Fears about trade, growth and rates. New phones, new watches and a big bet in tv. Your next trade on apple and the stocks in its universe shares of costco soaring 45 this year. But is a pullback coming its our call of the day Halftime Report starts right now. Good to have you with us on this wednesday, 9 11, as we remember and always will your Investment Committee today, joe, steven, jon and pete na, welcome, everybody stocks are higher this hour. The dow trying for its sixth straight day of gains. Not bad. But we begin with the big trade happening now in the overall market momentum apparently is out and socalled value apparently is back jpmorgans quantity grew who called the rotation about two months ago says the flight from momentum has only begun. Id like to start the show, guys, the hour with a stat i pulled out of fax this morning i think kind of will highlight better how big this shift has been 58 of the top 62 stocks in the s p 500 this week, theyve gained an average of 9 . Been on fire this week theyre also all down over the past year with a loss on average of 25 in other words, the worst of the 12 month stocks, the worst of the worst, has been the best of the best this week why . And do you think this can continue okay, well good question. And i would say it feels to us like a quant driven trade so the market hit up 20 . The s p for the year last week and it felt as if someone hit a button and all of the Top Performing names began to come down growth names like paypal these some of facebook, stocks that are up 40 to 70, 80 . Starting to come down and the worst perform, energy, the big banks, retailers, started to come, it felt like bottom fishing to us. I know people will feel otherwise. But i think this sort of trade can work for a while its hard to see it lasting for long unless those groups really perform fundamentally. Joe, ill give you a couple of examples. Macys, down ta 35i , its up this week. The gap, down 33 in a year. Up 13 this week an oil related company, slummer jay, theyre up double digits this week. Okay, so if youre a trader, you get excited about Something Like that. On monday, i thought that the despairty between leaders and laggards gave great opportunity. Leaders that are up 3 a day an on the other side, you have the Software Technology names that are down 5 . As a trader, thats great. As ay dynamic. Exactly what you want to see its indicative. It is its an indicative of a market thats going to move higher the advance decline line for the New York Stock Exchange reached a high today so finally, you have financials. You have energy. You have small caps participating once again thats a very Good Environment the other thing ill take exception to is momentum is out. No momentum is not out. Youve had a strong move for the tenyear yield up about 30 base i point frs that 144 low okay we dont want the to walk too far wii way from thiyield rs gog to get out of control. You still want those technology napes that hanames that have th organic growth ill push back a little bit, joe, politely of course. Which is this. Unless you have new money coming into the market, you have to sell something to raise the money to buy something else. It appears from just the numbers that people are selling some of the momentum stocks to buy the other stuff. So how do you say momentum is not out . To carries point, momentum will come back once again. Listen, momentums tart iing starting to come back again as were speaking to carries point, i dont know that its people making this dra mountainic shift shes right. Its the quants recognizing near term momentum in financials, in energy, in small caps. Look at the move in the iwm. I shared with you materials. Etfs look at the move in the iwn i shared with you. Grasso i cant, im knnot jim cramer give me a break. My job is to make you look smart, not make me look smart. Work with me here. Well try harder its an hour show i shared with you last week i had bought some calls in iwm look at the dramatic move in that thats quant driven. I think its about the speed of these rotations. Today, to joes point, look at today. Going into today, just an hour ago, were look iing at a flat market now its up 100 points. Why . Wow, all the momentum names are back take a look at lululemon b where is that stock trading . Under 200 a share apple, that was the one that was holing everybody then look at technology itself all of those names are suddenly stating to pick up again today so yes, these things happen, brian, and theres always rotation in the market, but the speed and velocity is extraordinary sometimes. And look at the vix itself which was 21 about eight or ten days ago and now its trading 15 it gives you a little bit of a sense of people are getting more comfortable. They understand the time frames and Everything Else. So theyre look iing to october osks but in between, now and when we get towards october, people are looking at different names saying yosay ing you know what, i still believe in system of these momentum names because they have value and during earnings season, they crushed it. Theres been a slight back up in race. People are reading to say maybe the economys better youre going to some of the more industrial names i see some of the laggards moving higher. Banks moved higher because of rates. Oil. That was moving higher because same thing but also there are some value buyers that i would say are not liqu liquidating growth names but adding to the market as well as new money coming in. Healthy. Broadens out the base for the move higher. Today x we have positive news out of china in terms of moving tariffs from some goods. Not critical good. Positi positive so i continue to see a market trending higher until we get to the talks with china then it can go higher from there in terms of the fed though, i still see no reason for the fed to ease next week. I think its 64 the if they do if they dont, its a knee jerk reaction in the market and does nothing for the longer term outlook. So what do we do, jon how do we make money where it seems like everything is up, even the tlt even the bond etf is hire. Lots of money coming into the market from pretty much everywhere well, just a couple of, well, ten days ago, brian, we saw a lot of the Industrial Metals starting to move up again. We saw services and number of these sectors that have been moving up over the past week one name, freeport, i put that one up on the show for unusual activity i was mocked went for that particular call, but its been dead on. Its up 12 in a week. And industrial met daals are bak many of the industrial Goods Companies were back. Were they thrown out babies with the bath water yes, they were along the energy banks have suffered an we know why because Interest Rates were down there and jamie dimon was saying can weven ma even make h as the low end of our range if we push these rates towards zero he says they still can i believe they still can but i think that Industrial Metals services, those goods are really where you want to be. Shaking their head. Some of the cheap ones. Shaking her head at you is she going to mock me, too . I wouldnt dare but we know that Interest Rates were there going lower makes it harder r for banks. Doesnt make it easier Energy Prices where they are were going lower unless somebody cuts supply or theres more demand hard to make more money. Its really hard if youre in the traditional Retail Business to do better unless you have a heart transplant or something tra plantransplant the its fine if these stocks move because they were so cheap because people have been selling them all year. You buy something that looks to you as if its you know, ten times earnings, nine time, even if its really only 14 like macys the valuation is below the real estate but heres whats weird. This is a weird market today because utilities, which have been on fire any way, are a best performing sector today. Thats a fear trade. Nervous, safe haven. But not the share. Utilities and real estate were among the highest performing groups of the year with technology so this is a return right now like right as we speak and i think theres a danger into reading specific sectors. I add to cloud again, your favorite stock i bought a company cyou, similar to the Taylor Family ha ripped off shareholders where conjunction with sea trip. Whats happening 10 bid on the table from so h hu which owns basically all the voting stock and mostly und underlying stocks. Trading at nine. Thats what its worth based on the battle sheet alone either they raise the bid or you make the r 10 plus i added to well i bought global blood. Gbt. Had approval from the fed. The fda. It didnt reflect fully in the stock trade. Semis were first kind of leading the market higher a couple of weeks ago. You have to watch the semis. Last 48 hours, theyve been very stable in an environment where to your point, momentum is being sold lamb verresearch, high today, 2. Sky work is back. I think the semis very important in that. Were going to continue this discussion because whats happen ng the last couple of hours today, momentum is starting to come back just in the last hour or so. Well see if that can continue right now though, lets get a market flash with dominic chu whos talking about oil. Thats right because oil prices were decent lly higher today then took massive leg lower now down by 2 it was a precipitous drop and the reason why was because of bloomberg headlines coming out on a story they were say iing according to sources familiar that President Trump had discussed a possible easing of iran sanctions to help secure a meeting between the u. S. Delegation and iranian president rouhani for later this month now to connect the dots over the past couple of days, the reason why ambassador john bolton was fired resigned, however you want to view it, is possibly because accord iing to the story, that there was an Oval Office Meeting where this was discussed and bolton pushed back against the idea in a very strong fashion. So some of headlines from yesterday melding into some of the headlines from today i will also point out Energy Stocks were the best performing sector today on a daily bases on some of that that rotation into some value sectors, but now e youre seeing stocks like apache, marathon oil, halliburton, devin all go from solid gains to losses at one point intraday so some market moving headlines coming out oil, the very, very center of it back to you. An interesting headline there. Oil moving a little bit, which i find a little odd only because iran has been selling oil around the world. We know that from guys doing great work like tanker trackers and some of the other ones marinetraffic to t marinetraffic. Com. I dont know how much more oil is going to come on. Oils biggest problem b has been two countries. Three. Russia, iraq, probably near five Million Barrels a day and right here in the good old us of a. Theres been so many fits and starts pete and jon have had unusual options activity, but theres been fits and starts in where you get your starts in equities. The name i would suggest is one oak. Find me an Energy Equity name at an all time high, thats where oke was yesterday. About 74. Im long it. Staying with it. I believe that it is completelyy in the fundamental sweet spot of this confusing oil story ive not had energy expo hur for a while. I dont think you necessarily need it. Youre historically an Energy Investor i have in the past, but i think i can make, do well enough in the mark without owning Energy Stocks when energy is only analyzable because so many geo political factors as well as also supply demand fakctors that you cant add on you got to, we got to separate the stocks from oil okay because stocks and we look at the xop an etf weve talked a about a lot. Its valuation on some levs, guys, is trading at the same level as when oil was at 15 and 20 a barrel because the stocks have been left for dead and one reason i dont think weve talked about, a lot of these esg movementings among Institutional Investors, environmental social responsibility and government, theyre not buying fossil fuel companies and i wonder in fact actively selling them i wonder if thats an opportunity for our audience if they want to do it because the big boys are selling because theyre now not allowed to own them right i mean there might be opportunities out there, but waiting for that flush to happen you need the flush to happen. Everybodys selling out billions of trillioning of dolla dollars. Absolutely. I think to steves point, we have to see a little bit of that start of that turn we really havent seen that for the most part. Joe brings up a really interest ing name, but he brought up one name and hes our energy guy he had one name. So it just gives you a little idea for a guy who spent his life in the energy space that he can obl only come up with one name there will be a time, brian, just probably isnt right now and i dont think the flush has completely happen. The average return of the seven Companies Operating the heaviest of the back et in north dakota over 12 months is down 61 . Thats the average the Institutional Investor in energy is not making money in the equity names theyre making anytime the debt market they made a ton of money coming off 2016 and they continue to do so and if you talk to a lot of hedge funds, thats where the opportunitys been im working on a big, i dont want to give too much away a big oil debt piece little tease the maturity wall is coming. Lets move on, shall we . I just want to mention that if were talking about the market as a whole, one thing we havent yet mentioned is the china trade dispute. I mentioned it. Oh, sorry ill go slower next time. I heard you thank you. The market isnt isnt moving anywhere in a strong direction higher for sure unless we resolve that to some extent. Weve gone back and forth across 20ten, 12 times and to get above 3,000, we need to have a deal. I know that but energy was 20 or whatever percent of the market then ten now four and a half. By the way wharks we havent mentioned was the fact there are some politicians, its not a political show by the way, today should be a politics free holiday nationally because its 9 11, but there are some politicians who have mentioned either banning oil and gas fracking or banning oil and gas all together and yet oil still hasnt caught a bid, but thats for a different show. Maybe on a Different NetworkPresident Trump also firing off on the fed again saying policymakers should cut Interest Rates down to zero or less he also said quote the u. S. Should always be play paying the lowest rate. No inflation only jay powell and the Federal Reserve that do not allows to do what other countries are already doing. Once in a lifetime opportunity that we are missing because of joe, bone heads. And also have Jpmorgan Chase here jamie dimon says he does not think well see zero rates in america, but the bank is prepared if they happen. Are we getting zero rates . Zwl im going to go to a lot of different places on this i had a conversation with a three billion plus team of advisers on the west coast about a month ago and they said to me, hey, were in trouble right here, we gave up our taxable fixed income exposure. Listen, jamie dimon, one of the smartest guys out there, was talking about a 4 tenyear, potentially higher okay, now were going to other way. So i think unfortunately, predicting where yields are going to go is a losing proposition. I, i dont think you give up that ball last of your portfolio. As it relate to the president s tweet today, bottom line on zero rates in the president s tweet, first of all, i agree with you today should not be business as usual. But more importantly, when youre looking at the composition of this economy and gdp, its all about con sunlgs not government spebd spending. And in the u. S. Is as strong as its been in many years and it stands out above the rest of the world. So no. I want to be, i love that youre out of the west coast though and no throwing shade at jamie dimon. The guys great. However, the west coast guys, the three smartest names probably in fixed income who have been right are all on the west coast the west coast, not new york controls the bond market okay whoa, whoa. Rick reeder hes a mart guy, too. Substantially more fixed income asset than gun lock theres gugen heim and it would argue. Still, put them together. Pimco. Okay. So by the way, doesnt actively manage money, but did at tcw he called this just saying p you want to know the bond market is going, go west, young weiss. Lets take a, back to trump. I like that conversation better. No offense worked up when i slammed the west coast no, my daughters on the west coast. I go out there quite a bit its fine. If you take a look at trumps business, who stands to benefit the most from negative rates his real estate. Right . Thats what it is. No surprise there its a conflict and by the way, look what negative rates have done for all the countries that have it look at where they are which economy do you want to be in ours or that what do you want to do with the retirees that have seen their incomes go down every single year with rates going down so id say theres only one bonehead in that conversation and its not powell. Who is is it . Leave it to lets move on. Got a lot more to do. Good discussion to far, guys heres whats coming up on the rest of the Halftime Report. Costco shares rallying more than 40 this year but is most of the upside already done the desk debates it in our call of the day plus, we want to hear from you the Investment Committee will be answering a few of your e lfmeons ahead. Thhati report is back in two minutes. Welcome back costco shares are rallying more than 40 this year theyve done great outperforming the xrt as well as the Broader Market in general, but that could be coming to an end. Oppenheimer says the upside ahead in