Call on ge why he says there could be more turbulence ahead its our call of the day and michael farr is unveiling his top ten stocks for 2020. Part of halftimes game plan to get you ready for the new decade Investment Committee is ready to go Halftime Report starts right now. Welcome good to have you with us on this friday our Investment Committee, jim, josh, steve weiss, jenna, the chief Investment Officer at boston private wealth. Michael farr is the ceo of farr, miller and washington. Also with us today onset, keith banks, the head and vice chairman of bank of Americas Solutions group. Stocks are hitting more highs. Could be the first eightday winning streak in more than ten months we have news happening at this moment on boeing our phil lebeau has it scott, this involves united airlines, which is one of three u. S. Carriers that flies the 737 max. It has announced that it will pull the 737 max from its schedule through june 4th, which means when you look at the u. S. Airlines and when they plan to fly the max again, look at united it pushed it back three months its not plaping to fly the plane again until june 5th as you take a look at shares of united, we reached out and they said look, the reason were farther back than perhaps our competitors is because we want to make sure we give them enough time if they need to rebook flights, but the importance here is that this now pushes the max delay or cancellations into the beginning of the Summer Travel season the busiest time of the year for the airlines also another piece of news regarding the max. Spirit aerosystems out of wichita, kansas, is going to halt max fuselage production starting january 1st so max fuselage production will stop on january 1st. Guys, theres a photo we have put out and youve got to see this its where you see 100 max fuselages that are just stacked up on the tarmac in wichita because theyre built but cant be delivered because theres not production going on or limited production until the end of this year out in renton, washington take a look at shares of boeing as well as spirit. Under pressure today not a huge surprise that spirit would make thismove. Scott. As we watch boeing shares do take that turn lower, phil, appreciate it very much. Thats phil lebeau with the latest there the number one industrials analysts on wall street is going to be joining us in just a few moments. He has some new note out today regarding General Electric but boeings all oaf over it so youll want to here from him until you do anything on any of these stocks and hell be with us you can talk to me about the stock. Its not so much a united or spirit story its all about boeing on as you said, what could be a worse week for a company than this ones had. That was references also the rocket launch day, which is not going to achieve enough altitude to get to the space station. Look, despite that what i come back to is that the max will be back in the air. And we know that it will be back in the air next year or theres good reason to be that, but the decks have been clear. We know what theyre paying southwest. 125 million. Although it hasnt really been confirmed. So its a clean, clean slate and theres still only two major manufacturers. So i had sold a bunch of stock, had them in position i actually added to it over the last couple of days then ill just hang out, wait for it to come back on is now the time to buy boe g boeing is the kitchen sink, if uyou think, okay, june could be the day, wouldnt surprise you now to see the two airlines who pushed it to april now u have to meet where united is if everybody get together on it. We dont know when its coming back to service, but i think we can say it will the faa is movie inalong on thi. If i were guess, its early march. Why airlines have their april a june why are you saying march when i say get it many the air, meaning youve got to get it in the air and certify it it takes some tile. Its not like the first flight going from miami to new york im talking about flights i think these june time frames is probably right theres another aspect to this, a reason why this thing cant go on much longer which is that boeing is a critical part of the u. S. Economy its not just boeing phils talking about spirit. Theres all sorts of smaller supply companies that feed into this plane this is going to hit the Macro Economic numbers in the First Quarter so eventually, the faa has to realize okay, were slow walking this for safety reasons. Thats good. But dont slow walk it forever get it back in the air if its safe its starting to pass a lot of the tests meaning theres kind of blood on the street youve got a fabulous company with a great Balance Sheet thats 25 years off its highs. People dont like this story it feels bad so if it feels bad, thats a good sign for an investor could there be more hair on this story . Sure seems like the goal line is getting moved a bit and perhaps these share prices could go lower. But trying to pick that bottom in here probably doesnt make a lot of sense if youre going to buy it you kind of buy it jims point, with trumps call, youve taken the slack out of the system. So any delays that were going to be there because the faa had other priorities, those are gone so right now, its more of a move okay, what do we have to do theyre not going to slow walk where they dont have to on the other side though, i bought more united airlines. To me, this is president obaosie airlines because although youre canceling flights, youre canceling capacity that was biggest concern about the airlines too much capacity. So the question for me is when it does come back online, itwhas it going to do for air fares that will assess my Airline Position lets talk about the Broader Market you mentioned what youre buying people are buying stocks today s p is on pace for its best quarter since 2013 best year since 2013, best december since 2013. Get the point. Nice to see you again. Good to be here, scott. Where do you see the market in the year ahead . Its been a great year theres a lot of talk about whether 20s going to be top heavy because of a noisy second half were constructive going into the year the a great environment for risk assets youve got a global synchronized stimulation cycle. Short rates are coming down. Balance sheets are expanding more countries are going on the fiscal route think b about where we were last year we were going into 2019 expecting four rate hikes. We got four rate cuts. So we think the macro environment is going to stay positive and thats going to be a good backdrop for stocks to continue to outperform especially visa vee bonds. For how long . We think the first half of the year will be positive. With the summer with the election looming larger, well probably take a lilt l break th then could get a pullback does that mute the gains you could get in 20 i dont think so. Our expectation for the full year is you can see 8 to 10 full year gains again. Front end loaded little pause in the summer and based upon how the election plays out, hopefully get going again. Shannon i disagree what with that if we look at the traditional cycle during an election year, that first half of the year t d tends to be choppier than the second half of the year once the platform is moderated and theres an expectation that not all of the far right or left initiatives that the nominees campaign on are going to be put into place i think that were more positive outside of the United States in the first half of the year if you think b about what the fed has done, the major thing they have done, they didnt need to loosen financial conditions, but they needed to steepen yield curve but weve seen that. I think about creating an opportunity where we have a stable dollar, im more positive on International Emerging market stocks in the first half of the year than in the s p 500 youre going to come into 2020 with some good momentum out of this year and seemingly, nothing at least in front of you that you can visualize that stands in your way. Youve had movement on trade the feds out of the way for a bit. Theyre not going to do anything in the first months of the year. We know that what upsets the momentum you enter 2020 in . I think by definition, the thing none of us are talk iing about because anything we look at in front of us as a binary eechbt what the market has spent the last ten years doing is resolving to the upside. Look at every election for example, look at brexit. Things like that, which are even if the market doesnt like what the resolution is, it does like that there is in fact a resolution and then we bide our time until the next big, bad uncertainty, but i think narratives are dichbt now, a year ago at this time, we were down 19 on the s p 500, on the way to being down a full 20 within the context of the secular bear market weve been in since 13 and it wasnt even the first time we were down high teens for the year so things change really quickly. Sentiment was in the dumps a year ago and people looked at this year and they say, well, we dont know if the fed son our side maybe they were taking the b pressure off what we know is theres not going to be Earnings Growth. Theres a manufacturing and industrial recession and the rest of the world looks like hell that wasnt helpful. We shattered a lot of myths this year one of the main ones being you can have a 30 rally total return on the s p with no Earnings Growth. Thats a huge myth thats been shattered. What else . Small caps up 3. 8 in december versus the s p up 3 for me, a very positive sign russell 2000 is still 4 below the september 18 high i think thats still to come todays the 31st all time record high for the s p 500 this has been going on all year and my main take away is technicals, more than narrative, have kept you in this market if you obsessed over every trade headline because of things like that, you didnt do yourself any favors the internals were good all year and Getting Better and now theyre as good as theyve been since january. Josh is right obviously you can have a 30 year in the s p with no Earnings Growth. Negative can you continue though into a new year under that dynamic . I would push back and say no well, you know, but the path of least resistance is still up. This bullish trend is still in place and as much as the bullish numbers, you think about what the fed does it not only looks at inflationary numbers, they look at expectations for inflation. So the bullish sentiment is still in place meaning investors are continuin to discount bad news and embrace good news. They continue to buy this. We havent had a piece of bad news in the past year thats really been able to slap this market down. Should you be cautious as much anything, i think youve got to be cautious of the complacency thats out there everybody is talking about everyone one of the talking heads, my dear friends, are saying look, Interest Rates are very low the feds on the sideline. Nobodys going to get in the way. S p estimate earnings are for 10 higher theyre higher at the beginning of the year. That strikes me as high, but heck, if you could get a 5, 6, 7 year out of 2020, i mean i would get down and kiss the p ground i hear you. Im not you know, but but its what takes it down whats going to take it down thats my point here are two things that the consensus is pretty much rock solid on if you looked at barrens 2020 year outlook this past weekend not a single strategist thinks youll see plus 220 or higher on the tenyear treasury. Nobody thinks its even possible so lets put that one to the side the other thing is that were going to have this impeachment that is essentially going to be a circus and we know what the outcomes going to be and not a single republican senator is going to switch sides and they wont even call witnesses and theyre going to do it as fast as they can to get to the vote not saying those two things will be wrong im say federal government youre hooking for areas where theres 100 consensus, those are the two things it will be interesting to see the reality deviate from that expectation. My only point in initiating this and maybe pushing back is you cant have multiple expansion alone again. No. Can you no, we think this year its going to be the market will be driven by earnings we think you can get 7, 8 Earnings Growth. If you see money falling into the market, maybe get a half a tick up but it will be an earnings driven market to joshs point, youve got to worry about a couple of things number one, no one thinks inflation will be a problem this year if it starts to become a problem, thats a huge change and the second thing is weather we have all gotten comfortable, ourselves includes, that we have phase one sort of of the u. S. China trade deal if starts to flip the other way for whatever republicason, chak no one thinks inflation can happen i find a huge disconnect between the ceos of global businesses who have disinflation around the world and are comfortable with it now but when you talk to and i do every week, Small Business owners and im sure you do as well, they are experiencing real inflation in the form of Health Care Costs for their employees in the form of the types of wages they have to play to get quality people there are 7 million jobs theyre having trouble hire iing and wee seeinging wage growth. That has not spilled over into the fortune 500 sweep, but thats something i think is possible for this coming year. What are you thoughts about that divide one of the things thats helped on the labor front the fact weve seen the prime age worker, Labor Force Participation rate has gone to 82. 8 a big jump thats put workers into the workforce thatand thats helped flatten the curve. Typically, you dont have a problem until you start get itig closer to 4 youre right theres a strong correlation between wage growth and inflation. And thats been whats largely been absent here we got to keep an eye on that. But i think once again, i think the pique in that prime age labor force rate was over 84 you think theres enough slack still. Theres enough slack that more people come in and mute it. But you want to continue to see wages go up. Thats a big chunk of our economy. Why wouldnt if you look tat the year weve had, almost everythings gone up right . Why wouldnt bonds and stocks go up again in 2020 proving economic picture keeps stocks in the game uncertainty about elections and other things keeping bids and bonds why couldnt you have a similar scenario in 20 . So we had, we we think going to be a much better year for equities versus bonds. Funny. Everyone fretted over the inverted yield curve the tenyear is at 192 right. The curb has a nice, positive slope to it so we think at this point, you know last year, we saw 100 basis point drop in rates. What turbo charged i think there was a 14 return in Investment Grade bonds last year were not expecting if the economy continues to firm up and inflation shows a little sign of life, we dont see why youre going to get that back up of rates. Short rates shouldnt rise because again the b global stimulus activity, but we think the long end will keep rising and thats going to take some of the juice out of the total return i think the biggest risk is rates, inflation look at the swiss, they just raised rates they were the pioneers in negative rates you can only keep negative rates for so long. To me, you dont need to see 10 Earnings Growth or 6 early on all you need to see is the positive momentum. The market is a direction alan mall and the market doesnt go to where its looking at the end point, its following the momentum in the positive but you would agree though that the fed has not going to do anything most likely, for the first half of the year the second half is undecided. However, well you think the feds going to raise rates into an election . I think they would, yes if youre seeing inflation pick up and i dont think its going to get there at that point to be by the election. But i do think you could start seeing it rear its ugly head ip thought it would pick up two years ago. Now youve got an inflationary question take a look at commodity prices. Oils back theyre all going up depends on your measuring period but in the last three months, weve seen commodities so weve had those blips before but its in response to easing trade tensions, which is what has held back the global economy. I think you have to point out the commodity cycle is picking up right now i have a risk of inflation. Then youve got to report today out of wells fargo from jay bryson, the chief economist there at wells fargo, they dont expect the fed to raise rates through 2021 now i mean thats do they expect three cuts this year . 18 months ago . Not a chance in hell but youve got a major Money Center Bank thats come out with a thats wrong went bankrupt jay bryson is really smart guy, got to tell you i think you know josh is talking earlier about consensus. I think the third leg of the stool is that pmis are going to continue to accelerate at a meaningful rate. I think this Global Growth story is baked in so if you think about it in terms of inflation, were talking about how the fed cant move in the first half of the year and i would counter that that if we see the reacceleration in growth the way thats being priced into the market, i think we could see inflation that could force the feds hand my view is that thats the other thipg that were seeing from a consensus perspective that could be qulup set weve seen two declines in 2012 and 2016 so now, we could pump obump off that we could be stable at this level and create another to your point, potential scenario where growth isnt Strong Enough to create inflation, but still Strong Enough to support risk asset. A little sniff of inflation is not going to force the fed to raise rates and theyre going to look back to the december mistake they made 12 months ago as evidence. Overshoot one other thipg, i think its reason bable to say you can have a good year in the market and equities, but not as easy. Even though it wasnt mentally easy just talk iing about price actin ing right now, you have sphb the high beta names and splv, its inverse, low volatility names, both hyatt hiting a high right n