joins us live from new york city today. Good to see you again. Why werent regoing back to the rows i think if you take a step back and lack at what the Market Dynamics were doing the correction we had, noneof the longterm trends were broken we pulled back 10 tested the 200day moving average. Momentum is tistill firmly on bisignal so those longterm momentum indicators dont shift around often. And now you have as you guys mentioned, leadership stocks leading. Breath is not as good as good as wed like, but the cyclical areas are showing that then just as far as levels go, we are at a unique situation in the last two weeks where we had double inside week so the high and low of last week was inside the high and low of the prior week which was inside the low of the week before that. Thats a rare occurrence and were not about to break above the high of that week two weeks ago. 27. 63 on the s p from the longterm perspective, you never validate the trends and shortterm, youre building upon those upside resistance levels one of the themes on this show over the last couple of weeks and we were talking about him before and hes in the catch. Is that the cost of doing business is going up and so i want to get your take on the xhcommodities side and maybe how it feeds to emerging markets. Em stocks are up 60 since the bomb of february 16 versus 40 for the s p. Thats a new Leadership Group and you have a great chart in your weekend notes about lum per taking out a 25year high. No ones even talking about it so continued strength throughout this year in things like commodities and maybe some of the em country where is commodity strength is good for stock prices yes part of that is the weakness in the u. S. Dollar. We do think it probably continues to chom around here lower. So that should be bullish for emerging markets i think the bigger issue for global stocks in general and youve talked about this is the a that as the s p was breaking out from 2013 to where we are now, global stocks went nowhere. So theyre just now starting to get above highs from 2010, so you had a seven or eight year base where these stocks went nowhere. Just start iing to break out a lot of markets are heavily weighted towards the tech names. But even brazil, which isnt the local market in brazil hit a new high on friday again, i think as long as currencies and Interest Rates remain somewhat stable and dont have any drastic moves, that will probably continue to be the theme. Theres nothing technically that would tell you that the comebacks been too much too fast well, again, you guys hit on this before. The recoveries of late have been very much swift and once you put in that low, you tend this see these vshaped bottoms at the lows, what are we going to see a repeat of that v bottom or more of the traditional back and fill retest type of market i think its notable that the s p futures actually did retest the lows in the cash market didnt. So you have that going for you but again, when you have the Market Dynamics such that is big cat names may have such a large part of the market amazon, microsoft, google. As long as those continue to be leadership, that can overwhelm the weak breath because those are, its a market cap weighted index and as long as those stocks are leading, its tough to anticipate a fresh role a couple of weeks ago, we were concerned about the velocity of a rebound. Too much too fast then fail iin up against the high. If we failed, does that present a much longer term ominous signal for the markets and secondarily, if you take out those highs, does that immediately bring into 3,000 for the s p . So yeah, another thing we note is that at the top in january, there were almost, there were very few, if any, negative divergence. Thats very rare that you would see that at the final high so i think to your point, if we go up and the nasdaq is very close to making new highs, if and when the s p were to make new highs, then you can start, youll probably put in negative divergences. In other words, breath will probably not be as strong on the new high as in january to that could be the start of something nor meaningful, but again, these are all just really just ifs and whats until we see a failing high or start to roll back over to the downside, its difficult to anticipate i think the rule we go by, you tend to see negative divergence, but u its not all equal market tops its difficult to use that as you know, to say okay, this is it ab were going to roll over i think its something to keep an eye on if and when we make those new highs. Thanks as always. Mkm partners this breath question is one that people have been kicking around for a couple of weeks. It was the journal had that story last week about three stocks carrying the weight of the s p comeback well, you know, we talked about that we often when we have this conversation, seems like we talk about the faang stocks, but im seeing participation elsewhere one of sectors last year that was left for dead was retail another sector that could be on its way to making a comeback is Energy Oil Prices have clearly stabilized in a much higher range this year than they were for all of 2017. That is going to flow through the entire energy complex. I think youre going to start to see the breath which i feel is expansive already start to expand into that area. Warren buffett addressing a wide range of topics this morning. Over the last year, weve bought more apple than anything else apple has an extraordinary consumer franchise i like tim cook very much. Their policies i see how strong that ecosystem is to an extraordinary degree. You were very, very, very locked in, at least psychologically and mentally, to the product youre using. Need you have anything more than the buffett endorsement on apple . Thats so outside of consensus. I cant believe he thinks apple is good. The fact he continues to buy it thats great. Im a shareholder forever. I think what hes saying is not anything thats like wildly outside of the every day discussion around the consumer franchise and the lock in nature of the apple customer. The fact he continues to buy it its a value stock. Keep wiing it he understands the whole ecosystem that weve talked about for so long. Ill give you a new one. Services people finally figured out. This growth, ill give you a new one. Wearables. Keep an eye on the wearables underneath whats going on at apple as if next thing people are going to look at services now, everybody gets it. Now, its wearables. Thats where steven weiss is going to say theyre not innovative the worlds greatest Value Investor is buy iing the stock. Yet still lumped in with the faang acronym. I feel like buffett in real life, he was schooled by graham, but hes a growth guy. I think youre right. Your point is not lost and i think like you know, this is an example where hes obviously not early to apple, but apple even since they began buying and it wasnt his idea, it was todd and ted, but this is a classic buffett stock in a lot of ways one of which being this idea that they have a really sustainable mode because not just the quality of the product, but customers that are apple customers are not price checking them against the latest samsung every two months you say hes not early on apple. Thats obvious its a trillion dollar stock now. But hes also in a sense telling you youre not going to be too late on it either because they have all of these attributes, so if you dont own the shares now, why cant you feel comfortable buying like i have you can in a 10 correction, we often talk about theres opportunity it was a great opportunity when apple went down to 150 you want to call it val, growth, whatevvalue, growth, whatever i. How Many Companies tell you thai going take it down to zero you were going to say the fundamentals had changed you could say i dont know, the iphone x doesnt seem to be doing as well. Thats the equivalency of questions. Of saying the yankees are going to win 110 games this year no, theyre not. Theyre going to win 105 buffett doesnt think about sales trends world series no matter what maybe not. Havent they proven over the last couple of years that as a company, they are in the world series every year, apple im not suggesting otherwise. If were talking about Warren Buffett taking the position, hes not looking at oh, how well is the latest model, think about how many times hes, how many cycles hes held Something Like cocacola through. Diet coke is out now back in. Now its out thats not whats going on when berkshire has a position in the stock. I think hes looking at the sustain bability hes not looking at the iphone to get to the point where youre going youre saying the xrk. A lot of people say its a failure. The launch isnt as strong. Whatever i think that buffett sort of backed that up because buffett is not shortterm and we know how long term, hes look iing further ou and what is he looking at . Hes seeing the old part of the business thats transforming over into the new part of the business that are going to be the growth area for apple. Know iing buffett and the people running the money over there, they looked at the correction and not only apple and the market at large and said this is ridiculous and he was loading up 116 billion in cash hes desperate for buying opportunities. Hes saying it in the letter he wishes the phone would ring he wants people to bring him deals, but hes making the comment and the jegenius of buffett, he is kind of saying that hes requiring assets and willing to pay anything. Hes not. So hes, he would never say the markets too expensive here, but hes kind of saying it in his actions and by describing some deals that buffett didnt get because others were paying a lot more than herp got a lot more. Halftime report is yus getting started. Next up, a stock josh has score d big on is hitting the skids according to one analyst who slapped the stock with an underweight rating plus, where mike mayo stands on financials as rates rise before the break, our data partners on what happens to oil after 1 rise for the dollar in february get bullish. For many, go to cnbc. Com kensho. The lfmeept bhati rorisack in two minutes. Where can investors seek predictable income in an uncertain world . Pgim sees alpha in real assets. Like agriculture to feed the world. And energy to fuel its growth. Real estate such as ecommerce warehouses. And private debt to finance transportation and infrastructure. Building blocks of strategies to pursue consistent returns over time from over one hundred fifty billion dollars in real assets. Partner with pgim. The Global Investment management businesses of prudential. You know whats not awesome . Gigspeed internet. When only certain people can get it. Lets fix that. Lets give this guy gig really . And these kids, and these guys, him, ah. Oh hello. That lady, these houses yes, yes and yes. And dont forget about them. Uh huh, sure. Still yes xfinity delivers gig speed to more homes than anyone. Now you can get it, too. Welcome to the party. We are back. Shares of one of joshs favorite companies. Albemarle. Josh recommended the stock on the show in the past its our call of the day they talk about oversimply and Lithium Price areductions in 2019 what do you do its worse than that. T