Stock higher from here the Investment Committee is ready to go. Halftime report starts right now. Great to have you u with us on this wednesday, the day before thanksgiving. Our Investment Committee, joe, jon, steve and jenny Stocks Holding steady, but enough for the dow, s p and nasdaq to hit new highs. The nasdaq trying for its 25th record close and its 11th this month alone. Tech, industrials, consumer staps, all hitting record levels we continue to buy into this rally, joe yes, we are in the middle of a melt up. Thats what with we can call this its being powered by significant dispersion on many sectors. Technology, health care, financials, so you can find opportunities in each of these sectors. Are we pulling forward some of the gains from 20 . B potentially, but thats not a concern we have now. We think a lot of it is predicated on the basis that the consumer is strong when you look at Balance Sheets and you think of governmental ambulance sheets, corporate. What better Balance Sheet is there than the consumer . Savings rate at the lowest since 2010 consumers now as a a percentage of gdp debt, thats falling. Private sector debt is actually falling in the United States i think the market is in the middle of the melt up process. When do we have to be concern ed about the process companies are still is not really spending their great Balance Sheet, shouldnt we have to worry about that when it comes to earnings for the next quarter . I think the companies and the lack of visibility that joe spoke to because of whats going on with the trade talks and on and on and on trade talks, i think theres some of the priorities there and were likely to see the real deal come i was noting today that China Industrial profits fell by almost 10 9. 9 year over year. That is dramatic, folks. Thats another reason theyre going to do this deal even if its a small deal first and its a series of deals. Theyre going to do that then i think youll get that commitment from corporations because when the china trade deal comes off, i think the likely to do that were going to see these Companies Spending the way were seeing the private investors spend iing, joe and jy i think thats going to be a very positive catalyst in 2020 thats part of the reason why people are so optimistic about this trade deal or at least phase one. Take a look at the u. S. Versus china. Some of the recent data. It looks like the is fair iing better which may be because u its chinas hand. I dont know if youre a buyer of that thesis its not so much that im a buyer of that, but im in joes camp, yes, you keep putting money the work here because theres a total lack of alternatives so if i have clients who have money who need to be invested and im looking out three, five, ten years from now, theres nothing else to buy. I cant buy bonds. The bond yields are too low. Preferred are getting nothing. Private equity, weve seen those start to ratchet down. So i look at my portfolio then take im with joe and jon and say but the companies are still expecteded to earn maybe l l, 10 or grow earnings 8, 10 next year and that im not sure entirely hinges on trade i think theyll grow even if we stay in stat quo i dont think we will, so maybe well get an extra hit from t t that im positive on corporate Earnings Growth from that. Wheres the risk reward in the market now, steve . 18 times in the s p 500. Whats the upside versus the downside i think its pretty much in balance, actually. Possibly more to the downside. So everybody comes on the show and every market isthe most capable. Everybody say you know, dont really like it you cant say euphoria is anywhere maybe we get another couple of a percent. A big, seasonal trade. Lets leave china out for a second if you report that companys spending, earnings arent looking great for next year. So many have called the bottom in earnings here, if we dont get it, worse if we get declining earnings next year, i think the market could suffer a little bit if you look at the other periods, at a craps b table, doc, throwing dice cant lose you run so lucky what time you lose you show up for something. The market say its going to keep going up. It goes down you dont know why thats why it goes down so much. So i think were in balance in terms of the risk reward but if we were the handicap the outcome, i think theres going to be a deal with china because theyve got to stop the outflow of supply chains that are going everywhere south korea, vietnam, those will be the next trade issues as we move forward because vietnams got nothing to give us back. South korea does more fakih to rs here, but right now, i believe theres going to be a trade deal if not, well kick it down the road and third factor is what the cent ties to it its not really trading up on talk either way. So but it will trade if we dont get a deal youll see a major decline thats an interesting point because even in todays session, despite the headlines not just from President Trump yesterday, but also from the Commerce Ministry in china, were not doing anything here. We are flat. Right as flat can be. Despite good economic numbers. But the s ps up dows fine i think youre right that were desensitized but i think where ill pick a bone with you is on the kraps table. This isnt a kraps table and investing isnt a game im not saying its a craps table. Its a momentum market pure and simple theres reason for apple to do what it did. Its up 60 . Momentum market in the shortterm so if youre in it for a day or week and playing and trading, maybe youre right you get a crappy hand, maybe have a bad roll of the dice one time also i disagree that earnings may slow i think theyll come in solidly. We dont know whats your basis bet . Strong consumer Global Growth had a strong consumer this year earnings grew small. Earnings declined. I hate analogies that make the market like a craps table where youre just playing. I do. Okay. But i just think its important to remember its not a game and if youre in in it for the long time, youre not just going to get a random hand and if the market gives you a random bad hand sh, it doesnt that long so you stick with it and come out well on the other side you think about the broad asset class. Every one is basically higher in 2019 is that a condition we thought was going to exist going into 19 . No way. Not at all. So you look at the conditions and think what could change in those conditions we have a fed thats pivoted from 18 to 19 for being hostile to being friendly. Does that change thats a big significant risk for the market are the Economic Conditions in place for that no, i dont think they are price of oil, i dont think thats discussed enough. The price of oil in the Fourth Quarter fell from 76 to 42 did i fall on fundamentals or did it fall on liquidity concerns in the overall marketplace or was it used as an atm. It fell on fundamental concerns because it hasnt bounced back with the rest of the market. Oil trades somewhere between 55 u and 60. Thats a favorable condition for the consumer lastly talking about earnings, we had multiple expansion. All this market was. So in a little bit. Down from nice, double digits but that economic, that earnings condition, you say to yourself going into 2020, if theres the slightest bit of acceleration in terms of Earnings Growth, okay, now i just added whats a very fertile environment in 19 i made it even more fertile going into 2020. I know logically that doesnt sound like the right place we should be in it sounds optimistic, but tell me what condition is really going to change. How does that translate into your view of the stock market . Because conditions can be better next year versus this year, but that doesnt necessarily mean the stock market performs in tandem with it of course if you look back, again, i go back to this time year look at the Earnings Growth we experienced in october of 2018 Companies Reporting double digit Earnings Growth and the market piqueded so to your point, yes, market can trade in a behavior thats much different than the economic and earnings environment thats why i said i think we are pulling forward a lot of the gains. I think at some point in anticipation of Political Uncertainty with the election, the appreciation were witnessing now probably stalls out and we go into a pause phase like we did in 6 for a period of time. I think the interesting point next year is going to be will companies spend . Thats what everybodys waiting for. Companies started spending i just dont see it. Nor is the market look at our returns this year. Theyll have clairity clarify where theres a deal record highs were reaching as anticipation that companies are going to start opening up their wallets soon we hit this thing all the time i know you guys do on the five as well. The issue is that the consumer is still 70 of this economy and the consumer is what has driven us. The consumer has felt better throughout the year i would say now because of Interest Rates coming down. Because their financing costs are coming down. Weve seen it in homes new home sales existing home sales and the like weve also now seen it for the first time in 40 weeks, folks, weve seen railroad loads increase by 10. 6 . Thats the first increase now that weve seen in 40 weeks. So that shows and is it because you know, corporations are buy ing a lot more than they, than we expected . No, this is consumer driven and so i think that will continue to drive us next year our people slight lly more optimistic that corporations will spend in maybe there are. Thats not my thesis its consumer stays strong instead of being 3 where we were last year at this time, were at 1. 75 and i think that continues to drive the consumer and in fact, i dont mind the corporations staying on the sideline i think well see a lot more m and a like we saw monday this week a lot more of that throughout 20 to 20. I agree i think its where companys spend. Companies build something, right, theres nobody to go work there. So what are they going to build on well make an acquisition. Costs. But you have Technology Improving things take a look at 5g. Its going to completely decimate the job force in my opinion. Theres a secular decline in business spending. I believe so. Okay. The market has been able to endure that to jennys point before about where else can you invest i said this yesterday. 2019, chairman jay powell, is clearly the player of the year for the capital markets. He returnedly quidty in situati liquidity in a situation that was much needed. You always look at liquidity growth when investing in assets. In 2018, it was contracting. We made a commitment in 2019 to return the growth in liquidity once again in 2020, that liquidity is going to grow and its going to grow beyond the United States its global Central Banks that are going to increase that liquidity and put near ly a trillion dollars of extra liquidity out into the capital markets. So what you were saying before is its all b about conditions this year so for me, im not necessarily looking for corporate, cor corporations to spend. I actually think mergers on monday were interesting because my immediate take on that is they dont have anything to spend on so theyre buying growth by merging. I also think looking out to next year, to me, whats going to dictate the success of the markets next year is that gap between conditions, expectations and then what the reality comes in at. So if expectations are 10 Earnings Growth and we grow at 11, maybe thats great its expectations are 10 growth and we go up 5, we could have a pret pretty icky market but i think theres little chance we repeat what weve seen in 2019. Thats just, this year is extraordinary in terms of one year total return. So i dont look for that and im really looking at the gap between expectations and reality. So tomorrows thanksgiving. Gobble, gobble, everybody. Uncle steve says hey, john, what do i buy in this market . That uncle steve . Oh. Didnt occur to me he was slightly yes jon what would you tell him . I would say the big successful consumer stocks are what i would buy first, mel. Before i buy banks ive been one of the folks thats missed out on the bank run, sadly i think theyve done phenomenally and theyre going to do well into next year, but the first thing is home depot, target but im not buy iing them now because of what i talked about yesterday. This was their super bowl. Into black friday is their super bowl i buy them in mid to late january. These stocks that im talking about. Because i think they get the lift then. They probably have a lot of sideways action and people ba basically rebalancing their r portfolios after these furious runs i wanted to clarify, this is a favorite relative. Not that you dislike not steve weiss what would you tell the favorite relative to buy, joe . So i would tell them growth plus financials. Technology growth. Health care. Retail lulu lemon names but its also financials and i think financials have been able to endure, they experienced a rally towards 2 ten year has fallen back to 175, but yet financials are trading at all time highs so theyre able to endure that. If were able to get a modest lift in net interest margins go in the favor of financial institutions, thats one of the reasons why i want to continue to hold them so i like the Growth Strategy is not going away in a 2 world anytime quickly. But i also want to throw in some financials there as well and notice i didnt mention energy yeah. For at least favorite relative i i guess. I disagree. So i was thinking if asked this question about this time last year, i think id give the same answer again my thesis last year was that we didnt need that fang kind of cohort to lead the market higher i remember saying at some point what if the other 490 stocks in the s p actually performed okay. We could have a really good year this year. I think that could be true again next year and so thinking about whats underperformed, where there were great quality companies, i agree, joe, financials there are great playing in energy i think you could look to small caps and look to things where their earnings are growing they have missed out valuations are still pretty cheap. Thats what i tell people to do. The original steve. What do you say . Are we related . You tell yourself well ill tell you what i bought trip. Com i added to bah bah i dont, my thesis on baba has played out well for a change and i dont think its just a one in done in other words, theres so much pressure on these companies to have a secondary listing. If they could, theyd like to bring them all back to china to the a shares market, but theyre too big. However, there are a number of companies, of which i own, that have gone private and relisted some big ones. Chio 360, relisted 50 billion and traded to 134 billion in the first day. So the to me, the pressures going to continue. They changed the rules for the dual list iing in hong kong to allow founders to maintain their dual class stocks, so i think you could expect to see jd. Com i think they expect to see trip. Com ten cents, also have a dual listing there. Thats going to continue to bring up baba. Just real quick i also think very important that apple and microsoft continue to have the type of appreciation theyre having apples not going to go up 66 in 2020. It could the. A great observation absolutely could but logically, you would say wow, another 66 , were talk in about almost a 2 trillion company at some point. What about steves thought, joe, about the 5g rollout with these phones we know its even coming to that thats going to be the biggest product. Theyve started, read digi times or papers over there in asia theyve started to tell their suppliers ramp up your 5g. Underscoring my exact point how critical the performance of apple might just be in 2020. No, i dont think its critical im saying its not going to go up we dont know whether its going to go up 66 , but if it goes up 50 again in 2020, youre looking at one heck of a year for the s p 500. On to boeing shares, under pressure today weighing on the dow, the faa saying it will control approval of o the 737 max return and now new reports that the fuselage on a triple 7 x split dramatically during a september stress test joe, weiss, you both own boeing. Recently. How recent . About the last three weeks, we talked about it initially, i bought some calls 370 calls. That worked out then i rolled that into owning the stock itself stocks sits above its 200 Day Moving Average i think at some point, 2020, be talk iing about boeing as being one of the Top Performing stocks i respect and understand the faa wanting to come in here and being basically the last authority to approve what goes on with boeing and returning the 737 max. Thats the right way the way it should be, but i think the software fix is going to be resolved and i think at some point, were going to be talking about this company with a backlog of over 300 planes this is one of the simplest investment cases ever. There are two manufactured planes airbus said we couldnt meet our deliveries we underdelivered, so if you want to go into their backlog and wait years and years 7,000 planes. Then go ahead so boeing will come back, whether six months or a year the other bad news, expected that the non faa regulators, the ones in europe, want to chime in about it as they should so you change dynamics, but every time you have this tighter regulation, you just like with the banks, you haed it harder for any competitor coming spto e market not that they can come with such high caps. Would i love to see boeing relaunch safe ly the maxes next week absolutely if not, if its next month or in january, february, im still going to make my money its just going to put it off for a little bit longer term though, b isnt there a concern that airlines will see the value of diversifying their supplier of aircraft the repair. The maintenance and repair of those. And yes, the training. The pilots if youre trained in on the 737 max or any of their other plane planes. So its a deeper mote than just waiting much. And youre still going to forever to get that plane unless you do a deal like where youve got jet blue which already flies a bunch of those and you do an m and a deal thats the only way you break out of