Still lots of questions swirling an tech. Does the turbulent in tech continue, do you think by the way, value has been leading lately and thats a story in and of itself yeah. You know, a whole host of folks said that would happen, eventually, scott. From tom lee to Larry Mcdonald and so forth i dont think the story is over for tech you and i talked about that monday i said i think that we are unlikely to test significantly lower in tech. Yet, here apple is back down on the lows of the last several months, scott. Ive noticed a lot of those value plays that you discussed, for instance, infrastructure plays in particular. Steel, mining, things like that. Getting lot of money flow, a mean a lot thats worth noting. To your point, thats partially why perhaps people are using tech as a source of funds. I dont know how long that lasts. I certainly am not betting that it lasts very long as far as tech being a wreck and value being where you want to be thats the way it is for the last several sessions. Shannon, month to date, terms up 5. 5 . Tr industrials have bone better to johns point, if you look at big tech month the date, apple down 16 amazon the whole space is down double digits facebook facebo facebook 13. Jim said its time to put cash to work, just not in tech. He recommends picking up cheap stocks that are being brought down by the entire averages. He mentioned some of the industrials. I think jim makes a great point. Not necessarily needing to rotate out of your Technology Names which are good long term holds especially be high quality ones but taking money from cash or perhaps from gold, perhaps from bonds, those that have been allocated in a more conservative posture. This is a great time to be adding money into the market we have seen it in flows i dont think the average person who is taking, especially on the institutional side are not taking cash and buying tesla what they are doing is taking cash and either putting it across the market or more likely they are putting it into these cyclical sectors that they think are poised for an economic rebound. The challenge is that it cannot remain limited to just a reallocation between tech and these sip cyclical sectors the indexes get weak people get concerned theres a more sustained correction on hand and we go back on defense which is back into tech. We really do need to see money coming from other places besides within your domestic equity allocati allocation i dont know that were there yet because theres tistill a l on the horizon and obviously a political perspective. I think thats what we need to really have a true value rotation the other part of the story as we witness another well talked about ipo today is money coming out of tech but coming out of the biggest of tech so you can buy the snowflakes of the world and the other stocks that were talking about today throughing the one that just went public. Were talking about new money come sboing into the market, yov to look at the Business Case of megavalue stocks we were seeing buys at these levels with apple, facebook and microsoft. Those Business Cases still are resill yenient Going Forward if new money were coming in, we would probably avoid alphabet, amazon and netflix we hold all those names and were holding those names. Thats new money also as shannon brought out that you could rotate into some industrials. This week we purchased Illinois Tool Works industrial company, Industrial Products and equipment steve, i want your opinion on this value versus growth deal. We got a lot of notes talk about. We may be seeing a sort of a rotation towards value the recent outperformance of growth and value over value broke down last month. Is this truly a turning point now . I think i dont know that its a turning point i do see this trend continuing in the short term. Ive got cut back in some tech exposure ive added some nontech exposure value is such an odd term. Do i consider facebook to be a greater value growing near 30 selling at 30 p e as a greater Value Proposition in caterpillar which is seeing a decline of 56 in earnings and selling at a similar p e. Let me rephrase it. L lets not talk growth versus value. Lets say tech versus industrials. It plays off the point now is the time to put some fresh money to work but not in the areas of facebook or faang or megacap growth fwbut in the caterpillar, in the dows and the 3ms. We say maybe those are the ones that got ahead of themselves. Its time for money to go into the depressed areas. I think that is the trend Going Forward for the next i think its trade i dont know if its another week or two months thats where the momentum is the markets been a momentum market for quite some time not just this year last year and the year before what works, continues to work for a period of time if i look out a year, i dont want to own those industrial stocks because i think the ships are stacked against them the economy is not going to pull out when you snap your fingers i think its plateaued to get vaccine, but youre basically making a typical early stage bio tech bet by going there. Thats binary. I do believe well get a vaccine. What if we dont wheres the greatest risk . Its in the airline and industrial names we dont get a vaccine, the entire market is at risk i agree the trend is there now i just think if you look out over six months or a year, that your better suited in growth than in the industrial names i hold you i bought some i turned my dow calls into dow equity i added to dover i do think youll see inflation down the road at some point. Thats what you need you got to believe that fed which most believe is largely out of tools will be able to achieve that 2 plus inflation without that those names jim mentioned arent going to work there is a fair amount of skepticism and the market would be telling you our first guest is taking some tech profits and buying value stocks what does the move you made in the market say about where you believe the gains will be had in months ahead what were doing with our clients and that is we have these overweights. Obviously some of the tech positions as youve seen that large run up over the last six months were going to be takiing some o the the profits from the overweight names not selling out entirely but reinvested in some of the more beaten down and undervalued areas of the market. That could be like a developed and emerging markets or international. We see good valuations there compared to u. S. I think theres a couple of things going on and you have the credit quality where banks have been aggressively provisioning for their loan losses and if we see that defaults are better than expected they could be releasing some of those funds into earnings. That could provide a slight tail wind for some of those then we have the flat yield curve going out for a couple of years. Probably thats going to compress the net interest margins. It will have sustainable dividend yields despite the fed bu putting a cap on youre not getting off the tech train youre just lightening up a bit and looking at the depressed areas where you can see om opportunity. Tha right its our discipline we stick with we still like a lot of tech names. Were not getting out of them all together we got to make sure we replans those and diversify. We did a big rebalance back in march when the market dipped. We put that from fixed to equity as we caught the upswing which has been really great for our clients. Were seeing theyre all overweight so well be trimming away obviously, its going to be largely from some tech names did this week give you pause in any way, shape or form with the snowflake ipo . Im wondering who ining how youe current landscape. The way its viewed today could be different than the way it was viewed a week ago given what snow flake brought to market and how it was received. Right i think its a rapidly changing situation that weve got well see this kind of volatility in the near term. All you got to do there is you just got to be prepared. You have to remember who you are as an investor you dont want to get whip sawed by whats going on in the market you have to remember that if youre a long term investor, youre looking out years and years. I dont get concerned about the recent situations, near term volatili volatility i try not to worry about these things do the things you can control which is make changes at the margin make sure youre where you need to be. I dont know why are we to believe this value trend of late can really be long lasting if the longest term trends in the economy are mostly geared towards Technology Research has shown a trend can persist a lot longer than you think it should or will. Historically speaking when talking about value and growth, if you look at russell 1000 growth index and the way its out performed the value index since 2008, if you go back to maybe around 2000 with the dot com bubble, you saw how there was a sharp up tick in growth and followed by value out johns outperformance i dont know if this signals some sort of over arching rotation into value. We hope so we have been pulling for that for quite some time. You and i a lot of other people i appreciate you being on the show its nice to add a new face to the gang well talk to you soon all right. What do we make of that . Time to trim some tech maybe put it into financials they said its increased the Downside Risk for those kinds of stock. They down weighed the sector to market weight. Its not a popular call. Even people who are saying, pulling back a little bit on faang, steve, were going from strong overweight to overweight. This is a little further down the line its tired. Ive got live exposure its not been the best performer. I take a look at the people that have come on our show Value Investors that have found reasons to buy amazon and grade School Google and facebook they are going into the honeywells theyre going into the ones we mentioned p i do think it continues. What we havent talked about is the political landscape. I would not include banks in that because theres a fundamental change to their business theres loan loss reserves theres assaulted in their business that were seeing by these direct ipos. I hear you. As you own facebook and amazon, alphabet and microsoft and you have this call from barclays today, its not the consensus. Lets be clear theres way, way too much tech bearishness. We remain overweight on i. T. Sort of seen this movie before its going to have a rebound dont get thrown by what you witnessed lately in the market is that the right perspective to have i agree with that were holding those companies. There are some companies that are below fair value in our estimation were holders in this spot we dont feel the Business Case for tech has changed oracle has not done as well as other big tech. It had really good expectations Going Forward. Good outlook and also valuation. As we look at the Free Cash Flow to enterprise value, we saw that it was actually below fair value at these levels. This is outside of the tiktok discussion we said its a buy at this level. We purchased some shares earlier in the week. Talk about tiktok situation no one knows how that will shape up at the end of the day in terms of the broader market, ubs, they say they see the s p 500 trading at 3700 by the middle of next year. Youve had, i dont know, three to four different firms come out in the last whether its days or last few weeks and say 3600 on the s p for this year. Im not sure what you think about that call. Were at 3334 right now with a potentially volatile road between now and november in the context you had a week of Senior Executive of blackstone come out this week on cnbc overseas on one of our enterprises over seas and suggest that youll have a lost decade for stocks over the next ten years. I think the consensus expectations for this year are lower than what you cited. We usually have a postelection bump i think a lot of that has been pulled forward i think looking to nec yeaxt ye, the catalyst for stocks to appreciate next year is the vaccine as you relate but also evidence that this significant amount of monetary and fiscal stimulus with produce reaccelerating growth. I think you get that on either side of the aisle in 2021. I think the u. S. Government will have to be focused on getting people back to work in some new growing industries if you look at the catalysts, you need this broadening out and you need there to be true economic growth. As it relates to financials, the challenge is everybody is talk about this sort of lost or changed environment for financials i think its the opposite of the technology argument. If technology is part of our daytoday lives in every single possible way at this point, why wouldnt you just own technology i think there needs to be a broadening out of the lens to understand that the economy has a lot of different ways to make money in stocks. Its going to go back to valuation. Its going to go back to where you think you can get out sized above index performance and those will be in the areas that havent performed. Thats my view ongoing into next year i think the rest of this year will be pretty bumpy my next says its no surprise that market has rallied despite the challenges that do still exist in the economy welcome back its good to see you thank you im not sure whether the debate is the market shouldnt be up relative to where the economy is maybe its the way the mark has gone up and certain parts of the market visavis tech. Sure. I think we can quibble those things do you disagree with that should tech be a little lower than it is maybe. The narrative that i take issue with is this idea that the market as a whole is disconnected from economic reality. We know what tech has done this conversation ignores the fact that the economy is doing pretty well relative to what people thought was going to be the case youre going to have gdp growth of 25, 30 in the third quarter. The ism is back at 56. This is all suggestive of economic growth. Steve mentioned the airlines earlier. Theyre down the department stores, the office reits the parts of the economy that are doing very poorly are seeing the stocks do very poor he thats entirely what you should expect at the same time you have stock like nike and blackrock and s p are doing exceedingly well p and g and olgate and clorox. The only reason the economy is not doing great, right . Thats fair sfwlp the only reason the stock market is where it is relative to the strength of the economy is because its so pumped up on fed induced steroids okay. I dont dismiss the Federal Reserve and fis acal authoritie and that has a Multiplier Effect throughout the economy which is much larger but lets not pretend this isnt what always happened lets use 2009 as an example the stock market ended 2009 manager like 65 off its low the entire time the stock market was going up, the Unemployment Rate was going up. It ended the year around 10 stocks do much better than the economy would suggest. The recession didnt end until the end of the year. The stock market was already the new high like 09, the Unemployment Rate was going up the entire time i dont dismiss the Federal Reserve has done a whole lot to sure up the stock market and the credit markets thats unquestionably true i dont think we should ignore the fact that relative to where people thought would be the case the economy and earnings are doing much better. Thats fair ill give you that i think thats Fair Assessment you see these stocks and huge gains, does that give you any pause. Do you see signs of 1999 . Im not talking about apple and facebook im talking about the other stocks and should we take a bit of pause as we view that i think its always prudent to pause and observe things going on theres no doubt that tech and the market are trading at levels that we havent seen since 2000. Youll get the comparison. Its important for us to be clear about the level of overvaluation that you see now might be more widespread its not nearly at its core as excessive as what you saw then price to earnings and free and cash flow. For the larger names that were talking about, in the 1970s, i had to check polaroid was trading at 90 times earnings and mcdonalds. Were nowhere near the level of overvaluation. In 30 seconds or less, it sounds like youre a bull on be narcot market right now the buy is to the upside. You have enormous tail winds for the economy and the market you have fiscal authorities in your corner. Youve got the Federal Reserve in your favor. Thats not the say there rbarent technical issues if the economy is going to do well and earnings will do well then the stock market will do well all right good to see you again. See you again soon Home Improvements have surged what about the run for those stocks well debate that next in our call of the day. Were back after this. Incomparable design makes it beautiful. Stateoftheart Technology Makes it brilliant. The visionary lexus nx. Lease the 2020 nx 300 for 339 a month for 36 months. Experience amazing at your lexus dealer. Xfinity is your home for the return of live sports. Welcome back here is your update at this hour early voting began in minnesota today where voters lined up to cast their boll ballots ahead of campaign trips by donald trump and joe biden. Early voting also began in virginia, south dakota and wyoming today. Cvs is doubling the number of drive through coronavirus Virus Testing sites at its pharmacy location. The company says new locations will be operating by midoctober offering selfswab tests by appointment only and at no cost to the patient the virus is surging in europe the spanish capital struggles to contain a second wave of coronavirus cases. The madrid region has a virus transmission rate six times higher than the National Average and authorities are set to announce measures today to try and slow its spread. Well keep you up to date on that story because its still developi developing back to you. Thank you. Traders are making moves jon, youre buying calls tell us. Scott, over the past four or five days we have seen a lot of money flow into infrastructure plays like mittal. Obviously steel maker, biggest steel maker in the world stock has not exploded yet we think its almost like a coiled spring here because of a big up