By 17 state attorneys general to stop rivals and sellers from lowering prices, degrade quality for shoppers, overcharge sellers, and stifle innovation the suit represents one of the biden administrations most sweeping and aggressive moves to break up what it sees as consolidated power in the hands of the tech giants the administration hopes this will both lower prices new competition and spark new innovations that will help the economy. The ftc says amazons alleged schemes impact hundreds of billions in retail sales every year ftc chair lee. Lee it occurs in two markets the online superstar market that serves shoppers and the market for online Marketplace Services that are purchased by sellers. The alleged tactics include antidiscounting measures and conditioning sellers ability to obtain prime eligibility on using amazons costly fulfillment service. The ftc says it is seeking a permanent injunction in federal court that would prohibit amazon from engaging in that conduct, scott. Over the past half hour, lina chan held a press available with reporters. I asked her what the outcome is, is she seeking a breakup of amazon she did not say that, did not go that far she said this is all about determining whether or not amazon has liability in this case then she gave another statement which gave an indication into her thinking in which she said that ultimately this is about the scale and size of amazon, the feedback loop of all these different mechanisms in interlocking agreements working with each other. She said all that together is more powerful than all those individual tactics would be on their own. It seems to indicate to me, scott, that there is a possibility that the government would like to see Something Like a breakup of amazon down the line they are not saying that now, though this is about determining whether amazon has liability we will bring you anything they have to say about this very soon back over to you eamon, a couple things, liability, you hear that and think fine would be the most logical outcome in terms of remedy and this is not lina khans first dustup reporter they have not won every time theyve been aggressive we should look at this in the context of the ftc not able to block microsoft activision, for example. You can imagine the scale of amazons defense here, one of the most powerful and lucrative that will mount an intensive defense. Well hear from them shortly, i believe. Well see what they have to say, but theyre going to deploy battalions of lawyers. Amazon paid a 25 million fine in earlier Consumer Protection case against amazon eamon, i appreciate your reporting. Thats eamon javers live for us in d. C we do have our Investment Committee here josh brown, stephanie link, do you want to give me what your takeaway is from what eamon reported so it might be too soon to have a takeaway, per se. I think whats going on is a fairly novel use of antitrust law. Theres not a lot of precedent going after a company because they are lowering prices for consumers too much its a strange thing, and i understand the point its really amazons logistics that sellers rely on and when amazon competes against sellers on its own platforms and it brings to bear all of these interlocking technologies, it makes it almost impossible for someone else to win. There are competitors. This is not a situation where amazon completely owns ecommerce theyre just the best at it. Theyre losing market share everywhere, and its very difficult, in my view, to call them a monopolist when you consider the fact amazons Online Shopping business advanced only 5 in the last quarter. You compare that to walmart, 24 growth in ecommerce, compare that to shopify which is a great option for all of these third party sellers. Their revenues were up 31 last quarter. If were talking about cloud, its the same story. Amazons cloud segment, aws, grew 12 last quarter. Take a look at microsofts cloud business, azure, it grew 27 amazon is actually losing share in real life, if you look at data i know people have feelings about it, too. They feel that amazon is ubiquitous, hard to compete with, et cetera. Realistically this is not a traditional monopoly we are not talking about turn of the century guilded age stuff type here. Stephanie, when we talk about an ftc case regarding one of the tech giants and, remember, weve talked about a number of issues with the government going after big tech over the last handful of years, i find that investors that i ask often yawn. Shareholders always suggest, it is what it is. Its political itll be a fine. No big whoop is that the way you feel today exactly i think the stock will be volatile since its up 51 year to date. Its not exactly cheap its cheaper than its been, but its not cheap you have higher interest rates, so thats going against growth in tech. This will take years, thats number one number two, if they split up the company, i bet the stock goes higher because you can then appreciate pure plays. Aws, which josh said, grew 12 its stabilizing in terms of growth maybe it can reaccelerate retail, the retail business, margins were double expectations and the Company Thinks they can get back to old highs in terms of operating margins, so profitability on the retail side is improving i think a split, if it happens, would be positive. And then finally, this company just generated 6 billion in Free Cash Flow last quarter alone. Any amount of fine theyll be able to handle so lets talk about the markets more broadly today tech is down and amazon is among the stocks, as you see them before this news hit was down. Were pacing for the first quarter, liz, in a year. The dow is below its 200day moving average i have 7 of 11 s p sectors below their 200 day as well, and 17 dow xocomponents, more than half the dow, below their 200day moving average a rough month winding down rolling off the steps sounds scary. The local high was july 31st and the drawdown has been reasonably orderly since then weve had rising tenyear yields before we have a ten year that since may up 120 basis points. So its natural that stocks should pull back there has been a huge dislocation between where yields have gone and what p es have done, continued to rise as yields have risen. I think a lot of this is reasonably rational. The signal were getting right now from the market, both from industrials and the dow, just because the dow is sort of that sentiment for cyclicality, is that maybe people arent as confident that we will avert recession, maybe not as confident we will avert a contraction in the economy, and i think thats also healthy. I think there needs to be a healthy amount of skepticism, which we were missing through the end of july. I feel weve got the major issue, steph, at hand is what still is a pretty Strong Economy. And thats obviously good. Versus too strong of an economy which leads to higher rates, which leads to more sticky inflation, which is bad. Now you, by virtue of the moves youve made in the market, continue to bet on the Strong Economy trumping Everything Else because you must if your new buys are cisco and deere, that says i believe in this economy over Everything Else and soft landing is in my playbook and, thus, these types of stocks are going to do well well, these stocks are trading at 12 and 13 times forward estimates, and i do feel good about the estimates, and thats the whole reason im optimistic is because the economy has hung in there for now driven by the consumer, by jobs, by wages, pockets of manufacturing with 2 trillion of stimulus into the infrastructure segment of the economy. That is what is keeping us kind of alive, if you will, right its offsetting all of these unknowns with the fed, with higher oil prices. By the way, on the industrials, i would also say a headwind is the dollar the dollar is absolutely much stronger than what most people have expected. I get the concerns but the economy has been able to handle it for now, and that leads me to earnings, right . And so i have to feel good about earnings for me to be more bullish, and i feel good, at least on cisco and deere, theres opportunity here both stocks are down cisco is down 9 from its high, deere down 11 year to date. There are a lot of great characteristics of both companies. It goes back to the Bigger Picture of earnings. Earnings last quarter troughed, down 4 year over year i think the better demand, the better sales thats going to be. Its underappreciated and i think youll see the earnings season will start with the banks how do you think the reception will be . Are we going to cheer because they made a lot more money because in nominal terms rates are higher, or are we going to say, oh, my god, the ipo calendar sort of came back and then sputtered the Housing Market is like super man, frozen in whatever the that material which which narrative do you think is going to start earnings season off considering those two . Capital markets is definitely improving. I think that has definitely troughed you will see it in the second half of the year bank of america last week alone reiterated guidance for Net Interest Income and margins and numbers have come down dramatically for the space maybe thats not going to be the liftoff to the market, the bank earnings, but i dont think theyll be a disaster, right i think the big five, six are taking a lot of market share from the regionals, and that is in their favor then i look at American Express and theyre talking about loan growth up 18 in august alone. You dont buy the narrative that stimulus for everywhere is running thin, and its going to continue to run thin, and the consumer is going to run out of money as that runs thin, and the economy is absolutely going to slow because of lag effects we have yet to see. You dont buy that i buy some of it. What part of it i think were going to slow how could we not, right . How could housing not slow more with over 7. 5 Mortgage Rates . 90 of people that have a mortgage have it under 5 . So existing home sales have been miserable, ill give you that. New home sales up 32 last year over year. Short term, its a bigger headwind for auto sales. Thats a much, much tougher mark to borrow into as a buyer. The Housing Market, its kind of like, all right, cant sell, cant buy, whatever. Well stay put you have to look at jobs. Thats the end of the day, initial claims are the leading indicator. At 216,000 on a fourweek moving basis average, right if jobs start to go in the other direction, we get to 300, 320, 350, i start to worry, but were going in the opposite direction, which is amazing well, what happens, liz, part of what i asked earlier, if rates keep going up because the economy is too strong, what if the tenyear, for example, hits 5 , noless 7 , like, you know, jamie dimon says i think people should be prepared for higher oil gas, higher rates, so the world may not be prepared for the fed at 7 . That according to the times of india. He doesnt necessarily have to nail the number, but what happens if he nails the direction and rates, as a matter of fact, havent peaked yet . Is that a problem . I dont think anyone rationally looks at that and thinks its nearterm horizon. It would be a big mental threshold for Equity Investors and we would continue to see a selloff if it happens in a spike, more voluatility in the market. The vix has been rising. Its higher than its been since spring its up 35 from the lows which is scary. And still below 20 somehow wild but its been quietly rising and strength under the surface has been quietly weakening so rates may continue to go up, right . I think the bigger risk in the near term with rates rising is, number one, you have companies that need to refinance debt. Small caps are probably the most vulnerable in that space theyre not going to be able to refinance all of it. You have a maturity wall in corporate debt that starts to become an issue in 2024, really becomes a bigger issue in 2025 as we know markets look forward. So if people start to get worried that companies cannot roll it over at those rates, theres going to be stress in places like the high yield market i wantto agree with something you said, liz, if youll permit me please, by all means. Strength underlying is the story, talking to traders and People Living inside of the market, and this is, to me, whats notable, whats changed in the last week or so august was not a great month for stocks most of september not so great whats really changed here, whats picking up speed, about 8 of s p 500 names are now at 52week lows not just statistically but some very big, important stocks i know well get to disney well talk nike. Well talk about some of them. Thats starting to weigh on sentiment. And then back to stats, about 20 of s p 500 names have an rsi thats below 30. 30 being considered like where we say stocks are oversold not enough for us to say the washout is over yet. The names were talking about, 17 dow components, as i mentioned to all of you below their 200 day, amex, boeing, salesforce, disney, dow, goldman, home depot, honeywell, j j, cocacola, 3m, merck, across all sorts of sectors were talking about. Thats just showing some technical damage within the market with the things you look at again, if were looking for, like, all right, when is this summer swoon what do we want to call it its not really a correction yet. When is it at its end . My point is, i need to see more than 20 of the names technically being oversold below the 30 rsi i feel as though we have more work to do of course that could change. As of right now, it doesnt look like were done yet. The problem is there are alternatives, a couple fixed income, cash you can get 5 cash. I understand more, right . How do you keep making a bullish case than most for the stock market look, its not 100 bullish i didnt say 100 , i said more bullish than most buying stocks like deere because the economy is running above trend, and the atlanta fed gdp tracker at 4. 9 . Even if weend up at 3 , thats really good. Thats really good and to your point earlier, though, whats bad is that inflation will stay elevated there are puts and takes, scott. When i can find stellar Balance Sheets, number one in the industry on sale with margin upside and if i think the economy is going to hang in there, demand upside, sales upside, thats, to me, very compelling you know what im thinking about as you say that . Blue Chip Companies with pristine Balance Sheets where demand will remain good, im talking about mega cap tech ooh the nasdaq has been getting hurt worse than others, down 4 in a week, difficult and tough impact on the performance of those stocks so why wouldnt, in a more uncertain world, liz, people continue to go to those stocks bank of americas flow show they see the biggest outflows for the second consecutive week in tech. That money continues to come out at a time where maybe the dynamic says that those are the stocks that are going to continue to do the best in a more uncertain environment i think they will because of muscle memory, to some degree. Remember, a lot of these stocks, the nasdaq 100 was up, what, 35 through summer giving a little bit back and, again, were not in correction phase yet. Giving a little bit back is still keeping these quite afloat i do think investors are conditioned to go back to mega cap tech as that defense trade the issue is that its been the trade that is supposed to work in every environment its been working rising, falling, defense, offense, all of it. There are headlines now coming out about a lot of these companies. All the headlines are different. There are headlines affecting Company Specific sales that i think could send some of it into a little bit more volatile of a territory. The reality of what happens in a Business Cycle is that large caps do outperform as we stay in this late cycle behavior i would expect investors to still have an appetite, a buying appetite, for that, and if a pullback continues, they look more attractive on a valuation basis. I feel the more important question is whether buy the dip is still alive in those names. They are the biggest ones in the market if you look at the declines over a week, alphabet down 7. 25 . Amazon down 7. 5 declines of a lesser extent maybe half as much as other names, but apple is at 172 ive heard suggestions from even analyst who is love the stock suggest it could go to 160 of course it could. Anything can happen. Weve seen crude oil trade at negative 10. The idea of course it could i honestly think that, to stephanies point, if youre talking about the next six months, it may, in fact, turn out that 5. 25 tbill is the best investment. Most people are not investing for six months from now. Most people are thinking about ten years, 15 and 20 years, and i think they will default back to this idea that if i can buy a secular grower with a great balance sheet, i would rather do that i hate to interrupt you, and i apologize. We do have amazon now responding to the ftc antitrust suit. Deirdre bosa has that for us dee . Reporter thats right, the suit filed just about 20 minutes ago attributed to amazons Senior Vice President of Global Public policy and the companys general policy general counsel, excuse me the statement says, todays suit makes clear the ftcs focus has radically departed from its mission of protecting consumers and competition. It says, the practices the ftc is challenging have helped to spur innovation and have produced greater selection, lower prices, and faster delivery speeds for amazon customers and greater opportunity for the many businesses that sell in Amazon Stores if the ftc gets in its way, the result would be fewer products to choose from, higher prices, slower deliveries for consumers, and reduced options for Small Businesses the opposite of what antitrust law is designed to do. The lawsuit filed by the ftc today is wrong on the facts and the law, and we look forward to making that case in court. So a lengthy statement, scott. Amazon is making the point that its ecosystem lowers prices for consumers and gives opportunities to Small Businesses by putting them on the platform, so its hitting back pretty hard, which is not unexpected well see how this plays out in the months and years ahead as you