The Investment Committee is ready to go. The halftime quart rotes starts right now. Welcome, good to have you with us on this tuesday. Joe, brothers najarian and Courtney Gibson the president of loop markets the stocks were positive not so much any more because yields are very much the story, yet again, steve this dazed and confused market as we said at the top. Doesnt know what to make what is going on in the current environment and neither does wall street because the notes and the advice being passed around today is at odds. So, when you invest in a stock, you want the reward to outweigh the risk. You know there is risk to everything you do. And you know that youve got to talk about a time frame and have one in mind. Here, i just think very uninvestful market and a best in balance and anything favoring the down side. Multiple expansion to get us to the levels where we are. Earnings have come down meaningfully and the markets held levels just 18 months ago when china was not so front and center the yield curve wasnt inverting and the fed was on a tightening schedule because the economy was looking so good. With all the uncertain we have here take off exposure and i didnt do much on friday. I saw the smh very early in the day. I was glad i did that was my biggest position i bought boeing. A lot of boeing and by far my biggest position after the smh and i sold almost half of that yesterday, matter of fact. So, i think you have to be very careful. Anything that is cyclical dependent on the economy not going to work regardless of the state the economy is in. I gave the analogy going back a few months that trump is essentially the ceo of the s p and not a ceo theyre going to invest in because i cant ge stability there and i cant get direction. So, even questions as to whether china actually initiated a phone call bloomberg had a story today that nobody in the Chinese Government is saying they did matter of fact, theyre saying, we dont know where that came from trade continues to be front and center and an inverted yield curve. The yields on the bottom righthand corner. 148, yields dropped, stocks dropped. You agree with that . Absolutely. You know, mike wilson was on earlier today and he was fantastic i thought. He talked about around the rest of the world and how bad things are looking from that perspective and how he is looking into the future. Utility and real estate and still add risk if we see a selloff one thing that stood out today e even when we were up 200 points, gold gold, silver 52week high for slv and then this volatility that is wanting to stay around that 20 level a lot of people view that as no mans land you get to 15 its a bottom. You sit at 18, 20, 21, a very difficult place to be. It is summertime if you look at volumes right now, scott one day in the last six that was actually over normal volumes other than that, about 5 million short per day in the derivatives world. Thats a huge number so, i mentioned kind of this dazed and confused feeling that the market has and the note are conflicting. Strategists are conflicted jpmorgan says its almost the time to add back risk into your portfolio. After ubs yesterday said go underweight global equities, theres just too much uncerta uncertainty, politically and otherwise. I leave it to you guys what should you do well, you know whats interesting, i understand your perspective. Unfortunately, though, investors that have to remain invested they dont have the ability to pull all their money out they have to find value in the marketplace and what is really interesting right now, at least at loop capital. I called and i said, guys, what are our clients doing . What are folks doing interestingly enough, theyre doing, scott, exactly what you said theyre actually buying on some of these dips. Almost four to one were seeing buys in consumer discretionaries and in financials and in technologies so, were seeing people picking up in areas where their portfolios have space, have room and where theyve seen a little bit of a down tick that theyre now able to pick up some of the names they like to hold for the long term. I think thats where investors need to be right now if youre fully invested i dont care if youre running a strict ly portfolio what are you buying . When you talk about global yields and you talk about what is going on on the global stage, the u. S. Is th if you like what the ceo, aka mr. Donald trump is doing, when you talk about the flight of quality and buying gold. You have to say from a country p perspective, where is that flight to quality . The United States. Lows of the day for stocks. I wonder, joe, what the message of the market is to be our friend Larry Mcdonald had an interesting tweet earlier looking at the group of stocks whether its sectors and performance on the s p 500 and cites over the last 12 months that staples have outperformed almost everything and quite dramatically discretionary is up 3 and financials are disappointing and the russell is disappointing and the banks are disappointing. Consumer optimism peaks ahead of a recession, confidence number today was exceptionally strong so were at the crossroads of what is going on were at a stall and were at a stall because i keep talking about it i think the communication from washington, d. C. , has been wrong since thirdursday, august 1st 28 is the gain when the president was elected until he announced the steel and aluminum tariffs. Somewhat sideways. High data exposure type names respond to a correlation the correlation previously was, where is the chinese currency . If it was valued above 7, equities move lower. The correlation now is specific to the three month, the tenyear which is now negative 50 basis points and the two year to the ten year which is negative 4. 5 basis points when we begin to see that correlation break down, then that opportunity will be there for equities to resume the uptrend, once again. I disagree with the premise that a recession is looming a recession is not looming when youre looking at other Asset Classes like reits, like Investment Grade and like high yield and municipal bonds. There is internally in the u. S. Economy an untold story where it feels recessionary and thats whats going on in the Steel Industry were not spending enough time talking about whats going on in the Steel Industry because the automotive industry, the oil and gas industry the cost of the tariffs and the rising production costs, they have basically taken demand off the table for these Steel Companies and youve got a u. S. Steel that now has a, m market of 1. 5 billion. Goldman says a bigger hit from the gdp war than expected they say 0. 75. That is a lot bigger than other folks forecast it is they realize the concern about why rates may be moving and, you know, stagnating where they are if not moving lower and why some of the other concerns are out earnings taking a bigger hit than expecting and the stock market cant get out of its own way. John, one of the shortest term traders in terms of time frame for buys and sells thats very true i still am today, which is short term but, when youre looking at the market right here and i was listening to tony this morning talking about when you see the signs of a recession, its usually corporate crushed, ote people dont want it spreads are tight. Exactly im saying right now im buying on the 5 dips like we just got. Facebook last week you got a chance to buy it below 177 today when the market was higher was over 184 right now 183. I think there are lots like that you can put into the, mat almost any time here. I would say concentrate on what the market is giving you when it gave you that flush in apple a week ago i think you buy into that and to Larry Mcdonalds quote and i love larry love you, lar. Xlk is up 26 . Staples up 15 and he is correct, of course. But you look at xlk, broad Market Technology is up 26 versus 14 or 15, whether you were talking about s p 500 or staples. Ill take tech every day of the week, scott. You know, no doubt in my mind that certain stocks are perma holds as much as they can be microsoft. Im not selling that im not selling visa but im aware and its likely that those stocks in my view, at least, will go lower before they go back to their old highs i dont go to complete cash and courtney is right that investors have a choice which is why analysts and strategists stay bullish to the bottom as they did in 2017, 2008. He had a choice hes willing to buy a facebook and some of the other names that have gotten unfairly beaten up i agree with him. Some of the pullback we witnessed. But very few were skilled enough traders and can spend their time like john does and pete does to take advantage of those. For me, im saying its not worth it when trump can come out in the middle of a trading day and get the market down 700 points so, at some point you have to sit back and wait for the prime opportunity to put longterm capital to work. Whats that what is a prime opportunity . Dont know. Its not until the trade gets done, settled. I also sold tot. I thought rates would go lower, they are longerterm rates. Trying to take most of the beta u out of my portfolio because beta is going to kill you you think the fed cuts next month . I think its 50 50. 50 50 way higher. In my view, 50 50 i know what views are saying the market is telling you it will at some point jay powell has to draw a land in the sand and say the market is not going to dictate what im doing ive got to look and ive got to do what i think the data is telling me and right now the data is not telling him away from the uncertainty in the market that you have to cut again. So, on one hand, hes cutting because he thinks the recession may be in the future i asked you the question because if they do and they have a dovish message in that, again. Dont you think stocks will go up on that i think stocks will go up not any more. I dont know i think stocks would go down a lot further than they would go up its in the market already i think thats one of the things that is propping the market up i would say strategy is not going to be much different to your point, the Federal Reserve gives us 25 basis points what is working so far year to date i suspect those microsoft and those mcdonald, disney type names, theyre going to continue to work. If the Federal Reserve to your point doesnt give us 25 basis points, well, then they own s p 2600 and they need to be prepared for that. To me, it comes down to strategy and you look right now at what is your strategy in a market are you going to go after value right now . Do you want energy and do you want financials . I have a ton of financial exposure it feels awful do you want tech . You always want technology. But for me you want a different type of technology you want microsoft and Services Oriented technology. Some of the names we have been talking about. I dont know if its the high beta and the faang type names you want right here. But the performance. Have a debate on that to me the assumption risk does not have to be in the mega cap, hypergrowth type of names because your risk is that theyre utilized in an atm in a volatile type of scenario. Weve seen that over the last couple weeks like i said, i like tech because of a lot of the things joe talked about there because i think people are going to be looking for the sort of performance that youre not going to see else where, scott you qknow, again, back to Larry Mcdonald he made the point about staples and how well theyve done. Extraordinary to see a doubledigit return out of staples is not something you see every day. Virtually lock step with the s p 500. And both were sold off in december staples, as well as tech sold off hard last december we all remember that so, when youre looking at year to date numbers we should probably be looking at, you know, year over year numbers to see exactly how much outperformance there is. 12 months this is not year to date thats what im saying. So, when youre seeing that kind of year over year number, scott, especially with the tech move that weve seen. Especially with apple right back, you know, within moments of that alltime high, again even though i know its 232. Were not at 232 right now but were close enough if this Earnings Report is as strong as tim cook implied it might be single out apple and alphabet and lets talk about those highs but those Mega Cap Technology names. Alphabet and apple stand out distinctly above amazon and above facebook and netflix why . Theyre committed to buying back a ton of stock youre seeing outperformance because of that Capital Allocation strategy. I think our allocation strategy remains important. Youre not seeing outperformance over the next 12 months in this quarter you are right but hes talking about last 12 months i agree with this quarter. But, look, i think theres a complacency in relying upon the old factors in terms saying there is no recession. For example reits. During the last real big recession wasnt in an etf that you could buy. It was a liquid. Now big etf which has drawn a lot of capital done very well the last month. I can tell you even though the fundamentals are good, they havent been hypercharged over the last month purely a place to hide for yield. Theres this search for yield continues everywhere i think thats why spreads remain tighter than the credit quality deserves weve seen some credit quality erosion in some of the banks weve seen that. Minor, very minor. Weve seen it. So, dont be complacent with relying on indicators that are completely outdated. This time is different one indicator is the yield curve. We talked about that today as yields move lower. Ceo of roflat rock. Good to see you thanks for having me, scott. Stocks move lower are we concerned about it or not . So, i think, listen, i think the risk has grown i think you have to be concerned about policies and Global Growth is a concern and manufacturing is a concern and im not concerned about the consumer i think the consumer is in great shape. Savings are up and income is up and optimism is very high. Yes, i think you have to be concerned about tail risk. I think steve weiss made a great point. Look what european rates are doing tonight and you get this amazing poll into u. S. Rates i think it will keep going not enough yield not enough bonds in the world and i think it is going to continue to drive what is pretty extraordinary dynamic. Fixed income we talk about on your show. Duration Interest Rate risk really works in a portfolio, when you have a fed working with you and if the economy slows, the fed is going to keep cutting. By the way, in your debate i think the fed is going in september. Not much of a question theyll go in september and, quite frankly, i think they should go 50 to actually and then stop because you have a dynamic an asymmetric risk reward. What people miss, you have an inflationary dynamic coming from the rest of the world. Were not going to people have been talking about five years, ten years the fed needs to be cautious about deflation coming from the rest of the world. You think they should go 50 do you think, what do you think the impact on the market would be if they, lets just say they go 25 and then if they go or if they go 50 what is the stock market going to do, do you think . So, its a couple things. First of all, my view is they should go 50 and then pull back. I think they should make a strong statement about, listen, well be there if the economy l slows and there are 20 countries cutting rates. If you dont do it, you ship the dollar higher reserve for circulation that is really dangerous. I think they have to do it and the equilibrium rate is lower. I think theyll go 25 in september and 25 in october and i wouldnt do it that way. But i think thats the way theyre going to do it now, what is really important . The idea about being more aggressive the idea about going you need to steepen the curve a bit. Listen, if you go more aggressive, people will think about some inflation finally coming in. You will steepen the curve a little bit by the way, i think there are things you can do with the balance sheet, et cetera by the way, im not, theres so much focus on a couple basis point move and the inversion of the curve. There is a grab for yield on the long end of the yield curve that comes from pensions, insurance i think its maybe a bit overdone in terms of the shape of the curve relative to what it means for the economy. Because you have these influences today that we havent seen historically. You raise interesting questions about what the fed may do and what the fed should do and, you know, so does the former new york fed president bill dudley, rick, who you may have seen the oped today. The fed shouldnt enable donald trump is the title of it basically asserting that the fed shouldnt be there to clean up the mess that the president creates with the trade war i want to bring in Richard Fisher into this conversation with us, as well president of the dallas fed. He joins us by phone mr. Fisher, good to have you back what do you think of mr. Dudley says the fed shouldnt enable donald trump. I agree with that first of all, if you look at what is happening to manufacturing sector, all the uncertainty there derives from trump policy and the concerns about supply chains and where you locate your production facilities and so on have nothing to do with Federal Reserve policy and if they were to cut by 50 basis points, which i do not believe they will, it wouldnt have any effect whatsoever on that uncertainty so, why would you spend a quarter point or 50 basis points when you dont have to given that consumption is still running very strong. One of you mentioned earlier that Consumer Confidence peaks just before recession. Of course thats the case because over 70 of our economy driven by consumption. 11 is driven by manufacturing i dont think the fed should move i dont think they should do anything at all in september if they do, 50 basis points is just a suggestion. I think it would scare the hell out of the market. It would indicate that were really deeply worried about the economy. Dudley makes these arguments, but dont you feel like he undermines his own argument of independence he takes a political bent off of whether he likes the policy or not. He says it clearly i mean, this is policy has always had outcomes in the political arene a. Its not the feds job to decide whether they agree with the policy or not. No, i think the feds should keep on. The uncertainty is c