Record high today, up more than 17 this year. Check out the big tech names hitting fresh alltime highs in todays session, apple, microsoft, facebook, amazon, netflix all marking new highs. Is this headed straight for a giant iceberg, guy [ laughter ] when you read that, you hesitated reading that this is the bubble in my head literally said should i read this or should i skip over it, titanic tech run headed straight for a giant iceberg. I went with it lets go with the metaphor. I am a fan of leo i know you might find this propostrous but leo is a huge fast money fan we should collectively give a shoutout so i was talking to the great dan nathan earlier today and we were just talking about the move in amazon. Amazon is up 3 today. Amazon has added this month which i think today is the 9th of july. Just this month its added almost a quarter of a trillion dollars to its market cap. I think there are only 22 companies in the s p 500 that have a market cap of a quarter of a trillion dollars. Its a staggering thing. If youre watching this and if that makes sense to you, thats fantastic. You understand it a lot better than i do. But at a certain point the chasm between growth and value has to correct itself unfortunately, i think the correction is the nasdaq giving up the ghost what does tip that off, steve grasso, grasso you could have thought that when amazon crossed 3,000 for the first time last week and missed out on the latest 200 points to the upside or so. Its funny you say that because im looking at a chart back to april. Thats when amazon became overbought it rallied 56 from that point until now. So its been running at or around overbought for months now and the problem is people want to buy the market, they buy large cap tech, they buy growth, they buy small cap tech. But to guys point, they dont want to buy value. I dont know if that gap between value and tech can narrow until theres a vaccine. So tech will keep marching on higher you could have some volatility, a correction, but i dont think youre going to have a cat th cataclysmic fall off a cliff people take that money and put it into growth, end of story. For some investors, though, stocks occupy or some big cap tech stocks can occupy both growth as well as value. Karen, you probably are in that boat when it comes to makes like microsoft or an apple. But at what point does that stock migrate from value into just simply growth right well, i am long microsoft, apple, el alphabet, some facebo. As the market gets higher, theyre not as expensive relative to the market as they used to be kind of, which does and doesnt make sense as rates go down, multiples expand, right . They are also still, though, areas of growth. Even with the pandemic, youll see some of them with tremendous growth i dont have another alternative is also a big part of it i dont know where else to put the money. I think apple has run a lot. Its certainly not cheap especially when you think about the hardware part of the business but if you think about the Services Part of the business, its not expensive either. Alphabet also i think is not crazy expensive but i dont have any other better ideas im kind of just sticking with them if i could answer one of your earlier questions, when does that divergence start to correct and converge between growth and value, i agree with steve, i think if we get either a vaccine or a cure that really works or we see numbers start to come down dramatically, then i think that value will really start to get some momentum. We saw it briefly a month or two ago and then it really petered out. Thats what has to happen to get those two sectors to convert. Tim its haircut day, its exciting, my first in five months look out tomorrow. It looks fine, but its the back america doesnt see the back its long back there. Theres a huge covid party going on in the back obviously we have to be careful about how we congregate back there too. Were going to get rid of it in terms of the nasdaq, the numbers are 24 outperformance to the s p were talking about growth and value. Were talking about tech and nontech you also have to be careful what the definitions of tech are. Yes, amazon and aws as a highgrowth tech business, data center, et cetera. But what is ecommerce anymore ultimately this is where most commerce is getting done you know when best buy does business, do they become a tech story . Are they a specialty retailer and big box . The recharacterization of the industry is something were going through now and the former definitions dont mean a whole lot. The chasm between growth and value is somewhere around 900 basis points the question is and john woke from wolf was on yesterday talking about how financials need to do something for the s p to have a decent year. Basically nine times in the last 30 years financials have been down and those nine years the s p was down so Bank Earnings nextweek are really important even for people that think that banks largely are caught in this conservative guide. The Price Performance right now i still this should be something for the overall market to worry about, even though i have been Glass Half Full on banks to be clear. Lorie, great to see you. Great to see you too. Your year end price target for the s p 500 is 2750. Do you think this tech run weve been seeing is regoing to break i think the market as a whole is overextended and tech is certainly nod t immune one of the things weve been looking at nasdaq is the csp data on future positioning were seeing a cyclical area like small caps investors are still very cautious. If you look at nasdaq future positioning, its actually pretty close to historical peak and its continued to climb. We saw general positioning get stretched back in february thats what nasdaq looks like at the moment so to me, i do think theres crowding risk. If you see that crowding risk unfold in the tech space, it will harm the Broader Market that will be one of several potential contributors to volatility this summer. When you saw that crowding back in february, was that preceding the record highs yes. Youre laying the groundwork to retest those highs before that pullback that youre forecasting for later. You saw that extreme level, that peak positioning and s p futures that you did not see it in the nasdaq futures. They werent low, but they werent at Similar Peaks the way the s p 500 futures are. So what the data is telling us is that nasdaq all along through this has been marching to the beat of its own drummer. So the russell, you mentioned it briefly, but the iwm i think closed below 140 in my opinion and i might be wrong the russell has led us to the upside over the years, its led us to the downside it clearly didnt get anywhere close to the highs 135 was the june 11th low, i think. Is the russell trying to tell us something for the Broader Markets . I absolutely think you hit the nail on the head, guy. If you look at russell 2,000 relative to s p and relative to nasdaq, the same way nasdaq is functioning as a defensive vehicle, the russell 2,000 is functioning as a pure cyclical vehicle. In mid may when we really started to see economic surprises pick up and there were a lot of hopes and dreams on this economy and this second wave being avoided, the reacceleration, the reengagement really taking off, thats when the russell 2,000 briefly took off in terms of relative performance but it only lasted a week by the beginning of june it was gone that really coincided with concerns about the second wave of the virus reemerging. Investors were willing to play the russell when those hopes and dreams were running strong but as soon as those started to get question, the hoprussell fa again. It is absolutely a barometer now. Do you think were going to see some kind of stimulus that will serve to put a floor under the market and if so, how big and is that priced in already . So i think stimulus is largely priced into a degree i think kind of getting an extra round out of washington, i do think that would help markets a little bit in the shortterm there have been some jitters on that when it comes to the fed and the stimulus from the Federal Reserve, i do feel like thats gotten generally priced in at this point thats what put the floor on the market, caused multiples to expa expand i think the problem with these stimulus ideas is theres only so far they can go youve really got to see the confirmation of the market data. The market is still really shortterm if those indicators dont cooperate, if theres a lag between stimulus and those indicators perking up again, youre going to have a problem in the market. Where do investors hide out where should they hide out, lori, if your forecast for 2750 comes true on more of the defensive side we like utilities. We think tech stole utilities thunder back down the drawdown now youve got a very cheap sector if you look at health care, thats another one of our overweights. We really think of it as longterm secular growth in terms of the secular growth versus value, were neutral there on a 12 month view but we think health care looks more appealingly valued than tech were neutral on the tech space. Just in case were wrong, we do like to have a cyclical play in our pack pocket. Weve looked at things like financials for commodities the consumers and industrials. We think industrials is probably your best play if the data does start to firm up it just looks much more attractively valued to us and frankly safer in terms of fur fundamentals and financials for the consumer thank you steve grasso, 2750 you think that works out for the end of the year . Im hoping it does not work out for the end of the year. I think you could see a little bit of a drawdown. I dont think its going to be that deep. I think people will rush back in to buy the market. As long as the fed is there to backstop, the market is going to continue to go sideways to higher. Karen, when youre asking about stimulus, did you mean fiscal stimulus or monetary stimulus yeah. I was thinking fiscal stimulus i think weve got to see something by the end of the month before Congress Goes on rest both sides want to give away as much money as they can i think that will put a floor on the market. Lets turn to the other side of the market here among the biggest loses today, banks. The biggest names getting slammed days before earnings seasons. Jp morgan kicking off Second Quarter earnings season on tuesday. The performance, tim, was weak across the board today are you worried about banks for next week . Im worried about the price action and again this underperformance gets to a place where banks look very cheap to me relative to the market. Either the market is wrong or banks are wrong. So i still think its an overly conservative approach to banks i think the stress test, you know, a lot of just confusion around the Balance Sheets, how good they are. I think theres some concern about how the banks suddenly were reminded theyre under the thumb of the Federal Reserve or the nationalization dynamics in the Banking Sector going into election season. The backdrop from the regulatory perspective for banks for the last 3 1 2 years has been about as good as its ever been in the last ten years or at least or certainly precrisis these are concerning elements of how banks are trading. As i mentioned, i dont think the market ultimately can do a whole lot if banks are going to finish down here i think the banks have a lot of bad news priced into them. I dont have any problems owning jp morgan. The price action of the last couple of weeks, two weeks ago if you asked me how i feel about jp morgan, id say best of breed and a bank that i want to own. I dont feel any differently today. I may feel differently the day after earnings but right now my sense is banks have been caught up in expectations thats a tough, unclear road for credit. Lets get more on the banks and bring in christopher whalen. Great to speak with you. Hey, nice to speak with you, melissa. Tim opened up by saying a lot of them are inexpensive. That begs the question, value trade or value trap at this point . Well, i was a buyer coming out of april, especially for my preferreds ive been rotating into them because they were so cheap you could buy income up to capital structure below par and you dont get that very often. I also loaded up on a bit of us bank but frankly, between then and now, i just decided that i still have no visibility on credit you know, your conversation, right . I think thats whats weighing on the street. We had a nice rally. We had jp back at 1. 3 times book at one point theyre still relatively strong, the good names but the weaker names have been suffering. You know, capital one, i even worry about goldman, because we have issues with them and they have high risk franchises both in terms of credit and other types of risk. I think the street has pulled back because we still dont know and we still have no guidance. You know, theres no guidance out there and the street has pulled their estimates back too. Theyre talking about this year. Its really all the visibility we have. What i tell people is watch credit if credit comes in light versus q1, thats good to his earlier point, right, it tells you people are getting more comfortable with whats coming. Right. If were loading another 50 blgt billion on the fireplace for the rest of the year, that tells you well see a big credit loss for 2020. We talk about banks as sort of a monolith but obviously there are many different types of financials in that basket when youre concerned about credit and credit losses, the big unknowable at this point in time, which financial has the most exposure to the most concerning kind of credit to have the small commercial customer which is typically a small Bank Customer worries me a lot, main street, melissa. Think of all the different types of small to mediumsized businesses that have been impacted by covid, right its an enormously wide swath of the economy. As you go up the food chain to the bigger banks, the us banks, the jp morgans, theyre good performers they know how to manage credit im not worried about them but i am worried about some of the narrower businesses like the capital ones that are facing not today but maybe in october and november a big uptick in unemployment and credit costs. Im very concerned about the number of enterprises that have managed to support their employees and keep everything together for a few months and now theyre letting people go. I had a young man serving me dinner the other night in stone harbor, new jersey, who had been a Marketing Executive for a Dance Theater and they had to let everybody go think about that type of example multiplied over the entire consumer Small Business complex. Meanwhile, were going to have a record year in residential mortgages. This could be well over 3 trillion this year, 40 on volume because of the fed. So thats a bright spot, but i think consumer and commercial credit, anything having to d with multiuse commercial real estate that has any kind of a retail aspect to it is going to be in big trouble. Hey, chris, what do you think . Do you think this is more of a macro call when you look at the xlf . Its down 23 year to date when you look at the xlk, its up 18 year to date. Is this less to do with the banks specifically and more to do with investor preference . I think it is a kcombination of the two i think a lot of investors dont fully understand whats coming at us because its not like 2009 this is not a liquidity crisis this is kind of a grinding credit discovery process and resolution process, which is going to take years. I think, you know, when we talk about the 30s and a comparison, we may need help for the courts and for governmental agencies around the country to deal with the dislocation of this kind of credit event its more like the mid 30s. I think thats where we have to focus people, because the strength of the u. S. Economy is that we resolve things like this quickly. We dont let them sit around but i do think, you know between this year and next year, its going to be a tough story for banks. You know, the estimates have earnings down 50 this year from last year. I think its going to be more than that. Chris, thank you. Okay. Thanks, guys be well. Chris whalen. Guy adami, in terms of the most troubled areas in financials, chris, you know, pretty much hit it on the head in terms of the blends exposed to small and mediumsized businesses. That would probably be regional. Yeah. Its interesting capital one was one of the names he mentioned i think weve talked about this for a while, theyre overseeing the have and the have notes s in terms of companies that have done things well and the companies that have just impaled themselves i put wells fargo in the impaled themselves category. They took a 13. 7 billion loan loss provision last quarter which is up 413 year over year. Youve got to wonder what happens this quarter maybe you get a bounce i do agree with tim that jp morgan is worth trading at these levels ill say this and im not suggesting anybody does this on this panel or on the network, but you cant look to the banks when theyre doing well and say what a barometer they are for the broader economy and then discount that when theyre trading poorly, which they are now. If its good on the way up, you got to take the bad on the way down i do absolutely think banks are telegraphing something here. I think one issue, karen, is that we dont know what reality really is given all the stimulus that has been handed out to both businesses, small, medium, even large as well as consumers we just dont know who the depths of the pain is. Right we dont know and i think well get a little bit of clarity this coming earnings cycle, but we still wont know because, you know, things have changed in the last two or three weeks a lot. What theyre going to tell us next week is only up to june 30. Clearly i think giant provisions are coming, but i also think in a name like jp morgan, giant provisions for a while are baked in, and i think not everything is data. Chris touched on mortgage markets. I just think about the last quarter of the Asset Management business think about the Capital Market business think about people are concerned about auto loans not paying. The value of those used autos now, theres maybe a good floor there. You know, even for residential prices are firm and houses are selling. When you try to think about really what is the credit risk of being priced in, it seems gigantic to me that could come to pass for sure, that could but for me, jp morgan is absolutely the best of the best and i think its too cheap i think its an extraordinary franchise. Chris may be right, they could earn well less than half than last year but thats not what makes upmost of the value when i think about a