The dow toing 25k. Steph, whats the significance of those big numbers we have now been able to get over . Its very positive. It makes people feel better especially if they were buying back in march and april and may. We have been getting pockets of activity thats picking up like the tsa travel numbers look bet per. Mortgage applications up four weeks in a row these are baby steps what this tells me is yes we had a horrific recession were still in it. Its probably going to recover a little bit faster than i initially expected i dont know if its a v but i think april and may are the worst months of the year on terms of the Economic Data and that we are going to start to see an improvement if you do see an improvement and get the economically sense tifr sto sensitive stocks to rebound, thats very encouraging. If you look at financials, they are down 26 on the year industrials are down 26 on the year these things could have a mean reversion and that could propel us higher along with Technology Still being one of the leadership josh brown, you have the s p above its 200 day moving average. Tom lee suggested the market is still many the hands of the buyers he said the fact of the matter is, the sellers are done selling. The buyers control this market right now. You buy that not really. Theres some things happening in the internals that i think are very constructive and i hope the se area know that tom lays out is true. Im not rooting for him to be wrong. To his credit, he has been bullish throughout now, when you look at things like the rsp which we brought up on the show last week, this is an etf that tracks the equal weight 500 it assumes every component is the same size. That is up 3. 5 with the s p up only 2 . That tells you that strength is broadening out when you think about stocks off their lows, the iwc, which is the micro cap etf is now 52 off its low. Thats an incredible rally the russell 2000 up 45 off its low. Its not just the ten big tech stocks plus amazon there are a lot of positive moves in stocks. The internals are Getting Better here is the other side of that if first thing is, stephanie points out seeing the statistics Getting Better and thats true statistics building off of an extremely small base is very misleading we should not be thinking about sta ttistics at all now if last week was the apocalypse and this isnt, 38 isnt so impressive quote these numbers off of january and february activity and then ill tell you were out of the recession i like that things are Getting Better we have to throw the stats out the gains look like typos and i recalls specifically, when you tell me that people booking flights is up 180 over the last month, give me a break thats not of use to anyone. We really have to think, i think, on longer time horizons and we have to use rolli ining r rajs not last week versus this week i hear you. Its interesting that youre having a big day in the stock market and if i told you that apple and microsoft and amazon are all in the red, that tells you theres a little i think thats a pretty interesting sign today that you have such a strong market day and those three pillars of the market are negative i think it says the optimism is broadening out. These three horse men of the stock market that have driven it back stock market gains since the lows have really been a winners take all kind of market. The gains have been driven by that narrow group of tech stocks some health care and some of the Consumer Staples thats beginning to broaden out. People are continuing to look through based on vaccine, hopes and everything and say its continuing to be the time where we look through the bad part and see through to the return of the economy. It strikes me this continues to be priced for perfection were not looking for any other air pockets out there. Im always encouraged when i see stocks go higher but i want to see the fundamentals follow. When you dont see the fundamentals driver stock prices then youre seeing a separation. Youre seeing stock become more expensive and i think, all right, whats my up side from here versus my down side i think caution is still warranted, scott the stock market is sort of proceed fundamentals catching up with it, michael maybe, jim, thats what this is. This is a belief that the reopenings will go better than expected i thought tom lee, i mentioned him earlier and the thoughts he had on the market. He had another interesting state about the states reopened. Had new cases down 29 he poenints to that being an interesting sign maybe this will go better than a lot of people thought. Thats what the market is anticipating the market is an anticipatory beast. Airlines Like American Airlines has a horrible Balance Sheets. Citigroup up 9 . The market is saying it believes, whether its right or wrong, it believes the economy will come roaring back credit losses at the bank will not be as stressful as people expect and all that stuff again. I dont know if thats right or not. What i do know is i look at number ons ts on the virus, thas ground zero and youre not yet seeing a second wave thats why the market is getting its animal spirits its looking at the cyclicals and saying the russell 1,000 value has underperformed russell 1,000 growth by 23 Percentage Points in the first five months of the year. There are bottom fishers who will put that and sap i want to buy financials and i want to by airlines unless you think its false optimism some people will say its false optimism if you look at the stocks that are up today whether its the airlines as josh referenced that are ripping a lot of the travel names. A lot of the most beaten down that are rallying, certainly its built on optimism steph, why isnt it false optimism i dont think its false because you have a lot of things going in your favor. Namely the liquidity thats ha we have talked about you have monetary and fiscal policy initiatives that are so accommodative. I think that is really the basis for a lot of the excitement. At least its a tail wind, if you will when you couple it with on a week over week basis, on a month over month basis, data points are Getting Better i think that matters the market is a discounting mechanime mechanism. I think you can continue to Gain Momentum and confidence. Confidence is what its all about. I think youre slowly starting to see it. Consumer confidence today was a little bit better than expected. We have to see if the reopenings do go successfully thats a very big thing that im watching lets say they do go well. These Building Blocks and you have these sectors that are still down 20 to 35 i mean, part of me says, okay, liquidity, its great. It gives you false, right. Thats what it did it brought things back from the potential death of the economy, if you will. Gave you a pulse you still have to be able to run along way. Youre going to have to get some improvement fundamentally in the economy if were going to be able to take significant steps forward, right i get it liquidity is a huge story. Its going to take you so far. Heres the problem. You need to build on it youre right. Like in other words, if do you think about liquidity as like revving the engine, pulling the engine or at a secertain point o need the engine to run by itself i cant think of a more end to 2020 than new all time record highs500 and unemployment hovering between 10 and 25 . That would put the capper on what we have seen go on. When you talk about by the way, you talk about an election happening in the midst of that that is going to be fascinating the way people who havent returned to work on own a business but havent seen their business get back even to 70 or 8 80 of where it was six months ago. You think about those people watching the s p 500 which half the country is very little involvement with, coasting to all time record highs and you say what happens with all this liquidity. It was good. It helped. How do you take it away. We know its very hard to do that think about what went on in 2018 gdp was hitting records. Right. You had great retail sales you almost everything. You had wage gains everything you could want and the fed did one rate hike too many and the stock market lost 20 in seven weeks yeah. Its very hard to take this liquidity back its way harder to take it back than it is to give it. I want you to think about europe the all country world index is on fire right now. Its up over 3 on the day absolutely ripping european stocks are hitting their highest levels japanese stocks too since early march. They have not had the recovery that the s p 500 had theres an article about huge amount of employees whose paychecks have been removed from the corporate payrolls the government is directly paying workers in places like germany an france. How do you take that back . How do you tell corporations that was a fun social experiment these are your employees well let you pay them again i like it like this. You pay them how will we live like this long term term we cant how do you remove this liquidity, thoughtfully . I dont know i dont think well be thinking about it for a while. Liquidity will be with us. I agree with you 100 ive been saying this for weeks. The liquic liquidity that was c by the Federal Reserve is unprecedent, far exceeding that of the financial crisis. Money supply in eight weeks is up 25 ive never seen that i agree. Theres no way they are taking that back. As a result, that is all going to be flowing into the stock market and the economy im still one of the few voices that think well have inflation in 2021. Nothing double digit, nothing hyper inflation. Im not talking about that but for the first time in over 20 years, this liquidity, this money will find a place to go and its thats whats happening right now. The market seeing this happening. I hear you. Theres no denying that professor, liquidity has gotten us to s p 3,000 and dow 25,000 again. If were going to hit new highs this year or early next year or when ever question do, if we do, arent you going to need fundamentals of the economy to Start Playing ball with the liquidity . They will i mean, i think they will. Obviously, i do think market will hit more new highs before the economy does really going to be lagging should we be that disturbed. Were talking about the politics of envy. Like, oh, my god im still suffering. Market is hitting new high i think theres going to be recovery all the way around and were going to all be thankful for the recovery that weve had. The good news is still coming on the vaccine antiviral front. Thats a key thing thats a key issue, i think, that will really motivate the election as well as whats going to happen to the markets in the fall its perverse though. You have 25,000 on the dow 3,000 on the s p and 30 plus Million People out of work, professor. I hear you. Listen, i think in receiptrospew will look as the lockdowns as the wrong policy social distancing masks were right and the cdc was really slow off the mark on that. We could have kept many more Enterprises Open and leave much of the seriousness, not all of it, of course. History will show that we really, unfortunately, did not follow the right policy. Look, unless you can turn around and some will turn around and say imagine what would have happened if we didnt have any of that policy, who knows how bad things could have bad. Who knows how big the numbers could be as were sitting here talking about on the precipice of 100,000 deaths in the United States too thats right. The question theres a difference between the lockdown, which was closing all small stars instead of those deemed essential and enforcing masks and social distancing. Some say you cant really have effective social distancing without a lockdown im not sure we havent yet seen the surge in cases in florida, georgia and texas. Some people say it might come later. Again, history will show we do have countries that had not gone into as extreme lockdown theyre not going to suffer the amount of unemployment that we have although were going to have a severe world recession thats going coming up. There are places we could have followed we look at the german model and many of the asian models that did not go into the extreme lockdown that we did they did not go there in south korea. This will be a certain topic of debate moving forward you can sense it were already having it. Let me ask you this. Lets cut to the chase you sound optimistic on the market are regoing to hit new highs in 202 2020 is that a real possibility or is it too optimistic . Its a possibility. Given no serious second wave, without even a universal vaccine, my feeling is it even a likelihood that we will reach it one of the unfortunate things about the lockdown is we actually improved the prospects of the very companies in the stock market we widened the gap between large and small and between those people feeling the pain and those people that have their portfolios it was almost keep the big ones open and let them get used to it. Doesnt that mean it will revert though . What . Thats josh brown asking you a question its great to have you on im glad youre well what youre saying sounds like if we say that the lockdowns closed off independent businesses so walmart could do double its volume in a given region, lets say. If we say then that, the reopen will be good for the economy and social distancing is preferable to lockdowns wouldnt that argue against the stock market how do you have it both ways because now youll have the new stores open we already did the shift. Theres going to be a permanent shift. They have the money to make it safer. Its going to be really tough for these to get it. They will eventually but boy, we gave them a bigger push than they could ever do with 50 billion advertising campaign, in my opinion well, thats not comforting to a lot of people, obviously. Thats a difficult conversation to have, professor youre talking about the heartbeat of this country is suffering and theyre going to be, youre saying, forever not forever i think restaurants will come back Small Businesses come back slowly. I think many states widenedthe gulf we know whats gotten us to this point. Do we continue with whats working or do we use the opportunity of thinking the economy will rebound faster than what we thought. It will continue do out perform and do well. Both sectors tech and nontech will be stimulated by the huge liquidity that is as said just before i came on thats just not going to the fed is not going to pull it all away they were below the target, 2 for two decades. They say im going to run it 3, 4, 5 and all this liquidity will come. More employment. Its going to be a good committeconomy. Those are the economies that history says is actually going for the stock market and i think thats what inverstors see coming thats why they are buying stocks you dont think the joke is on up that the market has run up way further than it should be just given where the economy is and how high unemployment is and that its ripe its ripe for a correction on the first bit of bad news. Thats two things one should consider first of all, on the unprecedented liquidity that was pushed into this market. Thats number one. Secondly, one we really raeleale and i said this way in february. Stock had long livered asslive. They depend on earnings far over 12 months. It depends on earnings more than 12 months in the distance. I think that the combination of liquidity and looking ahead both of them saying where do i want to be. I dont want to be in bonds. I think right now theyre saying, yeah, stocks are going to take an advantage in this sort of environment. Thats where theyre going professor, ill leave it there. You be well. Ill talk to you soon. Thank you very much all right this becomes the next wave of our conversation tr to rotate or not to rotate. Lets listen to what jim said. You heard what the professor said here is kramer i say stick with whats working. I know its boring i know people want to rotate its something that Portfolio Managers love to do. I dont like to rotate into any stocks that will have numbers cut. How about that . Professor might be right. Well find out here. Well find out if either the folks are saying that one more thing is coming. We got another dip in the economy prevails or professors right. In terms of what jim said, i think jim is about 60 to 70 right. I think you continue to stick with those stronger Balance Sheets that have been working but that cant be your whole portfol portfolio. You can own microsoft, apple you can own johnson and johnson and Procter Gamble and i own those stocks im also buying and ive owned some other stocks that have been beaten down that i think have a great opportunity to perform. Its rotating or not rotating youre talking about alphabet and facebook these have been big winners. They say they are running out of head room. How much can you keep raising price stocks jpmorgan are doubling down on call for rotation. Morgan stanley still embracing cyclicality. Where are we is it time to leave some of these stocks behind . The microsoft, apples, google, amazons, facebooks and go into those cyclical areas that will improve if you think the economy will improve i think the fang stocks are secular growth those names youre talking about are trading anywhere from 25 to 35 times earnings. The only one that i would say profits in is amazon that stock is going to struggle because they will not have operating leverage because they are spending so much money this year for good reason. As a stock price or the stock in general, i think will under perform. I love the cloud theme i dont think that goes away. Jim, is it the time right now to take some profits on growth and put some money into value and you can define whatever individual stocks you deem as value stocks but we know the kinds of stocks that im talking about. Steph was talk about some of them too industrials and energy we can talk about the financials in a moment. Well tease that ahead how about the notion of taking some profits and having a higher concentration or higher exposure into some of those so called value stocks the sthort answer hort answes the key word youre using is some you dont want to take all your high flyers and get rid of them. They should continue to do fine. You should take some of those profits and go into these stocks i gave you the comparison earlier. The belief that the second wave is not occurring right now maybe it occurs in the fall. Maybe it doesnt occur at all. I dont know until and unless you get a second wave of the virus, then yes you should be recycling. Some of the profits from your high flyers into these value names because theyre not going away t