Action Toll Brothers and stitch fix stocks are moving. Well break down the trades straight ahead we start with target practice, folks. Looking into next year more firms putting out 2021 s p forecast its quite a range, citigroup 3800 three percent higher than now on the s p at the other send j. P. Morgan 4500 about 20 percent upside so folks as we gear up for next year, which camp are you in guy . Are you at the low end 3800 or closer to jpmorgan. I will tell you what im in i love Tyler Mathison. Nice to see you. Youre the man. Thanks for being here tyler. Tyler, what was that show boldly go where no man not star tr trek you a fan . I never was a fan thats okay. Nor was i chauvinism notwithstanding, for the first time in History TodayGlobal Market exceeded 100 trillion of market cap, 115 percent of global gdp and s p 500 now about 180 percent of u. S. Gdp just ridiculous numbers. So i understand why the market is going higher, i get it, but id about in the low end of that camp, tyler. Low end, closer to citi how about you, tim playing the Tyler Mathison bye camp if you look at tell me where the fed will be in terms of the language, dont think they will do a lot with rate but may start to guy in 2021, thats where the market going to be, i think were going to be in the upper end of the range i do think you have a dynamic here the whole reason we have equity to global gdp ratio because every central bank in the world push you out of the risk curve minute that changes i dont want to be anywhere close by but in the short to mediumterm we have a covidhealth scare dynamic that pervades the world and in this country were arguably peak maybe going higher, point is, theres very little room for Central Banks to change and with that dynamic with normalized earnings in 2022 will give street analysts ability to upgrade dont want to be near the market when the step back when we get to the normalizing level, equities will be very, very expense ifr at that point. Last time i saw you nathan you were in scott walkers backyard you had a dog with you is it a maltipoo yeah, maltipoo and im going to give you a multifacetted answer, tyler, you know, its interesting investors are fairly optimistic looking past the worse of this coronavirus that we have rage ago cross the country raging across the country and plantet, whats going on now is at heights worse than march and april and theyre looking towards obviously these vaccines i guess it would be too easy to think these vaccines are going to come in the sort of numbers and with the, just kind of the ease that were expecting to get to tims normalized earnings in 2022 in a line that goes like that. If you look at s p 500 up 15 percent on the year nasdaq up 40 percent and russell you see and say were discounting a lot of good news i look at s p 500 trading at 22 times above five year average of 17. 5 and ten year average 15. 5 and you need to see that e come up to get to ane valuation set up that really looks appetizing and good for doubledigit returns. Id expect early 2021 volatility retesting maybe some of that 3400 and then you get that 20 percent push up to 4,000 and some of those targets up there once we have more clarity on the vaccine and what it means for the global economy. Maybe rough spots early and then move towards 4,000 karen bring us home what do you think . Interesting, nobody was down on the numbers you cited for street analysts. Im always optimistic. I am optimistic now. Even if we see hiccups in the distribution of the vaccine and how many people take it and how helpful it is, i think it will be tremendously positive for sentiment even if companies dont yet have the traffic that they need to get back to where they were. I still think people will be very bullish i will be bullish. I think of the portfolio i have, if i dont think something will go up 10 percent then i shouldnt own it theres enough risk in the world. If you think theres down side and less than 10 percent upside probably isnt a great risk reward so that would put me in the camp of at least ten percent. Two things i heard was interesting, guys initial kick off point about the total value of Global Equities and total value of s p 500 being greater than the gdp and then dan your point that theres a lot of earnings anticipation built into where stock prices are today lets kick that around a little bit. Guy, do you want to lead yeah, absolutely, tyler i want to be optimistic as well and i understand what everybody is saying and historically markets do go higher but comes down to you cant get there from here, echoing what dan is saying, maybe we get to 4800 some Time Next Year but i dont think its a Straight Line from where we are now i think you have to look at at least 4800 on the down side to flush people out before it goes much higher if you think the market will go unabated to those levels is foolish, and i dont think anybody saying that here, i dont think the analysts will say this as well if you look at citi, tobias on the street thinks theres hiccups early in the first quarter. So i dont think its a Straight Line to anywhere in the 4,000s from where we are today. Yeah and its funny, because were talking about s p earnings and talking about targets on an equity indices, were not talking about what did it take to get here. I know tim mentioned monetary policy, thats going to stay easy for a long time, what else did it take . Trillions and trillions of dollars tacked on to this countrys deficit at a time hospitalization and deaths and Small Businesses going out of business, lives and livelihood, literally are at highs or lows and its not particularly good theres going to be a lot of scar tissue on this economy once we get on the other side of the vaccine. Structurally high unemployment i know on friday that 6. 7 looked a lot better than people thought bouman when you take into account all those people who no longer are looking for work or disrupted by this pandemic its a much higher number and we know from the Global Financial crisis it took years and years to get to a normalized sort of level. To me thats another thing with the economy its easy to do discounted dash flow analysis and get this valuation and talk to where the s p 500 is trading our economy is going to be feeling nasty pulpitations for at least the balance of 2021. Karen, you get the last word here i still come out to be bullish. I dont often disagree with guy but this motion of the markets being bigger than gdp if we think of gdp as revenues theres light of thing s that trade at greater than one times revenue, thats not a crazy statistic its just that we havent been there before and we havent had ratd theres either, its a recipe for the upside. Thats a good way to think about it gdp as a revenue stream and stock values are a function or multiple of that our next guest says get ready for regime change for stocks, hes chris harvey wells fargo head of equity strategy, welcome g to have you with us good to have you with us you heard us discuss the s p levels overTime Next Year and your call, 3850 sort of towards the low end. About a five percent gain from here why do you come to that conclusion and what do you see . So tyler, where we fall out is we think you should expect midsingle digit returns for the Broader Market but when we look at small caps and risk we think you should get double digit returns. If you look at large caps, performing exceptionally well, earnings have held up much better and we just dont see a ton of upside with large cap when we look at small caps numbers are down, valuation is relatively attractive and you can see double digit returns, so for us its about relative value and opportunity than looking at market direction and large caps. Lets talk about regime change, i had one in my marriage that ended well going back a few years, regime change is not always a bad thing, folks, lets talk about what you mean when you talk about regime change in stocks for 2021. Well, sorry to hear about you. With regard to regime change, what were talking about is many players have got Long Duration, theyve done well with higher momentum and you go back to 03 a and 09 you had a recession and people ran for cover in Long Duration assets and trades but what happened is were on recovery on the edge of a very robust and durable reinflation trade and people will shift from hiding to getting more economically sensitive and look to play offense more than in the past typically when you have that occur its a very aggressive move and happens in a very short period of time so we dont want to stick around for it we want more exposure to smaller caps more sicyclicality and financias and higher covid plays do you think the stayathome plays, the stocks that have done so well this year, are going to have a relatively less favorable year next year the zooms whatever. Thats exactly right. With a lot of these companies, we compare things toto 99 but valuations then were off the chart and fundamentals werent there here valuations are pretty high. Theres a lot of goodnews priced in. When we look at opportunity when were marginal investor we find better opportunity in the margin caps and cyclicality theres better valuation and if you want to make zudouble digit returns u have to put more risk thats not uber or momentum names you want to use these places as a source of funds. Tim you look like youre ready to jump in here with a question. Always ready to jump in, tyler, and always ready to talk to chris about this. It sounds like when you talk about regime change and more cyclical stocks and banks and even small caps this is a broadening of the market rally, chris, this sounds very bullish to me. Is your outlook, which is somewhat muted, youre not negative, is it a function of market technicals and sheer weight of the companies youre talking about. I love the market we have right now, a lot of the stuff more economically sensitive is outperforming. I think you hit it on the head what you should expect is, you should expect really big returns, very positive earnings revision, very good relative growth in your average stock, when you look at bigger or larger cap stock theyve really done quite well, in some cases theyve benefited from this, hard to benefit two and three times so theres going to be a rotation, rotation, rotation again, theres nothing wrong with a lot of these larger cap stocks, we just think its very hard to make double digit returns from these things. Chris, thank you very much, we appreciate you being with us, as always have a good rest of the year, see you in 2021. Thank you. Guy, any final thoughts here . Yeah i have a few final thoughts i love this whole regime change thing, as you know theres regime change in nfc east as your club goes down glorious tonight against pittsburgh youll know what i am talking about. Number two i hope you had a conversation with your son about outing him on National Television and this dollar that continues to get smacked in the face, i its a tailwind for Broader Markets at a certain point its a head wind i understand 100 what karen is saying, im with her one problem with global gdp you have Revenue Growth in a lot of these companies but no Revenue Growth in gdp, quite frankly, i think its going back the other way. Back to you, todd. Well try to smooth things over with my son, mack lucky he didnt see that were going to take a quick break here you can read all about wall street 2021 forecast including new note from Goldman Sachs saying chances of a pullback have increased and coming up palantir top of the tape today. But first, check out stitch fix stock surging in the after hours on earnings, is it time to sign l wel debate when fast money returns. I felt like. I was just fighting an uphill battle in my career. So when i heard about the applied Digital Skills courses, im thinking i can become more marketable. You dont need to be a computer expert to be great at this. These are skills lots of people can learn. I feel hopeful about the future now. The we have to find just anosomething else. It. Good luck what does that mean . We are doomed. [laughter] thats it. I figured it out were going to give togetherness. That sounds dumb. Were going to take all those Family Moments and package them. Hmm. [laughing] that works. Welcome back to fast money, everybody. Check out shares of palantir, it topped the tape today on news of a big deal josh with the details, hey, josh reporter so, tyler, a new deal for palantir. Cnbc, and let me bring you the details, can confirm that the company has won a deal with the u. S. Food and Drug Administration this is a threeyear deal worth 44. 4 million, its going to allow the fda center for drug evaluation and research and on Oncology Center of excellence to use the companys software to integrate and analyze data, specifically, helping the agency with drugs including possible covid19 treatments, palantir shares shooting higher it went public in september from first day of trading now up 200 percent. Ceo who cofounded the company with others, provides Data Analytics software and services to Government Agencies like the department of defense and sells to company like air bus and bp reported Earnings Results last month raised revenue forecast for 2020, 44 percent back to you. Thank you very much tim, do you hold palantir . Yeah. You own it . Yeah im long on the stock. Yeah, ill tell you what, first of all, one of the dynamics we should be hearing more about data is the new oil if you think of the world 20 years ago and strategic importance, its all about the power of data. In terms of largescale Software Enterprise vendor whos had the ability and sense of eco system to dominate in a a. I. Driven world have a mathor major advantage. Palantir with 15 New Enterprise customers. Yes we know about the large u. S. Army and naval contracts and now the fda. They are a standard that i think very few people will be able to compete with when you have these kind of clients only breed more success. Software companies trade at absurd multiples is the caveat here certainly this company came to market and flathrashed around h caught five over the last six weeks, scary for investors, but this theme is something you will continue to see and into reason palantir isnt at the head of the line. This is a stock that came out few months ago and didnt do anything for several weeks and as tim pointed out as you look at the chart over there it has taken off like the alps. Yeah it really is quite extraordinary. I dont follow it closely. I saw the 44 Million Contract over three years i also saw the 7 billion change in the market cap today. Seemingly on the heels of that 44 Million Contract which is kind of a astounding to me i know its overall growth i hear what jims saying, it caught fire. Fire can trade at any prays. Im not long price. So im not long but certainly wouldnt short it. Dan are you skeptic at direct listing price at 10 and then went sideways for a few weeks, the gripe was this is a tenyear old company on a gap basis is not profitable, coming to market in a kind of new sort of way with that direct listing but people didnt seem to care so karens point is a really good one, 44 Million Contract adding 7 to 7 to million in 8 million in market seems ridiculous, theyre doing what theyre supposed to be doing, but trading 36 times sales next year expected only to growth 25 percent. I dont care if you add one or two dozen enterprise customers if theyre 45 million in three years will take three decades to grow into that valuation, with this attributing half the market cap of ibm id say this is bit of a bubble here im not telling you it cant continue to inflate. Youre seeing it in a lot of other Enterprise Software companies but it cant grow to the sky. Tim, quick thought, i see you shaking your head. Never shaking my head at dan. The concept that this is just 44 million fda contract is wrong and if anything this buzz puts them in the center of everything covidrelated, they helped to determine toxicity problem in Hand Sanitizer few weeks back they will be involved with the fda hand in glove as vaccines get approved thats part of it. Think of the drug stocks in the covidbringtomarket cure thats part of the buzz today. Again, its the role they have with such strategic and massive clients that makes this a bigger headline than the 44 million. Folks, thank you. Were going to take a quick break. Coming up we have an earnings play, stitch fix Toll Brothers. We got the after hours news on them and well bring you the big headl headlines from those reports. And fast pitch on retail does this redhot stock have more room to run well bring you the next when fast money returns a higher risk of strokeive with due to afib not caused by a heart valve problem. So if theres a better treatment than warfarin, im on top of that. 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