Off. Halftime report starts right now. Welcome. Good to have you with us today on this friday joe taranova and josh brown and the chief Investment Officer at boston prime wealth. Stocks are on pace for their worst week in a couple months and significantly higher this hour after the jobs number came in slightly lower than expectations and not as bad as feared josh brown, you told us we were due for a bounce and i guess we are getting it today nice reversal yesterday, too, by the way. Look, you look at when you get that oversold on the components of the s p. Yesterday pointed out only 8 of s p names were above their tenday moving average that is an extreme negative down turn for the market and everything that is washed out. Historically weve been able to bounce from that degree of oversold across the market the other thing is that a lot of the concerns from earlier in the week have been invalidated and the jobs report is just the latest example of that so, we get really negative on a data point and no reason why we shouldnt. I get that but then you say, hey, looks like unemployment is still solid. We can nitpick about the pace of wage games decelerating and some various things. All told, revisions up in the prior months and this was not bad. So, you get a little bit of a stasis and people calm down. I think apple is really the big story today. A big index component. Psychologically its Important News looks great, i think a true break below 217 if youre a trad trader, thats where maybe you think about coming out of it investors are not getting out and today the more buyers and sellers have never been more apt. Joe 232 is the 52week high joshs point on apple. Not that far away that theyre ramping up orders. The rebound we got in the market and on apple. 217 for a trader is exactly the price stock that you want to look at. I mentioned that i purchased the stock that ill break out and make alltime highs and i believe that is going to happen. A point of reference at 217. But overall the market continues to go to a lot of different places i wish i listened to myself when i said that a year ago keeps going to a lot of different places and, ultimately, scott, just ends up no where you talk to the Trading Community to be a trader in this market right now, wow. That is a really difficult endeavor because yesterday you were as a trader thinking that the market was goeging to break down and sand detearrierate furr and continuing to carry exposure and in a diversified way not highlighting utility over reits or health care and a broad mosa mosaic. How about the question we asked at the top of the show is the economy now just good enough to keep the rally, if you want to call it that, going . Youre still, what, 4 , 5 from the highs . Yeah. Youre not going into a recession. Thats what todays numbers show in my opinion. I dont think much changed from the report today i was bracing for a really bad number i think everybody was of course you already have a manufacturing recession. You have a slow down in growth in the services sector, which is critically important the last thing you wanted if you were bullish stocks was to have a really negative jobs report. Look, the private sector jobs was very disappointing since the Second Quarter of 2012 and not supervisory wages were up 3. 5 annualized it is not all bad on the wage front. The revisions made me feel better overall i feel good. I dont think this disw sways td from doing what it wanted to do. 82 probability. I dont know if they have to go to december. But net and net the ism kind of freaked us out and i think we have to take a step back pmi was a little bit better and consumer and housing is very good and inflecting. So, im watching these wage numbers and i thought overall today it was okay. Kind of, shannon, gives you the all clear to not get too, too negative ahead of trade talks next week. You dont have to think the sky is falling in the market before these trade talks are happening. You dont know what is going to happen there but maybe the risk there is to the upside i think thats fair one thing that were looking at is this one data point on the Services Side certainly doesnt indicate trend were actually a little less optimistic about the economy over the last 18 months or so. The bottom line, if you have a potential tail wind in trade talks and more positive brexit resolution and still really no alternative. If you think the consumer is steady enough and we have good enough growth. I mean, the services pmi was still expansionary we are contracting and i dont see another alternative for alteau investors on the sidelines that would be the catalyst for me for Equity Investor to take a step back. Josh, good enough maybe those are the two words that matter most if i say its good enough and, oh, by the way, rate cuts on top of good enough what is wrong with that picture . I think thats reasonable you know, look, if we were to end the market tomorrow, youre up high teens on the year in s p and also made a ton of money in bonds. So, the mood doesnt match the environment. And a lot of that has to do with headline volatility. But headline volatility has not really spilled over this year into market volatility dont forget, this time last year we were in the midst of what would have ultimately turned into a 20 statistical bear market by december 24th september is when the wheels fell off shortly after making a new high or october shortly after making a new high in september. And thats after having done the same thing in the january february period. So, we had two midteens to 20 selloffs last year we havent had it this year. Its really important to comp t compartmentalize how you feel versus how things are actually going. How things are actually going are no where near as dire as people are speaking about it if i told you things were good enough and the stock market could go up good enough in an environment and pour sugar on top of that with rate cuts how could you be negative in that environment i think the next four weeks are incredibly critical. I think what were talking about here and i think josh would agree with this. The consumer are they going to continue to spend through the duration of q4 especially with a shortened holiday period a lot of that behavior is dictated by the pricing they see during the month of october. Now, earnings. The visibility on earnings i think its a little clouded for this upcoming quarter but i have never been one to sit here on this desk and say we need a trade deal some form of a trade deal agreement. Something that gives the market the belief whether its good, not good, but the perception that its there in the month of october. I think lends itself at a very critical time for the consumer, for the market the end of october, s p 500, 2900, consumers out there spending s p 500. 2700 consumer puts their hands in their pocket at the worst possible time. Services slowing, job growth slowing and it only underscores and i wonder if thats why the market reversed in a way yesterday and then follows through today. Just puts the fed, steph, right there. How can the fed is going to cut rates. Thats what the market underscored yesterday with services and today with, if you needed any other ammunition on that road. You get the jobs report theyre going to cut so, i think the market is telling you that with the percentage, but youre growing 1 , 2 gdp no inflation and thats also very important to what the fed is considering and, oh, by the way, lower Interest Rates in general are pretty good for the consumer which everybody is obsessed theyre going to roll over one of the reasons i was saying that is the engine that keeps us going. Maybe, just maybe, earnings are not going to be as bad as expectations we have convinced ourselves well see negative growth. Maybe you might see it in some sectors like energy and some sectors like cyclicals and, guess what, those stocks are already reflecting a lot of bad news so, thats why i have said to you all along, i have this bar bell approach. Until we get certainly on trade and then you can make a really logical choice as to where you want to be at that point where you really want to double down but you cant really do that because youre going to lose your shirt if youre all in on cyclicals at this point. Lets talk then about positioning. Bank of america says that positioning is still too bearish. Yes and contrarrians on credit and stock and bullish both you look at utilities and look at staples. Is that a reasonable strategy to have . I think that the defenses are very much ahead of themselves but you have to have a few theyre just very, very expensive in my opinion. Look, there was nothing wrong with pepsis quarter yesterday not at all 4. 5 organic growth and reiterating guidance and dividend yield and the stock trades at 25 times same with costco own costco because i think theyre very impressive. I dont feel good about a 35 multiple any day that is very expensive you have to pick your spots in the sector i think thats a good point, stephanie. There are times when it pays to have a lot of conviction, especially when youre in a specific uptrend or downtrend and week after week that continues to be confirmed. That is not the environment we are in right now a very mixed bain eed bag i like to look at weekly charts and when you do that, you see a lot of things that dont seem like they should go together look at the momentum mtum is the etf. Look that could go either way. Very, very unsettling to be in the middle of no where with that ind index. The russell 2000 down 2. 2 on the week transports lost 3. 9 this week regional banks lost this week and then on the positive side, semi conductors are hanging out near highs have not been able to wipe them out. Invidia up on the week and take a look at housing. This should not be doing as well as it is doing if you then take a look at the russell 2000 and the trance ports on the negative side you are not seeing a lot of things that seem like they should be doing what theyre doing in concert and thats a tough environment to be pounding the table in either direction. And i dont think you have to. I would take the other side on housing and all the things we said because were seeing positive inflections in orders and seeing a lot more millennials getting back into the marketplace and seeing better supply. I actually do think and theyre beneficiary from lower Interest Rates. I agree with you, its like unevenness in the market to your point. But there are certain sectors that should be working in this im glad to see that it actually is i completely agree. I guess im saying not often recession conversations with the Housing Market doing so well right so, goldman says in a time of uncertainty like you have now, the tilt your portfolio away from volatile Growth Stocks which have consistently lagged the market during the past 35 years. You dont get overexposed to it you have to have things in your equity portfolio that dont feel so good. You dont want to dismiss them financials i know the coming quarter, they are not going to be good financials that are struggling to be unchanged today. Youre going to have the composition of your portfolio in a marketplace that josh is correctly identifying as having lack of conviction, lack of confidence, lack of visibilitvi how should it look . Dont tell me diversify specifics. Go specifically to the sectors. Go to each individual sector and try to identify in the sector which of those names are outperforming their peers both on a fundamental and technical basis. I could go to the financials i mentioned that before. I could talk to you in the financials about mastercard, kkr, usb those are the types of names i own in this environment. I could extrapulate and look at energy and say energy is performing, also lastly, i could talk about industrials. I could talk about coal part and im not thinking directly about a caterpillar or some of the names that are struggling. I want to mine for what is outperforming and what has the fundamentals qualitatively and technically. Steph, ill ask you the same question ive been on land for a while but broadcom has gotten beaten down silly if apple news is right, they benefit. I like nxpi i believe the auto market is stabilizing globally i like that name very much i like aig with the new ceo and the stock is extremely cheap and you dont necessarily need a steep yield curve as you do for aig as you need for other banks and apollo i sold out of blackstone and im adding back to apollo because its down 10 from its high and i have a new name at the end of the show well talk about in the consumer area shannon i think, you know, similar to joes comments on financials you know, we still Like Health Care here. We like names like anthem and we like j j despite the opioid headwinds theyre facing taking advantage of consumer names like Royal Caribbean which is not something you hear a lot about. The numbers are great and the fundamentals are strong for that company. Again, i dont think that if you look at a sector Like Health Care or financials we like the exchanges in the financials you cannot limit yourself to just saying, okay, i want to be all growth and momentum or all im going to take these value cyclical plays and great names in industrials like honeywell and really poor names you dont want to own in this sector, as well you have to be careful good stuff. Well take a quick break and here is what else is coming up on the Halftime Report. A first on cnbc interview with boston fed president eric he was against cutting rates in the last fed meeting has he changed his tune . You dont want to miss this interview. Plus, rolling the dice on Dominos Pizza shares down over 10 in three months but it may be time to buy. Our call of the day. Thealim hfte report with scott wapner and the traders is back in two minutes welcome back to the Halftime Report. A market flash on cedar fair amusement company. Two days ago they got an offer from six flags to get bought out at 6 million. They rejected that offer the stock with a big intra day move spiking up 3 in the last several minutes. Thats cedar fair turning down the 4 billion offer from six flags. Scott, back to you eric, thanks so much. Big interview coming up right now. Lets get to Steve Liesman live from the boston Federal Reserve with a first on cnbc interview that is the boston fed president eric rosengrand. Steve . Scott, thanks very much we are inside the boston fed here with eric rosengrand. Thanks for joining us. Nice to be here with you. Job growth coming out this morning below expectations came in 136,000 but the Unemployment Rate falling to 3. 5 a 50year low. Give us your initial reaction to this job data. As you highlight the Unemployment Rate is quite low at over 3 over the course of the summer, 3. 7. The Household Survey was a little stronger than the Payroll Survey i think you have to keep in mind exactly where we are in the cycle. We have a very low Unemployment Rate at this point were relatively close to 2 inflation. The kind of job growth that you would expect if youre trying to keep the Unemployment Rate constant and inflation rate constant would be in the range of 90 to maybe 115,000. Were getting the kind of employment growth i would expect in a stable economy. The bigger question whether it ends up being weaker from here and that depends importantly on what happens on the consumer side of the economy. When you look at the level of job growth to you want to bring it down to you want employment to be stable and lower a couple reasons we get concerned. The committee as a whole thinks that the median estimate for where Unemployment Rate would be over the long term is 4. 2 3. 5. Were already pretty tight and the reason for that is twofold. One is in periods where the labor markets are quite tight, we expect over time that wages and prices will go up. So, core pc has gone up from 1516 to 18 core cpi has gone from 2 to 2. 4. We have seen some movement in prices we also have to worry about Financial Stability. You press the economy too hard and you start finding different pockets of the economy starting to have more troubles than you expected i was going to interrupt before as the informational note here that the committee has had a differing view on what the right level of unemployment is it used to be above 6 and were learning now we can operate this economy at a lower Unemployment Rate without inflation its definitely true. The estimate of what the Unemployment Rate would be in the long run has come down that does move around for a variety of things includes kind of what the demographics of the population are different age in the population does make a difference the amount of immigration makes a difference population growth in general makes a difference and education makes a difference all the factors that think about going into how tight would the labor market be before we see price pressures. When you look at a number like this and look at where the job market is, but we had two key indicators this week the ism Service Indicator and manufacturing. Both weakened from where they were certainly last year what is your overall outlook for Economic Growth . So, my overall view is it is going to be around potential for the second half of this year the third and Fourth Quarter my estimate of potential is around 1. 7 thats pretty consistent with what the private sector expects for the last two quarters of this year. I think that data that we have is weaker than it was before, but is actually pretty consistent with getting around to 1. 7 if we start getting much lower than that, that employs a rising Unemployment Rate and we would want to think about what is happening in the economy some of the data that we have gotten over this week is not a complete surprise. We know that tariffs are having an effect on the economy and the Manufacturing Sector globally is being impacted by what is happening with trade so, we would expect that exports a