Mim im melissa lee, this is fast money. Everyone here inhouse we start with the potential warning signs of the market. Major indices with solid gains the do w adding 400 . The nasdaq, not far behind but not everyone came along for the ride check out apple, pulling back more than a percent and a half today. The worlds Biggest Tech Company is now more than 9 off its alltime high hit in midjuly. Thats not all microsoft managed a gain today, but down 10 from its record high last month. So, is this cause for concern or a sign that the rally has actually broadened out, that we can move beyond just these two, you know, generals, dan . Yeah, so, when you think about the moves that the two of them have, okay, technically, they have broken the uptrend in place for most of this year. Thats important in a market where people dont really care much about valuation if you think about how far microsoft and apple have come, they make up 14 of the s p 500, two of the stocks together if you look at the reports that they had, they were fine there was nothing great, there was nothing horrible but they sold off really hard, and i think that is important to note in the fact that it happened very quickly. If you were to have other names join the party, that would certainly be a problem but you talk about the rotations that weve seen, and it has been pretty good. If you think about it, the s p had lows on friday, only down 3 from those highs, with two of the biggest components down 10 . So, to me, i think you can look ate, if you wanted to try to be really bearish, slow market, weve just gotten through earnings, we dont have another fed meeting, if we do see some things start to snowball, the other names join the party, if we were to see amazon, if we were to see, you know, google, which gapped up 10 , fill in their gaps, we could have a bit of a problem right now, i think its okay the other sectors that rallied today will continue their rally . Industrials, officials, consumer discretionary, the markets can hold up . Can i ask you to ask a would you rather of guy wait. Follow the rules. No would you rathering. Im not it would be interesting to ask someone, would you rather the market follow higher the megacap tech stocks or see them sell off. Try that, guy, what do you think . Youre asking it now . You didnt even im confused already. You know what, i was i was doing great until that last part im out. Im out. You are out guy i understand what he meant, though, oddly enough if you had told me on july 20th that by august 7th, both microsoft and apple would be both down 10 from the alltime high, say, okay, guy, wheres the s p 500, i would say, melissa, we are no doubt trading down to that level, 4325, where we topped out last august and we are probably threatening to go through it here we are at 42520. I you this its a matter of time before the Broader Market catches up to what the megacaps are doing. Today, outstanding you agree, karen . I would have thought the market lower, but i think this is much better action. I think that, to see other companies, other sectors sort of join the party, there were some like travel which pulled back a little bit, which is going crazy, and love to see that in banks, love to see that in industrials. Consumer discretionary is still unclear, because we do have the Student Loans beginning to be repaid next month, and so, thats a little less clear to me, but i feel much more comfortable with the market like this i still am short the igb, which was up today i think that high flyer index should have some pressure on it with rates having moved the way they have. Tim, question for you oh think about this, we just talked about the two big ones, okay, but think about semis, okay what we heard from amd, what we heard from taiwan semi, what we heard from qualcomm, the list goes on and on, wasnt particularly great my question to you, and i know you focus on the relative strength of this index when we get to nvidia on august 23rd, i feel like it has the potential to have the sort of reaction that microsoft and apple, because really, just good is not going to be good enough i need to apologize first, because i have taken this desk off the rails and the unacceptable. Its unacceptable let me answer dans question and give the show back to melissa, please sorry look, as ive said, we havent made new relative highs on semis since nvidia reported, and the qs, as well. If you look at apples chart, it hasnt broken through to the downside, the 100day moving action, september of 2022. We know where it all went. And on some level, the big stocks in apple, notably, theres a refleck fivety to all of this, and a circular nature can they pull down the other stocks if its aggressive enough of a selloff and i would argue that apple is Discretionary Spending its not a tech company. Third straight quarter, they pulled a lot forward i think it doesnt bode well for discretionary. But the broader economy is in a pretty decent place, so, i actually dont think its a lot to be alarmed of the velocity of the move, its pretty major stuff that weve seen, but seeing rotation, that aggressively, means a lot of people have been outside the broader economy and need to get there in a hurry to pull a page from karens playbook, though, some would argue that those valuations, like for instance, in apple, should never have gone to 30 a pullback is natural and totally within the range of normal behavior for the stock, because it should not have been at 30 to begin with on a forward p ee basis, anyway. Microsoft, as well. Does it deserve that premium probably not so, the quarter was very good. But not quite good enough. And apple, the quarter had some little nicks in it, whatever nvidia will be really important, as dan said, august 23rd i think if it is anywhere close 11 billion, thats bad. They have to beat, in other words. They have to beat they have to beat. Which they would. Have said if they didnt think they would beat it had to be sandbagging if they dont beat, unless they have Something Like, we have such a giant book, we just were not able to fulfill, and well be doing that, but i think 11 billion not hold this stock here karen said that actually the day nvidia reported, said exactly those things and i think today, in small part, this resteepening of the yield curve, which, again, north of 100 basis points i think less than 70 basis points close today, which is, again, an Amazing Movement in a short amount of time i think the markets construing that as positive and maybe in the very shortterm, it is its the resteepening where risk as sets start to get whacked we were saying, the vix open the week at 13, okay, it was just saying to you, there was no fear in the market the implied move in the options market, the oneday move for apple was 3 that might have been one of the smallest moves for apple, especially after this perfect 45degree angle that carter talked about so, the fact that stock sold off 5 in a Straight Line told you where everybody was. They were on the same side of it i think theres a lot of other stocks like that, but were going to need this sort of Snowball Effect or Something Like that, to put some real fear back in the market to get the vix back above 20, if you will, but there are levels, and last week, he said that breakout level of 176 in apple would be a great place to start adding to that, and it went right there. Microsoft got a level of 300, fill in the gap, maybe, to its last earnings from april back to 275. Those are where you want to buy the stocks which is thats where you want to buy the qqq, if those two stocks get back to those i think i was selling, just not major stuff here, but i was selling some puts down to 160 on apple, based upon the velocity of that move, that vol and those deltas were paying you. I can trade out of that if so, you dont get these opportunities with the biggest stock in the world, the stock that moved 54 into those numbers off of jan 4 low and i just think that if you now look, again, relative apple to the s p, its back to where it was last year. So, all the outperformance is gone does this hardening you at all do i look like the hardening type i thought, you, of all people no, but the market has differentiated between the earnings reports apple, microsoft, had the little nicks or whatever you want to call it in their reports so they sold off they warranted that selloff, they should not have been at that pe, given what they delivered. And we hadalphabet, meta, a different story. Not being rewarded anymore. Thats an encouraging sign the fact that were seeing this rotation, despite the fact, again, apple, microsoft, other names have gotten whacked over the last week and a half s p still 4520 very encouraging sign. I think its going to be relatively shortlived, though, because again, these global bond moves, nothings changed on that front at all and the resteepening of the yield curve, which, banks love today, i dont know how much longer the markets going to like it. Now a lot of people are seemingly talking about some credit event in the back half of this year. Im sure well talk about that at some point. The things to be concerned about in the fall. Higher bond yields so interesting, because we knew it was going to be higher for longer almost like we didnt want to believe that it was going to happen nobody wanted to believe it, and all of a sudden, fitch downgrade, we see a spike, and oh, we better start selling. I know. The underpinning to the me for the bulls in the market are still the same if you want to see a soft landing or no landing scenario, its still there yes thats why i really buy into the story of, its just its the treasury saying we have so much more to sell and were going to be selling ten years, for example, so, we see two tens, to guys point, 67 basis points, down from 103, wherever it was that thats really just a supply and demand issue. Thats it. More supply of tenyear is coming step back and wait or buy them now if they get cheap enough i guess this is what were calling a bearish steepening this is not really, you know, a concern on inflation it is concern on maybe some of the macro, some of the credit. Karen is right, a lot is technical, but the reality is, owning equities, when you can get 2. 5 from tbills thats the biggest problem with everything were talking about, is the stock market is expensive. By any measure i dont know what the economy is going to do. Clearly playing out a lot longer to go into a downturn. I dont think the economy is in a bad place at all a lot of things are ugly i know its a manufacturing recession, but its the equity market valuation thats the problem. For more on where the markets go from here, lets bring in David Rosenberg david, great to have you with us you say its silly season, these days, for the equity markets why is that . Well, i think it goegs back to the comment that was just made about valuations. So i understand the momentum aspect of this market and the technical aspect of it, and we can debate the soft landing or hard landing i would say if you have a soft landing, no landing view, lets face facts you have a 20 multiple on the s p 500 on forward earnings. Thats a 5 earnings yield, and you can pick up 5. 5 in the Treasury Bill market with no risk, though duration risk, no capital risk so, i would say that, you know, when do the math, its a very expensive market, no matter what your macro view is when im talking about silly season, its one thing to have a 20 multiple a couple years ago when rates were at zero. But the premium has only been where it is today 10 of the time in the past the valuations are extreme im not going to say that they are dot com level extreme, but we are in the top 10 of valuation excess that weve had historically and i think thats a warning sign how do you see this playing out then it seems like so many people are all of a sudden, you know, moving to the other side of the boat in terms of soft landing, no landing, they are jumping onboard, we see strategists bumping up their price targets by year end. It just seems that all of a sudden everybody is getting really bullish just when you say silly season is starting. Well, i guess its the its the benefit of having done this for 40 years. So, you see what happens is that the market takes off for whatever reason. And then you get the analysts and the economists and the strat strategists scurrying around trying to fit the narrative. And then the price action. Sometimes the stock market is going to do what its going to do, you know we go back to 2007, for example. Nobody really had a recession in their forecast and everybody was talking about, you know, wheres recession, we had the inverted yield curve, the lags are extremely long and as we had back then as we had today, we had a very expensive market on our hands, and at the same time, we had a ripping rally, you know, from the summertime of 07 to the october 9th high the market absolutely ripped and everybodys scratching their heads. Of course, we know what happened next and so, sometimes people just fit the narrative to the price action, because what else are you going to do . We all know that the market is this ma live lent beast, does not always respond to valuation, its not a timing tool it doesnt always respond to the fundamentals it just sometimes takes a head of its own and its called animal spirit. The reason why the term animal spirits is around is because thats what happens when we have the momentumbased rally, which weve had for the past several months the one thing i would like to ask the group is this, that when the fed is cutting Interest Rates into a bear market, all you ever hear is, dont fight the fed, dont fight the fed, dont fight the fed. And valuations matter, the markets cheap, but on the other side of the coin, you know, the fed is tightening policy and they really havent signaled that theyre done yet. And p you dont hear anybody saying, dont fight the fed anymore. And now nobody talks about valuation. So, its just guy adami says it, rosy in your note, you said, Discretionary Spending in real terms barely expanded in q2 you talk about the market recognizing and not. We talk about a name like disney, or starbucks, or nike, theyre barely, like, unchanged on the year. The market is recognizing, i think, the fact that youre, like, kind of putting out here about Discretionary Spending will a recession be started by a consumer slowdown even with the back draft of the jobs picture, which seems kind of confounding, or might it start from something on the enterprise level . I think its going to start at the consumer level, and i think that well see the first signs of this after the Student Loan Forgiveness Program ends in the coming months. So i think its going to be consumer led i understand the frustration amongst the bears, and ive been on the show before, and the question is, where is this recession already . Wheres this recession already but the thing is, Interest Rates do work their way through long lags and whats happened this year, 100 true weve had tremendous fiscal stimulus, but thats going to term out before the end of the year. Whats not going to go away are the lags from the Interest Rate increases, and even if John Williams says, well, rates will come down next year, the question is, by how much the economy hasnt reset yet, and i did this work looking back historically, only a handful of times has the fed raised the funds rate 500 basis points or more in less than a year and a half this is a significant rate shock, and we havent seen the full impact yet. But what im going to tell you is that after the 500th basis point increase in the funds rate, and it hasnt happened that often, okay, its six months until the recession in that sixmonth period, were basically were in purgatory. We dont know we dont know where we are, were just asking questions, where the recession . But unless you believe Interest Rates dont matter in the most credit sensitive economy in modern history, or you believe that Business Cycle has been repealed, because weve had a year where fiscal policy did have an impact, it is not going to be big enough to offset the lags from these Interest Rate increases. So, i think that by the third or fourth quarter, were going to start to see more evidence, but its going to come out of the consumer side. Right not the corporate side, but there will be spinoff effects this is going to be a consumerled recession it will be more severe than people think into 2024 all right, david, good to speak with you, thank you. David rosenberg, Rosenberg Research im going to apologize, because we posed a question to the group i know. Anarchy ive turned this into chaos on the show tonight sorry do you think it will start we heard so many stories from retailers so far that have reported about tradedown, et cetera i do. Because if you think the consumer stops spending when something happens in the market to the downside. It happened in the fall of 2018 from october to christmas eve, Consumer Spending stopped on a dime because the stock market went down 19. 9 . So, im still of the belief its going to be a stock market shock, which will scare the consumer, which will roll into a consumerled recession on top of that, the student loan repayment, and Higher Energy prices. No question energy is now a fresh headwind, and though Energy Companies have actually probably been the biggest disappointment, though theyre probably not out of this earn earnings, but its an issue. Dan mentioned nike, starbucks, and apple, i mean you know, nikes not going to get away from you on the upside whats the multiple you want to pay . Not a peak market multiple and probably started six months ago. Coming up, shares of lucid on the move after the companys latest results numbers from the quarter. Plus, all of todays tesla headlines. And tyson shares dropping as earnings and sales head south. Is it time to take your eggs out of this basket oh. That d reheft ne returnsn as upbeat music constant contacts advanced automation lets you send the right message at the right time, every time. constant contact. Helping the small stand tall. Nice footwork. Man, youre lucky, watching live sports never used to be this easy. Now you can stream all your games like its nothing. Yes thats what im talking about. [ cheers ] running up and down that field looks tough. Its a pitch. Get way more into what youre into when you stream on the