Jim, jon and shannon lets get a check on markets this hour. Stocks are plunging again. Off theirs worst levels and the nasdaq is the biggest loser of the day led by the Technology Names. The dow was up at one point this morning almost 250 points. Now has done a complete uturn and is down triple digits ina big way. Theyre off 425 points thats off the lows of the day the last couple of days, has it made you frightened of what could be to come no. Not at all i think this is healthy profit taking i think whats going on is this massive rotation from growth into value if you think about it, the russell 1000 growth index even after this pull back is up 21 year to date you know that apple and nvidia and zoom are up 340 from the march lows in is healthy i think the rotation makes sense. The reason it makes sense is because the Economic Data continues to surprise to the up side were recovering faster than anybody thought. This is on top of yesterdays data part of consumer manufacturing now youre seeing better job numbers thats encouraging still have a long way to go. Should work better im not abandoning technology. They could take a pause and maybe the new leadership will be the cyclicals for the time being. Is this, jim, a matter of new leadership, to so to speak. We highlighted so much its been within the s p 500, technology, Consumer Discretionary and Communication Services that have far and away been the leadership in the s p 500 and amongst those maybe six or seven stocks that have been powering the gains we have seen this show play out in the past. It never really comes to fruition i voiced my concern earlier this week. You want that rotation to come during a position of strength in the market if it simply the value names dont go down as much as the Technology Names in this rotation meaning the whole market is coming down, thats pretty much cold milk for me a lot of these value name, you look at financials, they are still way, way under their highs. They are down on the year bp same is true of energy a lot of material stocks as well i hope our watchers are not getting freaked out. Many people have been saying were due for a correction. Wouldnt mind a pull back to put some cash to work. We cant fall into this trap of saying the sky is falling. Im not going to buy stocks. I want to point out last week i said that visa is a name id like to add. Visa should perform nicely in that regard. Im happy to have picked it up at 201 today they are the ones that led to the upside what exactly goes on the Shopping List of your constructive it doesnt feel like the a panic right now. Interest rates going higher. There are other parts of the stock market that arent selling as much. Its a healthy pull back variety. What goes on the Shopping List whats going to be here is theres going to be a pull to into these names i continue to feel this is a defensive trade. Maybe you feel better about buying it after a couple of days of a dip more importantly, i think that you do want to make sure youre looking at the cyclical sectors and looking at Quality Companies there. I think the Shopping List is not all that differentbut perhaps this rotation away from technology will offer people the opportunity to look outside of the tech sector and Communication Services, for that matter, to other parts of the market i think this creates an entree for investors to become a bit more diversified it probably offers an opportunity to have discussions about diversifying concentrated positions in the faang names and being able to put that money to work in other areas of the equity market. Growth in general creates an opportunity for materials and industrials. You brought up the faangs thats where i want to take the rest of this discussion in the beginning part of our hour john, theres been a lot of made specifically in some megacap tech and Communication Services. Nous been kind of reported on by the wall street journal as well about Japanese Investment conglomerate soft bank being one of the largest players in single Stock Options tied to Megacap Technology stocks. It could be in the billions of dollars worth of exposure and thats been driving the market here is a graphic were showing viewers right now. What i want to tell you is as of june 30th, according to regulatory filings, soft bank had massive positions in big names like amazon, alphabet, adobe, netflix, microsoft. Its a who is who list of all of these megacap names. What is happening in the options market, jon, that is causing all of this and is soft bank really to blame i know what you read and what you intuit last week is this hedging. Why are we seeing so much volume and why is volatility picking up to the upside in the market. In other words, we werent melting down last week but we were seeing volatility move from the vxx from 24 last week to 27 on friday and today because of yesterdays action and today spiking into the 35s it seems the reason was just as the Financial Times has cited, there were out sized bets placed by soft bank bets on these individual names everything from apple and tesla and alphabet, facebook, you name it anything that would be somewhat faang related and in particular in tech. Now, what that did was it caused the skew that we normally see where out of the money puts, for instance, skews higher than calls. The calls were skewing to the upside as well there was nobody that wanted to provide the upside because apple was making that extraordinary move into and after it split so was tesla as those happen, dom, we saw a lot of folks basically panic whether it was soft bank or the marsh of the ants as well. All the the little traders that followed in on some of those big upside move, most of those little traders arent the ones that are the catalyst for all the buying that had. When ever we talk about people making these out sized bet, somebody provided that access to the markets. Its the likes of deutsche bank, morgan stanley, jpmorgan, go Goldman Sachs that becomes a feeding frenzy. Nothing better highlights that than tuesdays action and the reversal that we saw very aggressively yesterday when they more or less just pulled the rug out from under the market. Right now, id say that much of what we saw on that run up post those splits that i just spoke to, as well as these sell offs now yesterday and today is because of the absence of that big whale. Thats what the Financial Times called him the soft bank trader, a whale. We know our viewers and listeners are trading professionals. They know what skew means. Youre saying there was a Huge Movement in prices for similarly priced call options versus put options. People started to pay a bit more on the call apgoptions side we saw soviet unioigns of that last couple of weeks ill turn back to stephanie. Given the idea that the market has manifested the way it has now with all of that options activity and hedging activity and everything else, what do you do with Technology Stocks . Is this the buying opportunity do you go back in . Are you nibbling what is the strategy there well, i think you can be selective. For example, i was buying broadcomm earlier this week. It didnt feel good yesterday. They had a great quarter last night and they are benefitting sfa substantially from their wireless business. Its going the grow 50 . Thats all apple its 5g. I still want to own the cloud names. The 5g names the data center names. I dont think this is the buying opportunity though for the mass of tech. I dont think that this is the were over just yet i think this pull back could last a little bit. I think this rotation really could have some legs i have been saying for a while, you have a barbell owe o you own the secular growers and you want some of the cyclicals i will be a buyer of some of the Technology Companies on the pull back theyre up so much from the march low. Jim, i know that they are up a lot. Apple is now down marketedly from where it was just three days ago is it possible that apple can go down say another hypothetically five, ten or more percent given the pull back we have seen in those shares let me move on from the obvious answer of yes. Let me say this, im not worried about apple or microsoft or amazon falling out of bed. First of all, i dont think its likely where i think we should be talking are some of the other high flyers that got way too ahead of themselves. Its not that they are bad companies. Theyre going companies. Im talking about tesla, zoom. These are Fabulous Companies we were on two days ago, i think tyler was on and were we praising if virtues of zoom. It was up 44 that day it was up 7 fold on the year one of the things i talked about on wednesday was you have to ask yourself at that price, whats priced in. My thesis was too much good news is priced in more good news that can possibly happen over the last couple of days you have seen those two stocks, which in my opinion, got into a bubble territory, pull down quite a bit. I think theres probably a bit more to go there they got so high they sucked in buyers on their way up those buyers, some of them will be looking at losses right now and saying, what did i do . Those names could be ones where selling begets selling back to your original question you look at apple and you see their raising their production for the year 5g is coming out their multiple is not egregious. I wouldnt say that by any stretch of the imagination not in a 0. 6 . Theres a small hand full of stocks you have to worry about i seem to remember you maybe being a trader, trafficker in call options tied the zoom have you done anything with that position that trade that triggered whether it was i got zero hedge tweeting me now. Its not soft bank i dont know who the whale was that triggered the trades. All i know is that particular buying activity, billions of dollars of additional upside pressure on the markets basically pushed a lot of folks like me out of some of these stocks you just couldnt justify it zoom, tesla, juniper, theres a host of stocks over the last three or four trading days i had to exit either because they just became way too extend eed and ta call skew was so extreme again, im throwing this back to you because youre the one last week that really noted that first when we were looking a t this, you said, is this just hedging or what the heck is going on why is the vxx moving up so dramatically at 26 while the market was flat to rising. Its willing to provide that upside call speculation except at very, very dear prices. It goes back to getting more of the men and women back onto the trading desks at jpmorgan, deutsche instead of these pods all over the country as well as the trading floors riep right now what you dont know really could kill you. I think a will the of lot of usg at the trades saying whats going on the more uncertain people are, the less willing they are to provide that access to the markets. Again, that skew then gets really wide. Im going the take a look at this particular debate about whether or not the markets should be bought at this point or whether or not were going to revalue things and say maybe were due for a pause. Dan has a note out there saying the sell off is a speed bump on a path still higher for tech stocks ahead he says we believe tech stocks could still go another 20 to 25 higher looking ahead we view pull backs today as opportunities to own the secular growth stories in cloud, psyccy security and tech faang. Shann shannon, im going to turn to you for this one the bullish argument is this is a pull back that should be bought is there is ae nar owe managing peoples money where youre out there nibbling and buying because of the pull back it depends on where youre starting your position the challenge with the names has been to jims point, these arent the necessary the names that are distressingly over valued these are companies that have grown into their valuation because they executed over the last six months. Not just as a defensive trade but they have been executing on the top and bottom line. I think if you look at your clients portfolios or your personal portportfolio, look att in terms of where is your exposure theres certain things you can could invested in where you have out sized technology if youre supplementing that then youre probably over exposed in this environment where we see the potential for some of this rotation. However if you took a lot of money off the table back in march or youve been in fixed income which is a difficult place to be right now, youre looking to add incremental risk, your time horizon is the next several years, were anticipating Economic Growth to improve. I think that you could be nibbling here but if youre trying to time these trades just perfectly, you know, in a name like microsoft, youre probably going to be enjoying being an investor for the next five years. I wouldnt with so worried about making sure youre getting it today or tomorrow or next week on a pop. Lulule lululemon has been downgraded. These are tactical moves that have happened because of the run up is now then a scenario where the bears can say you know what, its time for the pause . Those have different drivers. It comes back to looking at the particular company and why they have done so well. Lulu, for instance, i dont own it its top of the line retail. Their demographic has been disproportionately unaffected by covid job losses if you look a at each of those companies thinking about the potential for those stocks to continue to rise in price and potentially expand their multiples, we have to look at it from a stock to stock basis. However, to stephs point earlier in the show, if this value rotation, this maybe rotation or baby rotation as im calling it right now because we dont know these are absolutely high growth names are going to be sources for cash for people reallocating within their equity portfolio. At this point its about rel tifr opportunity stephanie, we talked about broadcomm but you added some mcdonalds and nxp semi. You also sold out of paypal. Interesting moves. Why . Im trying to buy low and sell high. I was buying it at 100 ink its had a nice run. I love the secular story but its a bit rich for my blood thats why i did put it into broadcomm and nxpi i think the auto is just beginning. 14 of their revenue is tied to mobile payments as well. I like their mix and Customer Base i think theres margin upside. The stock is like flat on the year im trying to get stocks that have a lot of upside that havent run. Lovely Company Great management team. Great balance sheet. I wanted to take somegapes there. Put it into mcdonalds which is lagged its trading at 33 times forward. Its not cheap those earnings are trough earnings as you reopen the economy, i think the revenues will come back i think the margins will come back its Great Management Team good product cycle im trying to buy low and sell high you mentioned zoom, also tesla. You also sold out of a number of stocks and call positions beyond that as well can you take us through the other moves made there sure. Adt. Exited chegg but i still have options on it. What i was doing was in many cases taking off some of the direct exposure with the equities and going with the stock surrogate which is options or option spreads. In some cases, in fact, the last three that i named, i exited those positions completely didnt simulate a long position over on the options side of the street as far as options, ino, lrcx, tilray a lot of options over the past three or four trading days im feeling better about it. The sell offs were so extreme and tesla is once again kind of falling into that category where it was 5 30 when they announced that 5 billion raise on tuesday. Today it broke through 400 pretty hard. Thats looking a little more interesting again. All right this is just the beginning we have lots more stocks to talk about and trader moves to make sheer. Transportation stocks coming off the worst day since june some of our experts own stocks are in that Industry Group that debate is straight ahead on halftime report. Were back in two minutes. You can go your own way go your own way your wireless. Your rules. Only Xfinity Mobile lets you choose shared data, unlimited or a mix of each. And switch anytime so you only pay for the data you need. Switch and save 400 a year on your wireless bill. Plus, get 400 off when you buy the new Samsung Galaxy note20 ultra 5g. Welcome back what youre seeing is a look at the markets right now. It is red. Very much so but ill point out that at the lows of the day, the dow is down over 600 some odd points were down about 356 right now yes, its still deep in the red. Still very, very much so off the session lows the nasdaq off by 2 just about having its particular declines on the intraday basis the russell 2000 out performing. Lets get to the headlines with sue. Good afternoon. Here is whats happening at this hour ahead of the labor day weekend, the tsa is reporting the most daily passengers through its check points since the pandemic began. Thursdays total of 878,000 people is more than ten times the april low but it is down sill 60 from last years level. Spain and italy reporting the highest number of new infections in a singling day in some four months moments ago france reporting nearly 9,000 new cases the countrys largest one day increase so far. The led head of the world Hh Organization says vaccine nationalism will prolong the pandemic and renewing calls for United Global response so far the u. S. Is refusing to join the w. H. O. s vaccine coalition. Off the coast of sri lanka, a Burning Oil Tanker carrying more than two Million Barrels of crude. The fire has been contained away from the ships cargo and the risk for an oil spill is low thats the news update this hour back to you. What is the dynamic thats playing out. Dow transports down again u. P. S. And fedex are the biggest names both rebounding today. Analysts said some of those declied declooins are profit taking. Stocks gaining 50 over the past three months both had holiday level volumes