Category 2 but its still danger it slammed into a gulf coast as category 4 150 miles an hour winds. Well take you lye where the situation is still unfolding sports coming to a stop. Maybe temporarily. Players in nearly every proleague choosing not to play last night in protest of the shooting of jacob blake inwayway the Milwaukee Bucks began the protest. Bucks owner said i fully support what the team is doing and im going to do whatever i can to help them get their message out and try to bring about a change. It sountdds like the nba may be back on today. Everything is very fluid your Investment Committee is here today we got to do a quick recap of these record markets. Green, green, green, green the s p up as well the s p earlier hitting the milestone of sorts plowing above 3500 for the first time ever. The nasdaq, else what, every high is a new report high. Even the small caps performing with the gain on the dow, 247 points even the lowly laggard dow getting in on the action its now the last major index to turn positive for 2020 jim, all the major indexes hitting new highs. It may be a nice media headline if it continues after today. What were looking for a sign is broadening out of the rally. The tech stocks, the apples, the microsofts of the world that go up thats wonderful to the extent youre seeing the transports, the industrials participate. Thats healthy nietds to continue into next week we have seen too many of these head fakes and this may turn out to be another one. The jury is still out. You think its a head fake . The worlds longest head fake if it is. Its a strong date today for some of these cyclicals and financials are extremely strong today. We put together a little chart it shows whats been going on with breadth of the market we can see that year to date, only 33 of stocks are ahead of the s p 500. I bet the majority of those are Technology Names or tech or digital platform plays in the last month, were starting to see some moves some breadth you see month to date were at 41 of stocks in the s p are ahead of the s p 500 what happened in the first two weeks of august, it was much broader. 57 of s p names were ahead of the index. Really a very, very broad move from value stocks and they gave that back in about a week. Now were going to have to see whether they can make up that ground and come back on track and start to really show that they can push through and last in terms of that rally bryan how much is the Federal Reserve jim, go ahead jump in here i want to point out, what kerry is saying is true. I want to see value perform but the fact of the matter is, Large Cap Value is still down 10 year to date. I thought of that number when you said in your opening promo, accurately, all the major indices are up on the year the huge section of the market that includes financials, industrials, energy, its really laboring its not part of the party when i talk about the broadening of the rally and that being an indication of held and might not yet quite believing it, im pointing through that 10 year to date decline on Large Cap Value as evidence number a or letter a if energy that is small and sill there and if financials can kick in, could that provide an extra leg up considering they continue to do well. Of course more stocks go up, more groups go up, then the market goes up assuming that others go up as well look let me clarify what i meant i get your point i agree my question sounded ridiculous let me frame it a different way. If theres a rotation from tech to financials, that could be bad because tech is so big yes, they would all have to go up what are the odds theres a rotation out of one tech, into another versus all of them now participating . Is that a little better . Right thats better. Happy to help you clarify that we have seen these mini rotations including whats going on now today sure we have some tech stocks hitting all time highs 52week highs. Ive got in my portfolio that are down a few percent the market is higher today i dont classify it as either. I have to be in growth now because thats where i see stocks going up. Im a little concerns that we have seen these mini rotations with greater frequencies the sustainability hasnt been there. Some dont make any sense. The market can go up if tech suffers a bit. If tech suffers mightily then because the way numbers add up, youll see some fading of the market i do think well get that test coming into the Fourth Quarter because there was a will the of pull forward in my view from work at home from Companies Find they can do more with technology than with people, in some cases. This put has been monstrous. I think youll see weakness in these tech names that will be by a vaccine. Lets all hope and pray for that do you see a test for sorts coming and if so, do you think well pass i can envision a test for the entire market because its rallied based on the unprecedented fiscal and monetary stimulus that weve had and the expectation that earnings are going to fully recover to 2019 levels in 2021 we also have concerns about seasonality, the election and a host of other factors. China tariffs, that will occur in the fall. I think it occurs when the economy gets legs and actually starts to get traction where investors dont have to pay up dramatically for Growth Stocks remember, a year ago these Growth Stocks were selling at Free Cash Flow mull approximatio 6. 5 today they are selling at 3 to 3. 5 thats because investors are paying up for growth if we have a growing vie ining n where we have sustainable growth, it should be rotation into the cyclical and value stocks let me follow up with that because Goldman Sachs saying while equities, primarily Technology May be having not be an expensive now as they were since 19 99 in the tech bubble, goldman recommends are sticking with stocks over bonds and Interest Rates where they are agree or disagree with that goldman call i agree and the reason why were overweight growth is because these companies are helping every one in coping with the covid. As a result of that, they are having recurring revenue streams, large motes around their business, exceptionally high Free Cash Flow levels apple, 73 billion in Free Cash Flow over the last 12 months we would continue to overweight equities and the growth sector ive got a market flash i got to get to it looks like draft king is popping on some news out of espn among others that nba players will resume playing in the playoffs the athletic matching that reporting saying that according to sources, nba players in a meeting todayagreed to continu playing this postseason but want to find new and improved ways to make social justice statements that after protests after the shooting of jacob blake in wisconsin also saying that players expect games to resume this weekend draft kings up almost 2 now at one point was up almost 3 on this news some reporting citing players that they will begin playing begin in the postseason after the death of jacob blake back to you. Jim, ill get to you a second i shouldnt have gone to rich on that sec questiond question kerry, i want to get in here for a second on that news of draft kings. Draft kings is in an interesting position as are any gaming stocks that you have both a situation where since theres not a lot of sports on tv, thereless games to bet on. Having fewer sports people are witnessing in real life means that the market for betting has gone up. Theres been just a bigger audience theres a lot of marketing thats going on. This is an industry that, i think, is really accelerating its adoption during the pandemic even though they have been very few games. Yeah, i get that it hasnt jumped theres more competition in the space. These are interesting companies. Its an interesting space. Lots of International Competition thats going to be part of the betting movement we are watching them all we have not bought any but i think its an impressive space to keep your eye on. I see wast goihats going on the nba may resume this weekend. Lets take the other huge story of the day a little deeper into the Federal Reserve and what as a historic change to fed policies regarding inflation. Steve is here now with all this and what it means. Steve. Its a historic change by the fed. With fed becoming the first Major Central Bank to put in place an average inflation targeting resegimeregime they they aim for inflation above 2 here is the before and after before 2 was the target now 2 is the average target that the fed will allow inflation to drift moderately above 2 to hit the target over time in another big change the fed added its statement it will no longer operate as if low unemployment means inflation will follow. Inflation has the serious risk of the economy. Inflation that runs below its desired level can lead to an unwelcome fall in lower expectations which can pull inflation even lower resulting in an adverse cycle of ever lower inflation pnd. It suggests a fed that will keep rates lower for longer and could mean near term keep missing the target and seeing Inflation Expectations drift lower. Its trying to break that cycle by saying ahead of time theyre not just shooting for 2 they are aiming for an average it could run hotter for a time its a big deal, steve. Stick around for this conversation here if you can jim, i want to get you back in here how much is the Federal Reserve obviously not just todays move but the move we seen in the prior weeks because as steve has done excellent reporting on, everybody expected this outcome and so we pulled forward the buying on what happened today from virtual jackson hold i think what you just said nailed it on the head. It begs the question why are we up today and the answer is were up on nothing fundamental. Were up on sentiment. Why should low Interest Rates matter it matters because it promotes the multiple on stocks higher. The problem is we have been seeing that now for four, five months and i dont think theres anything different in the Interest Rate environment today versus the beginning of month that would justify a 40 higher price on apple just as an example. This is all fine and good they are changing the methodology but i think its weak tea they are getting it higher. I think what the fed did is a piece of what needs to be done i wouldnt confuse two things that are going on and i can understand why people would mesh it together. Theres an immediate cyclical issue in front of us which is what you just described. The number of people unemployed now. That is stuff the fed and hopefully congress will deal with with policy right in front of us. We may have something new happen in september, for example, a qe program. Well have that debate some other time what this is addressing, jim, is a very long term problem i dont know where you were many the 70s, i was pumping gas i was the most popular guy in town i used to get free businepizza i filled up his tank that engendered this fear of inflation. This is a big move in saying were no longer operating looking over our shoulder at the shadow of i flags that that learned experience and fear is something we must exercise from our psyches and were going to go forward with employment being the bigger metric well look at to keep that unploim rate low and not fearing inflation. I knew i liked you because my dad owned a mobile station in l. A. And i at 9 years old was pumping gas in 1980. We just both admitted child labor and graft on television. I had like 4,000 in my pocket at the end of the day it was ridiculous. I want the tax from that pizza you took from that guy you think the fed is exhausted most of their capabilities here . Well, look, the markets are resting on a couple of issues. One of which is a continued involvement by the fed which i expect them to be very, very aggressive when necessary. If you look at what they have done today, they have cut the funds rate to zero eliminated reserve requirements, lowered the rate on the interest and excess reserves. Its already been exhausted and have had a tremendous impact so the markets really are impounding future impacts from these same tools and my position is that theyre going to be less impactful. Sure, they will be able to lend to businesses. We really need something out of the fiscal to bridge us until economic recovery resumes and that likely occurs when we start getting a vaccine. The abbott news is very significant today. I believe the fed is supportive yet less impactful than it has been vaccine would be more impactful. The fed is definitely a part of this story, here what else do you think the fed might have in its quiver of arrows, if anything . I just want to address the point that a couple of people have made suggesting that fed is really pushing here and perhaps looking at the wrong things. Most commodities, excess supply. You look at restaurants, services, apparel. We can come up with a long list. Labor. Theres excess supply of labor i dont see how theres all pressures that people talk about. Jay powell is well aware of that there are more concerns immediately about price falling rather than price rising despite all the borrowing and the financing that the government is doing. Thats the way we see it got a lot lightly the fed and everything else. Do appreciate that thank you very much. In the meantime, buyers keep on buying, what they have been buying technology staying red hot the nasdaq up another half percent. You have microsoft, qualcomm hitting new highs. Stephen, you have the most tech exposure still every day with goe higher are you hanging on considering selling taking some profits here well, lets call it for what it is. Anybody been in the market for any period of time has to feel were getting a little breezy at this point you look at the multiples have gone from at the end of april, 56 times which is already high. You have to have that gnawing sense if youre staying too long at the party however where else are you going to go . I repositioned some things got rid of some things i bought that were in jims world that worked quickly on the rotation and now arent working gm and ford. I dont see the future being any brighter general dynamics, i got rid of today. Im also looking for stocks that are under the radar and im looking for those. I bought mdla which comcast uses that measures the satisfaction of the employee and the customer i bought another one, smar which allows you to coordinate all workers the work product they are post sass play but they use Artificial Intelligence and platforms in cloud to coordinate Work Activity where ever you are. Those are new ones theyre not cheap but theyre working. I think you ever to be very careful going forward. I expect the Fourth Quarter to have some volatility if biden wins and the congress both houses of congress go to democrat, i expect to see knee jerk reaction down i think it will be much better for the economy and the markets going forward. Than split congress. Its not without extreme caution that i go forward and with that gnawing sense of greed you got smart chief there jim, i got to imagine youre loving this qualcomm run another all time high which was left for dead a couple of years ago. It had some serious legal head winds that its resolved. I said earlier the russell 1000 value down 10 percentage points. Growth up 30 percentage pointed. The point being this, to steves pien point, you cannot look at that difference over the last eight months and say its healthy. I dont care what were talking about in terms of secular trends and pandemics. Thats not healthy it has to safely end by some of the flows going into the value sector those financials and out of the technology that were talking about. Its not Just Technology were talking about. Financials leading the way today. How long has it been since we said that multiple times in a matter of couple weeks transports, industrials, financials, they are up as much as 12 this month. Rich, are you add vising your clients to move deeper into some of these names or sectors . Well, in the portfolio that we manage, were along jpmorgan and wells fargo. We dont see these saectors doig well until the economy starts getting more traction. Were not adding to it were sticking to it with our growth equities. Anybody around the table been buying more financials in the last couple of weeks or days id be a seller of financials jims a buy jim, buy first and stooeephen sl people are counting on the 10year treasury yield to go up. Were at. 74 which is high for the environment. Its probably not going up any higher with the what the fed is doing. The reason behind the trade is the market is expecting loan losses in the Big Money Center banks that is expecting losses to be much greater than they are. That depends on the continued reopening and healthy economic recovery from here thats what the trade is loan losses are much less than expected thats why buying a citigroup at 70 of book value makes sense. My view, i think you sell the banks on any pop here is whats happening you can have a direct listing on a stock to raise capital where wr as before that wasnt really the case youve got powell that has come out and said rates will stay lower for a lot longer take a look what the they have done in japan. Were in the same place. Appreciate that straight ahead, hurricane lauras path, it makes its way through louisiana a lot of tough folks there. They are facing a tough time as well theres a cnbc Global Headquarters were back right after this markets of record highs. Experience the adventure of a bigger world in a highly capable lexus suv at the golden opportunity sales event. Lease the 2020 rx 350 for 419 a month for 36 months. Experience amazing. At your lexus dealer. Expewelcome to camp tonsafun on xfinity its summer camp, but in your living room. Learn how to draw with a minions expert. How to build an indoor Obstacle Course plus. Whatever shes doing. And me, jade cattapreta. The host of es the soup camp tonsafun. Its like summer camp, but minus the poison ivy. Unless you own poison ivy. In which case, why . Just say summer camp into your xfinity voice remote to join. You see the nasdaq has turned a little bit negative now lets